Because of a 2006 constitutional amendment, Nevada's minimum-wage will increase by 70 cents an hour on July 1.
Nevada's hourly minimum wage is set to jump 70 cents, or 9.3 percent, on Thursday, from $7.55 to $8.25 for workers who don't receive health benefits through their employer. For workers with company-sponsored health insurance, the minimum will rise 10.7 percent, from $6.55 to $7.25.Liberals, as you might imagine, are thrilled with this news.
Credit the increases to a referendum Nevada's voters passed in 2006. The law pushed the Silver State's minimum wage for uninsured workers $1 per hour higher than the federal rate, and required Nevada's base wage to rise every July 1 based on either inflation or any federal wage hike -- whichever is higher. The federal minimum rose last summer to $7.25.
But Jan Gilbert, Northern Nevada coordinator for advocacy group Progressive Leadership Alliance of Nevada, said there's abundant national research showing that raising the minimum wage doesn't cost jobs, and such pay increases actually stimulate the broader economy. A 2009 report from the Economic Policy Institute found that boosting the federal minimum wage to $7.25 would generate $5.5 billion in additional consumer spending over a year.There's abundant national research all right, but even liberal researches (who support increasing it) admit that increasing the minimum wage increases unemployment. And teenagers are increasingly feeling the effects of this misguided policy.
"I think there's kind of a Chicken Little, 'sky-is-falling' reaction," Gilbert said. "If anything, what an increase really does is increase consumers' buying power, reduce costly employee turnover, raise productivity, increase consumer satisfaction and improve the reputation of companies. A raise is a benefit to our economy. It's more money being spent in our economy."
But let's leave that aside and take Gilbert at her word. If raising the minimum wage leads to this host of positive consequences, why don't we increase it to $100 an hour? or $5000? or $1 million?
This isn't a hypothetical question. I'm serious.
The answer to this question reveals the fundamental flaw in liberals' economic way of thinking. Liberals assume that there's a seemingly endless supply of other people's money (OPM) or stuff (health care, food, transportation, etc…). (Important caveat here: The only point of money is to be able to purchase things. No one wants pieces of green paper; we want the purchasing power that green paper represents.) If there is a never-ending supply of OPM and there are poor people, it logically follows that rich people are harming the poor, because they have more than their "fair share" of money. Hence it is the government's job to redistribute wealth through things like the minimum wage and taxes that punish the wealthy.
The logic is sound, except that they are basing their arguments on a faulty premise.
There isn't an endless supply of other people's money or stuff. The world, in fact, is defined by scarcity — unlimited human needs and wants in a world with limited resources and time. And if the world is defined by scarcity, we can't mandate people get paid $100 or $5000 an hour without hyperinflation or record-high unemployment that leads to complete economic collapse.
If there are scarce resources in the world — and there are — you can't mandate that someone gets something, like a wage, that they can't earn, because the resources don't exist. (Another important caveat: You can do this in the short term if you cannibalize savings that have been built up over the years or go into debt. But as the U.S. is seeing right now, that's not sustainable.) And no amount of government mandates can change this reality.
The minimum wage is just another well-intentioned policy that hurts the people its advocates claim to want to help the most.
Bonus: The Review-Journal drops a great editorial on the minimum wage today.
Posts
16 comments:
What about cost of living? It's generally those with the resources which raise the COL. In this sense, ethically speaking, it seems something needs to happen... either control COL, or raise wages. Your rather extreme increase examples were comical, given your "serious"-ness to the question. Obviously this isn't feasible/sustainable, nor are these these actual less than a dollar raises for probably the majority of those forking the paychecks. However, there are many who can afford more, and can provide even simple benefits, but choose rather to exploit and collect. We need balance in this regard, we need regulation. The free market should be a fair market where people receive what they have earned on all sides of the pay scale. There's so simple answer, but there is also no need for such a subjective/exaggerated approach to the issue. Let's actually work on finding solutions which work, rather than taking the easy two-sided approach. The answer is somewhere in between...
