I didn't say minimum wage created the unemployment problem. I said that minimum wage, like all price floors, creates shortages (unemployment). The higher the floor, the greater the shortage. McDonalds and Taco Bell won't shut down. They just won't be able to hire low-skilled workers. Far from helping the disadvantaged, minimum wage makes them unemployable. And has anyone stopped to consider that perhaps these jobs got shipped overseas precisely because minimum wage forced some American workers to be too expensive?
What evidence can you offer to support this notion? Prove it. Minimum wage has been raised many times and business always makes dire predictions that never turn out to be true. Sure they will be able to hire low-skilled workers. They have no need for many high-skilled workers. They are already paying them more than minimum wage because people can't afford to work for wages that won't pay the bills. My wages have gone up, your wages have gone up, executive wages have skyrocketed. Inflation steadily advances. It is obvious that minimum wage has to go up from time to time as well. I've already stated that a 27% raise to $10/hour seems like too big a single jump, but 5-10% every few years to keep up with inflation and salary inflation across the board is reasonable and necessary.
As I said earlier, basic economics. http://en.wikipedia.org/wiki/Price_floor A historical (and current) example of a price floor are minimum wage laws; in this case, employees are the suppliers of labor and the company is the consumer. When the minimum wage is set higher than the equilibrium market price for unskilled labor, unemployment is created (more people are looking for jobs than there are jobs available). A minimum wage above the equilibrium wage would induce employers to hire fewer workers as well as allow more people to enter the labor market, the result is a surplus in the amount of labor available. The equilibrium wage for a worker would be dependent upon the worker's skill sets along with market conditions. Prove it you say. Okay, here's the results of one study on the effect of minimum wage on unskilled black workers. http://epionline.org/study_detail.cfm?sid=137 What does having to pay bills have to do with it? Do teenagers in high school work to pay bills? What about College students? If you were a 16 year old living with your parents, do you really expect a company to hire you for 10 bucks an hour? My wages have gone up insofar as my ability to negotiate my wage going up with my employer. The same with you, and the same with executives. The government has no business mandating minimum wages any more than it has business mandating my wages or yours. Artificially setting prices for something doesn't mean its value has changed.
That is one theory. Three comments: 1. How did you determine that the minimum wage is above the equilibrium wage? Taco Bell, McDonalds, and most fast foods pay more than minimum wage right now. 2. If minimum wage should be based on equilibrium market conditions, then wages must be allowed to rise at some point as the market rises, should it not? And since the market has steadily expanded and grown, the equilibrium-minimum wage would have to grow as well, yes? 3. Clearly, by your calculation, the equilibrium wage cannot remain static. Clearly, you cannot advocate that the equilibrium wage can never rise. And here are the results of a study in The American Economic Review that found no indication that a rise in minimum wages creates unemployment. http://www.jstor.org/stable/2118030 Opinions differ out there. We're talking about full-time minimum wage employees here. It's not just a matter of the business's economics, but of national interests. It is not in the best national interests for full-time workers to be paid below the poverty level. Students and teenagers work part-time but they still deserve fair wages for fair work. I pay students up to $10/hour. There are some states that exempt high-school teenagers from part-time minimum wages. But exempting adult students trying work their way through college would be overt discrimination on the federal level. Well, it is the law amigo, so they do. I maintain that it is in the best national interests to have a fair and equitable minimum wage, no one has suggested that any other wages be affected. I have no problems with it based on the equilibrium wage as you advocate, for then it would rise steadily as the market rises in the long run. But the businesses won't get to set the "equilibrium" point. It has to be a fair economic formula. I think most businesses would prefer a fixed labor cost for planning than one that floats, as a matter of practicality.
