Unlikely. Very few employees in the US make exactly the minimum wage, which is why it's true that minor increases have close to no effect.
There are massive lobbying efforts by big business every time the minimum wage issue comes up for debate
True, for example WalMart lobbies in favor of minimum wage increases. Out of concern for low-income workers, or to raise business costs for their competitors? Hmm...
Keep in mind how many products are imported from third world countries that have poor labor standards & low wages. The current US lifestyle is heavily subsidized by this cheap labor. Additionally here in the US there is often abuse with illegal immigrants who make well below minimum wage & work in poor working conditions.
Much of the third world is the way it is due to a history of instability, violence & repression, not necessarily a lack of well to do business men looking for an opportunity to avoid having to deal with pesky ideals such as labor regulation.
While it's great that Chinese have the option now of working 12+ hour plus days 6 days a week instead of going off & dying in a rice patty field, somehow I doubt philanthropic philosophy is the reason business goes to China.
Great Britain.
The entire rest of your post is frankly nonsense--it's clear you've never actually learned anything about economics, because most economists concede that the minimum wage doesn't really do much to help anyone, and if anything, only increases unemployment.
History doesn't back you up on this--the 19th century was a materially poorer time in the sense that less wealth was being created to begin with. While large numbers of immigrants lived in poverty, they voluntarily chose to live in those conditions because it was the best opportunity they had. If there was a minimum wage above and beyond the value their labor could legitimately produce, they wouldn't have had that opportunity and they would have been materially even worse off. More to the point, there is still a permanent underclass of immigrants living in poverty and earning less than the minimum wage in this country. When the relevant wage and immigration laws are enforced on that population, the net effect is that they're forced to live in the impoverished countries they voluntarily chose to escape from.
As for the rest of us, our recourse is to legitimately generate more wealth than the cost of our wages and benefits so that we remain profitably employed. The majority of the American population is doing this just fine without the government coming in and setting our wages for us.
That doesn't make much sense to me. The consequences of a minimum wage law are purely economic, on the people as a whole and on the employers and employees affected by that law, as well as on the people who aren't employed due to that law.
Why bother with any regulations, or indeed employee rights at all?
Some regulations are helpful; some aren't. I'm just talking about the minimum wage.
As for your arguments about immigrants - people may migrate to live "the American dream", but how many people's situations are actually improved?
That question is for them to answer. If they don't find their conditions improved, they're free to return home. (Obviously, I'm setting aside cases of human trafficking and so forth--that's an entirely separate issue, and I think we both agree that human trafficking is wrong.)
Through the '90s, it didn't matter how good a
machinist you were - if you lived in the Detroit
area, your employment prospects were poor, just
because of the glut caused by hemorrhaging auto
industry.
there is no economic evidence whatsoever that the
presence of a $7.25 minimum wage has had a measurable
impact on employment.
But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.
What you had to say about history of minimum wage in America is interesting, I'll read up on that.
Without savings, how do you pay for retraining? Without savings, how do you pay for relocation? Without savings, how do you start a new venture of your own? Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings? Without a minimum wage, wages for the lowest skill jobs get driven down to starvation wages. At those rates, its very difficult for people to accumulate enough capital to make the necessary improvements to their situation.
>But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.
Right, and while we're at it, we can move the top tax rate right down to 5%. The extra money freed up will generate so much economic activity that government will end up making money in the long run.
One common method is to work for free for a short time, until you gain the skills necessary to perform a new job.
Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings?
By reducing consumption.
Where I live, the GDP per capita is about 40x lower than the US. The top 5% tends to have a standard of living comparable to the bottom 5% of the US. The savings rate is 20%, compared to +/- 2-3% in the US.
Luckily food, shelter & transport is free too.
Where I live, the GDP per capita is about 40x lower than the US.
Where exactly do you live & what is the quality of life for those at the bottom?
The average poor household in the US has 2 rooms per person, a car or two, air conditioning, and all sorts of consumer goods.
http://www.census.gov/prod/2008pubs/h150-07.pdf
I recently visited a family in Bandra (one of the poshest suburbs of Mumbai). They had 0.75 rooms/person, no AC, an inconsistent and undrinkable water supply, no car and a single bathroom about half the size of any in the US (i.e., no separated shower stall). My understanding is that this is fairly typical for their strata.
They are in the top 5% (roughly) of India. If Indians can save 20% of their income, so can Americans.
Sheltered poverty in the USA means studio apartment, no a/c, no car, no laundry facilities on site, dangerous neighborhood, little to no public transport.
You also have dirt poor poverty which people commonly refer to as "trailer trash", where you have communities of poor people living in trailers wasting away their lives with poor choices & poverty.
Then you have the destitute poor which are those that live on city streets, eat a charity kitchens & often have drug or mental health problems.
I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance. Often the US poor don't have money to save because they bought an A/C, fixed their car, had to see a doctor or payback a loan they took out the week before to make ends meet. That or they live with subsidized housing & utilities and are given a tiny amount of welfare/food stamps which is lucky to last to the end of the month.
Go read the census article I linked to.
If you wish to claim the government's definition of "poor" is overly broad and includes huge numbers of people who are actually middle class, I agree with you. But that simply means there are far fewer poor people in the US than we currently believe.
I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance.
No, it's due to wealth, plain and simple. Take away government assistance and virtually all Americans still have more than $1200/year to live on.
a tiny amount of welfare/food stamps which is lucky to last to the end of the month.
If that were true, poor Americans would not be fat.