I'm going to respond to what I think are your 3 main arguments, let me know if I missed something.
1. I suggest raising the minimum wage to $100 in direct response to Giblert's quote. She claimed that raising the minimum wage had a host of benefiical effects. If that's the case, I asked, why not raise it to $100? And that's the question I answer in the rest of my post.
2. Your assertion that the Cost of Living has increased is wrong, wrong, wrong. Let me refer you to a recent Jonah Goldberg column.
Key quote -- the costs of housing, food, and clothing combined have dropped over the last century from about 75 percent of the average family's expenditures to around 35 percent, largely thanks to the ability of the market to democratize innovation and decrease the cost of necessities and conveniences.
But read the rest of the column to see how the cost of living has not only decreased, but that people's standards of living have dramatically increased.
3. Your comment seems to imply that businesses are exploiting workers or could afford to pay more. Two points:
A. A business is not a charity. The goal of a business is to make money. Now I think it's a good business practice to pay your workers well (decrease turnover, improve performance), but that's not my call or your call. If a worker doesn't like it -- get a different job.
B. Businesses (operating legally) in the US don't "exploit" workers. Why? Workers can leave. If a worker isn't earning the wage he/she wants -- leave. Get a different job or start your own business.
You can't exploit someone when they choose to work there and there's a multitude of options for them if they quit.
The answer is freedom - not some government official determining how you can or can't earn.
Lastly - watch this video of Milton Friedman answering your objections better in 2 minutes than I ever could
I was just going to say, as an above poster pointed out, that the logic in this article is sound until you take into account cost of living.
The issue is more complicated that either side makes of it: yes, it is true that money doesn't grow on trees. But it is also true that the cost of living is controlled by those selling those products that result in that living (that's why it's called COST of living rather than, say, the income of living).
Markets are more analogous to systems governed by entropy. The only way to drive up the organization of the system, i.e. the amount of wealth, is to take wealth from another system.
What perfect system to take from than the less powerful but numerous low class? But then, if this didn't occur, the whole system would collapse. It's very complicated.
The answer to your question is:
Because that would be stupid.
There are boundaries within reason and your reasoning clearly oversteps those.
In none of the quotes you offer did anyone suggest that raising the minimum wage to an exorbitant extent would be a good idea. Rather, the suggestion is paying unskilled workers a livable wage. There's a difference.
You do however make a couple of valid points.
A. Liberals are thrilled with this news.
Yep they probably are.
B. We live in a world where resources are relatively scarce.
True also.
But does that mean it is justifiable for those who do the grunt work to have to suffer through life?
And believe me, not earning enough to feed yourself and your family (if you have one) although you work hard, is enough to bring the toughest among us to tears.
And no, for some it's not a matter of choice or the freedom to leave employment that determines where they work. That is a more complicated issue than what I expect you to understand. Although I don't know you, I also mean no offense when I say that.
I don't regard myself as either conservative or liberal. But if your hypothesis reveals a fundamental flaw in liberals' way of economic thinking, I reckon my question reveals a fundamental flaw in conservatives' approach to human dignity.
Sorry but the reason why the government doesn't raise the minimum wage even higher is because of the effects it would have on unemployment.
$100 an hour certainly would take care of cost of living wouldn't it?
Btw, between 1997 and 2007 the minimum wage did not increase. Despite this, there were 3 million fewer people earning at or below the minimum wage in 2007 than in 1997. To make matters more interesting, the U.S. saw an increase of over 5 million wage earners during that time (wage earner classification does not included salaried workers which by definition already earn well above minimum wgae).
Now how could that happen?
Jules a 10% increase in the minimum wage is generally associated with a 3 percent increase in unemployment. So while you may benefit 97 percent of minimum wage workers with a small wage increase 3 percent of them go from earning a living to nothing at all. How dignified is that?
