Minimum Wage vs Competitive Wage? Playing Devils Advocate.

[Meldread]

Alright, I apologize upfront if this post comes off as disjointed and not making much sense. I am playing around with some thoughts bouncing around in my head. I am also NOT advocating for one side or the other, I am just trying to figure out what would benefit the people and the country the most. I would like to hear other people's thoughts as well.

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What would happen if minimum wage was suddenly done away with? Would companies offer more or less for products and services? Would it benefit large corporations or small businesses? Would it create better work environments, better benefits, and better pay for workers? Would it make America more competitive with other nations, and allow us to retain more of our jobs that seem to be going over seas?

The above questions are the questions that I am trying to answer, but most importantly I want to know if it would benefit or disadvantage the average everyday worker.

I don't believe if minimum wage was suddenly done away with that jobs that previously paid good money would suddenly begin offering "slave wages" - basically say, five cents an hour, but that it would create a more competitive market. I can see the downside to minimum wage laws as setting a certain standard, a standard that most companies can agree to pay.

Workers are seen as a resource, and managers do their best to get the most efficient jobs done from the workers for the least amount of money. However, if say, a company was only offering $5 an hour for a certain job, and another company started to offer $8 an hour for the same job would workers not be more inclined to go work for the other company? Well, that of course wouldn't be a bad thing for some companies who can easily rely on "disposable" labor such as factories or fast food. A minimum wage law might be more appropriately applied there. But what about jobs that require certain skills? Obviously companies which want to retain certain workers will have to offer better benefits and pay in order to remain competitive.

What about small businesses? I believe it could be easily advocated that a minimum wage does not really effect large multinational corporations as they rake in such large profits they have the ability to pay perhaps even double what they currently do. However, a small business or a business that is just starting may not have the capital to pay a minimum wage. It could easily be argued that as such businesses grow and expand they will offer higher and more competitive wages. They would also likely target small towns that have higher unemployment because such areas will be lacking in competition. It would then in turn help develop the smaller rural areas.

Of course, a Competitive Wage would need some type of counter balance, and Unions would be essential to that. Having the government invest in small businesses and key corporations would also grow the economy.

If a minimum wage was eliminated what would happen to products and services? The economy works off supply and demand, and if the supply of cash is lowered then less people will be able to buy products and services, and in turn such products and services would have to become cheaper for people to afford. On the flip side of that coin, if minimum wage is raised then would that cause products and services to cost more, as there would be more money in the system to spend? How would that affect those who are already making more than minimum wage? They obviously wouldn't make more money, but products and services would cost them more as well. The economy constantly seeks to naturally balance itself out.

I am unsure of what is more beneficial to the majority of Americans. I can see benefits and disadvantages in both. Unions and a minimum wage would be essential in cases that involve "disposable" labor, but in cases that require skills - in cases where you can be competitive - the question to be asked: Does a minimum wage hurt or benefit the worker?

[Jim Sagle]

1. Whadda buncha RNC shit.

[Meldread]

4. *rollseyes* I'm not advocating either position.

I am writing down thoughts and internal debate as it comes to me and am interested in constructive feedback on the pro's and con's of both. I don't see how it could hurt, especially considering as if you disagree with one side or another it only provides you with a stronger basis to advocate for such a position.

Obviously, I don't think a competitive wage scenario would work unless there were strong Unions behind the workers to advocate when they feel workers are being treated or paid unfairly.

I am trying to look at other developed nations, who are forging ahead against America on all fronts (Japan comes readily to mind), they also have a minimum wage which I believe is even higher than the American Minimum Wage. I am trying to figure out what makes them more successful than America and then trying to figure out what can be changed in America to make us more competitive.

In a nutshell, I would like to think of a way to have a strong economy, and a higher standard of living for all Americans - basically having our cake and eating it too. You can call brainstorming a "buncha RNC shit", if you want, especially without even offering any constructive counter points - which is what I am looking for... well I guess it just shows that you don't have any thoughts at all and much prefer to repeat only what you hear, instead of trying to think up solutions to problems. Well, good luck I guess. I'll leave you to your sinking ship. Excuse me while I climb onto the lifeboat.

