Why is FAIR TRADE better than FREE TRADE?

[Lumpenproletariat]

More harm than good from minimum wage.

You request a Wall of Text ? You got it!

There are good reasons for a state imposed minimum wage.

But overall there's more harm than benefit from it.

Prove it.

And not just with your unsourced conjectures.

In economics nothing can be PROVED except with Walls of Text, not with the short nursery-rhyme slogans you prefer. So let's not have any complaints about the length of the following.

You can PROVE something in economics with either good theory or with empirical data. Most of the "proofs" based on empirical data are not sufficient and fall way short of really proving the claim -- insufficient data. But when there really is abundant data, in rare cases, the claim can be proved.

It has been PROVED in one real-world case that the minimum wage increase did net damage to the economy. There is generally some evidence, data, on either side of any question, but not PROOF. Such as proof that MW did total net harm or net good for the economy. Just as in a court of law there is always evidence for both sides, but the real provable truth is that of one side or the other. But there is proof in one case that a MW increase did net harm, as a glaring exception to the norm.

The following case against MW is re-posted from earlier. What's important here is that MW increase has been proved to have done more harm than good in at least one case, that of Samoa in 2007-09. And there is no case ever where it was proved that a MW increase did more good than harm. This time it's PROOF because in this case even the proponents of the MW increase had to admit that it was wrong, and they voted to rescind it. When all sides agree, it has been proved.

How Does the Minimum Wage Impact the Economy?

Did you even bother to read this article? It gives as much evidence AGAINST minimum wage as in favor of it. It is slightly slanted toward giving minimum wage the benefit of the doubt, if it's set reasonably low, because of negative effects on employment and undue burden on some businesses.

And there's no clear evidence that minimum wage does produce the intended benefits. There's only one case where we have clear evidence -- proof -- of the effect of minimum wage, which is that of Samoa where Washington tried to impose the federal minimum wage, and it had to be rescinded later when the increased minimum wage ended up doing more harm than good. In this one case we know for sure that MW did harm, not benefit.

PROOF that MW increase did more harm than good

In 2007, Congress passed legislation to raise the territory's minimum wages, but subsequent legislation delayed or reduced these increases. The current schedule would raise all of the territory's minimum wages to the current federal level by 2036—although any increase to the federal minimum wage will delay this schedule. https://www.gao.gov/products/GAO-17-83

This case shows clearly that the MW increase did more harm than good, so that even those who originally favored it had to reverse themselves after the results were clear. I.e., they added "subsequent legislation" to delay the original increases passed, which were based on normal beliefs of liberals/progressives/left-wingers in the benefits of minimum wage, which were disproved by the results in the following years, as the economy collapsed in Samoa as a result of the new minimum wage. They have finally conceded that it's impossible to make this work until after a long time passes, more than 20 years, for the higher wage levels to phase in slowly enough to minimize the negative consequences they know it's going to cause, as it caused in 2007-2009.

The normal leftist MW ideology required the wage level in Samoa to be made the same as in the 50 states, which they figured would be fine in 1 or 2 years of phasing it in, starting in 2007. When that fell apart, then they delayed the increases a little, then a little more, and so on. And it still could not work, and they finally had to admit their wage ideology was false and agree to a very long-term scheme of phasing it in all the way to 2036, by which time they figure it will be possible for the wage level to be made the same for Samoa as in the 50 states. This is virtual PROOF that MW theory is false, as it requires more than 20 years of phasing it in, totally contrary to everything they believed originally. Even if they can phase it in by 2036 and make it seem OK, we still have every reason to believe that the negative effects of MW will be the same, but that these effects will be spread out so thin that they are not measurable.

By May 2009 the third scheduled minimum wage increase in Samoa took effect, rising to $4.76 an hour and covering 69 percent of canning workers. This did not increase purchasing power, stimulate demand, and raise living standards, as many minimum wage proponents theorize. Instead StarKist-one of the two canneries then located in Samoa-laid off workers, cut hours and benefits, and froze hiring. The other cannery-Chicken of the Sea-shut down entirely in September 2009.

The Government Accountability Office reports that between 2006 and 2009 overall employment in American Samoa fell 14 percent and inflation-adjusted wages fell 11 percent. Employment in the tuna canning industry fell 55 percent. The GAO attributed much of these economic losses to the minimum wage hike.

The Democratic Governor of American Samoa, Togiola Tulafona, harshly criticized this GAO report for understating the damage done by the minimum wage hike. Testifying before Congress Gov. Tulafona objected that "this GAO report does not adequately, succinctly or clearly convey the magnitude of the worsening economic disaster in American Samoa that has resulted primarily from the imposition of the 2007 US minimum wage mandate." Gov. Tulafona pointed out that American Samoa's unemployment rate jumped from 5 percent before the last minimum wage hike to over 35 percent in 2009. He begged Congress to stop increasing the islands' minimum wage:

"We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control. But we are ordered not to interfere ...Our job market is being torched. Our businesses are being depressed. Our hope for growth has been driven away...Our question is this: How much does our government expect us to suffer, until we have to stand up for our survival?"

Samoan employers responded to higher labor costs the way economic theory predicts: by hiring fewer workers. Congress hurt the very workers it intended to help. Fortunately, Congress heeded the Governor's plea and suspended the future scheduled minimum wage increases.

https://www.cashmerevalleyrecord.com/minimum-wage-disaster-american-samoa


Subsequently the minimum wage increase in Samoa has been delayed or reversed:
https://finance.yahoo.com/news/cong...ErvYnUIIC9ske3Krystx3YIRTnbF8q8HWJvHkpy1yiUgA

It's clear from these reports on the Samoa MW increases, that everyone agrees that the increase was too much and has to be rescinded. And yet many still favor MW in Samoa and want to make it equal to that in the 50 states. But this continually gets delayed, because everyone knows of the damage when companies have to cut back or shut down. So now they're thinking maybe Samoa will finally have the same MW as the U.S. by 2036, way off in the future. Everyone agrees on putting it off, delaying it, but also ideally they favor the MW idea, as a theory. But in actual practice, so far, it's not working.