The minimum wage is a law that can best be described as a law that discriminates against the least skilled among us.
To the anon poster(s):
First, the cost of living has dramatically decreased in the last 50/100 years. Please see the Goldberg column I linked to in my previous post. And also the Friedman video where he explains that only in free market systems have the masses escaped poverty. Poverty has been the normal human condition for thousands of years. What changed? People were freed and the free market was allowed to flourish.
Second this is wrong - "Markets are more analogous to systems governed by entropy. The only way to drive up the organization of the system, i.e. the amount of wealth, is to take wealth from another system."
The free market creates wealth (wealth = stuff not pieces of green paper). Here's proof - you and I are richer than King Tut. He had more gold, but we have cars, AC, cell phones, movies, an incredible variety of food on demand, etc...
What happened? In the last 3000 years (mostly the last 200) people have been creating new things (wealth).
Now the people who create the wealth (stuff) do earn more money than other people. But everyone benefits from wealth creation. Ex: I've never worked on cell phones, but I can get one for "free" with a service agreement. This technology didn't even EXIST 30 years ago.
Third, businesses are not charities or churches. If someone can't earn enough to support themselves and their family they need to go to a charity for help. Both businesses and charities are extremely important, but neither should be made to function like the other.
Alright. So let me put it to you different terms.
Let's look outside Nevada for a second.
In a state like Wyoming where the minimum wage is $5.15, that economic model must be akin to Utopia according to you guys.
And if I follow your logic, it would make perfect sense then to lower the minimum wage for unskilled workers to $0.01 an hour (only because not paying them at all would be illegal).
Alternatively, you could do away with the minimum wage law in its entirety and leave it up to the employer to determine a worker's worth.
I'm guessing that would be your intent here.
What exactly would your vision for that hypothetical be? Everybody would get a fair shake?
You guys have a string of fancy degrees but you haven't learnt anything. No offense, but that's the way I see it. Hear me out.
It's about balance. The reason for the existence of the minimum wage law is merely an attempt at sustaining some kind of balance between industry and labor. It's not the perfect answer by any stretch but it's as close as we can get at this point.
The ideal solution would be that industry take responsibility for those (the grunt workers) who by and large sustain their existence. So far that hasn't been the case and by the looks of it, that won't be the case for a long, long time.
Victor ... as for your remark about charity:
It proves my point if you think about it. If by whatever circumstance you are unskilled but willing, capable and committed to doing your fair share of the work, then you, by all means, should not have to rely on charity.
Hence the attempt at balance.
Hi Jules -
Several points.
First, Yes the minimum wage should be abolished. Go back the original article (http://www.lvrj.com/business/minimum-wage-rate--increasing-97217949.html) and you'll discover that 99.6% of Nevada's workers already make more than the minimum wage.
But - according to your logic - how is that possible if the government's not setting the rates (or achieving balance)? Because people aren't idiots and we have freedom in this country. If someone doesn't like the wage they're earning, they get a different job, learn a new skill or start a business.
All the minimum wage does is eliminate the people with the least skills and experience (the young and uneducated) from getting a job which would give them skills and experience. And hence Nevada's teenage unemployment rate is 34.6 percent.
People who make the minimum wage and work hard don't keep making the minimum wage. As they get experience and prove their worth they get raises, but this never happens if the minimum wage is so high it prevents them from being hired in the first place.
Second, where are you going to find these angels (in the words of Friedman) to determine what's a fair standard of living? All people are self interested and greedy including government bureaucrats. The beauty of the free market is that you only get rich by pleasing your customers with better and cheaper products. In politics you get rich by brown nosing and favoring politically powerful people.
Third, your biggest problem is you're creating a false dictomy between "labor and industry" like these are two competing giants. There's no force called "labor" or "industry." There are only individuals doing what they think is in their self interest. An individual works for a company, but that company is composed of other individual employees and shareholders (individuals). If an individual doesn't like the wage he gets from a company, he can quit and go elsewhere. If enough people quit the company will either raise wages or fold.
