Minimum Wage Round 237...

[Nice Squirrel]

If we artificially raise the price of broccoli it will put more cash in the hands of broccoli sellers. Broccoli sellers will in turn go out and spend that cash, which will raise the demand for broccoli!

Who sees the flaw(s) in that argument? Anyone? Anyone?

Are you talking about the oil industry? You know, the industry you are in.

 

[AthenaAwakened]

If we artificially raise the price of broccoli

as opposed to artificially holding it down for decades?

it will put more cash in the hands of broccoli sellers. Broccoli sellers will in turn go out and spend that cash, which will raise the demand for broccoli!

How many brocolli sellers are there in a given society? how many working poor?

Who sees the flaw(s) in that argument? Anyone? Anyone?

I came name one flaw in this argument. But I won't. I will just look in his direction and whistle.

 

[coloradoatheist]

as opposed to artificially holding it down for decades?

it will put more cash in the hands of broccoli sellers. Broccoli sellers will in turn go out and spend that cash, which will raise the demand for broccoli!

How many brocolli sellers are there in a given society? how many working poor?

Who sees the flaw(s) in that argument? Anyone? Anyone?

I came name one flaw in this argument. But I won't. I will just look in his direction and whistle.

How have they artificially held it down? Did they pass max salaries for normal workers?

 

[SimpleDon]

Welcome paulberry to the forum.

You have jumped in to one of our most contentious of topics in which the vast majority of participants trot out their well rehearsed points that don't seem to understand the economic theory that is behind the points.

For example, the increase in the minimum wage will drive the unemployment rate up because "If a worker costs more to hire employers will hire fewer of them." This is based not on supply and demand, but on the theory of marginal productivity, that employers hire the very last worker when his marginal product, the added production that he produces, the costs of which equals his wages. This theory is not only suspect on its own but even the people who support it admit that it only appliers when the economy is at full employment. But if the economy is at full employment there would be no reason to increase the minimum wage.

For the most part they have learned these points from their favorite bias confirming sources with little to no understanding of the logic, or in most cases, the lack of logic behind the points that they so readily endorse.

It's not based on the theory of marginal productivity. It's based on basic business. Cash in and cash out. You've increased cash out. So a business has to make the decision. Accept the less cash remaining (profit), increase cash in (raise prices) or go out of business (cash out greater than cash in). Which one of the three happens depends on the perceived changes in cash.

The phrase that I quoted is based on the theory of marginal productivity. Sorry. It is what allows economists to say that under the right conditions that raising the minimum wage will result in unemployment. They don't mention that the right conditions that they refer to only occur say once in a century, if then.

You are right that a producer is faced with three choices when he has increased costs. But you are correct in not listing laying off people as being one, which is what we are talking about here.

What you are forgetting is that there is still the same demand for the product at the pre-cost increased price. If the less efficient producer is making no profit at the old price and pre-minimum wage increase costs and the increase forces him out of business there will be more efficient producers able to meet the demand for the product at the old price. This is known as the creative destruction of capitalism, and it is one of capitalism strengths, not a weakness as you imply.

Remember also that all of the competitors will see the same increases in costs. There is no competitive disadvantage to paying the higher wage. This is why many businesses support the increase in the minimum wage, especially businesses that pay a higher wage even if it puts them at a disadvantage.

 

[coloradoatheist]

It's not based on the theory of marginal productivity. It's based on basic business. Cash in and cash out. You've increased cash out. So a business has to make the decision. Accept the less cash remaining (profit), increase cash in (raise prices) or go out of business (cash out greater than cash in). Which one of the three happens depends on the perceived changes in cash.

The phrase that I quoted is based on the theory of marginal productivity. Sorry. It is what allows economists to say that under the right conditions that raising the minimum wage will result in unemployment. They don't mention that the right conditions that they refer to only occur say once in a century, if then.

You are right that a producer is faced with three choices when he has increased costs. But you are correct in not listing laying off people as being one, which is what we are talking about here.

What you are forgetting is that there is still the same demand for the product at the pre-cost increased price. If the less efficient producer is making no profit at the old price and pre-minimum wage increase costs and the increase forces him out of business there will be more efficient producers able to meet the demand for the product at the old price. This is known as the creative destruction of capitalism, and it is one of capitalism strengths, not a weakness as you imply.