Firstly AHS has a disclaimer that it overestimates poverty levels. This can inflate who falls into the "below poverty levels". Also the AHS is counting totals, yes someone may have A/C but that doesn't mean they have a car or 2 rooms per person. Someone could have two rooms & a car that breaks down often, but no A/C. Someone could have all 3 and someone else could have 0. Also the AHS mentions that 11% of those below poverty don't have safe drinking water & 20% live in a neighborhood with serious crime.
Also rooms per person & A/C & a car may not illustrate quality of life. You could look at Brazil having a rooms per person ratio which is much better than India, but your life would still suck if you lived in the slums.
Let's just say that being poor in the US poor isn't a picnic. But I don't think that India is a picnic either. The poor in each country faces a different set of problems. Just because the US poor have more money than the poor in India doesn't mean they don't still face serious problems. Like the saying goes "More money, more problems".
No, it's due to wealth, plain and simple.
Is the US just magically wealthy? Where is wealth derived from? How does a country like India become wealthy?
Take away government assistance and virtually all Americans still have more than $1200/year to live on.
...and cost of living in the USA is exactly the same as in India?
Rooms per person, A/C and car may not illustrate quality of life, but they are consumption. If the Indian upper middle class can reduce consumption and live without such luxuries in order to save 20% of income, so can the US poor.
Also again comparing the US to India is not an exact science.
http://www.mckinsey.com/mgi/mginews/bigspenders.asp The next two groups—seekers, earning between 200,000 and 500,000 rupees ($4,376- $10,941), and strivers, with incomes of between 500,000 and 1 million rupees ($10,941-$21,882)—will become India's huge new middle class. While their incomes would place them below the poverty line in the United States, things are much cheaper in India. When the local -cost of living- is taken into account, the income of the seekers and strivers looks more like -$23,000 to $118,000-, which is middle class by most developed-country standards.
Perhaps not having clean drinking water makes other aspects of life cheaper in India. Does clean drinking water matter? Yes. But maybe not having clean drinking water is the trade off you make for being able to save 20% of your income?
Also there are very few places here in the US that are going to let you work for free to learn about the system works & then either hire you on or give you skills that are transferable elsewhere. Employers do not like desperation & want people who have qualification that match what they're looking for. They'd rather pay someone who knows what they're doing than waste their time on someone who's desperate for a job & is actually going to cost them money while that person subtracts from others while learning things.
If you're making minimum wage, there's not much consumption to be lowered. Rent, transport, and food will eat it all up (and then some).
Rent, transportation, and food are consumption. If they're eating up everything and then some, find a way to lower them. Move in with your parents if you have to, or share a place with friends. Learn to love rice, beans, and potatoes. Walk or take the bus. There are lots of options.
(This isn't abstract theory; I'm presently living on not much more than minimum wage, and I have a wife and kid.)
How many minimum wage earners have a MS degree like you?
This is true of very few of the minimum wage and less earners I've been friends with over the years. (I apologize, I don't have broader statistics than "people I know".)
It's amazing how little money you can get by on if you're willing to really cut back. I don't think it takes an MS degree to figure out how.
Yes there is friction, but how does that effect whether internships are a good idea? By far the biggest source of friction in technology hiring is the lemon problem[1], and internships actually help get around that by providing references. You could credibly argue that unpaid internships are a good idea only in highly frictional labor markets.
As to location, well, if there aren't any jobs in your industry locally there won't be any internships either, so that's a distinction without a difference in this discussion.
That only works in an absolutely frictionless labor market. Meanwhile, in the real world, there are many sources of friction - location being the most prominent. If you have valuable skills, in say, graphic design and the one print shop in your town shuts down, then it doesn't matter how good you are as a designer - you're not going to get a job. Through the '90s, it didn't matter how good a machinist you were - if you lived in the Detroit area, your employment prospects were poor, just because of the glut caused by hemorrhaging auto industry.
>There is an argument in favour of minimum wage, and it's this: some people are too incompetent to be capable of standing up for themselves, and these people would be easy to take advantage of for malicious bosses, of which there are no shortage. The minimum wage is a blunt force mechanism that aims (and fails) to protect this set of people. The reason it fails is that in protecting low-wage employed people, it locks out people who are in a worse situation - unemployed.
Nice job with that straw-man. Unfortunately, the argument you cite bears no resemblance to the actual reason we have a minimum wage. The reason we have a minimum wage is that historically, its the lack of a minimum wage that has created an underclass of people in poverty that don't have the resources to increase their station in life. All throughout the 1800s and early 1900s the US tried to be your minimum-wage free utopia. The results were horrific. We had a permanent underclass of (usually immigrant) tenants living in squalid conditions. If you want to regress to 1890s-era working conditions, then yes, by all means repeal the minimum wage.
Lacking a minimum wage also hurts the economy. Without a minimum wage, the number of consumers for any good beyond basic food, clothing and shelter products would be drastically cut. History has shown that without outside incentives, employers will pay only the minimum needed to keep their workers alive (and sometimes not even that). A minimum wage ensures that there is a bottom in the race to the bottom for wages.
>The minimum wage system is a mechanism designed by the elite to allow that elite to paper over things and sleep at night pretending they're doing the right thing. It hurts the people it claims to protect.
If that's the case, then why do the elites always protest vociferously every time the minimum wage is raised? There are massive lobbying efforts by big business every time the minimum wage issue comes up for debate, despite the fact that there is no economic evidence whatsoever that the presence of a $7.25 minimum wage has had a measurable impact on employment.