[Catchawave]

2. Great post !

And I appreciate the time you put into it :hug:

Here's a great website addressing the Min Wage concern:

http://www.oneamericacommittee.com/minimumwage/

As far as I know, John Edwards is the only Dem working the message right now. He's also on his Rock Star (shrieks and giggles) tour with:

http://www.hotelworkersrising.org/edwards.asp

Unfortunately, there are far more corporate/lobbyist pushes to make us think if we raise the min wage, American businesses will shrivel up and die.

Guess that means we have to follow our hearts.

[Meldread]

10. Thanks for the link!

The more I weigh the pro's and con's the more it seems that minimum wage is the best solution.

The real thing that nags at me, of course, is how it effects smaller businesses especially businesses just beginning. Small businesses are the major employers of America, and as minimum wage is raised, would that force such employers to cut benefits to the workers? (Such as Healthcare?) Also, employers that offer goods and services would they simply pass that pay increase on to consumers, which of course, would in turn place us at a point where we are no better or worse off than before? How would a increase in the minimum wage effect those already earning above minimum wage, especially if the goods of products and services are passed onto the consumer?

I mean, the problem is - I can see the pro's and con's in both... I really wish there was an economics' expert out there who could really break things down in terms for everyone to understand. (One that isn't trying to push either agenda, one that is willing to just give it to us straight.)

[ayeshahaqqiqa]

3. Ok, here's my thoughts

I work for a small pest control company. The techs earn from $9-$12 an hour; I make less. There are times we need extra workers to help with digging out under houses (state regulations say that a crawl space under a house must be a certain number of inches before we can treat the crawlspace for termites). In years past, the boss paid minimum wage-but very few people would do the work, which is hard and dirty. This year he's found he has had to pay $8 an hour to get help-but right now, there are new businesses in town and there aren't very many workers available. I suspect that this summer, when we can get high school seniors to work for us, the wage will go down a bit, unless one of the kids is the son of the friend of the boss. The cost of our services won't go down, that's for sure.

I haven't had a raise in a couple of years-I only got the last one because the state started requiring us to pay sales tax on our services, and I do that. We get paid vacations but no health insurance at all.

My husband says that one time a factory was wanting to come to town, but the City Council wouldn't give them the permits when they found out the starting wage would be $12 an hour-no one wanted to have to raise other salaries. The companies that have come in since that time have kept wages low, around $7-$8 an hour.

How does that relate to cost of living? Like everywhere else, the price of gas and heating fuel has gone way up. There are many who have to go to the food bank for food, or, like me, can afford groceries if they go to the salvage stores in town (the fact that there are two in a town of about 12,000 is telling, I believe). I get my clothes from one of the many thrift stores in town, and garage sales are big. Taxes are on the increase as well.

If there wasn't a minimum wage, I feel, the wages in this town would go way down-either that or the few factories left would leave for cheaper pastures.

[Meldread]

6. Thanks for your reply!

It's sad, but I'm not sure of a good solution.

We could lessen the restrictions that a town or city has to block a large corporation from coming in and paying better money. However, in doing that you kill off smaller businesses and in turn aid large corporations.

Personally, I believe smaller businesses are better than huge giant corporations, but at the same time it is often the giant corporations which have the ability to offer the best product, service, pay and benefits.

:shrug:

It's a horrible dilemma.

[ayeshahaqqiqa]

17. I support small business whenever I can

I think there is a way to compromise. One is to bring in a mix of business, so that the larger corporations are producing a good or service that really isn't duplicated in the local small business sector. We have that in our parking meter factory, our cardboard box factory, our seasonings factory (great Greek seasoning comes from Arkansas, who'd have guessed?), and long distance trucking company.