Remember also that all of the competitors will see the same increases in costs. There is no competitive disadvantage to paying the higher wage. This is why many businesses support the increase in the minimum wage, especially businesses that pay a higher wage even if it puts them at a disadvantage.

Yes, certain companies want the higher minimum wage in place because they know it will drive out their competition. It will drive out the mom and pop businesses and some more business will come to them, but not enough to offset what was lost in terms of job creation. But the same people will complain about how mom and pop stores go away and we are left with chains and big businesses in the market.

Laying off people is definitely one of the choices a business has to reduce to costs out. They can lay people off, have employees work less, make them worked under the table overtime, or cut other benefits like training. All of them happen.

 

[SimpleDon]

Welcome paulberry to the forum.

You have jumped in to one of our most contentious of topics in which the vast majority of participants trot out their well rehearsed points that they don't seem to understand the economic theory that is behind the points.

For example, the increase in the minimum wage will drive the unemployment rate up because "If a worker costs more to hire employers will hire fewer of them." This is based not on supply and demand, but on the theory of marginal productivity, that employers hire the very last worker when his marginal product, the added production that he produces, the costs of which equals his wages. This theory is not only suspect on its own but even the people who support it admit that it only appliers when the economy is at full employment. But if the economy is at full employment there would be no reason to increase the minimum wage.

For the most part they have learned these points from their favorite bias confirming sources with little to no understanding of the logic, or in most cases, the lack of logic behind the points that they so readily endorse.

What a pantload of crap.

The bizarre economics come in when you try to explain why a raise in minimum wage wouldn't reduce demand for unskilled labor.

I am cut to the quick by your detailed, insightful criticism of my post. I don't know if I can ever recover from it.

The only bizarre economics that I discussed was the theory of marginal productivity. And yes, it is bizarre and no it is not my economics. It is the economics that anyone who believes that "If a worker costs more to hire employers will hire fewer of them” implicitly endorses, a person like you for example, even if they don't realize it, as you don't seem to.

Oh, we will try this. See if you can follow this. It makes no business sense to lay off workers if their wages go up. The increased wages cuts the businesses' profits. If they then lay off workers they will not only lose see reduced profits from the increased wages of the retained workers they will lose all of the cost covering revenue and all of the profits from the production of the laid off workers. They will be even worse off for having laid off the workers.

I remember that you like to ask questions but you don't like to answer them. If you could put it aside for just one time and answer this question that I asked elsewhere about this subject.

If raising the minimum wage results in unemployment does that mean that any wage increase results in increased unemployment or is the minimum wage somehow special?

The bizarre theory of marginal productivity which spawned the idea that an increase in the minimum wage results in increased unemployment tells that yes, any increase in wages or for that matter any increase in any cost will cause unemployment. That is just one of the many reasons that no one believes in marginal productivity any more. But the zombie like idea that increases in wages causes unemployment lives on, even if the parent theory died a long time ago.

 

[dismal]

I see it! It's the part where you use an incredibly narrow segment to argue against an economy wide policy.

What percent of the economy is spent on minimum wage labor?

 

[ksen]

Must be a lot since the anti-MW people keep predicting disaster if it's raised.

 

[dismal]

Must be a lot since the anti-MW people keep predicting disaster if it's raised.

A number would be nice.

Since you have hinged your argument on MW labor not being a minor slice of the economy I would assume you'd have done this work beforehand to know if you were spewing complete crap or not.

 

[dismal]

What a pantload of crap.

The bizarre economics come in when you try to explain why a raise in minimum wage wouldn't reduce demand for unskilled labor.

I am cut to the quick by your detailed, insightful criticism of my post. I don't know if I can ever recover from it.

The only bizarre economics that I discussed was the theory of marginal productivity. And yes, it is bizarre and no it is not my economics. It is the economics that anyone who believes that "If a worker costs more to hire employers will hire fewer of them” implicitly endorses, a person like you for example, even if they don't realize it, as you don't seem to.

Oh, we will try this. See if you can follow this. It makes no business sense to lay off workers if their wages go up. The increased wages cuts the businesses' profits. If they then lay off workers they will not only lose see reduced profits from the increased wages of the retained workers they will lose all of the cost covering revenue and all of the profits from the production of the laid off workers. They will be even worse off for having laid off the workers.

I remember that you like to ask questions but you don't like to answer them. If you could put it aside for just one time and answer this question that I asked elsewhere about this subject.

