102. CalGal - Jan. 28, 1999 - 2:12 PM PT
cont'd from 101.
Fourth, yes you have switched gears. Which isn't a problem. It's just that in Message #57, I listed the two major justifications people use for the "living wage"--to help those in poverty and for general fairness. This particular thread of debate began because I questioned you specifically about the benefits of the EITC as opposed to a "living wage" *as a method to help the poor*. (just trying to keep those issues separate)
Up to this point in time, you were answering my questions on the living wage as a means of helping the poor. In Message #87, you moved to general fairness. That's fine. But it is irrelevant to the use of the living wage as a means of helping those in poverty.
I have yet to see you offer evidence that an increase in the living wage is more effective than the EITC to specifically help those living in poverty. Is there any evidence? Or is the only benefit the pride of working rather than getting a handout? And is that pride worth the risk of the potential problems I've pointed out and that you haven't rebutted--and, in fact, have acknowledged?
103. CalGal - Jan. 28, 1999 - 2:12 PM PT
Ms,
Message #96
"Believe it or not, I actually know about as much as PE does wrt to labor markets, although it appears you have a preference for hearing about such things from him."
Not at all. I have no idea what the two of you specialize in. No insult was intended.
As I said in my previous posts, you seem to be acknowledging the only problems I have been concerned about. My question is, then, why argue for the "living wage" as a means to help those in poverty, since it is far more likely to help those who really need it?
Why not just stick with general fairness as your reason for upping the minimum wage?
104. Raskolnikov - Jan. 28, 1999 - 2:14 PM PT
MsIT: The point of young workers is certainly open to debate. I can't recall the several places where I have seen this, but I will endeavor to look them up. Still, even if it is only 1/4 to 1/3, it is still transfers which would be better targeted elsewhere, IMO.
105. CalGal - Jan. 28, 1999 - 2:15 PM PT
Incidentally, I support a minimum wage, on the grounds that people should be protected from their own stupidity. It is the requirement that the "mimimum" wage be a "living" wage that I am questioning.
106. Msivorytower - Jan. 28, 1999 - 2:30 PM PT
First, I didn't read your Message #57, I frequently don't read your messages unless they are directed toward me. Call me crazy.
Second, in that comment you create an artifical distinction that I simply do not agree with. That this discussion is about two different things: helping the poor and ensuring a decent wage for all workers. To me, they are complementary, and not divisible in this discussion.
Third, I saw only one example of yours, that there might be shirking. I said that the impact of shirking would have to be empirically determined. But for that matter, so would an increase in the EITC to the extent that workers would be assisted to the extent they would with a significant rise in the minimum wage.
"First, I didn't say the living wage was incredibly inefficient. I said it was an incredibly inefficient method of accomplishing an end--the end being to assist those actually living in poverty."
There is no diffence between these two issues. Perhaps you can explain what you think this means. And you are using the term in an economic sense regardless of whether you think you are or not.
"Third, I have pointed out what I see as potential problems with raising the living wage for everyone, as opposed to the EITC, *as a method to help the poor*."
What is the second thing?
The distinction you make between the poor and a decent wage is artificial IMO, it is important to you, not me. I am interested both in helping the poor, AND in considering that everyone should get a decent wage in this country. We are rich, there is no reason not to have a decent wage here, why? because we can.
107. Msivorytower - Jan. 28, 1999 - 2:32 PM PT
"Up to this point in time, you were answering my questions on the living wage as a means of helping the poor"
No, I don't think so, I never distinguished between the working poor and workers in general. If someone is working at the minimum wage, they are among the working poor, regardless of their age.
108. elliot803 - Jan. 28, 1999 - 2:34 PM PT
"First, I didn't say the living wage was incredibly inefficient. I said it was an incredibly inefficient method of accomplishing an end--the end being to assist those actually living in poverty. I did not--nor would I ever--use the term "efficient" in the economic sense of the word. I believe I have already said why I think it is inefficient in the every day sense of the word."
Vintage CalGal incoherence.
109. Msivorytower - Jan. 28, 1999 - 2:35 PM PT
"I have yet to see you offer evidence that an increase in the living wage is more effective than the EITC to specifically help those living in poverty."
The evidence is that we have minimum wage laws, and that we keep increasing them over time. Why? Because they are effective in helping mitigate extreme poverty among the working population. This seems so obvious to me that I am a little stunned that I must even state this. The EITC is simply an add-on for those who cannot work themselves out of poverty, but then, if those at the lowest levels were earning a decent wage, fewer of them would NEED the EITC.