[Meldread]

20. Yeah, but what about...

...businesses like Wal-Mart, K-Mart and other such huge shopping centers?

I agree that in an ideal world there would be a nice and healthy mix of big and small business, but... it's always my feeling that larger businesses when they show up like to kill off smaller businesses and create local monopolies.

Manufacturing is a different beast all together. There really is no competition locally as the competition typically involves labor. A factory can always move elsewhere where there is a larger segment able to work and it really won't effect them overly much.

[ayeshahaqqiqa]

21. We have WalMart store #2 here

yep, the second store Sam Walton ever opened up, so it's been around for quite a while. They even upgraded it to a superstore when those came into fashion. Perhaps it is instructive to say that local small businesses have been able to start and stay in business here. The way they do it is by offering better service and (this might come as a surprise) lower prices on some items than WalMart does.

[Child_Of_Isis]

5. I think it would take all of 2 hours

for the "slave wages" to hit us. Actually, the min wage is already a slave wage in my opinion.

[Meldread]

7. I agree it is too low.

...my actual hope would be that competition would kick in and drive it higher naturally.

The line of thinking I was using was this: If there is a minimum bar set, then what gives companies the incentive to raise the bar and be competitive?

Of course, things would naturally balance out and the real key question would be, would it balance out higher than it is currently or lower? Well... I'm not sure. I am certain in some cases it would most certainly be lower, but I am not so certain in other cases.

[elehhhhna]

11. How would removing the floor on min wage spur COMPETITION?

A rush to the bottom, perhaps. The two have nothing to do with each other with regard to upward pressure on wages.

If you want to kix some problems, demand 40 hout work weeks--yes, even (especially!) for "salaried" amployees. OT pay exists to encourage employes to HIRE MORE PEOPLE when the workload expands.

[Meldread]

14. Interesting point, but...

...what about small businesses who simply can't afford to pay? It seems to me at least, and admittedly I could be wrong - please point out if I am - that such regulations favor larger corporations who can afford to pay more.

Should we favor larger corporations over smaller businesses? I can see the benefit in that, although admittedly I don't like it.

(Side note: I answered your question in another post lower down in this thread.)

[elehhhhna]

24. "can't afford to pay"? If you...

can't afford a min wage employee you probably don't need one.

[Mikimouse]

8. Employers, by and large, do NOT consider workers to be assets...

they consider them expensive liabilities that would do nothing if given the chance. Classic social darwinism.

[sandnsea]

9. Well let's see

Has the price of anything gone down since corporations started using dollar a day labor overseas? No you say?? Interesting.

We have minimum wages in order to help that small business be able to compete on the same level as a big business. Once again, look oveseas. What's hurting small business? The ability of larger corporations to move and pay low wages. If they could do that right here, without even having moving costs, they'd just cut wages and cut prices even lower, and drive their competitors out of business. Race to the bottom. That's what minimum wage prevents, that's why we got it in the first place. Go back and read some FDR. He lays it all out.

[Meldread]

12. Good point.

I thought about that as well.

I guess the question is then what can and needs to be done to create a better market, one that is attractive for both the business and the worker, while at the same time both innovative and something that can push our economy forward?

That's really what I'm looking for. I am looking for that "magical" balance. I've been looking over Japan and Singapore and they just seem so much more successful at it than us, and businesses seem to favor them more - but at the same time I can't figure out why because they have tons more restrictions! (At least it seems that way looking at the surface.)

[sandnsea]

18. As I understand it

Their culture doesn't reward the kind of run-away greed that ours does so CEO's don't make 500x as much as employees. They also have a co-operative work structure that is more oriented towards output than personal competitiveness. Then there's their national health care. Beyond that, somebody else would have to answer as to standard of living and differences in expectations. They've had their own tough times with different monetary policies and that sort of thing too though. Sometimes I think it's just one big merry-go-round and the horses are all the countries and they're just traded between the heads of industry; and only the rich know which horse to get on at any given time.