There is no need for "balance" [aka gov't picking the winners and losers] when we have freedom.
The market coordinates wages quite well, because individuals know what's in their self-interest better than anyone else. Hence 99.6% of Nevada's workers earn more than the minimum wage.
Fourth, you say: "It proves my point if you think about it. If by whatever circumstance you are unskilled but willing, capable and committed to doing your fair share of the work, then you, by all means, should not have to rely on charity."
A) You would make businesses into charities with your policy positions
B) If you are unskilled, but willing, capable and committed to doing your fair share of the work you are going to find a job in America and be able to support your family (and this doesn't even include joining the Army). It's been done millions of times by penniless immigrants. Why did those people want to leave their countries and come to America?
Because here hard work is rewarded and you are able to create your own destiny.
No need for balance? Really?
Labor and industry have been at odds over wages since the inception of trade. So yes those are very much two opposing forces.
Industry has the ability to take advantage of labor in order to maximize profits. Labor has the ability to inhibit industry exploitation to some extent. So although maximizing profits on industry's side, and gaining financial security on labor's side are not mutually exclusive, they do drive in opposite directions. There's no false dichotomy. That's just reality.
If you don't realize that, then you're in denial Hell pal. What do they teach you kids in college? Anything?
2 other things.
A. If you honestly believe that you are free in this country then you are delusional beyond reproach. I'll leave that right there.
B. And if you honestly believe that hard work is rewarded in this country do us a favor. Go speak to the thousands of GM workers who gave their lives to that company only to get kicked out the door, have their jobs shipped to Mexico and their pensions and insurance canceled. There are many other examples but I don't want to keep you too long.
Moreover, speak to any one of the millions of your fellow citizens who now find themselves out of work, out of a house, with nowhere to go and no more unemployment benefits thanks to economic policy based on that "Trickle Down Economics" you guys so faithfully preach. Oh and "We should not regulate the banks because they will be responsible with our money." Oh oh oh, and don't forget "If the company does bad things it will fail...it will be the market to act as a determining factor."
Except when your government decides to use taxpayer money to bail said bad company out. Then said bad company can do whatever they want. Right?
Wait it gets better.
If the market coordinates wages so well then why is the income gap between executives and average workers growing every year?
Surely you can't blame that on minimum wage.
So are the rich getting smarter or are the poor getting dumber? Or are the impoverished simply lazy and spoiled?
That's it, isn't it. That last one.
Some more things...
How in Sam Hell are you supposed to start a business if you are not earning enough money to survive as it is? Not everybody has rich daddies from whom they can get seed money.
If you are unable to raise capitol, what are you supposed to use? You surely won't qualify for a business loan so should they good look for some of King Tut's gold maybe?
You said "people aren't idiots" but your reasoning on that one point alone puts you well within the realm of "A little bit retarded."
But perhaps I'm an idiot too then.
Because you said, "All people are greedy." I am certainly not greedy though I am sure in your world that would at least earn me the label of "Idiot."
Your insinuation that it's easy to quit a job because of a wage dispute is infantile. For many that is literally their only option - keeping that shitty job with shitty pay whether they like it or not.
Having been there in my life, I don't need an angel to tell me that $6.55 an hour is not enough to make a living. That much I figured out for myself.
Also, just because you earn 10cents above the minimum wage rate doesn't mean you're any better off, regardless of your impressive statistical prowess.
Lastly, the freedom you so staggeringly refer to means nothing if it is not accompanied by an overwhelming sense of responsibility. Not only for yourself but responsibility toward those who share those freedoms.
Every one individual acting solely in his or her own best interest does none of us any good.
Again, I don't expect you to understand these things but perhaps one day, when you think back and reflect on your life, you'll remember this little exchange.