Congress OKs American Samoa minimum wage freeze
By THE ASSOCIATED PRESS
JULY 19, 2012 1:35 PM
PAGO PAGO, American Samoa — Congress passed a bill this week to freeze American Samoa’s minimum wage, responding to employer concerns and a government financial report that suggest automatic increases were harming the U.S. territory’s economy.
American Samoa’s minimum pay was set to increase by 50 cents in September, but that now stands to be delayed until 2015.

Notice how they had to keep delaying it again, and again.

Minimum wage in American Samoa varies from $4.18 to $5.59 per hour, depending on the industry. The lowest wage is for garment workers and the highest is for those in the shipping industry. Tuna canneries make up the largest private employer, where the rate is $4.76.

The Fair Minimum Wage Act of 2007 provided for annual 50-cents per hour increases until the rate matched the rest of the U.S., where the minimum pay is $7.25 per hour.

Note: "Fair" wage here -- It's only fair! -- but unfortunately the real world is not based on Left-wing ideologies about what's "fair" -- so the ideology has to keep changing to conform to the real world.

Increases for 2010 and 2011 were previously delayed by another federal law. The last increase went into effect in 2009, the day after a tsunami killed 34 people in the territory and the same day a tuna cannery shut down.

The issue of pay has been the focus of an ongoing debate in the territory where a communal land system allows many people to live rent-free with their families. A majority of American Samoa land is communally owned by families. But everyday household items need to be shipped to the island, making them much more expensive than in most parts of the U.S.

A report last year by the U.S. Government Accountability Office said employment in American Samoa has declined because of the minimum wage increases that began in 2007. The 142-page report said the decrease in employment was a result of losing a tuna cannery in American Samoa. Employers blamed the minimum wage increase for layoffs, work hour reductions and hiring freezes.

America Samoa’s nonvoting delegate in the U.S. House of Representatives, Eni H. Faleomavaega, said the Senate bill was overwhelmingly approved Tuesday, 378-11.

While he supported it, “I take no happiness in the successful passage of this bill because I still stand for fair wages for American Samoa’s workers,” he said. “So between now and 2015, it will be up to the American Samoa government and our corporate partners, including StarKist and Tri-Marine, to find new ways of succeeding without further compromising the wages of our fish cleaners because I cannot promise that I will support any more delays after this.”

The measure now goes to the president, who is expected to sign it.

Note that these decision-makers are Leftist true believers in the Minimum Wage doctrine, and yet they are having to change their plans as their ideology is disproved by the facts. This is the PROOF that the ideology is false, when the crusaders for it have to admit grudgingly that it did not work, as you see in the above quote from the Leftist True Believer saying "I still stand for fair wages for . . ." and sticking to his ideological slogans stubbornly, and yet proving by his decisions, IN PRACTICE, that the ideology is false, regardless of the slogans he continues to preach.

Three years ago, StarKist Co. announced the reduction of some 800 positions at StarKist Samoa, citing a competitive industry and higher labor costs. Spokeswoman Mary Sestric said the company is hopeful Congress will again delay the next scheduled increase.

StarKist workers on a morning shift Wednesday declined to comment on the delay.

American Samoa Gov. Togiola Tulafono has said the 2009 cannery closure led to unemployment reaching nearly 20 percent by 2010.

“Congress is to be thanked for preventing further economic calamity in American Samoa and preventing continual increases to the minimum wage which would have led to additional layoffs in our fragile economy,” said local Chamber of Commerce Chairman David Robinson.

It's not that the above parties are against MW -- making Samoa the same as the 50 states. They favor it, but for Samoa they know it has to be delayed, again and again, because the facts show that it doesn't work. Not yet. The hope is that ideally some day maybe it's possible.

So there's clear evidence that it failed in Samoa, at the level of increase everyone originally favored, based on the theory that it would increase the consumer spending power and boost the economy. The facts proved otherwise. This is not just another MW "study" theorizing that it might work. This is a proven case where MW increase failed, as recognized by everyone, not just MW-debunkers.

By contrast, there has been no clear case showing that the MW ever did more benefit than harm. In all the "studies" promoting the MW there is no agreed evidence that it produces the net benefits intended. It obviously benefits certain workers whose incomes increase, but there is no measure of the negative results -- higher prices and higher unemployment numbers. These usually cannot be measured and are assumed to be small enough, but there is no way to determine whether the harm is greater or less than the benefits.

''Without a wage floor, employers would continue to pay less and less, destroying the purchasing power of the consumers who would make less money, Cooper said. The minimum wage then helps mitigate that imbalance of power between employers and low-wage workers.''

This only presents the rationale for minimum wage, without the author of the article agreeing with it. This only expresses the INTENT behind MW but not any argument that the intended results are achieved by it.

There are some references to economists like Krueger who says MW doesn't likely do harm to the employment numbers, but this is only so if the MW is kept low enough, below some threshold, and no one ever has explained what that threshold is, or given any evidence that a low-enough threshold has no negative effect. Rather, the only data on this is that the MW, as long as it's low enough, does only small damage to employment, hopefully none, but no study has ever shown that it does no damage at all. It's just that the damage is too small to measure. But the actual damage could well be greater than the benefit to the select workers enjoying a wage increase.

The case for minimum wage never denies that there is some harm caused, such as lost jobs and higher prices due to increased wages. The claim is always that the harm is less than the benefit of higher wages to the workers. But they never give any evidence or data to prove that the harm is less than the benefit. They just say the harm is "negligible" or that it is not measurable and is presumably small enough to be outweighed by the benefits. Which is all conjecture, not proof.

There is also a pretense to quantify how many jobs were lost, and sometimes they claim to be able to measure this, but they always put limits on the time span, or other limits to prevent a real measurement of the total number of lost jobs, even claiming that maybe the number of jobs really INcreased rather than decreased after the MW increase. But they can't identify what caused these new jobs, which could easily have been caused by dozens of other factors. Usually the MW increase comes during a time of an expanding economy, such as the recent expansion in 2010-2019, in a time when jobs increase anyway as a result of many factors (including increased federal deficit in 2016-2019, e.g.).