[AJH032]

13. minimum wage: the ups and downs

Conservatives will tell you that a minimum wage puts a price control on the cost of labor, which hurts workers by creating a "surplus" of workers because businesses aren't willing to hire as many people. Liberals will tell you that a minimum wage prevents businesses from paying wages that are too low for people to live on, and that without a minimum wage, poverty and corporate profits would increase. It's really hard to say with any kind of certainty which argument is more valid. I think it's wrong to say one side is absolutely right and one side is absolutely wrong.

Personally, I think conservatives lay out an interesting argument. However, it's also somewhat misleading. I really don't think the market of labor is so simplistic that we can draw a straight-line demand curve intersecting a straight-line supply curve and call it the truth about the labor market. Could it be? Maybe, but it's also possible that the minimum wage law doesn't decrease employment at all, and simply raises the pay standards. I think minimum wage laws are important to have because I think there's enough evidence out there supporting them. I do, however, think that it's possible for the minimum wage to be too high and in that case it would eat into the employment rate. I highly doubt it's reached that point though. It's a complicated issue (as is every economic issue, be it taxes, price controls, anti-trust, trade, etc).

[Meldread]

15. I agree.

It's very complicated, but also extremely interesting. I also agree that the truth probably lays somewhere between the two arguments rather than firmly on one side or another.

Have you ever taken a look at the economy of other nations, especially the business economy? Look at Japan and Singapore. They both seem to have a minimum wage and a extremely high standard of living. Yet at the same time they also seem to have even more strict regulations on businesses than here in the United States. I just don't see what makes them more attractive than the United States when it comes to that, because I feel that the United States already bends over backward for businesses (especially big business).

What makes them better than us?

[justabob]

16. One thing is being left out of the discussion

... health care/medical costs. You mention Japan's minimum wage and high standard of living, think about how much their government does for their people. They have nationalized healthcare and other social programs that make a huge difference in the standard of living. It will be a while before the US gov is willing to support the people like that.

[Meldread]

19. I thought about that.

...but how big of an impact does that have on business? Does having Nationalized Healthcare make a Nation more "business friendly"? If so, why don't corporations advocate in favor of it, it seems to me that the majority of corporations are against it.

I certainly support nationalized healthcare and other such social programs, but you really can't support those things without a strong economy - and having a strong economy means you need successful businesses.

Talking to others here on the board, I have to ask... does anyone know how small businesses are supported in Japan and other such successful nations? Do they favor large corporations over small businesses, and if so what has the impact been? (Also, what is in place to prevent monopolies?)

[Solon]

23. Actually, quite a bit...

A couple of things to keep in mind is this, most Medical Insurance in this country is partly paid by Employers, at least it used to. A Universal Plan of some sort that is able to spread the costs amoung all citizens is actually more cost efficient and would save these companies(like GM) millions of dollars in costs. Another thing is worker productivity, which should seem obvious but actually isn't for the dense. How much more productive are workers that don't have to worry about the cost of simple checkups? Think about it, less sick days, less catastrophic care needed, catching or prevention of many diseases and conditions like cancer, etc. etc. This not only would make workers productive, but would actually reduce the cost of medical care as well.

Now why businesses would oppose such measures is actually complex, because businesses are divided into two basic sizes. There are small businesses, usually employing less than 150 people but many up to a little over a thousand or so, they are the ones that would most benefit from a UHC system, simply because "group rates" offered by insurance companies are the least beneficial to them. Large businesses, on the other hand, actually are somewhat indifferent to the whole debate, usually they are large enough to get "discounts" and when that doesn't work, they use their size as leverage and either outsource labor to nations that have UHC(Canada), or ones where the employees are desparate for work and don't care to have benefits(Mexico). No, the only companies that DO unequivocally oppose a UHC system are in the Medical industry here, this includes Big Pharma, Medical Insurance, and Medical Treatment Industries. The reason is actually simple, if the government is the only buyer of medical equipment and supplies, that means one of these two things, price bidding for LOWER prices or outright price controls, they don't want that, at any cost.