It's been fun man. I wish you nothing but the best.
Julius Muller
Well said Jules.
Also...
Victor, King Tut, are you serious?... Yeah we have more stuff, but stuff does not = wealth as you defined it. King Tut held the means to the stuff; he had the money (not to mention, for some reason I recall a certain tomb which was found which held more "wealthy stuff" in it than any other grave in all of ancient Egypt... who's was that again?. The only thing which might lend support to your definition is if you include the cost of the said stuff you own. Money is wealth, and wealth is power... if you really believe "stuff" equates wealth (as you defined it, without the cost of said "stuff" as a factor), then you are very detached from the reality of life. This makes you not to different from the millions of others who in attempt to appear wealthy, buy/consume a lot of "stuff". I wouldn't be surprised if your behind on your bmw lease payments and your house is in foreclosure...
This kind of mentality is the real curse of King Tut's Tomb :)
Also Victor, your comment on COL - "costs of housing, food, and clothing combined have dropped over the last century from about 75 percent of the average family's expenditures to around 35 percent"...
Totally agreeable, when you try to limit the definition of COL to consuming "stuff". Your whole out look on wealth and living is skewed.
You seem to neglect the fact that cost of living is the cost of maintaining a certain standard of living; which I would submit is not just marked by how affordable your said "stuff" is. Obviously as goods are more easily made by the manufacturers prices drop, they in turn sell more... we know this. What you are failing to address is the cost of more important "stuff" like education and health care. What do their numbers look like over the last several decades? Wow! Isn't it so affordable :) I'm sure glad those costs are coming down... All sarcasm aside, our standard of living with regards to education and health (both better predictors of wealth than "stuff" I might add) has definitely decreased as a whole, and increased in cost. We are as a whole less educated and sicker than we've ever been.
I'm not blaming you for not recognizing this in your comments, cause maybe you (like me) were born into families which had the wealth to provide those kinds of things with no real hardship; I've just realized that it's not like that for everyone...
Jules doesn't care about balance. He cares about setting the balance for everyone else, based on what he thinks is best.
Imagine Jules, and let's pretend that Anonymous above decides to sell you his copy of the communist manifesto. You offer him $3 for it, and he accepts. While you're counting out your nickles and pennies, a police officer stops you. "How much are you paying him for that book?" He asks. "3 bucks," you say, picking a penny off the ground. "That's not allowed here. You have to pay him at least $7.25." "But he agreed to $3!" you protest. "You fool!" the cop thunders, unlatching his cuffs, "Don't you care about balance?!!" Baffled, you ask "what does balance have to do with anything? And what makes $7.25 more 'balanced' than $3? Just because you say so?" He responds, "Buyers and sellers have been at odds over prices since the inception of trade! Buyers have the ability to take advantage of sellers!!!" With that, he cuffs you, and takes you to a court where you are summarily sentenced to 3 years in denial hell.
Balance, Pheh. You just want to control what's not yours.
In reality, it's all a simple matter of buyers and sellers. If a worker is selling his labor for $7.25 an hour, but his labor is only worth $3 an hour on average, he will not be able to find a buyer. If the government then tells him that he must charge at least $7.25 per hour for his labor, then he is effectively priced out of the job market. Typically, it just means that teenagers can't find summer jobs, and the lowest skilled workers don't learn any new skills.
But for all your concern about "balance", this is the balance that matters - the actual value of your labor has to be higher than what you are being paid for it. And that means neither you, or me, or politicians in DC get to decide where that balance stands.
--Mike B
p.s. You really ought to *read* Victor's response, it's actually quite good.
Here's the thing.
Your economic policy has failed miserably and no matter what the alternative, you will stand against any reasonable attempt at remedy.
I understand that.
Jesus Christ himself can walk through your door on the 4th of July and say "If you want to go to Heaven, you'll do what makes sense in this debate." And you would reply "Oh no, the market will take care of it...at the end of the day it's all about consumption and demand."
