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That's mess up man I don't think you could get cheap labour over here without weed use of 25-50%. If the factory where I work instituted drug tests they'd need to replace about half the staff.

Huffy wrote:

And that minimum wages set a benchmark for prices, the higher the min wage the higher prices go....so nothing really changes, you just have larger sums of money changing hands but quality of life remains the same

Since bloody when?

 AustonT wrote:

Huffy wrote:

And that minimum wages set a benchmark for prices, the higher the min wage the higher prices go....so nothing really changes, you just have larger sums of money changing hands but quality of life remains the same

Since bloody when?

Its because those companies that employ minimum wage earners must now increase their prices to maintain the same level of profitability.

So as a result prices of everything goes up slightly, so nothing changes.

The people who get the minimum wage increase may have the illusion that they are making more, but they don't notice the extra few dollars their grocery bill has gone up by. So at the end of the day they arn't making any significant amount more then they used to. Maybe by a little bit, but certaintly not the amount their wages went up by.

People forget that one man's wages is another man's expenses.

I think the minimum wage is supposed to prevent isolated cases of exploitation rather than an attempt to raise the living standards of the poor generally.

Yeah, thats what it is supposed to do. Yet some people think that increasing it can simply increase people's standard of living, when really all it does is make the bottom closer to the top.

That's inflation not minimum wage. Or how do you explain price increases before minimum wage? Precognition?

Both can happen at the same time. Some price increases are Inflation, others are reactions to increased costs from wage expense.

 Testify wrote:
This is the way I can see us going in the UK. The hysteria over "taxpayers money" is bizarre and sickening.

Definitely. And the whole thing is built around this absolute conviction that some portion of welfare recipients are utterly undeserving drek. No interest is taken in what number that might be, just that they exist and something must be done to punish them.

Also doesn't surprise me about drug use. Most people on welfare can't afford drugs, the poor bastards

Well, there are the folk on welfare who take a welfare cheque because all their income is under the table, because it's from growing weed and other stuff like that. Those folk would be smoking some of their own supply, and I guess it'd stop them taking cheques. Not really sure that's worth the price of administering all those tests, though, given there'd be no more than few hundred in any major metro area.

Add in the idea that you'd discourage those people from claiming cheques by putting in work for welfare programs, and those programs would also help all the folk who are long term unemployed but not taking drugs, and give an incentive to go out and get a job to anyone who might theoretically be choosing to stay on welfare rather than get a job. And it'd mean some parks and highways get cleaned up as well.

 sebster wrote:

 Testify wrote:

Well, there are the folk on welfare who take a welfare cheque because all their income is under the table, because it's from growing weed and other stuff like that. Those folk would be smoking some of their own supply, and I guess it'd stop them taking cheques. Not really sure that's worth the price of administering all those tests, though, given there'd be no more than few hundred in any major metro area.

Add in the idea that you'd discourage those people from claiming cheques by putting in work for welfare programs, and those programs would also help all the folk who are long term unemployed but not taking drugs, and give an incentive to go out and get a job to anyone who might theoretically be choosing to stay on welfare rather than get a job. And it'd mean some parks and highways get cleaned up as well.

I don't buy that there's a significant folks on welfare are also drug abusers... but, I wouldn't be opposed to random drug testing (but would it be worth it?).

But.. totally agree with you Seb.

 Grey Templar wrote:
Its because those companies that employ minimum wage earners must now increase their prices to maintain the same level of profitability.

So as a result prices of everything goes up slightly, so nothing changes.

No, in order for that to work you'd have to have an economy where the inputs into every good is entirely wage payments to employees on the minimum wage, and you have a perfectly non-competitive market. Both assumptions are ludicrous, but for simplicity's sake we'll assume the latter and just look at the former.

So let's say that the assumption holds, and the only cost in production is employees on minimum wage. They're paid $10 an hour, and it takes two hours to produce a widget, that means the cost of production is $20 (no fixed costs because we're giving your 'theory' every chance of being plausible). The owner wants to make 10% profit on every unit sold, so he puts it on the market for $22. This means the average worker, earning $10 an hour, can buy 0.45 widgets for every hour he works.

Then a filthy left wing socialist gets in to power, and he increases the minimum wage to $12, because he hates America. It still takes 2 hours to make a widget, but now the cost is up to $24. The owner still wants to make 10% on every widget, so the final selling price is $26.40. This means the minimum wage worker, earning $12 an hour, can buy 0.45 widgets per hour. Exactly as Grey Templar claimed, the inflation due to the minimum wage cancelled out the wage increase, and left everyone back where they started.

