Minimum Wage.

[white_wolf]

I was listening to Thom Hartmann today and a caller mentioned that the minimum wage in the Netherlands for any worker over 18 years old is 22$ an hour. Personally I think that the minimum wage should be the minimum a person need to live on. I have heard all these arguments about them hurting companies and personally I do not buy it. I am sure the Netherlands economy is proably doing better than our is right now. So is there any support to raise minimum wage or am I just stupid and have no clue how economics works?

[enlightenment]

1. There is a lot of opinion on the matter.

Have you done any research to answer your questions? That's usually a good place to start.

Try entering a search string like "minimum wage debate US" into Google or another search engine and see what pops up. Your best bet is to start with websites that look 'reliable' - perhaps with domains like 'org' or 'edu' - or a .com site that you recognize as a solid source. Wikipedia can be poorly sourced, poorly cited, and very one-sided or very strong - look for the bibliography at the end and click on those links rather than relying on what the Wiki site says.
Blogs are iffish, unless you know who the person writing it is and what their credentials are like - for example, you would probably find more relevant and factual information on a blog written by an economist (though you might not agree with their assessment) than on one written by someone with a lot of opinion but not a lot of credentials.

[Echo In Light]

2. Paying workers more is dysfunctional to the Profit$ Over People Corp Religion

[evan2]

3. What about a maximum wage? If a co. is paying a CEO

& other senior executives many millions of dollars, CONSUMERS are subsidizing their income. Want more reasonable prices on
commodities like gasoline? There's a drilling co. in Texas whose CEO is paid $23 million a year in salary. Cap those
obscene payouts and maybe the price per gallon would be more affordable for the rest of us.

[hughee99]

5. Is there any guarantee that a decrease in executive salaries

would necessarily result in a decrease in prices, or would companies simply become more profitable which would raise the stock price and compensate executives by raising the value of the stock they own? At the very least, though, increased stock prices benefit all investors, not just the executives.

[hughee99]

4. Here seems to be the basics of it...

Lets say you double the minimum wage from around $7 to around $14/hour. Everyone at $7 gets their salary doubled. People making more than that may or may not get an additional $7 as well, but will probably get a raise. (If you have a person who's worked up from $7 to $13 after a few years, and a new person making $7, bringing both people up to $14 will not necessarily make everyone happy.) Also, any job that has it's compensation level tied to the minimum wage, as some union jobs do, also gets a raise of $7.

The company paying these employees will either have to cut into their profits (not likely) or some combination of raising prices, reducing the number of workers or trying to reduce expenses elsewhere (often cutting into someone else's profits, like a vendor) to make up the difference. Higher prices means inflation, reducing the workforce means unemployment.

Some would argue that the increased business would make up for this, but it's not guaranteed that this would be the case, and in the shorter term, you could probably expect that companies would not rely on added business making up the difference and choose to either raise prices or lay off workers (though they could roll this back later if the new business proves to be sufficient to sustain the wages, or they could just keep additional profits until they believe increasing the number of employees or dropping prices will increase revenue).

In a nutshell, that seems to be the argument against it.

[hayu_lol]

6. High wages in the Netherlands...

are a result of the Dutch wanting/demanding a stable society. They are an extremely pragmatic people.

High wages allow for heavy taxes to pay for:

National Health Care
A guaranteed place to live(no street homeless)
Fully subsidized education--kindergarten through college
and much much more.

They do not have the crazies to deal with like we do.

[hughee99]

11. I'm not saying I agree with the argument against raising the minimum wage

just explaining what I've heard from the crazies.

[Obamanaut]

7. self delete

[Phoebe Loosinhouse]

8. Minimum wage should have been tied to inflation years ago

and the fact that it hasn't been is a disgrace. That is a complete no-brainer.

[hfojvt]

9. you seem to not be aware of recent history

particularly these recent increases due to the Democratic victory of 2006

effective date - wage
09/01/1997 $5.15
07/24/2007 $5.85
07/24/2008 $6.55
07/24/2009 $7.25


Here's the whole chart, adjusted for inflation

Effective Date Hourly Wage
10/24/1938 $0.25 - 3.84
10/24/1939 $0.30 - 4.67
10/24/1945 $0.40 - 4.81
01/25/1950 $0.75 - 6.73
03/01/1956 $1.00 - 7.95
09/03/1961 $1.15 - 8.32
09/03/1963 $1.25 - 8.84
02/01/1967 $1.40 - 9.07
02/01/1968 $1.60 - 9.95
05/01/1974 $2.00 - 8.78
01/01/1975 $2.10 - 8.44
01/01/1976 $2.30 - 8.74
01/01/1978 $2.65 - 8.79
01/01/1979 $2.90 - 8.64
01/01/1980 $3.10 - 8.14
01/01/1981 $3.35 - 7.97
04/01/1990 $3.80 - 6.29
04/01/1991 $4.25 - 6.75
10/01/1996 $4.75 - 6.55
09/01/1997 $5.15 - 6.94
07/24/2007 $5.85 - 6.10
07/24/2008 $6.55 - 6.58
07/24/2009 $7.25 - 7.25

It's pretty obvious, from a business standpoint that you can hire two people at $7.25 an hour for the same cost as one person at $15.50 an hour.