110. CalGal - Jan. 28, 1999 - 2:36 PM PT
Elliot's quota was running low again.
111. CalGal - Jan. 28, 1999 - 2:46 PM PT
Ms,
"There is no diffence between these two issues. [living wage being inefficient vs. inefficient means of accomplishing an end]"
Okay, I'll take your word for it. It's just that you went straight into a justification of market economics, blah blah. Whereas all I was saying is that the living wage, considered only as a method of helping the poor, seems to be an inefficient method of getting the additional money to the right people. If that's the same thing, fine.
"I am interested both in helping the poor, AND in considering that everyone should get a decent wage in this country. "
Again, I'll take your word for it. It just seems that the second subsumes the first. Why make any arguments about it helping the poor? It seems better to stop arguing on behalf of any one group that works for minimum wage, since it gives the impression that they are the only ones you are concerned about. And then people like Rask foolishly offer alternatives that will only benefit that one group, rather than all workers slaving away for minimum wage.
112. Msivorytower - Jan. 28, 1999 - 2:53 PM PT
"seems to be an inefficient method of getting the additional money to the right people."
Well, you see, here lies the fundamental difference between our positions, I have no standards for who are the "right" people. As I stated before, anyone working at the minimum wage is among the working poor. The only teenagers who could possibly escape this condition would be those who are minors (under 18) and not legally able to live independently.
"Again, I'll take your word for it. It just seems that the second subsumes the first. Why make any arguments about it helping the poor?"
Because wages that are below a certain level lead to poverty, even when someone works "full-time". One can hardly discuss the notion of a decent wage without having some benchmark, ie. poverty, and what is considered the official income threshold designating those who are poor.
113. CalGal - Jan. 28, 1999 - 2:57 PM PT
Ms,
Message #109
You are ignoring my use of the word "specifically". As in--increasing the minimum wage significantly (which is what we are talking about with a "living wage") benefits everyone working at that rate, not just those who are extremely poor.
But since you have already said that you are actually concerned about all the workers, I realize this is a meaningless distinction to you. Consider the issue dropped.
Suppose a "living wage" was mandated in Iowa of, say, $8.50 an hour. Suppose that this caused minimum wage jobs to decrease by (and I'm making this number up) 4%. Suppose that of that 4%, 13% of the people who lost jobs were living in poverty. 10% were teenagers. (I made those numbers up too).
Now, suppose there was a proposal to drop the minimum wage back to the federal requirement (and I have no idea what that is, btw) and increase the EITC by 14%. (another fantasy number). This had the effect of raising the effective rate of the worker at the poverty line to $7.75/hour. The 4% of minimum wage jobs that were lost would be expected to reappear.
Would you support this proposal? As I said throughout, I made these numbers up, and for all I know there may be a huge downside to the EITC that I'm ignoring. Lemme know.
114. pseudoerasmus - Jan. 28, 1999 - 3:00 PM PT
Message #109
Msit said: "The EITC is simply an add-on for those who cannot work themselves out of poverty, but then, if those at the lowest levels were earning a decent wage, fewer of them would NEED the EITC."
I'm a little puzzled. Both the minimum wage and the EITC redistribute wealth from one party to another. Only the pattern of redistribution differs. So on what grounds does Msit so passionately prefer a high mandated floor on wages to the EITC?
Catgut said: "I have yet to see you offer evidence that an increase in the living wage is more effective than the EITC to specifically help those living in poverty."
Msit replied: "The evidence is that we have minimum wage laws, and that we keep increasing them over time."
I don't see how this is evidence at all, especially since the minimum wage in real terms has been _falling_, not rising, since the early 1970s.
115. Msivorytower - Jan. 28, 1999 - 3:04 PM PT
Btw, it could be argued that by instituting higher minimum wages, closer to what would be defined as a living or decent wage, that employers will reduce their demand for teenage workers, since it may be that their contribution to the enterprise (their work habits, dependability, absenteeism, output, etc) is not much above the current minimum wage level (if that).
This would be a positive effect, even if unintended, that should please those of you concerned about the "right" people being affected by such a raise. Clearly then, employers would develop a preference for workers whom they can actually get enough work out of to justify their employment. This would bias the lower wage job market toward older workers, those who are raising families, etc, precisely the people who constitute those most in "need" (if I understand your definitions of need, that is).