If a minimum wage is below equilibrium it's pointless. If it's above equilibrium it creates unemployment. Minimum wage is either ineffective or harmful. Yes. What does that have to do with government setting price floors? Why should the government interfere in market mechanisms? No. Let the market determine the equilibrium wage. If people want to work for $5 an hour, let them. I don't have access to JSTOR resources. It's in the nation's best interests to let the citizens work for whatever wage they want, and for employers to offer whatever wage they want. The government has no business interfering in that negotiation on the basis that it knows what is best for both parties. Really. So businesses don't get to set the "equilibrium" point. So if the government mandates that you pay your students $25 an hour on the basis that they think that's fair, you would accept this? They know what's fair for you and your students more than you do? Sure. History is replete with examples of businesses favoring fixed costs over reduced costs.
true but the wages they make create an even lower standard of living than our poor. shouldnt that be illegal? allowing the market to set prices is universally good. i was curious if you care about chinamen in your stupid little moral system that worries about wage slaves. apparently you dont give a fuck. i thought it was stupid to let the bible determine what is moral. but you take it to the next level and allow morality to be determined by lawmakers? right. so you think an intern should be allowed to work for nothing, but should never be paid 8 dollars an hour. by all means lets not allow an employer to pay the intern enough to buy lunch every day.[/quote][/quote]
Because history shows that business will exploit labor, even collude to exploit labor in the absence of collective bargaining or a minimum wage. This is good for business but bad for the national interests. Nobody wants to work for $5/hour. In what fantasyland does that happen? If business gives them no options but to work at $5.00, far below equilibrium wage, it is exploitation. Sorry. I have attempted to post the cover page below so that you can read the abstract. The citation is . . . Card, David and Alan B. Krueger, 1994, Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania, Department of Economics, princeton University, The American Economic Review, Vol. 84, No. 4, Sep. 1994 Another fantasy--that both parties can get what they want when the business is holding all of the cards. Entry-level jobs don't get to negotiate for a salary and you know it. That is not their basis. The government only wants that there be a fair and equitable arrangement that is consistent nationally. Of course not, the fox doesn't get put in charge of the henhouse. Nobody has suggested this. They have suggested $10/hour and I already pay students that much. What I said is that a fair and equitable arrangement (perhaps based on equilibrium wages as you have suggested) be implemented that protects the interests of both sides and the nation. You make the unproven assumption that wage costs must always go down when your own formula suggests that it be allowed to float with the equilibrium wage market conditions. This by definition would mean that the wage would both fall and rise as the market conditions indicate. And history indicates that markets steadily grow. So the equilibrium wage would grow as well. In fact you have ignored my comments concerning equilibrium wages and seem to have forgotten it, once it has been pointed out that it inherently allows for equilibrium wage increases. You seem to be suggesting that minimum wage can NEVER be raised but this is in direct contradiction with your equilibrium wage model. You also seem to think that "equilibrium market conditions" can be whatever the business feels is good for them, rather than a true equilibrium based on objective conditions.
Of course not. We cannot set conditions or make laws or change the economy of China. It is foolish to compare America and China without taking cost of living and relative conditions into account. Are you seriously suggesting that making peasans into middle class Chinese is a bad thing. Are you seriously suggesting that it is our responsibility to make them middle class by American Standards? Apparently you can't read. And surprise! You understand little about morality. Laws and public morality are determined by the majority of the people in a democracy. But then, you don't favor democracies because all of the people except you are idiots. What country have you determined to operate in a martinian fashion and why don't you live there? Could you possibly be full of shit? Try to pay better attention. What I said was that volunteer interns do not ask for pay, they are volunteers. Interns that I seek to hire are not volunteers. They seek to work in return for wages and experience and get paid a fair wage.
you really are karl marx. yes, they will collude to lower labor praices. and labor will collude to raise prices (thats what unions are). let them do their dance without taking sides. in a magical place called china. and yet you still buy the ipads. everything is fine as long as red wins. are you not the same red that tells about student workers leaving when you dont pay them better? which is determined by liberal lawmakers red support, of course. cant have the market manage that.
the question is theoritical. if you were a chinese voter would you vote for higher wages? why or why not? Apparently you can't read. And surprise! You understand little about morality. i do favor democracy. i just ament the fact that people like you vote. people who want to control other people. what if you had a volunteer that would be very helpful but couldnt quite afford to work for you unless you chipped in 5 an hour to help pay for bus fare and lunch. it is all the volunteer needs. would you prefer the gestapo rushes in and kicks everyone involved for engaging in a voluntary exchange?