So there is no case where it has been universally recognized that a MW increase produced net benefit rather than net harm. But for Samoa in 2007-09, it is universally recognized that MW increase did net harm, because even those who enacted the law to increase MW later had to admit that it failed, or backfired. And Senator Obama who voted for it in 2007 later as President signed the law to rescind the MW increase (or delay it). The delay is still in effect because everyone knows that it would do more harm than good to try to make the MW in Samoa today the same as in the 50 states. They keep thinking/hoping/pretending they can reach parity, with the same MW level in Samoa as in the 50 states -- but not now! -- it's not possible yet, nor will it be for many years -- everyone agrees, even Progressive Democrats who keep agreeing to delay it. This is the closest we can come to PROOF of something in economics, where all sides agree on the net result (harm vs. benefit).



That's the empirical data Wall of Text PROOF. But there's additional "proof" that MW increases cause lost jobs and higher prices to consumers.

There's also the THEORETICAL, which is just as legitimate. It's agreed in economics that there is increased price as a result of higher cost. ANY cost, including labor cost. There must be some price increases as a result of MW increase, just as there are price increases caused by any cost increase. It's called "Cost-Push" inflation, as opposed to "Demand-Pull" inflation.

But there are always other factors pushing prices up or down, regardless of any one particular factor. So any particular added cost can be offset by some other factor pushing prices down, so in a given case there may be no net actual price increase (or job losses). This does not mean that the price was not affected by the cost increase. That cost increase pressured prices upward, but other factors pressured them downward.

What is certain is that any cost increase, including MW increase, causes higher prices than would have been otherwise without that cost increase and no other change. Because of all the various changes happening, there is no way to calculate how much prices increased as a result of the MW increase.

The same reasoning applies to the lost jobs, as the higher price for labor discourages some employers. When the price of anything goes up, it's axiomatic that the buyers are discouraged, so the demand for the item decreases, including for labor. I.e., the purchasing of it decreases. And likewise this happens even though there are also other factors offsetting this one, so there might be no net change. Even then there is the effect of job loss taking place which would not have happened, while the other factors may offset this one. All the factors are still happening, even if they cannot be measured, or even if they are offset by other factors.

There's probably no case ever where it has been proved that MW increase did a net benefit or net harm, except the one case of Samoa where it has been proved that it caused net harm. In all other cases the net harm is too small to be measured. The total net harm could be great, from all the MW increases over decades and generations, but just as each case cannot be calculated, neither can the sum of all of them be calculated, however much it is. And there is no single case where it's agreed that MW increase produced a net benefit, such as it's agreed in the single case of Samoa 2007-09 that it produced net harm.

The most reasonable conclusion is that there is always net harm, just as in the case of Samoa, for the same reasons, but that the degree of change which happens is always small enough that the net harm caused cannot be measured. E.g., just as one bad night of freezing temperatures probably does net damage to the citrus industry but is too small to be measured, whereas an entire season or several years of a cold wave does measurable damage.

 

[ZiprHead]

An economics paper by our incoming treasury secretary Janet Yellen on the benefits of fair wages.

Abstract: This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and is also consistent with observed cross-section wage differentials and unemployment patterns.

The Fair Wage-Effort Hypothesis and Unemployment

David Pakman discusses the paper here.

[YOUTUBE]https://youtu.be/HKgtr3FFsZQ?t=395[/YOUTUBE]
Start at 6:35 if it doesn't start there for you.

 

[Jarhyn]

An economics paper by our incoming treasury secretary Janet Yellen on the benefits of fair wages.

Abstract: This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and is also consistent with observed cross-section wage differentials and unemployment patterns.

The Fair Wage-Effort Hypothesis and Unemployment

David Pakman discusses the paper here.

[YOUTUBE]https://youtu.be/HKgtr3FFsZQ?t=395[/YOUTUBE]
Start at 6:35 if it doesn't start there for you.

So, a repetition of the "boss makes a dollar, I make a dime, hence why I poop on company time" in a formal paper.

I can absolutely validate that I do a shit job and withhold effort in situations where my pay is shit.

 

[Loren Pechtel]

Too tiring to have to explain things again, only to get a response that does not relate to what was said. Rinse and repeat.

Except you keep preaching rather than explaining.

Fair is good but what's most important is that it actually works--and you ignore the fact your approach doesn't magically create the good jobs you say people deserve. We are addressing reality, not your utopia.

Workers being paid a fair and reasonable wage in return for their time, skill, labour and wealth creation is a utopian idea?

The way you define "fair" and "reasonable", yes.

If it's even possible to accomplish it it can only be done by diverting an awful lot of spending away from science and the production of the means of production--probably dooming the human race to extinction as our current tech is not sustainable--we advance or we crash.

 

[DBT]

Workers being paid a fair and reasonable wage in return for their time, skill, labour and wealth creation is a utopian idea?

The way you define "fair" and "reasonable", yes.

I define 'fair' and 'reasonable' in a perfectly acceptable way, just as the terms are defined in a dictionary. Nothing more, nothing less. You are scraping the bottom of your barrel of cheap tricks.

If it's even possible to accomplish it it can only be done by diverting an awful lot of spending away from science and the production of the means of production--probably dooming the human race to extinction as our current tech is not sustainable--we advance or we crash.

I've read that three times but can't make any sense of it. The human race is doomed if we don't have lowly paid workers while the rich get ever richer?

 

[Lumpenproletariat]

No matter how high the wage is, it could always be a little higher. So, what's the scientifically FAIR wage level?

Answer: whatever the latest wage level is plus 1 or 2 or 3 bucks more.

An economics paper by our incoming treasury secretary Janet Yellen on the benefits of fair wages.

Abstract: This paper introduces the fair wage-effort hypothesis and explores its implications. This hypothesis is motivated by equity theory in social psychology and social exchange theory in sociology. According to the fair wage-effort hypothesis, workers proportionately withdraw effort as their actual wage falls short of their fair wage. Such behavior causes unemployment and is also consistent with observed cross-section wage differentials and unemployment patterns.

The Fair Wage-Effort Hypothesis and Unemployment

David Pakman discusses . . .