There is already evidence that such a shift would take place by examining the change in labor demanded at fast food chains like McDonalds and others of the same ilk. Twenty years ago these places exclusively hired teenage workers, but a simple examination of their labor force today shows that much older workers have taken a significant number of these jobs. In fact, increases in the minimum wage generallyt do squeeze out the youngest workers because they ARE less productive (in their work habits) than older workers.
116. pseudoerasmus - Jan. 28, 1999 - 3:05 PM PT
"At very low earnings, the federal EITC provides increasing returns to work. As a result, the effective marginal tax rate is negative. In other words, as workers earn an additional $100 of income, their take home pay increases by more than a $100. At somewhat higher income levels, however, the effective marginal tax rates become very high, even exceeding 100 percent at two points...where the welfare grant and food stamp benefits are phased out as the federal EITC benefits begin to decline. This means that as a worker earns an additional $100, his or her take-home income actually declines by more than $100. As a point of comparison, a family of three with earnings of $4,000 per month would have a combined state and federal marginal tax rate of about 45 percent."
117. pseudoerasmus - Jan. 28, 1999 - 3:07 PM PT
Message #115
I would thought that older workers had lower turnover rates than teenagers, and that's probably the reason fast-food restaurants preferred them.
118. CalGal - Jan. 28, 1999 - 3:07 PM PT
Ms,
Message #112
Personally, I see a difference between a college student who is working at minimum wage--single, getting insurance through school, needing flexible hours--and a parent of two kids. An increase would benefit both equally. Which is what I meant by "the right people".
As I've said, I now understand that you don't distinguish between the two when speaking of helping the poor. I am now curious as to where and how you do make distinctions, which is what my last post was about. But I now realize you are arguing out of a sense of general fairness.
BTW, if we're just talking fairness, I'm pretty sure I'm opposed to any major increase to a "living wage", whether enacted at the local, state, or federal level. But in order to be sure, I'd like to know what the effect on employment is if an increase of, say, 35-50% took place. Or proof that something less than that would actually result in a living wage for anywhere other than Podunk.
119. CalGal - Jan. 28, 1999 - 3:16 PM PT
Pseudo,
Lordy, at times I feel stupid. Does Message #116 mean that raising the minimum wage without changing the tax rate to allow for it could actually hurt those people who receive the EITC? And if it doesn't, could you explain what it does mean? Apologies in advance for my denseness.
120. elliot803 - Jan. 28, 1999 - 3:40 PM PT
The important point is that income and wealth inequality in the U.S. are at near-record highs. I don't really care whether an increase in the minimum wage, or an increase in the EITC, or some other mechanism is used to rectify this injustice, I just want to see something done about it.
And income and wealth inequality on a global scale are also at record highs. The rich countries have a larger portion of global wealth than ever before, while a billion people in the third world eke out a miserable existence on less than $1 U.S. a day.
121. phillipdavid - Jan. 28, 1999 - 3:50 PM PT
Have not read the whole thread, but let me share some information about a Living Wage in my state:
• 86% of jobs with the most growth (i.e., new jobs) pay less than a livable wage.
• 50% of those jobs pay less than half a livable wage.
• A Livable Wage for a Family of Four is $33,315.72. A livable wage budget is a subsistence budget, about 33% less than the average family wage. For instance, on this budget a family does not go out to eat at restaurants, cannot afford a television or other appliances, purchases day care that is 30% cheaper than the state average, spends half of what the average family does on transportation, has no money to allocate for life insurance, the purchase of a new home, a child's college education, retirement, or vacation.
• The kind of jobs with the most growth and which pay below a livable wage are:
Waiters & Waitresses $11,128
Cooks, Short Order & Fast Food $11,606
Food Preparation Workers $12,646
Janitors, Clnrs, Maids, Housekprs $13,707 5
Teacher Aides & Edu. Assistants $14,144
Cashiers $14,539 44% 745 6 Guards $14,789
Salespersons, Retail $15,725
Cooks, Restaurant $16,411
Receptionists & Information Clerks $18,304
General Office Clerks $18,699
Truck Drivers, Heavy & Light $21,840
Semiconductor Processors $22,942
Supervisors - Clerical & Admin. $27,539
Supervisors, Marketing & Sales $28,350
Blue Collar Worker Supervisors $32,448
The bottom line is most of the new jobs in my state's economy pay substantially less than a living wage, so all the news about our booming economy and the plethora of jobs doesn't really mean that people are living better. A substantial number of employed people in my state are working poor, people too poor to realize any material prosperity at all.