The Netherlands does only have an unemployment rate of 4%, but they also have a poverty rate of 10.5% and the lowest 10% of the population only has 2.5% of the income to 22.9% for the highest 10%. Our own poverty rate is 12% and the lowest 10% spends 2% of the income compared to 30% for the top 10%.

Things don't seem hugely different for people at the bottom. 10.5% to 12% and 2.5% to 2% comparing our two countries. They presumably also have things like a better social safety net and national health care that we don't have.

[Crabby Appleton]

10. The minimum wage in the Netherlands isn't $22/hr

it's 1398 EUR per month for a full-time worker. That's about USD $2000 per month.

http://www.fedee.com/minwage.html

[Meldread]

12. Why not a minimum wage of $200 an hour?

As someone else noted Hartmann was wrong about the minimum wage in the Netherlands. The minimum MONTHLY wage in the Netherlands is roughly $1,870 (1300ish Euro's). Assuming a 40 hour work week it comes down to roughly $9.75 an hour. That's not that much greater than our own minimum wage.

Also, keep in mind some other basic facts. First of all, most people are paid more than the minimum wage requires. Why is this the case? There are a number of factors involved, but two important ones are location and the labor market. If there are a lot of available jobs and businesses want to hire the best workers, then they're going to have to offer better benefits and salaries. Another major factor is location - you're likely to be paid less for doing a job in a rural community than if you had performed that same exact job within a more populated area such as a city.

In my opinion minimum wage laws are somewhat silly due to the aforementioned fact, and detrimental to those whose labor is valued LESS THAN the standard minimum wage. Let me give an example.

Let's say you're interested in doing some landscaping and you put out an ad looking for a qualified landscaper. You're approached by a number of individuals and you're doing some pricing to see who is the most affordable. One individual you meet is a middle aged man who seems like a good guy, he's desperate for the work. He claims that he has good skill and talent, and that he'll work for virtually nothing. He doesn't have any references because no one else will give him a chance: he has a speech condition that makes people misjudge him - and they think he's mentally slow or incompetent. He's willing to work as low as $2 an hour.

Now, this man is harmed by the minimum wage laws. Legally speaking, you can't pay him less than whatever the government has mandated you to pay him. The labor market has valued this man to be worth LESS THAN the mandated minimum wage. So you have to consider him alongside others all of whom are willing to work for minimum wage. Why would you as a potential employer take the risk on a guy that no one else has been willing to take a risk on? You might take "pity" on him because you feel sorry for his situation, but that's insulting to him - you're essentially saying he's not worth the money you're paying him, and you're only giving him a shot because you feel sorry for him. However, since you're on a fixed budget you can't even do that, so you side with a more safe bet in a guy who has a couple of references and is willing to work for minimum wage. The middle aged man loses out again.

However, if the minimum wage law had not existed you could have legally hired this man - he was willing to work for much less, therefore making it much safer for you to take a risk on. This in turn would have put some money in his pocket - not much but some - but it would have given him something even more valuable than cash: a work reference. He can then take your reference to his next job, and ask for a little more money at the next job. Then on the job after that he can ask for the minimum wage. Then eventually after he has several more jobs under his belt, and has built up a number of good references and happy customers, he can ask for more than the minimum wage. Finally, his work becomes sought after by a number of individuals and he's able to make enough money to start a business and bring in a few employees.

In my mind the facts do not bare out the fears. The fear being that if there was no mandated minimum wage that employees would effectively have a race to the bottom to see how little they can pay their workers. When as we see and know from our own experiences, people are paid ABOVE the minimum wage all the time. The scenario above is the situation that faces many small businesses and unemployed people everyday. When you have a law that mandates a minimum payment, that doesn't change the fact that the market still determines the "value" of someone's work. When you're essentially looking at an unskilled individual with no references vs a semi-skilled individual with references, attempting to fill the same job, why are you going to take the chance on the unskilled individual when you have to pay them the same amount no matter who you choose?

In these cases, it forces people into poverty by denying them the ability to obtain work related skills they need to improve their lot in life. These people are forced to live on welfare because they are deemed unhireable.