Why don't you want anyone to read the paper? --

https://www.washingtonpost.com/blogs/wonkblog/files/2013/10/fair_wage_effort_hypothesis.pdf

It doesn't mention minimum wage law. And there's nothing to show that employers don't already take into consideration the possibility of paying higher in order to get better performance, which they have every incentive to do. But when it would not produce better performance, there's no reason to pay higher. And Yellen is not such an asshole as to suggest that every employer will get higher performance by increasing the wage level. The possibility of getting higher performance is never ruled out. Companies do in fact increase the wage level sometimes for that reason.

There's no reason to think employers generally don't already do whatever would produce better performance, as long as it's cost-effective. It's Wacko Economics to suggest that a law needs to be passed to get employers to do what is already in their interest, such as to get better performance from workers.

It's on an individual basis that this judgment has to be made. Certain employees probably would perform better, and generally the employer knows which ones these are, and does anything necessary to get the better performance, including a pay raise for those individuals.

But to suggest that all we have to do is pass a law jam-cranking up the wage level to millions of workers all in one fell swoop and BINGO! -- we get automatic 5 or 10 percent improved performance from them all? No responsible economist claims any such rubbish. There's nothing in Yellen's paper or from theory or empirical data giving any reason to believe such a thing.

David Pakman discusses the paper here. . . .

Not really. He mentions it but only gives his own superficial opinion about minimum wage, not mentioned in the paper, and he pretends that the paper refutes the arguments against MW, which it does not.

He pretends to answer objections to MW, but he doesn't answer if it would be good to increase it to $20/hr, to $25, to $30, to $35 etc. and how we know what is the right level to stop raising it. Instead he just says it's silly to suggest raising it to $150 or $1000/hour. He gives no principle showing where the line is drawn, but just ridicules the extreme $1000/hr suggestion.

Where in the paper does it say "Such behavior causes unemployment . . ."? Maybe it's in there, because I didn't analyze it line by line. But I'm wondering what is the argument saying that if workers are paid less than what's "fair" this somehow causes involuntary unemployment.

What it might cause is lack of jobs for some work which is not worth paying for because the benefit from it is less than the cost.

There's a lot of pop psychology in the paper, which any bozo on the street could rail on and on about, making it read like something written by a hippy or a drunk stumbling out of a bar, but just a little polished up with some technical jargon.

The paper does not deal with the obvious point that probably 95% of workers complain that they're not getting a "fair" wage, and the definition of "fair" just keeps going up annually (or monthly), in step with whatever pay increase may happen, so that a "fair" level is never reached. This point is not addressed but is just ignored as always by "fair" wage sloganeers and Leftist fanatics and uncompetitive crybabies who only know how to whine but can never explain anything.

 

[Loren Pechtel]

I define 'fair' and 'reasonable' in a perfectly acceptable way, just as the terms are defined in a dictionary. Nothing more, nothing less. You are scraping the bottom of your barrel of cheap tricks.

If it's even possible to accomplish it it can only be done by diverting an awful lot of spending away from science and the production of the means of production--probably dooming the human race to extinction as our current tech is not sustainable--we advance or we crash.

I've read that three times but can't make any sense of it. The human race is doomed if we don't have lowly paid workers while the rich get ever richer?

The human race is doomed if we don't find better answers to some important problems.

If you divert the money from development to consumer spending there's no chance of finding those answers. You just think you can wave a magic wand and pay the sums you envision without cost, but that's not reality.

 

[DBT]

I define 'fair' and 'reasonable' in a perfectly acceptable way, just as the terms are defined in a dictionary. Nothing more, nothing less. You are scraping the bottom of your barrel of cheap tricks.

If it's even possible to accomplish it it can only be done by diverting an awful lot of spending away from science and the production of the means of production--probably dooming the human race to extinction as our current tech is not sustainable--we advance or we crash.

I've read that three times but can't make any sense of it. The human race is doomed if we don't have lowly paid workers while the rich get ever richer?

The human race is doomed if we don't find better answers to some important problems.

If you divert the money from development to consumer spending there's no chance of finding those answers. You just think you can wave a magic wand and pay the sums you envision without cost, but that's not reality.

Development doesn't happen without workers to make it happen, mining raw materials, manufacturing, producing goods and services, time, skill and effort. Money is being made, but it quickly flows to the top end of town. The top few percent of the worlds population get tremendously wealthy, the rest are caught in various degrees of financial struggle regardless of their long hours of productive labour. That, in a nutshell, is the problem.

 

[Loren Pechtel]

The human race is doomed if we don't find better answers to some important problems.

If you divert the money from development to consumer spending there's no chance of finding those answers. You just think you can wave a magic wand and pay the sums you envision without cost, but that's not reality.

Development doesn't happen without workers to make it happen, mining raw materials, manufacturing, producing goods and services, time, skill and effort. Money is being made, but it quickly flows to the top end of town. The top few percent of the worlds population get tremendously wealthy, the rest are caught in various degrees of financial struggle regardless of their long hours of productive labour. That, in a nutshell, is the problem.

Still preaching rather than addressing the reality.

A far higher percentage of the money that goes to the rich ends up in development vs the money that goes to the middle class. Thus directing a larger piece of the pie to the workers slows development.

I've seen lots of stuff about the rich wrecking the world in the quest for profits (and usually justified criticism), but you fail to see that you're doing the same thing--trying to wreck the world in the quest for a better lifestyle.

 

[ZiprHead]

A far higher percentage of the money that goes to the rich ends up in development vs the money that goes to the middle class. Thus directing a larger piece of the pie to the workers slows development.

You're the one that 's confusing pieces of the pie. CEO remuneration does NOT include development money. You're just making poor excuses for the CEO class to keep their massive gains.

 

[laughing dog]

The human race is doomed if we don't find better answers to some important problems.

If you divert the money from development to consumer spending there's no chance of finding those answers. You just think you can wave a magic wand and pay the sums you envision without cost, but that's not reality.

Development doesn't happen without workers to make it happen, mining raw materials, manufacturing, producing goods and services, time, skill and effort. Money is being made, but it quickly flows to the top end of town. The top few percent of the worlds population get tremendously wealthy, the rest are caught in various degrees of financial struggle regardless of their long hours of productive labour. That, in a nutshell, is the problem.

