Good news from Arkansas! (Minimum wage increase)

[KrazyHorse]

Yeah, even before income taxes and FICA 40 hrs a week at 5.15 an hour is 895.07$ per month

Good luck on that...

[Sandman]

Originally posted by Imran Siddiqui
You are confusing two issues. Posters who say what France should do are focusing on France with all of its economic differences. Same with those who say what the US should do. It is an intraeconomy viewpoint.

This is vastly different than saying if X country has Y law, then Z measure should be exactly the same as AA country's Z measure, and if not then I've proven something.

Ie, saying decreasing min wage will raise employment in France is a far sight different than saying since France has such a large min wage compared to the US, it will always have more unemployment than the US as long as the wage is so high.

I never said the US should raise its minimum wage to British levels overnight. Although Britain and the US are usually regarded as having at least similar economies - hence terms like anglo-american capitalism. Surely there is some grounds for comparison?

As for Americans comments on France being based on a holistic analysis of the economic differences - paint me unconvinced.

A majority of min wage earners are in their teens. So 6 years does matter a lot here.

I'm not sure about a majority (depends which country). Nevertheless, the average minimum wage in the UK is still higher than in the US.

[Imran Siddiqui]

Although Britain and the US are usually regarded as having at least similar economies - hence terms like anglo-american capitalism. Surely there is some grounds for comparison?

Well first you'd have to gauge the effects of universal health care, the lack of which has caused some companies to experience problems in profitability, and hence more layoffs. Then a more litigious society in the US, which has had the effect of a number of businesses owing so much that they had to close down, leading to.. layoffs. Thirdly, the difference between centralized schooling and local schooling, whereby localities in poor areas in the US don't have as much money to spend on the schools and correspondingly the education of its students as do richer schools. Those are just three political/societal differences that have major effects and differences on the equilibrium of unemployment and min wage.

As for Americans comments on France being based on a holistic analysis of the economic differences - paint me unconvinced.

I'm not talking about people who yell about and say if France was economically more like the US, they're economy would be just as good as ours. But most people here are looking at France on its own, and saying that if some of the benefits (like the recent job security debate) were reduced, they may see gains in employment.

I'm not sure about a majority (depends which country).

I was speaking about the US. Perhaps Britain does have greater numbers of older people at min wage, but in the US, it is very much young people who dominate that income level.

[Gibsie]

Originally posted by KrazyHorse
Yeah, even before income taxes and FICA 40 hrs a week at 5.15 an hour is 895.07$ per month

Good luck on that...

I was assuming he was taking a ~70 hour week to be the "norm" for people on minimum wage, a couple of jobs (As many people on minimum wage do, I'm sure). In Britain if you work multiple jobs, having two or more jobs makes the taxman go totally nuts on your ass. Do you get punished for having 2+ jobs in the US?

[pchang]

In the US it is total income that matters, not the number of jobs it took to get that income.

[pchang]

Originally posted by KrazyHorse
Yeah, even before income taxes and FICA 40 hrs a week at 5.15 an hour is 895.07$ per month

Good luck on that...

I got $906.40 (8 hour/day, 22 work days/month)

[Provost Harrison]

Originally posted by Gibsie


I was assuming he was taking a ~70 hour week to be the "norm" for people on minimum wage, a couple of jobs (As many people on minimum wage do, I'm sure). In Britain if you work multiple jobs, having two or more jobs makes the taxman go totally nuts on your ass. Do you get punished for having 2+ jobs in the US?

He shouldn't, it should just be a matter of judging the total income and taxing appropriately...

[Dinner]

Originally posted by Sandman
The UK minimum wage is £5.05, or about $9, with lower unemployment that the US. How is this possible, minimum wage haters?

Agreed. As I said before their theory is nice but it is vastly overstated because in the real world employers have a lot of different considerations and normally don't have the option of just firing the guy on minimium wage. I'm really not seeing to many companies going bankrupt over a $1 per hour raise to the janitor either because any company which would go bankrupt over the cost of $40 per week then they're toast even without the raise in wages.

[notyoueither]

Originally posted by Provost Harrison

He shouldn't, it should just be a matter of judging the total income and taxing appropriately...

If it's like here, your source deductions for mulitiple employers won't be at the proper rate, thus you will owe a hefty amount when you file.

It's not the taxman going nuts, it would be the worker not accounting for this and saving enough, or asking the employers to hold back extra so that nothing is owed when filing.

[Darius871]

Originally posted by KrazyHorse
Errr....you work 70 hour weeks?

When I worked minimum wage I sure did, actually more in the 60-70 ballpark. That's still only 50-60% of a week's total conscious time, which is fine by me. Since I got promoted it's less of course.

Originally posted by Imran Siddiqui
That does seem a bit high, he probably miscalculated. That's about $10/hr doing a normal 40 hours work week.

Originally posted by KrazyHorse
Yeah, even before income taxes and FICA 40 hrs a week at 5.15 an hour is 895.07$ per month

Good luck on that...

