Tuesday, July 24, 2007

Minimum wage

Boy, I am posting up a storm (this will have to be the last one for today, though--WORK WORK WORK!)

Today the minimum wage increase from 5.15 to 7.25 an hour goes into effect. Workers in low skill jobs rejoice! That is until their employer realizes they are not productive enough to justify 7.25 per hour and lays them off. Or when in a year or so, the higher costs of production increases the costs of goods making the increase in wage meaningless to their standard of living.

Do people honestly believe that minmum wage increases help the poor at all? Do these "advocates" think that employers are just going to eat these increased labor costs? Isn't a low wage better than no wage? The people who time and time again come up with this stuff must have been humanities majors!

Chet Suburbanteenager working this summer at Abercrombie so he can get an iPhone will be pleased. But, is he the one we are doing this for?

3 comments:

Tim in Italy said...

Hey! I was a Humanities major, you little... free market privateer.

Pink, that's $290/wk. $1,100/mo BEFORE taxes. Have you bought a gallon of milk lately? I was making that 25 years ago right out of school. I'm sure A&F and Burger King will be fine, but I understand your point, hysterical though it may be. Still, there are other places to economize... like maybe the government doesn't have to pay out $1B to dead farmers. Thank God we're keeping the price of peas down!

Please tell me that you believe there is a balancing point between profits and compassion. In the meantime, watch Fritz Lang's "Metropolis" 10 times and then write a report on it. And I want it on my desk FIRST THING in the morning!

Michael in Norfolk said...

I agree with Tim in Italy. Yes, some businesses may be pressed by the increased employee costs, but others will stop making a fortune off underpaid workers.

I own my own firm, so I do know about employee costs, especially the added costs of health care coverage, etc. At some point the free market needs to yield to providing some level of working wage.

Pink Elephant said...

First, the common ground: Totally with you on the farm subsidies. It is a misuse of capital and labor to support and industry in which we have such a comparative disadvantage (not to mention the unfair pressure it puts on developing economies that HAVE a comparitve advantage in agriculture).

Also, I'm not exactly saying "are there no prisons? And the union workhouses, are they still in operation?"* I do believe that we as a society find the living conditions of those at the bottom to be unacceptable. Where I diverge is that I think this "solution" does nothing at all to fix the problem. For instance, payroll taxes extracted from the lowest wage earners go to my grandparents who all have a comfortable nest eggs apart from the Social Security shell game. Maybe we can adjust there. How about ways to make the lowest wage earners more productive and worth higher wages?

If a minimum wage was effective at addressing poverty, why not increase it to $10, 25$, $100 an hour? Then no one would be poor!

PS, though I was an Econ major, I did minor in German lit (which included a film course for which I did see METROPOLIS), so I have a bit of humanities in me too. :)

*Even my closest friends have a tendency to compare me to Ebeneezer Scrooge. I prefer to compare myself to Scrooge McDuck!