[flaminbats]

22. minimum wage has almost no effect on the prices you or I pay..

Why does anyone believe that abolishing the minimum wage results in lower prices for any good or service? Abolishing the minimum wage would not result in growing demand, nor would it result in increased supply. It would ultimately result in lower wages and falling demand for the goods and services, which hire these minimum wage workers. Who could forget that Bush promised his tax cuts would stimulate supply and demand to such the extent that our booming economy would increase tax revenue and government surpluses?

We could abolish minimum wage, but then why require employers to even pay wages? Why not allow companies to buy and sell slave labor? Why require employers to pay overtime, why not just pay workers the same wage for working overtime as paid on a 40-hour workweek...or just face being fired? Why require employers to pay half of the payroll tax, just double that tax for every worker? If people are nothing more than supply and demand, why not just buy and sell people like stocks and bonds? Why require employers to have minimum health and safety standards in the work place, why not let a crippled worker sell for his or her true market price?

Why bother with taxing those with income, why not tax everyone only the same percentage of their cost of living? Why bother setting prices based on supply and demand...just charge more for those who have more, and charge less for those who can pay less? Why even bother with contract law, just let supply and demand alone determine whether or not someone is trustworthy? Why have a Federal Reserve Board, let supply and demand alone adjust the time periods and interest rates to be paid for loans?

Sorry..but I am a Democrat because there is a limit to everything, including the benefits of Darwinism, a role of our government is to protect and support those in our free society who are least able to compete! The role of government isn't to just make and enforce the law fairly, it also exists to help protect our justice and freedom from the bare consequences of human error.

[Heewack]

25. I think the minimum wage is pretty much useless.

Where it really comes into play is in certain union contracts that are based on a percentage over the minimum wage. Acoording to the latest statistics I have read about 2 million people earn minimum wage nationally, most being those under 25 in service industry jobs. Note that waiters and waitresses are listed in that group and make up a bulk. When I look at EU members and there minimum wage we are fairly close. When you figure in cost of living our minimum wage is about equal if not a little better. Employers want the best employee for the dollar, and in an age where productivity reigns the competitiveness for that better worker will always keep the vast majority(98%+) of earners well above minimum wage.

[flaminbats]

26. rights are pretty much useless,that doesn't mean I will not die for them

rights are not useless for those who see them as tools for daily life, and the minimum wage is another tool..for those who use it effectively! The cost of living increases for individuals as they age, as their health declines, and as their ability to pay those expenses decrease. This is why we have a minimum wage, Social Security, Medicare, and Welfare..so the money and value of those who are healthy and young is shared with those whose cost of living is increasing..even as their ability to afford this decreases.

Small business does not suffer because of minimum wage, they are still competitive because of it. Workers who could otherwise be breaking laws and participating in the black market instead choose to take calls or stuff envelopes for companies who otherwise wouldn't have workers. Under single-payer healthcare, every worker regardless their wage would be covered, just when paying a higher payroll tax. The benefits of working for small business could far outweigh any benefits of working for another ungrateful supervisor at Walmart or Home Depot, hence the growing supply of workers this makes available in the market would ultimately drive down the net price of labor for small business.

[ComerPerro]

27. How would getting rid of the minimum wage help anything?

[Armstead]

28. Minimum wage is necessary

The answerer to your rhetorical questions is "No."

Business in the United States did fine when the minimum wage was comparatively higher in the 50's and 60's. They made big profits. They are only whining now about the minimumj wage is that they have become too greedy and piggy.

There is no way to compete with thge wage levels to be had overeas. We should not even try, unless we want to establish the wages in East Slobovia as the yardstick for our standard of living.

The minimum wage is a "floor" below which wages are not allowed to go. If that floor is removed, wages for many many jobs will decline.

It may be possible to have some sort of flexibility built in to accomodate small and struggling businesses. But those should be the eception not the rule.

Just a few thoughts. The minimum wage is necessary.