Convince me to vote for Kerry

[Dis]

Originally posted by chegitz guevara
Of course, we don't have a perfectly competitive labor market, so min wage increases are fine. They put more money in the hands of the working poor who spend it, which raises demand for products, which means more people need to be hired. Increasing demand always leads to higher employment.

do you have any studies to show this though?

That's all I'm asking for. I'm voting tomorrow. It's between the libertarian candidate or Kerry. If Kerry raised the minimum raise to $7 (which I doubt he can do) and this can improve the economy, then I will support him. Keep in mind I normally hate socialism (the reason I never vote democrat). But minimum wage isn't socialism.

[chequita guevara]

This from a man who used to call himself a socialist.

I have no studies. Just use some logic. What happens when you put more money in the hands of people who spend 100% of their paychecks? It works the same as a tax cut on the poor. They spend it and it boosts the economy.

The counter, however, is that small businesses claim they can't employ as many people. Your labor demand doesn't go down just because your costs go up, however. It's like increased gas costs, you just have to pay it. It's true, they might delay hiring new people, at least until business picks up, which it will quickly as all the poor workers start spending more.

[Dis]

Originally posted by chegitz guevara
This from a man who used to call himself a socialist.

I have no studies. Just use some logic. What happens when you put more money in the hands of people who spend 100% of their paychecks? It works the same as a tax cut on the poor. They spend it and it boosts the economy.

The counter, however, is that small businesses claim they can't employ as many people. Your labor demand doesn't go down just because your costs go up, however. It's like increased gas costs, you just have to pay it. It's true, they might delay hiring new people, at least until business picks up, which it will quickly as all the poor workers start spending more.

I would be a socialist if I thought it could work. I mistankly thought it could work at one time. Some of you make a good argument for it.

[Rufus T. Firefly]

I'll look for a study, Diss, but Che's logic is spot-on. Our economy at this point is driven by consumer spending. One reason that tax cuts for the wealthy don't work very well as economic stimulators is that the wealthy already have all the money they need for consumer products; when their given tax cuts, they don't spend more.

But you give someone who's making $5.15 a raise to $7.00 and you know what? They're not going to save that extra $1.85. They're going to take that extra money -- maybe $40/week after taxes -- and buy some new clothes, or more food, or maybe just new cds, or eat out more, or go to the movies instead of watching tv, or whatever. They're going to put it right back into the consumer economy, where it will do the most good.

[Imran Siddiqui]

That raise may also lose them a job when business (and not just small ones) will decide to carry less employees because labor costs have gotten too high.

[Dis]

Originally posted by Imran Siddiqui
That raise may also lose them a job when business (and not just small ones) will decide to carry less employees because labor costs have gotten too high.

And Imran does have a point.

I'm union and we have good wages. but because we get paid so much, the employer tries to keep the number of engineers to a minimum. We are understaffed and expected to do more work than we can handle. we have 15 engineers now. When they were non union they had like 40.

Higher wages = less employees.

[Moral Hazard]

There was a quantitative study done in NJ ~1991 on fast food employment, which showed positive employment. The methodology was shaky. I can't remember which journal it was in. American Economic Review I think.

Anyway most economists still view increasing the minimum wage as detrimental. I don't think the impact will be that great though. If it goes to $7/Hr

[Rufus T. Firefly]

Check ot this list of richest and poorest states, from another thread:

Here's a look at the top ten poorest US states:

1. Mississippi
2. Arkansas
3. Utah
4. New Mexico
5. West Virginia
6. Louisiana
7. South Carolina
8. Oklahoma
9. Kentucky
10. Alabama

Mississippi being the poorest.

Here's a look at the top ten richest US states. (DC included, because it counts in the electoral college.)

1. District of Columbia
2. Connecticut
3. New Jersey
4. New York
5. Massachusetts
6. Maryland
7. Hawaii
8. Nevada
9. Alaska
10. Illinois

Now check out this map -- http://www.dol.gov/esa/minwage/america.htm -- of which states have minimum wage laws higher than the federal minimum. Notice anything?

[Imran Siddiqui]

MH: Yeah, later looks at the study showed shaky methodology on that original study, such as testing restaurants in PA (for comparison) which were owned by the same franchisee.

[Imran Siddiqui]

Now check out this map of which states have minimum wage laws higher than the federal minimum.

Correlation and causation problem? I'd argue that richer states decide to give higher min wage rather than a higher min wage leading to richer states.

[Rufus T. Firefly]

Originally posted by Dissident


And Imran does have a point.

I'm union and we have good wages. but because we get paid so much, the employer tries to keep the number of engineers to a minimum. We are understaffed and expected to do more work than we can handle. we have 15 engineers now. When they were non union they had like 40.

Higher wages = less employees.

Maybe in a particular business, but not in the economy as a whole. Minimum wage raises have never corrolated with overall job loss in the economy.

[Rufus T. Firefly]

Originally posted by Imran Siddiqui

Now check out this map of which states have minimum wage laws higher than the federal minimum.

Correlation and causation problem? I'd argue that richer states decide to give higher min wage rather than a higher min wage leading to richer states.

Except that if higher minimum wages caused people to lose their jobs, as you claim, then high-wage states wouldn't also be rich, because they'd be rife with unemployment...

[chequita guevara]

Originally posted by Imran Siddiqui
That raise may also lose them a job when business (and not just small ones) will decide to carry less employees because labor costs have gotten too high.

I acknowledged this in my post, and then pointed out that as demand increases after min wage is raised, so will the demand for labor.

[chequita guevara]

Originally posted by Dissident
we have 15 engineers now. When they were non union they had like 40.

Maybe your union should get off its ass and demand more engineers.

Anyway, your job isn't comparable to min wage work.

[Imran Siddiqui]

Except that if higher minimum wages caused people to lose their jobs, as you claim, then high-wage states wouldn't also be rich, because they'd be rife with unemployment...

You seem to ignore a Hell of a lot of other factors in play. I've heard either you or che say use common sense, but raising the price of min wage labor (if a good portion of the economy is at min wage) through government mandate, instead of the market, would obviously raise labor costs and result in less hiring of those people. And basic economics will verify it... when you set a floor which is above the supply/demand equilibrium, you will have a shortage, which is unemployment.

The rich states can afford to have a high min wage, because if their min wage was at the federal level, the market would have most jobs higher than that (as happened all around during the 90s, where McDonalds, of all people, payed a $1 higher than the min wage for employees). The poor states, OTOH, will have problems because their work market isn't as dynamic or as intelligent (because of inferior schools), which is another reason they are poor. Rich states can afford a higher min wage because of the fact they are rich. That doesn't mean that an increase in fed min wage is going to end up decreasing unemployment.. the roundabout reasoning to get to that reminds me of the justification for supply-side economics.