From National Priorities Project.
122. thomasd - Jan. 28, 1999 - 4:14 PM PT
Would you call a sinecure a 'living wage'? I wouldn't.
123. phillipdavid - Jan. 28, 1999 - 4:24 PM PT
sinecure -- what a strange word to use.
124. FreeToChoose - Jan. 28, 1999 - 4:27 PM PT
elliot803
After your strong statements in Message #42 I believe you owe me answer to my reasonable question in Message #47
125. FreeToChoose - Jan. 28, 1999 - 4:33 PM PT
I confess I was quite puzzled at the direction this thread was taking. I didn't understand all the talk about mandates and legislation in what I naively thought was a discussion about “living wage”. Actually my conclusion was in thinking that a discussion of “living wage” involved some discussion of what it costs to live.
Silly me.
I think it was Msit that gave me the first hint when she mentioned a “movement” in Message #61
So I did a little poking around, and learned, if this website is correct, that “The "living wage" movement is a national campaign designed to set ultra-high minimum wages for certain workers.”
Source
So I guess it isn't relevant to talk about how much it costs to live? Our only discussion is how to find a clever way to increase minimum wages by giving them better names, and excluding some people from them?
The good news is this makes it easy to form an opinion: Bad idea.
126. FreeToChoose - Jan. 28, 1999 - 4:37 PM PT
In Message #24 CoralReef says:
“Has there been any serious proposal to make the minimum wage dependent on the state of the local economy (within the U.S.)?”
It looks like this is the main thrust of the living wage movement. See here for a list of local minimum wage laws or ordinances.
This is quite interesting. It has passed beneath my radar screen. This may mean that I'm not paying attention; or it may mean that the news media isn't giving it much attention. How many others know about this movement and the results to date?
127. phillipdavid - Jan. 28, 1999 - 4:42 PM PT
FTC,
If you click on the link at the bottom of my Message #121, you will come to a page with information about jobs and wages in each state. Within each of those state pages, you will find a short summary of what it costs to live in that state, and information about what a living wage would be there.
128. FreeToChoose - Jan. 28, 1999 - 4:46 PM PT
In Message #59 TabouliJones says:
“I assumed that you were making an oblique reference to a general inability of the poor to make reasonable life-style decisions and then positing this inability as an (again oblique) argument to the effect that a legislatively mandated "living wage" would either constitute a misallocation of resources or a subsidy to a class of people that does not deserve it.”
Actually, no to both points. I was making an oblique reference to the general inability of all people to know certain types of information, and only the fact that the non-poor can pay for their lack of knowledge makes it more of an issue for the poor. As to the “legislatively mandated” issue, your post was one of the ones that lead me to look into the issue a bit more. I certainly was not thinking about legislatively mandated options when I wrote my post.
129. FreeToChoose - Jan. 28, 1999 - 4:51 PM PT
“And before some other idiotic comment is made about the 40 hour a week benchmark, let me remind everyone that the AVERAGE number of hours worked per week by all full time workers in 1991 was 43 hrs.”
I fail to understand the relevance of the average number of hours worked. If I can work ten hours a week and provide all that I want to provide for my family, I could choose to work ten hours a weeks. If it takes me fifty of sixty hours to reach my desired lifestyle, then I need to work fifty or sixty hours. I cannot think of a good reason why the average number of hours worked is relevant to a concept of a living wage.
I suppose if someone would actually work out the annual income needed for some minimum lifestyle, one could divide that number by some number of hours to figure out the required hourly rate, but I can't think why the average number of hours worked would be appropriate for this calculation.
130. FreeToChoose - Jan. 28, 1999 - 4:52 PM PT
In Message #75 Raskolnikov says:
“$14 for SF is quite high. Santa Clara California has the highest living wage law I know of, at $10.”
How is this calculated? What is included?
131. Msivorytower - Jan. 28, 1999 - 4:54 PM PT
"I don't see how this is evidence at all, especially since the minimum wage in real terms has been _falling_, not rising, since the early 1970s."
Yes, the minimum wage has been falling, and poverty rates have been rising during the same period. While I wouldn't begin to suggest that the falling minimum wage has been the primary reason poverty rates have risen during the last 20 odd years, it surely has contributed, particularly since the fastest growing category of the poor is single women with children, who were more likely to be among minimum wage workers during that period.