But let's think about that original assumption, because the idea that the entire cost of production is from minimum wage is not even slightly plausible. Let's say, instead, that minimum wage labour only makes up about 50% of the cost of production. Because we know there all kinds of wages for management and skilled labour, and there's rent of premises and plant depreciation and other such expenses as well. So, when the guy works two hours, he earns $20, and he produces one widget. But there's all those other costs to be added on as well, so the cost of producing that widget is $40, to which the owner adds his 10% profit, and so the final good costs $44. With his $10 wage the worker can only buy 0.23 of a widget.

Then that filthy left wing socialist gets in to power, and as before he raised the minimum wage to $12. It still takes two hours to make a widget, and so as before the cost of the minimum wage labour added to the product is $24. But now we're adding that $20 of other costs, and then the employer's 10% profit, to get a total product cost of $48.40. With his $12 an hour the employee can buy 0.25 widgets, up from the 0.23 widgets he could buy before the minimum wage increase. That 20% increase in minimum wage produced a 9.09% increase in real purchasing power for the minimum wage employee.

But of course even that example is hopelessly contrived, because minimum wage makes up nowhere near 50% of the costs of input. We know all wages make up about 70% of GNI, and we know from information posted earlier in the thread that around 5% of the workforce is on minimum wage. That means that about 3.5% of the cost of production of all goods is impacted by an increase in minimum wage. Which means that if minimum wage went from $10 to $12, the cost of an average $100 basket of goods would inflate to $100.70. The minimum wage worker, who previously on $10 an hour would have had to work 10 hours to buy that basket of goods, now only has to work 8.39 hours to buy it.

tldr? The idea that minimum wage just inflates prices to the amount of the minimum wage is simply not true, to be true the only cost of production would have to be minimum wage. Which is beyond stupid.


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 whembly wrote:
I don't buy that there's a significant folks on welfare are also drug abusers... but, I wouldn't be opposed to random drug testing (but would it be worth it?).

But.. totally agree with you Seb.

Yeah, I'm not opposed at all to the principle of the state being allowed to drug test people on benefits if it wants to. I mean, if you want your privacy then don't take the money. If you want the state to give you money, then the state has the right to make sure that money is going to good use, and that means they have the right, if they choose, to require a drug test.

The issue to me, basically, is that from what we've seen the system catches stuff all people, probably because stuff all people on welfare can afford drugs (or that those who do drugs are smart enough to lay off for the period before their test). It costs more than it detects, and is therefore a waste of taxpayer money.

I think this really is a classic issue of policy being driven by popular perception of welfare recipients as drug addled suckerfish, as opposed to being driven by the reality of what people on welfare are really like.

I was just overly simplifying the situation. I know its not going to completely devour the wage increase of the people that recieve it.

However it will cut into the budgets of people not on minimum wage. So an increase of minimum wage will hurt them.



Lets take your given situation and tweak it,


There are 100 people in a factory making widgets. And this factory is in a town where there are other people working for other things but those details arn't important.

Lets also say that the Factory is the only minimum wage payer in town, with 80 of its 100 employees making minimum wage. Everyone else in the town makes above minimum wage.

Minimum wage at the moment is $10 an hour, there are material costs associated with each widget of $5, and it takes 1 hour to make a widget. Thus it costs $15 to make a widget.

The factory owner wants to make 20% profit on each widget. So the widgets are sold for $18 a piece.

Now just about everyone in the town buys widgets because they are a basic needed resource for most people. Both minimum wage earners and non-minimum wage earners. Minimum wage earners earn .555 widgets per hour of work.


Minimum wage is increased to $12.

So now it costs $17 to make a widget.

maintaining the 20% profitability on the widgets, the cost is now $20.40 a piece.

Minimum wage earners can now buy .588 widgets. A slight increase.

But what about the people who don't earn minimum wage? For them the price of widgets has increased by 11%, yet they have recieved no increase in pay.


So overall, the standard of living for people not on minimum wage has gone down.

IRL the increase will be very small, for the reasons you mentioned that wages are a small portion of expenses, but its still a decrease.

Minimum wage increases only benifit the people who are recieving minimum wage. A tiny portion of the working population.

 Grey Templar wrote:

Minimum wage increases only benifit the people who are recieving minimum wage. A tiny portion of the working population.

I'm not sure why that is a problem.