Still preaching rather than addressing the reality.

That one is meta-irony,

A far higher percentage of the money that goes to the rich ends up in development vs the money that goes to the middle class.

That is an unsubstantiated claim of fact. With the expansion of IRAs, and defined contribution plans, it is not clear that is true.

Thus directing a larger piece of the pie to the workers slows development.

See above. Moreover, it is possible that even if a smaller percentage of worker compensation goes into development, the number of workers greatly outnumbers the number of rich, so it is possible that more ends up in "development" when it goes to workers than to the rich.

Your argument is based on an unsubstantiated claim of fact.

 

[laughing dog]

You can PROVE something in economics with either good theory or with empirical data.

That is wrong. Data is either consistent or inconsistent with theory - theory by itself proves nothing about reality.

Whether or not a particular minimum wage generates net benefits or net costs is an empirical question, not a theoretical one. Moreover, it also depends on what people view as benefits and what they view as costs.

PROOF that MW increase did more harm than good

In 2007, Congress passed legislation to raise the territory's minimum wages, but subsequent legislation delayed or reduced these increases. The current schedule would raise all of the territory's minimum wages to the current federal level by 2036—although any increase to the federal minimum wage will delay this schedule. https://www.gao.gov/products/GAO-17-83

This case shows clearly that the MW increase did more harm than good, so that even those who originally favored it had to reverse themselves after the results were clear. I.e., they added "subsequent legislation" to delay the original increases passed, which were based on normal beliefs of liberals/progressives/left-wingers in the benefits of minimum wage, which were disproved by the results in the following years, as the economy collapsed in Samoa as a result of the new minimum wage. They have finally conceded that it's impossible to make this work until after a long time passes, more than 20 years, for the higher wage levels to phase in slowly enough to minimize the negative consequences they know it's going to cause, as it caused in 2007-2009.

The normal leftist MW ideology required the wage level in Samoa to be made the same as in the 50 states, which they figured would be fine in 1 or 2 years of phasing it in, starting in 2007. When that fell apart, then they delayed the increases a little, then a little more, and so on. And it still could not work, and they finally had to admit their wage ideology was false and agree to a very long-term scheme of phasing it in all the way to 2036, by which time they figure it will be possible for the wage level to be made the same for Samoa as in the 50 states. This is virtual PROOF that MW theory is false, as it requires more than 20 years of phasing it in, totally contrary to everything they believed originally. Even if they can phase it in by 2036 and make it seem OK, we still have every reason to believe that the negative effects of MW will be the same, but that these effects will be spread out so thin that they are not measurable.

By May 2009 the third scheduled minimum wage increase in Samoa took effect, rising to $4.76 an hour and covering 69 percent of canning workers. This did not increase purchasing power, stimulate demand, and raise living standards, as many minimum wage proponents theorize. Instead StarKist-one of the two canneries then located in Samoa-laid off workers, cut hours and benefits, and froze hiring. The other cannery-Chicken of the Sea-shut down entirely in September 2009.

The Government Accountability Office reports that between 2006 and 2009 overall employment in American Samoa fell 14 percent and inflation-adjusted wages fell 11 percent. Employment in the tuna canning industry fell 55 percent. The GAO attributed much of these economic losses to the minimum wage hike.

The Democratic Governor of American Samoa, Togiola Tulafona, harshly criticized this GAO report for understating the damage done by the minimum wage hike. Testifying before Congress Gov. Tulafona objected that "this GAO report does not adequately, succinctly or clearly convey the magnitude of the worsening economic disaster in American Samoa that has resulted primarily from the imposition of the 2007 US minimum wage mandate." Gov. Tulafona pointed out that American Samoa's unemployment rate jumped from 5 percent before the last minimum wage hike to over 35 percent in 2009. He begged Congress to stop increasing the islands' minimum wage:

"We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control. But we are ordered not to interfere ...Our job market is being torched. Our businesses are being depressed. Our hope for growth has been driven away...Our question is this: How much does our government expect us to suffer, until we have to stand up for our survival?"

Samoan employers responded to higher labor costs the way economic theory predicts: by hiring fewer workers. Congress hurt the very workers it intended to help. Fortunately, Congress heeded the Governor's plea and suspended the future scheduled minimum wage increases.

https://www.cashmerevalleyrecord.com/minimum-wage-disaster-american-samoa


Subsequently the minimum wage increase in Samoa has been delayed or reversed:
https://finance.yahoo.com/news/cong...ErvYnUIIC9ske3Krystx3YIRTnbF8q8HWJvHkpy1yiUgA

It's clear from these reports on the Samoa MW increases, that everyone agrees that the increase was too much and has to be rescinded. And yet many still favor MW in Samoa and want to make it equal to that in the 50 states. But this continually gets delayed, because everyone knows of the damage when companies have to cut back or shut down. So now they're thinking maybe Samoa will finally have the same MW as the U.S. by 2036, way off in the future. Everyone agrees on putting it off, delaying it, but also ideally they favor the MW idea, as a theory. But in actual practice, so far, it's not working.

Congress OKs American Samoa minimum wage freeze
By THE ASSOCIATED PRESS
JULY 19, 2012 1:35 PM
PAGO PAGO, American Samoa — Congress passed a bill this week to freeze American Samoa’s minimum wage, responding to employer concerns and a government financial report that suggest automatic increases were harming the U.S. territory’s economy.
American Samoa’s minimum pay was set to increase by 50 cents in September, but that now stands to be delayed until 2015.

Notice how they had to keep delaying it again, and again.

That is only proof of the legislation - not of the intent nor the driving forces behind it. The delays could be the result of lobbying and self-interest, not actual economic harm.

 

[DBT]

The human race is doomed if we don't find better answers to some important problems.

If you divert the money from development to consumer spending there's no chance of finding those answers. You just think you can wave a magic wand and pay the sums you envision without cost, but that's not reality.

Development doesn't happen without workers to make it happen, mining raw materials, manufacturing, producing goods and services, time, skill and effort. Money is being made, but it quickly flows to the top end of town. The top few percent of the worlds population get tremendously wealthy, the rest are caught in various degrees of financial struggle regardless of their long hours of productive labour. That, in a nutshell, is the problem.