This MLR study suggests that women comprise 65% of all minimum wage workers, a good porportion of whom are between the ages of 20 and 24.
In addition, This study by Mincy in the July 1990 MLR estimates that raising the minimum wage would cause an 11% decline in the percentage of families in poverty.
Both reports are in PDF format.
Btw, the Mincy study discusses the issue I raised in Message #115, that disemployment effects of raising the minimum wage have in the past been most felt by young teenagers rather than minimum wage earners among the adult population.
132. FreeToChoose - Jan. 28, 1999 - 5:02 PM PT
Phillipdavid
Thanks for the link.
I checked the living wage for Maryland, and learned it was just under 35K for a family of four. There is precious little information on how it is calculated, although I did learn that it doesn't include MacDonalds. I also “learned” that families with this income cannot afford TVs, refrigerators or stoves, which I find highly questionable.
In a more serious vein, do you know how the amount is calculated?
133. elliot803 - Jan. 28, 1999 - 5:05 PM PT
FTC:
The answer to your question is that I didn't say it. That's twice I've told you now.
134. FreeToChoose - Jan. 28, 1999 - 5:06 PM PT
Phillipdavid
I posted before I saw your Message #127
I now know what at least one group believes are the living wage amounts. I still do not know how they were calculated.
135. FreeToChoose - Jan. 28, 1999 - 5:08 PM PT
elliot803
So who posted Message #10 and how did they get your password?
136. FreeToChoose - Jan. 28, 1999 - 5:12 PM PT
elliot803
Oh I get it. When you claimed you could multiply by a factor of ten, and the same basic point would be valid, you get to decide what the basic point is, and you won't include the earlier statement that the amount was so affordable that Americans would gladly pay it. Very clever. Very sleazy, but very clever.
Can I assume that you take back your claim that this program is affordable? Or are you taking back your claim that a factor of ten is reasonable? Or are you going to find some other clever way to weasel out of your absurdities?
137. Raskolnikov - Jan. 28, 1999 - 5:22 PM PT
I wrote:
“$14 for SF is quite high. Santa Clara California has the highest living wage law I know of, at $10.”
FTC wrote:
"How is this calculated? What is included?"
How is $10 an hour calculated? For Santa Clara, it does not include benefits, such as Health Care, if that is what you are asking. Although other municipalities do have lower Livable Wage standards for employers who offer health care.
138. phillipdavid - Jan. 28, 1999 - 5:24 PM PT
FTC,
This is the national summary of the National Priority Project's report "Working Hard, Earning Less." I read it a few days ago, and if memory serves me well I believe they discuss a little bit how they calculated their figures.
139. Raskolnikov - Jan. 28, 1999 - 5:24 PM PT
Also, the tax distortions of the EITC are almost irrelevant when compared with the municipal Living Wage Laws, since the costs of the living wage are going to be largely passed on to the state, through their contracts, which will require approximately the same tax increases or spending cuts that an EITC would to raise the salaries of the same people an identical amount.
140. thomasd - Jan. 28, 1999 - 5:30 PM PT
I see a problem with assuming that 'minimum wage' and 'living wage' have anything approaching a clearly defined relationship. Effects such as the local cost of living, relative household expenses, relatively responsibility as breadwinner, hours worked, number of jobs worked, unearned income and taxes and credits all make it impractical, if not impossible to select a single minimum wage rate that will guarantee a living wage in all cases.
141. CalGal - Jan. 28, 1999 - 5:30 PM PT
Ms,
Are there any comparisons between the decline in poverty rate due to a minimum wage hike vs. an increase in the EITC?
Also, have there been any studies done on declines in poverty rate due to straight social services increases--increase in AFDC payments, etc. Although that's unlikely to fly these days.
142. thomasd - Jan. 28, 1999 - 5:31 PM PT
...relative responsibility...
143. CalGal - Jan. 28, 1999 - 5:33 PM PT
Rask,
"Also, the tax distortions of the EITC are almost irrelevant when compared with the municipal Living Wage Laws, since the costs of the living wage are going to be largely passed on to the state, through their contracts, which will require approximately the same tax increases or spending cuts that an EITC would to raise the salaries of the same people an identical amount."