If raising the minimum wage results in unemployment does that mean that any wage increase results in increased unemployment or is the minimum wage somehow special?

The bizarre theory of marginal productivity which spawned the idea that an increase in the minimum wage results in increased unemployment tells that yes, any increase in wages or for that matter any increase in any cost will cause unemployment. That is just one of the many reasons that no one believes in marginal productivity any more. But the zombie like idea that increases in wages causes unemployment lives on, even if the parent theory died a long time ago.

I suggest you go to the wikipedia page for "minimum wage" they have a decent discussion about the economics of it there.

 

[ksen]

Must be a lot since the anti-MW people keep predicting disaster if it's raised.

A number would be nice.

Since you have hinged your argument on MW labor not being a minor slice of the economy I would assume you'd have done this work beforehand to know if you were spewing complete crap or not.

Is that what I'm hinging my argument on?

Not that "broccoli sellers" are just one industry and minimum wage workers are in a much wider swathe of industries?

 

[Frikki]

How has the raising of the min wage worked in the past vis a vis unemployment?

 

[Loren Pechtel]

What a pantload of crap.

The bizarre economics come in when you try to explain why a raise in minimum wage wouldn't reduce demand for unskilled labor.

I am cut to the quick by your detailed, insightful criticism of my post. I don't know if I can ever recover from it.

The only bizarre economics that I discussed was the theory of marginal productivity. And yes, it is bizarre and no it is not my economics. It is the economics that anyone who believes that "If a worker costs more to hire employers will hire fewer of them” implicitly endorses, a person like you for example, even if they don't realize it, as you don't seem to.

Oh, we will try this. See if you can follow this. It makes no business sense to lay off workers if their wages go up. The increased wages cuts the businesses' profits. If they then lay off workers they will not only lose see reduced profits from the increased wages of the retained workers they will lose all of the cost covering revenue and all of the profits from the production of the laid off workers. They will be even worse off for having laid off the workers.

I remember that you like to ask questions but you don't like to answer them. If you could put it aside for just one time and answer this question that I asked elsewhere about this subject.

If raising the minimum wage results in unemployment does that mean that any wage increase results in increased unemployment or is the minimum wage somehow special?

The bizarre theory of marginal productivity which spawned the idea that an increase in the minimum wage results in increased unemployment tells that yes, any increase in wages or for that matter any increase in any cost will cause unemployment. That is just one of the many reasons that no one believes in marginal productivity any more. But the zombie like idea that increases in wages causes unemployment lives on, even if the parent theory died a long time ago.

You're assuming the business will continue to provide exactly the same services it was providing before. The reality is that they will often find low profit tasks which can be omitted and things where increasing costs make automation make more sense.

Just look at the modern staffing of a fast food place compared to what it used to be to see this in effect.

If a business produced exactly one product then your argument would be valid--but no business does so. Even we-only-make-widgets has multiple products: the widgets, the order taking, the customer service etc.

 

[Nice Squirrel]

How has the raising of the min wage worked in the past vis a vis unemployment?

No effect in any measurement, but I am sure there are those who will argue that the past is irrelevant.

 

[Loren Pechtel]

No effect in any measurement, but I am sure there are those who will argue that the past is irrelevant.

So teen unemployment isn't a measurement?

 

[Nice Squirrel]

Show me the numbers.

 

[SimpleDon]

I am cut to the quick by your detailed, insightful criticism of my post. I don't know if I can ever recover from it.

The only bizarre economics that I discussed was the theory of marginal productivity. And yes, it is bizarre and no it is not my economics. It is the economics that anyone who believes that "If a worker costs more to hire employers will hire fewer of them” implicitly endorses, a person like you for example, even if they don't realize it, as you don't seem to.

Oh, we will try this. See if you can follow this. It makes no business sense to lay off workers if their wages go up. The increased wages cuts the businesses' profits. If they then lay off workers they will not only lose see reduced profits from the increased wages of the retained workers they will lose all of the cost covering revenue and all of the profits from the production of the laid off workers. They will be even worse off for having laid off the workers.

I remember that you like to ask questions but you don't like to answer them. If you could put it aside for just one time and answer this question that I asked elsewhere about this subject.

If raising the minimum wage results in unemployment does that mean that any wage increase results in increased unemployment or is the minimum wage somehow special?