Still preaching rather than addressing the reality.

A far higher percentage of the money that goes to the rich ends up in development vs the money that goes to the middle class. Thus directing a larger piece of the pie to the workers slows development.

I've seen lots of stuff about the rich wrecking the world in the quest for profits (and usually justified criticism), but you fail to see that you're doing the same thing--trying to wreck the world in the quest for a better lifestyle.

I see that you still fail to support what you claim.

 

[Lumpenproletariat]

Letting the market produce more -> we're made better off.

Suppressing production -> we're made worse off.

There are good reasons for a state imposed minimum wage.

But overall there's more harm than benefit from it.

How do you know?

From both economic theory and empirical evidence. Both are legitimate and give proof or evidence that minimum wage does more harm than good.


THEORY: When you prohibit some hiring from taking place (jobs paying too low are prohibited), it means less production takes place, because some employers then eliminate some jobs, or decline to hire new workers they otherwise would have hired at the lower wage level. Less production -> less wealth produced -> less supply = lower living standard to all consumers.

Also some workers are then shut out of employment, i.e., those who could not get hired at the higher wage but who could get hired at a lower wage level. These would be better off to have a low-paying job rather than no job at all, so they are made worse off.

Those workers paid higher (from MW increase) don't make the economy better off, because in order for them to get more, someone else has to get less (the total production is not increased, but probably decreased by the higher labor cost), in order to pay for their higher wage. So their gain is cancelled out by someone else's loss.


EMPIRICAL EVIDENCE: There is at least the one case of Samoa (probably others too, though in most cases it's not agreed by everyone) where a MW increase definitely did more harm than good. Even those who originally passed the MW wage increase had to vote to rescind it later when they recognized that it did more harm than good. This is PROOF that there was more harm than good -- not just a theory, or opinion. Regardless of anyone's definition of "benefit" or "harm" -- in this case those who enacted the MW increase had to admit later that it did more harm -- by their own definition -- than good, because otherwise they would not have voted to rescind or delay the MW increase, and even to this day the MW in Samoa has not been increased to equal that of the 50 states, so the MW proponents are still unwilling to raise it to the level their ideology says is required, because they believe it's not yet possible for it to produce the benefit their ideology preaches.

This is PROOF, because the MW ideologues, the progressive politicians, sincerely believe it will do more harm than good. There's no other way to explain why they have not finally increased the MW in Samoa up to be equal to that in the 50 states, after 12 years of being able to phase it in, and yet they still won't do it. They are following the pressure of the unions and progressive ideologues, not selfish business interests or employers -- it's the Democrats and progressive leaders in Samoa and in the Congress who recognize that there would be too many layoffs and shut-downs, like happened earlier in 2007-09, when they enacted the higher MW in accordance with Leftist theory, which they agreed with, and still agree with, and yet they also know that it will do more harm than good, and so they have to contradict their theory and recognize the bad results which would happen, just as it did back then.

In order for them to finally force up the wage level in Samoa to equal that of the 50 states, something real has to happen in the economy to make it practical, like a major improvement in Samoa's economy, without the harmful consequences, which is not the case yet, so that economic reality is forcing them to recognize that their Progressive/Left-wing theories are false, even though they won't say so. Their actions are the proof, despite their preaching and leftist theories and slogans.


But meanwhile, there is no case where it is agreed by everyone that a MW increase did more good than harm. There is no evidence from any case study or example where all sides agree that the harm done was less than the benefit, as in this case where all sides agree that the harm done was greater -- and even today would still be greater -- than the benefit.

There was a time when there was no minimum rate and vulnerable workers were exploited mercilessly....

It's still true today -- those same conditions exist in other countries, and the conditions overall are gradually improving, very slowly, like they did in the developed countries. There's no evidence that minimum wage has caused any net improvement. Or rather, there are benefits and harms from that and other labor laws, and there's no reason to believe that the benefits overall are greater than the harm. No cases where this can be proved, but we do have at least the one case proving that MW did more harm than benefit.

. . . consider the conditions at the beginning of the industrial revolution, which drove the union movement to improve the lot of the working class...

There's no proof that collective bargaining improved conditions overall, for the whole society. The benefits to some workers had to be paid for by others who were made worse off as a result. I.e., by consumers, by everyone, not just employers, or just big companies or the super-rich.

It's not true that "the working class" as a whole was made better off. It's only certain high-profile workers who have benefited. E.g., some factory workers, and certain other select classes who got more attention, especially upper-middle-class workers, while many low-level workers have been totally ignored, especially independent contractors, and many in the underground economy.

All have benefited, over time, from better technology and other improvements in production, but there's no proof that the labor movement, or collective bargaining, has produced overall benefit. The benefits unions gain for some are offset by the costs to others, resulting probably in a net loss to society overall, unlike better technology which benefits everyone.

. . . and why minimum wage was implemented.

Yes, like why it was increased in Samoa and yet those intentions to produce net benefit ended up doing the opposite. We need more than the "WHY" it's done. We need to see the results, showing that the intended good results really happened without causing equal or greater harm to others. You have no evidence to show that the actual results were a net benefit. It's not good enough to just have a good intention.

Your objections are unfounded.

When you crush a desperate job-seeker who can't find a high-paying job as you require, imposing on him the terms you dictate and making it illegal for him to get hired, the burden of proof is on you to prove that your dictatorial terms are making society better off rather than worse off. Suppressing some production and outlawing work which might otherwise get done is probably going to make the net economy worse off for consumers generally.

Your dogmatism and fanaticism to crush these would-be producers is what is unfounded.

 

[DBT]

It's still true today -- those same conditions exist in other countries, and the conditions overall are gradually improving, very slowly, like they did in the developed countries.

It's a good thing that conditions for workers in some developing nations are improving, albeit way too slowly. But that's not the point. This is something which has been explained to you too many times, to no avail.

When you crush a desperate job-seeker who can't find a high-paying job as you require, imposing on him the terms you dictate and making it illegal for him to get hired, the burden of proof is on you to prove that your dictatorial terms are making society better off rather than worse off. Suppressing some production and outlawing work which might otherwise get done is probably going to make the net economy worse off for consumers generally.