If I understand this (and I may not, although each individual word made sense), I don't think it would be exactly the same people, would it? The whole issue is that the EITC is focused more on people who are actually living near the poverty line, so it would presumably target only those that need the assistance.
144. Raskolnikov - Jan. 28, 1999 - 5:39 PM PT
Cal:I didn't phrase that as clearly as I would've liked. My point was that a livable wage law is going to cost a city a given amount of money because of the increased price of its contracts. That same amount of money could be spent on an EITC with identical tax distortion effects, no matter who gets the money.
145. CalGal - Jan. 28, 1999 - 5:53 PM PT
Rask,
Yes, it wasn't very clear but for me to have said so would be a very pot to kettle sort of situation. My "each individual word made sense" remark was not a complaint, but rather my acknowledgement that I don't necessarily understand the issues involved and am therefore hesitant to claim comprehension. (See? I can write obscure sentences without any effort at all!)
That was what I understood you to have said. I was taking it the next step--mainly, that since the costs are probably the same, why not ensure that the people who actually live near the poverty line are the ones benefitting?
With the caveat I've given all along--namely, it seems intuitively obvious that the EITC is a more effective means of ensuring that the benefit is passed on to those who need it, but I have no proof or knowledge that this is actually so.
146. ChristinO - Jan. 28, 1999 - 6:07 PM PT
Sorry to bust in and leave, but I just got a chance to start reading this thread and had a question for FTC about post Message #32.
Yes, 40 hours is about 24% of the total hours in a week that could be devoted to earning a living. Did you run any calculations on what percentage of the total hours in a week are spent doing things besides work?
I ended up with 24% worked for someone who works 40 hours a week.
33% spent sleeping if one sleeps 8 hours a night (56 hours a week)
17% on grooming, transit, eating and bathroom breaks if one only spends an hour a day getting to and from work and no more than an hour in transit to run errands on the weekend (29 hours total)
This leaves less than 25% for anything else. Perhaps I misunderstood your tone but it seemed to me that you meant to imply that anyone who works 40 hours a week or less has got it incredibly easy or is lazy.
147. FreeToChoose - Jan. 28, 1999 - 6:11 PM PT
phillipdavid
Thanks for the link. It does go into much better detail than the other source, and far better than anything I had found.
148. FreeToChoose - Jan. 28, 1999 - 6:21 PM PT
ChristinO
My apologies if I left the impression that working 40 hours or less has it easy. Far from it.
But until the last generation or two, the norm was more like 60 hours a week. I have worked 60 hours in a week on many occasions. I won't pretend for a second that it was easy. It was difficult, and I looked for lot's of sympathy.
But I assume a person has to do what a person has to do. My brother routinely works 60 hour work weeks. He made some life choices and this is the consequence. He doesn't have it easy; on the contrary, he has it hard. (But he gave my son a place to stay tonight, so I am grateful.)
But when we talk about the amount of effort one must expend to provide a decent life, I fail to understand why anyone would argue that people shouldn't have to work more than the average workweek. In fact, working 40 hour is a bit less than average. What is the rationale for saying that someone should be paid enough per hour so that they don't have to work as much as the average person to reach some predefined level of income?
Frankly, when you see that these sites are sponsored by unions, I think the answers become clear. These aren't some altruistic groups trying to improve the lot of the average Joe, they are the unions trying a new tactic for raising minimum wage.
149. enochsmoky - Jan. 28, 1999 - 6:21 PM PT
I have noticed that no one has mentioned the severe adverse effects a living wage proposal would have on small business owners. I own a business that has 20 employees. Only 2 are paid at the minimum wage and all 20 receive health insurance and pensions. If you have to increase those 2 employees' wages by $2 an hour, you can damn well bet that the other 18 will be clamoring for a big increase also. Here is the arithmetic for a $2 wage increase for 20 employees who work 40 regular hours a week and 5 hours overtime: 2x20x40x52= $83200 in extra regular wages per year. 3x20x5x52= $15600 in extra overtime wages per year. That works out to $98800 in extra wages per year. Other costs such as workman's comp,pension benefits, taxes will also rise. Obviously there are no other employers in this thread.
150. Raskolnikov - Jan. 28, 1999 - 6:24 PM PT
Cal:I was taking it the next step--mainly, that since the costs are probably the same, why not ensure that the people who actually live
near the poverty line are the ones benefitting?"
yeah, that is what I have been arguing all along. However, MsIT's points are not to be taken lightly. The EITC does seem to be welfare to a lot of people, it does have its own disincentive problems, and minimum wages are extremely popular.
