Minimum Wage Increase Blocked in Senate

[Dinner]

Originally posted by Kuciwalker


Then why is it the right time to raise it now? Do you have any mathematical reasons for the particular number they want to set it at?

I imagine it is the highest they thought they could get away with.

[KrazyHorse]

Originally posted by Ogie Oglethorpe



No of course not. You saw my almost net zero qualifier is not the same as net zero.

OTOH as you indicate low end retailers of goods and services are most likely hit by the increased costs of minimum wage.

I submit it likely that minimum wage consumers are hit most strongly by these price increases more so then the costs at the local BMW dealer.

I agree that minimum wage earners will probably be hit harder by a minimum wage increase than will other consumers (as an increase in cost of living), but I doubt the effect on them will even breach 5%, let alone the 40% bonus they receive.

The ones most hit will be those making 7.00-10.00 an hour currently. However, that should be a temporary effect.

At the level minimum wage is at right now there will be vanishingly small effects on the overall economy, but there will be a significant positive effect on those at the bottom end of the pay scale...

[Ogie Oglethorpe]

I love these what ifs

Originally posted by Jon Miller
Here is an example where the cost of goods would not increase at all, nor would anyone lose employment.

Lets say there is a town, lets call it Town A. In Town A there is a McDonalds owned by Wealthy Man M. At the McDonalds, employees are paid minimum wage. Also, the people who are employed are constantly busy serving the customers.

Also, in this town, is Wealthy Woman W. She sees the profits that Weathly Man M is making, and would like to open a McDonalds, but McDonalds does not allow her to since M's McDonalds is providing all the comunities desires for such a fast food restuarant (Saturation).

Or alternatively since denied a McDonalds franchise she asks for a Burger King Franchise. Burger King was amenable to the franchise up until the enactment of the minimum wage. Wherein the profit looks to be too iffy a proposition to commit to such a venture. All of a sudden Burger King alternative no longer exists. Less potential employment results. Including several manager types making significantly more than minimum wage including depriving construction opportunities for the new venture including various and sundry trickle down effects to the local businesses (uniforms, cleaning supplies etc.)

The Minimum wage is increased. M's McDonalds is making less money, as he has to pay his employees more. He could fire an employee, however, then he could serve less customers and so would make less money (so that would be stupid).

I'm assuming that because of the condition you describe this particular McDonalds is at or near full utilization and hence the above competition is a most likely case. Likewise consider the chill to investors this represents to allowing a competitor to spring up. Otherwise I would challenge the fire a worker or two or simply not replace them via attrition or other productivity improvement opportunity.

Now let's say he doesn't like the lower profits, and thinks he could make more money elsewhere (like investing in
Google). So he looks for a buyer (Investment problems). However, W wished to own a McDonalds in Town A. She considers the profits to be reasonable for her investment, and purchases the McDonalds from M.

And so you rely on the magic of a rather desperate investor to salvage the situation. One who inexplicably has to have a McDonalds with all the now increased risks of profitability to add to the normal risks of doing business.

In this situation:
1. No one was fired.
2. Wages of the Minimum Wage employees increased.
3. Prices did not increase.

And all it took was a gullible investor willing to be a chump. And whats more it slowed builds of new such enterprises as well.

Now, possibly a lot of people would complain to McDonalds headquarters. Saying that they aren't making enough profit, and that McDonalds should do something (like increase the price of it's menu items). However, McDonalds isn't likely to do that for several reasons:
A. In City C, there aren't enough unemployed and the McDonalds there are already paying above minimum wage. Therefore few McDonalds are complaining about not enuogh profits.
B. It looks bad for marketing to increase the price. Additionally, McDonalds is competing with BurgarKing and so worries that increasing the price will drive more customers away so that revenues would actually go down. C. The McDonalds are still profitable.

So faced with that proposition McDonalds has a few options:

They can to take smaller profits. Hence they shaft the owners (stock holder which are people)

They can attempt to cut costs elsewhere can you say smaller portions of even lower quality goods and services.

Depending on the situation, raising the Minimum wage doesn't necessarily mean less employment opportunities and increased prices.

True they can in other ways provide less value to their customers and/or shaft their owners/stock holders.

[KrazyHorse]

Originally posted by Kuciwalker


Then why is it the right time to raise it now? Do you have any mathematical reasons for the particular number they want to set it at?

There's no real evidence that the federal minimum wage at the level it's been at since it was introduced has been any real drag on the overall economy, so keeping it at same real level (raising to ~7 today) shouldn't do very much harm, but should help out the extremely poor working class significantly.

It should probably be indexed to inflation to avoid the bull**** politicking over it...

[Kuciwalker]

At the level minimum wage is at right now there will be vanishingly small effects on the overall economy, but there will be a significant positive effect on those at the bottom end of the pay scale...

As I understand it, those people are mostly teenagers. Arguably the educational benefit of job experience outweighs the actual wage, and so the increased unemployment would cost them more than they gain, in the aggregate, in wages.

[Ogie Oglethorpe]

Originally posted by Kuciwalker


As I understand it, those people are mostly teenagers. Arguably the educational benefit of job experience outweighs the actual wage, and so the increased unemployment would cost them more than they gain, in the aggregate, in wages.

Precisely my point. Nothing beats actual work experience. Maximize employment to effect OJT and other work experinces.

[Kuciwalker]

And for those people who are trying to live on that money, I suspect a sort of welfare program would be more economically efficient.

[Ogie Oglethorpe]

Less time for crack smoking.


OK that was uncalled for.

[Ramo]

As I understand it, those people are mostly teenagers. Arguably the educational benefit of job experience outweighs the actual wage, and so the increased unemployment would cost them more than they gain, in the aggregate, in wages.

The majority of minimum wage workers are full-time. So generally not high school students flipping burgers over the Summer.

Most studies show the loss of income due to increased unemployment.among minimum wage employees to be much smaller than the increased income due to the higher wage. Similarly, inflation due to the increase would be much smaller than the rate of increase of the minimum wage. All in all, a pretty good thing for the working poor. But as I said, I'd prefer an expanded Earned Income Tax Credit to make the funding burden somewhat more equitable (less regressive).

[Kuciwalker]

But as I said, I'd prefer an expanded Earned Income Tax Credit to make the funding burden somewhat more equitable (less regressive).

[KrazyHorse]

Originally posted by Kuciwalker
And for those people who are trying to live on that money, I suspect a sort of welfare program would be more economically efficient.

I'd prefer a negative income tax rate for the lowest tax brackets to either a minimum wage or increased welfare, but we aren't going to see that any time soon.

Either way, there are some people who are trying to make ends meet by working 40+ hours a week at minimum wage. Yeah, they might be stupid and have made some bad decisions in the past, but I see no need to subject a working man or woman to abject poverty.

[Ramo]

That's basically the EITC.

[KrazyHorse]

Can the EITC result in negative taxes total owed, or does it simply enable a refund on taxes already paid?

In other words, if I gross 8000$ can it mean that my net is 9000$?

[Kuciwalker]

Do people who gross $8000 even pay taxes (apart from Social Security)?

[KrazyHorse]

It's close. The personal exemption in the US is rather low. ~3000$ per individual. I can't remember what the standard deduction is (because the bastards don't let me use it. Mother****ers), but I think it's around 5000$.

Either, way, what I'm asking remains valid: does the EITC go above and beyond all taxes, or does it cut off when the individual's total tax burden is 0?