Its not a problem persay, but it does reduce the standard of living for those who don't get the pay raise(if only be a tiny amount)

The bigger issue is that its not a viable solution for reducing poverty or increasing the standard of living. All it does is mean you can't have exploitative wages. which is a good thing of course. But I think some people see it as a poverty fighting tool when it really isn't.

 Grey Templar wrote:
Its not a problem persay, but it does reduce the standard of living for those who don't get the pay raise(if only be a tiny amount)

If Bill Gates earns more money next year, will it reduce my standard of living?

 Grey Templar wrote:
IRL the increase will be very small, for the reasons you mentioned that wages are a small portion of expenses, but its still a decrease.

You didn't read my whole example, did you? Because at the end I point out the portion of the cost of production taken up by minimum wage workers at about 3.5% of national production (rough figure, admittedly, but within the right ballpark). That means a 20% increase in minimum wage translates to a 0.07% increase in the cost of goods. That means that a 20% raise in the minimum wage represents an increase in real income of 19.2%

The inflationary impact is trivial in reducing the benefit of the raise.

Minimum wage increases only benifit the people who are recieving minimum wage. A tiny portion of the working population.

That's not a complaint, that's the whole point of raising the minimum wage. And yeah, the benefit is to very few. That's how it works like it does - significant benefit to a few, very minor loss to many. The point of the exercise being, of course, that those benefitting are at the bottom of society, with very little, while the expense is coming from those of us who are a lot more comfortable. If you have any concern over income equality at all, it's a no-brainer.

The only real concern comes in when you measure up the productivity of unskilled work, and conclude that an increase in the minimum wage will make some industries no longer viable. That's an issue facing, say, Australia's present minimum wage, as it's $15.59 and that's pushing at the limit of productivity in many competitive industries (steel is a prominent one here, but manufacturing in general). In that case there's a fair case that increasing it further will cause a material number of layoffs. But in the US, where the minimum is $7.25, that argument is pretty weak.

I suppose so.

Actually minimum wage increases do not only affect the minimum wage worker in a positive way though ever so slightly.

The Union workers, you know the 3%-8% of the working population depending whose numbers you use, almost all have in their contracts an automatic wage increase to the same % that the minimum wage goes up. This includes all those public sector (government workers) jobs.

So if the minimum wage of $8.75 goes up to $8.95 an hour, an increase of 1.02%, the union worker making $20 soon makes $22.44.


Automatically Appended Next Post:
So since we are on the minimum wage discussion, what should minimum wage be? pick a number any number, $20 an hour, $30 an hour?

What is it worth to you to have a kid pour your coffee at the local coffee house? or bus tables at the cafe, or sweep the floor?

It depends on the area. Its more expensive to live in some areas, thus the minimum amount needed will be different.

Also depends on what the job is worth.

What are currently minimum wage jobs may not have the same value.


Working as a waitress/waiter in a Diner and being a clerk at a 7-11 are both minimum wage jobs that I would not consider to be worth the same amount of pay. A waiter/waitress doubtlessly works harder then the guy that restocks shelfs and runs the register at the 7-11.

Its hard to pinpoint the minimum for what people should work for. It can seem like you are shortchanging some and giving too much to others.


Take the current $7.25 we have in the US. I would say that is plenty for the guy working at 7-11, but not enough for someone working as a waiter/waitress. For the work the job involves anyway.

 Shadowseer_Kim wrote:
Actually minimum wage increases do not only affect the minimum wage worker in a positive way though ever so slightly.

The Union workers, you know the 3%-8% of the working population depending whose numbers you use, almost all have in their contracts an automatic wage increase to the same % that the minimum wage goes up. This includes all those public sector (government workers) jobs.

So if the minimum wage of $8.75 goes up to $8.95 an hour, an increase of 1.02%, the union worker making $20 soon makes $22.44.

Thanks for the info. I didn't know that. Over here group contracts are pegged to inflation, if at all (normally you have negotiated increases year by year).

That said, I think the maths in your example is a little off. If the union workers wage is increasing in line with the minimum, it'd be going from $20.00 to $20.46.

So since we are on the minimum wage discussion, what should minimum wage be? pick a number any number, $20 an hour, $30 an hour?

Probably somewhere around $12. Don't do it all at once, though. Have regular increases moving towards that number, and that will give analysts the information needed to know when to stop.

What is it worth to you to have a kid pour your coffee at the local coffee house? or bus tables at the cafe, or sweep the floor?