Your dogmatism and fanaticism to crush these would-be producers is what is unfounded.

That just show that you have no idea, no matter how many times the issue is explained or supported with evidence.

 

[Lumpenproletariat]

It's not only employers who are hurt if the wage level is too high.

the damage inflicted by minimum wage: Less gets produced, everyone pays higher prices. -- i.e., EVERYONE is hurt, not just employers.

There are good reasons for a state imposed minimum wage.

But overall there's more harm than benefit from it.

How do you know? There was a time when there was no minimum rate and vulnerable workers were exploited mercilessly....consider the conditions at the beginning of the industrial revolution, which drove the union movement to improve the lot of the working class...and why minimum wage was implemented.

Your objections are unfounded.

He just doesn't completely express his thought.

How many more Walls of Text do you want? Why does everyone complain about the length of the Text Walls and yet also demand more and more extended Walls to "completely express" the thought?

But overall there's more harm to the owner's profit than benefit to the owners... is what he meant to say.

If that were true, then the minimum wage could be increased to $40 or $50/hour, and that would hurt only "owners" (a small minority), while everyone would else would be made more prosperous because of the much higher incomes and economic activity.

No, it's not only the employers who would be hurt by driving up the minimum wage to $30 or $40/hour. Or $25/hour, or $20 or $15. Or anything higher than the minimum necessary to recruit workers to take the jobs needing to be done.

You know absolutely that $30 or $40 would be too high -- i.e., it would hurt ALL of society, everyone, not just employers.

But how do you know that $25 would be too high? or $20? At some point the damage done would be too little to measure, and yet it would be there -- even noticeable, but not able to be causally linked to the cause (higher labor cost). Just because the damage is too low to be measured or linked to its cause doesn't mean it isn't there or isn't a significant amount. And that damage is obviously inflicted onto everyone, or virtually everyone, not just onto some companies or employers. If you think it's only employers who are hurt, while everyone else benefits, then you'd favor raising the minimum wage much higher, like to $30 or $40/hour.

Why not? So what if some employers, a small minority, are made worse off but everyone else is made better off? The great benefit to the whole economy would be enough that we could even put some employers on welfare to compensate them for their loss, to make sure that they still have a decent income after paying that higher labor cost. Why wouldn't that make sense, if it's true that the only ones hurt by higher-than-market wages are the employers?

 

[DBT]

the damage inflicted by minimum wage: Less gets produced, everyone pays higher prices. -- i.e., EVERYONE is hurt, not just employers.

But overall there's more harm than benefit from it.

How do you know? There was a time when there was no minimum rate and vulnerable workers were exploited mercilessly....consider the conditions at the beginning of the industrial revolution, which drove the union movement to improve the lot of the working class...and why minimum wage was implemented.

Your objections are unfounded.

He just doesn't completely express his thought.

How many more Walls of Text do you want? Why does everyone complain about the length of the Text Walls and yet also demand more and more extended Walls to "completely express" the thought?

But overall there's more harm to the owner's profit than benefit to the owners... is what he meant to say.

If that were true, then the minimum wage could be increased to $40 or $50/hour, and that would hurt only "owners" (a small minority), while everyone would else would be made more prosperous because of the much higher incomes and economic activity.

No, it's not only the employers who would be hurt by driving up the minimum wage to $30 or $40/hour. Or $25/hour, or $20 or $15. Or anything higher than the minimum necessary to recruit workers to take the jobs needing to be done.

You know absolutely that $30 or $40 would be too high -- i.e., it would hurt ALL of society, everyone, not just employers.

But how do you know that $25 would be too high? or $20? At some point the damage done would be too little to measure, and yet it would be there -- even noticeable, but not able to be causally linked to the cause (higher labor cost). Just because the damage is too low to be measured or linked to its cause doesn't mean it isn't there or isn't a significant amount. And that damage is obviously inflicted onto everyone, or virtually everyone, not just onto some companies or employers. If you think it's only employers who are hurt, while everyone else benefits, then you'd favor raising the minimum wage much higher, like to $30 or $40/hour.

Why not? So what if some employers, a small minority, are made worse off but everyone else is made better off? The great benefit to the whole economy would be enough that we could even put some employers on welfare to compensate them for their loss, to make sure that they still have a decent income after paying that higher labor cost. Why wouldn't that make sense, if it's true that the only ones hurt by higher-than-market wages are the employers?

Walls of text are of no help if your premises are flawed.

 

[Loren Pechtel]

A far higher percentage of the money that goes to the rich ends up in development vs the money that goes to the middle class. Thus directing a larger piece of the pie to the workers slows development.

You're the one that 's confusing pieces of the pie. CEO remuneration does NOT include development money. You're just making poor excuses for the CEO class to keep their massive gains.

CEO renumeration is a tiny sliver of the pie. Take it all away and the worker sees very little change in their paycheck (at least until things go off the rails, then he sees it go down.)

 

[Lumpenproletariat]

The super-rich should pay more -- but NOT TO WAGE-EARNERS, who are already getting their market share.

It is through their labour and input, time and effort that employees help create the very pie that they fail to get their market share of.

No, they do individually get their market share. You've shown no evidence that their real market share is greater than what they get. The proof that the low-paid ones are not underpaid is that they are so expendable -- i.e., if they quit they can easily be replaced by another worker, from among the abundant applicants waiting in the wings to take that job, who then perform it just as well because anyone can do it. That makes them less valuable, which you can't figure out.

Why can't you figure out that more easily replaceable = less valuable? Why can't you address this point? When you refuse to face a certain reality, or fact of life, it causes you to have these delusions and fantasies about labor and value and production, and what the wage level should be.

They, as employees, are providing the goods and services, manufacturing, construction, repair, serving customers, etc, etc, which is economic activity.

But individually they are so easily replaceable by someone else who can do the same activity, so they aren't really needed in order for that work to get done -- or the need for them is small = their value is low. The work can easily get done without this or that particular worker, making him/her less valuable than some other more critical worker who cannot be replaced and so is more valuable. That worker who truly cannot be replaced is paid more due to his/her higher value.