I have less of a problem with hefty minimum wage increase than I do with these niggling city ordinances. They frequently are ineffective, deter vendors from doing business with local governments, can be quite easy to get around (LAX, for instance, didn't give any of its employees the specified living wage of around $8 an hour, claiming that all of the employees in question were not employees, per se, but contractees instead - they got away with it), and are just one more anchor around the neck of government. Government has a bad enough reputation in this country without having policy makers skewing its behavior in a way which makes things more expensive and creates more contempt for regulations.
151. FreeToChoose - Jan. 28, 1999 - 6:26 PM PT
After a brief perusal of the site, I am so angry I need to take a break before saying something I regret.
I am thankful that this subject came up, because I see that there is a major insidious movement going on that I was unaware of. I can now be more aware of it, and know who is trying to hurt this country.
The calculations of the living wages are laughably idiotic. I will illustrate some of the more egregious problems after calming down. I wonder if those that objected to the technical errors in the bell Curve mathematics have checked out these sites. If they had any intellectual integrity, they would be blasting this stuff as anti-intellectual bullshit. I take it back, I don't wonder. I know the answer.
152. thomasd - Jan. 28, 1999 - 6:28 PM PT
I propose something more modest than a nationally mandated 'living wage'. I believe a minimum hourly wage in the $6 to $8 dollar range, that is *indexed to inflation*, with a perhaps 20% lower 'student' minimum hourly wage for those who are under 21 would be more appropriate.
153. FreeToChoose - Jan. 28, 1999 - 6:30 PM PT
Raskolnikov
I agree, although we may have different reasons. With massive proposed minimum wages, the potential problems aren't hidden. Even economists will opine that massive increases in minimum wages cause problems. This living wage bullshit is more like a stealth campaign. Wow the politicians with nice sounding propaganda, and they might actually fall for this. Based upon the site I listed earlier, it looks like many cities have caved in to these thugs.
154. FreeToChoose - Jan. 28, 1999 - 6:34 PM PT
thomasd
The correct minimum wage is zero.
Now, let's discuss what to do about people who cannot earn enough to live on. EITC is one excellent option. Friedman's negative income tax is another discussible option.
Raising the minimum wage is a way to effectively raise taxes, without taking the appropriate blame. It's sleazy.
155. Raskolnikov - Jan. 28, 1999 - 6:35 PM PT
enoch: I personally assumed you would do what is in your interest, either laying off the appropriate people, passing your costs on to consumers, taking a cut in profits, or going out of business. Empirically (there have been a lot of studies on the labor market effects of the minimum wage), modest changes in the minimum wage do not seem to have much of an effect on business survival or employment. In all likelihood, you would be able to pass the costs on successfully with little harm to your business. Remember that your competitors would have the same problem, equalizing the playing field quite a bit.
If you are referring to the municipal contract issue, I am more sympathetic, having done quite a bit of consulting in the public purchasing arena, and having a lot of knowledge of how much of a pain in the ass it is to do business with the government in the first place.
156. CalGal - Jan. 28, 1999 - 6:38 PM PT
Rask,
"yeah, that is what I have been arguing all along. However, MsIT's points are not to be taken lightly. The EITC does seem to be welfare to a lot of people, it does have its own disincentive problems, and minimum wages are extremely popular."
As I said earlier, I'm not objecting to a minimum wage per se. In fact, I have always supported it. But to set a minimum wage with the objective of it being a "living wage"--meaning a significant increase--is a different matter.
As for the perception of the EITC being welfare, I agree that this is a problem. But is a perception problem worse than the problems that might result from a goodsized minimum wage increase? (That isn't a rhetorical question; I'm genuinely curious as to the pros and cons of each.) Also, what *is* the possible impact of a hefty increase in the minimum wage?
And you won't get any argument from me about those city ordinances.
BTW--I live in Santa Clara County--I wonder if this is why all our fast food restaurants close early?
157. Raskolnikov - Jan. 28, 1999 - 6:40 PM PT
FTC: Minneapolis and St Paul both have Livable wage laws, as does Milwaukee, LA, Dayton, San Antonio and many other cities. I was fully aware it was a movement. If it calms you down a bit, you might want to know that the laws aren't having much impact due to lack of enforcement, court battles, and private sector dodges. Governing Magazine had an article on this in their December issue. I checked, but it isn't on their web site.