The other option is an award scheme, where you have different minimum wages depending on the job in question. So the person who sits on the reception desk in the air conditioned office and answers phone calls and tells people when their 2:30 has arrived would get a lower wage than the person who works outdoors, doing heavy lifting all day long.


Automatically Appended Next Post:

 Grey Templar wrote:
It depends on the area. Its more expensive to live in some areas, thus the minimum amount needed will be different.

People working in different areas gets kind of tricky. I mean, if the wage isn't enough to cover living expenses there I think moving is a reasonable expectation. I know it isn't always practical with the costs of moving and being around family, but we expect it of workers all the time.

Its hard to pinpoint the minimum for what people should work for. It can seem like you are shortchanging some and giving too much to others.

Take the current $7.25 we have in the US. I would say that is plenty for the guy working at 7-11, but not enough for someone working as a waiter/waitress. For the work the job involves anyway.

Definitely. That's what leads to the idea of an award type scheme, where you have different minimum wages for different jobs.

I can't understand how flipping a burger or shoving taco meat into a shell is worth $12 an hour. Not every job should pay a "livible" wage. And by livible I mean a single 20 year old should be able to afford his own apartment because he's a burger flipper. Having a roomate should be a fact of life if your skill set doesn't offer anything beyond the ability to do basic tasks.

djones520 wrote:
I can't understand how flipping a burger or shoving taco meat into a shell is worth $12 an hour.

Rick Bayless shoves taco meat into shells for far more than 12$ per hour.

 dogma wrote:

djones520 wrote:
I can't understand how flipping a burger or shoving taco meat into a shell is worth $12 an hour.

Rick Bayless shoves taco meat into shells for far more than 12$ per hour.

I had to Bing that name.

I did it for two years for much less. Then I moved onto a job that required real skills, and my pay began to reflect it.

djones520 wrote:

I did it for two years for much less. Then I moved onto a job that required real skills, and my pay began to reflect it.

So you're saying that being a chef entails no "real skills"?

 dogma wrote:

djones520 wrote:

I did it for two years for much less. Then I moved onto a job that required real skills, and my pay began to reflect it.

So you're saying that being a chef entails no "real skills"?

Calling an employee of Burger King a chef would probably get you punched by the likes of Rick Bayless.

By the way, it's Burger Kings birthday. Go eat Whoppers!

djones520 wrote:
I can't understand how flipping a burger or shoving taco meat into a shell is worth $12 an hour. Not every job should pay a "livible" wage. And by livible I mean a single 20 year old should be able to afford his own apartment because he's a burger flipper. Having a roomate should be a fact of life if your skill set doesn't offer anything beyond the ability to do basic tasks.

So your basic idea is that some people should be in poverty as a point of principle.

Dakka, the gift that keeps on giving.

 sebster wrote:

djones520 wrote:
I can't understand how flipping a burger or shoving taco meat into a shell is worth $12 an hour. Not every job should pay a "livible" wage. And by livible I mean a single 20 year old should be able to afford his own apartment because he's a burger flipper. Having a roomate should be a fact of life if your skill set doesn't offer anything beyond the ability to do basic tasks.

So your basic idea is that some people should be in poverty as a point of principle.

Dakka, the gift that keeps on giving.

No my idea is that employers shouldn't be forced to pay large salaries for basic labor that requires no job skills to do.

If a person doesn't want to live in poverty then they should work to better themselves. Sure you've got an example of a person with a bad lot in life here or there, but a large majority of folks who end up in that portion of the labor pool did so by the choices they made in life. I could still be sitting at Taco Bell making minimum wage today, but I chose to move onto better things. I went from a kid who grew up in poverty in the poorest county in Michigan to someone who will be retiring from their first career at 37 with a high paying job skill, and 3 seperate college degrees. It is all because of the choices I made for myself. And for most out there, it's the exact same thing.

djones520 wrote:

Calling an employee of Burger King a chef would probably get you punched by the likes of Rick Bayless.

Fair enough, but the point was that some taco meat is better than other taco meat and compensation reflects that.

Also 12$ per hour is ~24k per anum, I don't know many places where that entails a studio apartment without state assistance.

I didn't realize a living wage was considered 'a large salary'.

The sad fact is, we need people to flip burgers and stuff taco shells.

Skill is honestly a secondary reason for the pay rate for a particular job. Behind how much the job is needed and how many people there are competing for the job.

There are plenty of jobs that don't require any particular skill but still pay well because people either don't want to do that job or its a necessary job.

Like what?