The bizarre theory of marginal productivity which spawned the idea that an increase in the minimum wage results in increased unemployment tells that yes, any increase in wages or for that matter any increase in any cost will cause unemployment. That is just one of the many reasons that no one believes in marginal productivity any more. But the zombie like idea that increases in wages causes unemployment lives on, even if the parent theory died a long time ago.

I suggest you go to the wikipedia page for "minimum wage" they have a decent discussion about the economics of it there.

Is this where you get your economics from, Wikipedia?

So you have no other ability to support your own opinions. You don't know why you hold them. And you can't defend them.

You can swear at me but you can't answer a simple question

I obviously mistook you as being serious. Wikipedia.

You will not be surprised if I continue to mock you then will you?

 

[SimpleDon]

I am cut to the quick by your detailed, insightful criticism of my post. I don't know if I can ever recover from it.

The only bizarre economics that I discussed was the theory of marginal productivity. And yes, it is bizarre and no it is not my economics. It is the economics that anyone who believes that "If a worker costs more to hire employers will hire fewer of them” implicitly endorses, a person like you for example, even if they don't realize it, as you don't seem to.

Oh, we will try this. See if you can follow this. It makes no business sense to lay off workers if their wages go up. The increased wages cuts the businesses' profits. If they then lay off workers they will not only lose see reduced profits from the increased wages of the retained workers they will lose all of the cost covering revenue and all of the profits from the production of the laid off workers. They will be even worse off for having laid off the workers.

I remember that you like to ask questions but you don't like to answer them. If you could put it aside for just one time and answer this question that I asked elsewhere about this subject.

If raising the minimum wage results in unemployment does that mean that any wage increase results in increased unemployment or is the minimum wage somehow special?

The bizarre theory of marginal productivity which spawned the idea that an increase in the minimum wage results in increased unemployment tells that yes, any increase in wages or for that matter any increase in any cost will cause unemployment. That is just one of the many reasons that no one believes in marginal productivity any more. But the zombie like idea that increases in wages causes unemployment lives on, even if the parent theory died a long time ago.

You're assuming the business will continue to provide exactly the same services it was providing before. The reality is that they will often find low profit tasks which can be omitted and things where increasing costs make automation make more sense.

Just look at the modern staffing of a fast food place compared to what it used to be to see this in effect.

If a business produced exactly one product then your argument would be valid--but no business does so. Even we-only-make-widgets has multiple products: the widgets, the order taking, the customer service etc.

Deflection, why would the multiple products matter, the product mix wouldn't change. Your argument is that raising the minimum wage causes unemployment in a very short time because of the increased costs. I assume that this means with the same product mix. My argument doesn't depend on making a single product

Do you believe that automation will displace the lowest paid workers because of a three dollar an hour raise in wages? If I was going to invest to automate jobs it would be to replace the highest paid workers, not the lowest paid ones. Your theories always seem to assume that businessmen are all stupid.

 

[SimpleDon]

I see it! It's the part where you use an incredibly narrow segment to argue against an economy wide policy.

What percent of the economy is spent on minimum wage labor?

It must not be in Wikipedia. The BLS says that about 1.5 million workers earn the minimum wage and about 1.8 million earned less as full time students, the disabled or people who earn more through tips. There are about 75.9 million hourly wage workers in the US. You probably do need me to do the math since you couldn't do any of this yourself. That is about 4.3% of hourly workers earn the minimum wage. see here, http://www.bls.gov/cps/cpsaat44.htm

Hourly workers averaged 33.6 hours a week at an average of $20.70 an hour. This 75.9 × 20.7 × 33.6 × 52 weeks = 274.5 billion dollars earned by hourly workers in the US. Assuming that the minimum wages workers worked the average number of hours, 33.6, and the below minimum wage workers earned about 75% of the minimum wage brings us to, 1.5 million × 7.25 × 33.6 × 52 weeks = 19.0 billion dollars earned by minimum wage workers and 1.8 × 7.25 × 0.75 × 33.6 × 52 weeks = 17.1 billion dollars earned by the less than minimum wage workers. The grand total is 36 billion dollars paid to minimum wage and less than minimum wage workers, all for 2013. About 0.2% of the 17 trillion dollar economy.

 

[Frikki]

Show me the numbers.

Yes Loren is going to show you the numbers. Ohh wait he already showed them back on the day when this was still Internet Infidels you should look through one of his 800K posts to find it. That´s his usual M.O.