In saying that, I'll repeat, I am neither liberal nor conservative and in fact I'm not particularly religious either. But I know bullshit when I see it and this is just another shimmering turd in a pond of ignorance.
Trusting an unscrupulous employer to pay an unskilled worker a fair wage is like trusting Jeffrey Dahmer with your 12 year old.
And don't tell me that your assumptions, extrapolations and hypothesis will work perfectly as long as the employer is on the up and up. We all know that they're not.
From the Chinese joint in my town hiring illegal Mexicans to work in the kitchen for 2 bucks an hour to BP lying through their asses about what's going on in the Gulf; they're all unscrupulous and if there's an opportunity to take an immoral advantage of a situation or an individual they will almost without exception, do it in a heartbeat. Can you say Halliburton?
Mike, your analogy would be funny if it weren't so utterly imbecilic. But I suppose that's your mentality.
Let me guess....Palin fan? How about Rush? No wait..Glenn Beck right?
See the problem is that you're the kind of asshole that ends up in a decision making capacity somewhere along the line and you don't give a shit about the people below you that suffer because of your lack of empathy or conscious. Or even better, because of your lack of humility.
I say that for one simple reason. You akin people to commodities being sold. That is not entirely unlike slavery. I have a suspicion you pine for the "good old days"?
In short, you are exactly what's wrong with this country.
Last, good stuff on the COL posts. These guys' lives revolve around accumulation on material shit (stuff) as they so eloquently put it. Hence them not being able to see past that.
Mike - appreciate your response and your analogy is very strong.
Jules and anon - Sorry for the delay in responding it's a lot of work to try and correct so many incorrect assertions (and personal insults).
I doubt we'll come to an agreement, because we differ on the underlying facts so greatly. So (in a fairly random way) I'm going to submit a several pieces of evidence that I think respond to your arguments better than trying to go point by point would.
1. People literally die trying to get here. See Cuba, Mexica. And for what? Freedom (economic and political).
2. America has a lot of income mobility. If you're poor now, you probably won't be in 10 years. If you're rich now you probably won't be in 10 years. http://www.taxfoundation.org/publications/show/26399.html
3. No country has been as successful as the United States at lifting people out of poverty. See the milton Friedman video above.
4. Great stories of rags to riches in American here - http://www.smartmoneydaily.com/celeb-finance/10-rags-to-riches-billionaires.aspx
These people didn't feel sorry for themselves, they worked hard and made the world and themselves better off.
Here's one story. You know her as Oprah Winfrey, but did you know this? I didn't.
Oprah Winfrey
Net worth: $2.5 billion
Born in rural Mississippi to a poor unwed teenaged mother, and later raised in an inner city Milwaukee neighborhood, Winfrey was raped at the age of nine, and at fourteen, gave birth to a son who died in infancy. Sent to live with the man she calls her father, a barber in Tennessee, Winfrey landed a job in radio while still in high school and began co-anchoring the local evening news at the age of 19.
Her emotional ad-lib delivery eventually got her transferred to the daytime talk show arena, and after boosting a third-rated local Chicago talk show to first place, she launched her own production company and became internationally syndicated.
Winfrey became a millionaire at age 32 when her talk show went national. Because of the amount of revenue the show generated, Winfrey was in a position to negotiate ownership of the show and start her own production company. By 1994 the show’s ratings were still thriving and Winfrey negotiated a contract that earned her nine figures a year.
Considered the richest woman in entertainment by the early 1990s, at age 41 Winfrey’s wealth crossed another milestone when with a net worth of $340 million, she replaced Bill Cosby as the only African American on the Forbes 400. Although blacks are 12% of the U.S. population, Winfrey has remained the only black person wealthy enough to rank among America’s 400 richest people nearly every year since 1995.
http://www.smartmoneydaily.com/celeb-finance/10-rags-to-riches-billionaires.aspx
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