All your complaints are about the workers who can easily be replaced, and all that you are proving with your stats is that these replaceable ones might be a sizable percent of the workforce. E.g., they are the ones who have low leverage in bargaining for better terms, as you've repeated many times. You're describing their low value, but you've offered nothing to show that workers generally are being underpaid.

Planning doesn't get the iron ore out of the ground, sitting in boardrooms doesn't build houses, white goods, furniture, etc, etc....

Keeping thumping your bible doesn't change reality. There are three pieces of pie and any analysis that doesn't consider this isn't worth the paper it's printed on.

That doesn't address a single thing that I have said, and supported with stats.

Again, your stats only show that many workers are very easily replaced and so are less valuable, and this trend has increased over the time period you're complaining about. None of your stats show that their value is higher than what they're being paid.

You are merely expressing your objections, while failing to support what you claim.

The fact is that wealth is flowing into the hands of a small percentage of the population while pay for workers has been stagnating for decades.

There may be some truth in this, about excess wealth flowing into the hands of a few. But there's no flaw in the "pay for workers" which is stagnating precisely because their VALUE has been stagnating and for no other reason. Probably there is some excess profit happening somewhere -- that's a legitimate theory. Perhaps there is this "surplus" figure -- though also it can be explained as capital investment rather than surplus profit, going to future production.

But let's assume there is some surplus profit, or windfall, whatever you want to call it. That does not mean the workers are being cheated out of their "fair" share. What it means is that the production has become so good that it is generating this excess profit, not needed in such high figures, in order to incentivize the investors/capitalists to do their function. So a larger percent of that needs to be recycled back to the public, to EVERYONE, not just to workers in a certain company who are so easily available -- a dime a dozen -- to perform their particular function.

ALL of society is entitled to a greater "share" of this pie, i.e., to the surplus being generated. It should go to pay for infrastructure and other public need. Also to reduce the public debt. But not to increase pay to low-value workers who are easily replaced and whose function is already being performed so easily and will continue to be performed by the flood of job-seekers lined up to take those jobs anyone can do. What matters is whether the needed work will get done, and the truth is that all that low-value work will easily get done without increasing the wages.

Your 'three pieces of the pie' is simply not working. 'Trickle down' is not working, it is BS.

What you can't figure out is that the "trickle" we need to happen is that paid to the state to pay for public needs which are not being met or are costing everyone too much or running up too much debt. We do not need the "trickle" that you're demanding, to workers -- increasing their pay when there is no need to attract more of them.

No, the "trickle" needs to go where it meets more need, so more good will be generated by it. Wasting it on higher wages creates no additional benefit to society, because it contributes nothing to increasing or improving the production. Because all that work will easily get done anyway, by the overflow of job applicants chomping at the bit to take those jobs which will all get done easily anyway, without needing to pay any more than the minimum necessary to attract the needed workers, who are already there in overflow.

Why anyone who is not in the super rich class would defend this state of affairs is beyond me.

If you're right, then what's needed instead of the current "state of affairs" is to have more of the surplus profit taxed in order to pay for public benefits. The improved "state of affairs" would not be higher wages to workers, which serves no public benefit, but higher revenue to the state, so taxes from the lower brackets could be reduced, or the public debt reduced.

It is neither good for society or the economy at large.

Everything legitimate you have offered to make this point is a good case for higher taxes on the rich, or super-rich, not an increase in wages generally, which is "neither good for society or the economy at large."

The simplistic craving to drive up the wages even for low-value workers can only result in less employment of workers, meaning less work getting done, less production taking place, because of higher cost, and higher prices which all consumers must pay, making society overall worse off.

Your higher-wages obsession punishes ALL EMPLOYERS, not the super-rich who are getting those excess profits. Why do you insist on punishing and scapegoating ALL people of the employer class? most of whom have nothing to do with the excess profit phenomenon you're describing? You still are refusing to recognize that ALL employers are not super-rich gaining surplus profit. Some of them are struggling to survive -- even poor in some cases. Why do you insist on punishing all the employers, even the marginal ones, when these have nothing to do with the excess profits you are complaining about? You've been asked this numerous times and yet refuse to give any response.

You need for once to look up from your talking-points and "stats" script to engage your mind with the substance, and explain your employer-bashing hate. This whole group as a class is not guilty of anything to deserve the punishment you're driven to inflict onto them. You've shown nothing to justify your infliction of punishment on this entire class, as prescribed by your higher-wages doctrine. While at the same time your prescription completely ignores many/most of the super-rich you're complaining about, who are not employers and will continue to get their excess profit even after you get all your employer-bashing demands met.

 

[DBT]

No, they do individually get their market share.

It wasn't true the first time you made that claim, and it's not true now. You know very well that business managers try to keep wage cost to a minimum, that what a worker gets is related to bargaining power and demand within any given industry.

You've shown no evidence that their real market share is greater than what they get.

More than sufficient evidence has been provided. It just doesn't suit you to acknowledge or consider the evidence.

''Last year, the Brookings Institution took a deep look at pay across the U.S., and found that almost half of workers — 44% — earn low wages. Almost a third of low-wage workers were below 150% of the federal poverty level. The median pay among low-wage workers was around $10.22/hr. And when wages stay the same, they’re not really staying the same. Factoring in inflation, workers are getting paid less and less every year. It’s not enough to live on.''

''If minimum wage had risen proportionate to productivity, it would have been $19.33 in 2017. The federal minimum wage was set to $7.25 in 2009 and has remained stubbornly rooted there, despite repeated calls for an increase to $15. Though many states have set their own minimum wage, there’s not a single statewide minimum wage of $15 yet.
Where Lowe lives, employers aren’t required to pay a cent over $7.25. Tennessee is one of five states that doesn’t have its own minimum wage. It’s why, around two years ago, she got involved with Fight For $15 — a nationwide movement of workers who have been fighting for a federal minimum wage of $15, as well as health care, child care, and unions since 2012. When Lowe was first approached by Fight For $15 representatives, she wasn’t sure if she’d want to get involved. “But as time went on, I just got fed up,” she says. “We’re not being paid enough. They don’t care about us. Just all-around slave wages — I had to stand up and say enough is enough.”