65 hours of work/7 days a week = 9.286 hours a day on average
9.286 hours a day on average * 30.4 days a month on average * $5.15 an hour * 0.925 (looking at my pay stubs FICA is consistenly around 7.5%) = $1,344.74

Originally posted by Gibsie
I was assuming he was taking a ~70 hour week to be the "norm" for people on minimum wage, a couple of jobs (As many people on minimum wage do, I'm sure). In Britain if you work multiple jobs, having two or more jobs makes the taxman go totally nuts on your ass. Do you get punished for having 2+ jobs in the US?

Nope, it's all legit here. You could work 100 hours a week (the maximum I'd ever be able to tolerate for an extended period of time) between 3 jobs and the IRS couldn't care less as long as you provide a total.

[Rufus T. Firefly]

Darius, I admire your stamina.

But let's be clear: the minimum wage assumes a 40-hour work week. It's assumed to be, and discussed as if it is, the wage for a single, full-time job.

Now, politicians could be honest and say that they expect people who actually want to live on the minimum wage to work 10 hours a day, seven days a week. At least then we'd have a frank national discussion. But they continue to discuss the wage as if its for a forty-hour week, and on those terms its not enough.

[Adam Smith]

Originally posted by Oerdin
Agreed. As I said before their theory is nice but it is vastly overstated because in the real world employers have a lot of different considerations and normally don't have the option of just firing the guy on minimium wage. I'm really not seeing to many companies going bankrupt over a $1 per hour raise to the janitor either because any company which would go bankrupt over the cost of $40 per week then they're toast even without the raise in wages.

Its not just about going bankrupt. Firms can substitute capital for labor, or higher-paid, more experienced labor for less skilled labor. Either reaction hurts the people the minimum wage is intended to help by pushing the lowest skilled workers off the bottom rung of the ladder.

Rufus:

Your statement appears to assume that all or most people earning the minimum wage are solely supporting themselves or a family. I am pretty sure that a good proportion of minimum wage workers are teenagers and college students earning some pocket money.

I would agree that the minimum wage isn't much if you are supporting a family. If the US had a tiered system like the UK, where the wage varies with age (proxy for experience / productivity), then I would have very little objection, since older workers who are more likely to be supporting a family would earn more money, and the number of low-wage workers who find themselves out of jobs would be vanishingly small. As it is, other solutions are needed, such as better urban schools. I've heard it said that the surest way out of poverty is 1) stay in school until you finish high school and 2) don't have kids until you are married. That sounds like a pretty good plan to me, but its not up to me to implement it.

[KrazyHorse]

Originally posted by pchang


I got $906.40 (8 hour/day, 22 work days/month)

22 work days in 31 day month. Not in 30 or 28 day month.

52.14 weeks per year, 40 hours per week, 5.15 per hour = 10740.84 per annum. Divide by twelve = 895.07

If it's a leap year, the average per month will be 897.47

[KrazyHorse]

I would agree that the minimum wage isn't much if you are supporting a family

It's not even enough to support yourself in anything but the most abject poverty most places in the US.

895.07 - 6.2%FICA = 839.58

My rent is 400$ a month for a fairly crappy place with 3 other people. You might be able to get something for 350. Gas and electric = 50$ a month. Bus pass to get to work 70$ a month. 180$ a month for food. Phone line 50$ a month. 140$ left beyond what are considered basic necessities...

[Flip McWho]

Raising the minimum wage will affect unemployment.
Why? Basically cause you're raising the costs of production. Raising the costs of production will mean the company will either;
a) downsize
b) increase prices
c) increase efficiency
d) absorb the increase in wage bill.


However any adjust that is made to the minimum wage (assuming nobodies gonna be raising it $5 at a time) will have little to no real effect in regards to unemployment.

Consider:
Prior minimum wage increase hourly rate is say $9. Minimum wage increases this rate to $10.
40 hour working week.

Wage bill prior increase for business employing 20 people on the minimum wage:
9hr/wage * 40hrs/wk = 360 * 20 employees
= $7200 a week on wages

Wage bill after minimum wage increase employing 20 people:
10hr/wage * 40hr/wk = 400 * 20 employees
= $8000 a week on wages

So an increase of $800 a week on wages for the business who will do one of options (a,b,c or d) that I mentioned above.

Now the easiest way for the business to accommodate this minimum wage increase is to lay off 2 of the twenty employees or increase prices. The ability to increase prices will vary from situation to situation, for example a mcdonalds can't increase its prices whereas a supermarket can. Thus the business will fire 2 people to make up the wage bill increase.

However, this assumes that the business can afford to let go of those two employees. Mitigating factors, such as being unable to fulfill demand with fewer employees, will cancel this out in some places. These places will either increase prices or simply absorb the cost.

(I'm working on an assumption that increasing efficiency doesn't really factor in here as a variable, considering that it contains its own set up cost or they'd do it anyways)

Also this will only really affect business whose profit margins are tight (those that can't absorb the wage bill increase and can't adjust prices) and/or employes many people. It is fairly safe to assume that most businesses won't try to cut back on supply of the product unless they absolutely have too either. Cutting back supply means reducing profits.

So the biggiest effect raising the minimum wage by only a dollar will have is the firing of one employee in every ten.

So does increasing the minimum wage result in unemployment?
Yes.

Is it an important enough factor to count as evidence against having/increasing a minimum wage?
Absolutely not.