158. aldavis - Jan. 28, 1999 - 6:44 PM PT
As long as one is proposing a minimum or living wage, why be parsimonious? Hell, make it a real living wage, say $20 or $30 an hour, and throw in a shorter work week as well.
Have anyone of you every wondered why an employer hires someone? Believe me, it isn't because he has a deep concern that this person eat well. It is to help him make money, and if you do not believe that, you have never run a business.
Now, I believe as the good book says, "the laborer is worthy of his hire," but I don't believe it is any business of the pols. what I pay my employees.
they certainly have a right to join together and bargain for their wages. Politicians really don't care that people eat well, either. What they do care about is buying votes, and promiseing a prime rib in every oven goes a long way to that end.
159. Raskolnikov - Jan. 28, 1999 - 6:46 PM PT
Cal:"I wonder if this is why all our fast food restaurants close early?"
Only if your fast food companies have contracts with the city.
160. FreeToChoose - Jan. 28, 1999 - 6:49 PM PT
CalGal
“As for the perception of the EITC being welfare, I agree that this is a problem.”
Why is this a bad thing?
161. Raskolnikov - Jan. 28, 1999 - 6:49 PM PT
Al:"As long as one is proposing a minimum or living wage, why be parsimonious? Hell, make it a real living wage, say $20 or $30 an hour, and throw in a shorter work week as well."
The argument is that modest minimum wage changes have little impact on employment. No person here has argued that a 400% increase in the minimum wage would not be disastrous for the economy.
162. Raskolnikov - Jan. 28, 1999 - 6:53 PM PT
Cal:"As for the perception of the EITC being welfare, I agree
that this is a problem. But is a perception problem worse than the problems that might result from a goodsized minimum wage increase?"
The perception isn't a problem in itself. The problem is that the perception creates a barrier to implementation. Welfare isn't a particularly popular topic to be in favor of right now.
163. FreeToChoose - Jan. 28, 1999 - 6:57 PM PT
One of the more egregious flaws in the living wage calculations is so extreme, I am seriously wondering if I am missing something. I would appreciate it if someone would point out my blunder, if indeed I am making one.
The comparison of living wage amounts to average wages for certain jobs is a comparison to wages for *one* individual. The living wage amounts are for a family of four. (Presumably two adults and two children? Could I have this wrong?) The living wage amount includes an amount for child care, which I assumed implied that both adults were working.
Why do we assume two adults working, but only look at the annual wages of a single individual?
164. thomasd - Jan. 28, 1999 - 6:59 PM PT
The EITC is certainly preferable to out-and-out welfare. On a slightly different note, since a bare majority of wage earners is paying all of the net income taxes in America today, that would seem to be an effective deterrent to significantly increasing the relative size of the welfare state.
165. aldavis - Jan. 28, 1999 - 7:01 PM PT
Rask
I agree that modest increases in minimum wages do not have much of an adverse effect; note the last increase.
My point is that it is hardly more than a polical ploy used by both parties: Dems trying to show they feel peolple's pain and Repub. that they are fiscally responsible. How about the premise that the Federal Govenment has no business messing in such things.
166. thomasd - Jan. 28, 1999 - 7:03 PM PT
Re. 165 -
aldavis -
That's why I highlighted that once the minimum wage is adjusted, it should be tied to inflation. That would effectively remove it from political debate.
167. FreeToChoose - Jan. 28, 1999 - 7:05 PM PT
For all those people desperately researching the sites to help find my blunder, I did confirm that the family of four is two adults and two children.
168. FreeToChoose - Jan. 28, 1999 - 7:06 PM PT
thomasd
I have no quarrel with tying the minimum wage to inflation. Zero, augmented by an inflation index is still zero.
169. thomasd - Jan. 28, 1999 - 7:07 PM PT
Re. 167 -
FTC -
Care to hazard a guess as to which side of the political spectrum is promoting the 'living wage' boondoggle?
170. aldavis - Jan. 28, 1999 - 7:09 PM PT
thomasd
Good point, would not want to quibble, but I would prefer a populace that had a realization the perhaps the govenment could mess with us less. But I'm not too hopeful. Of course, I'm like that guy who pointed out he did not have a feminin side.
171. FreeToChoose - Jan. 28, 1999 - 7:09 PM PT
thomasd
“The EITC is certainly preferable to out-and-out welfare.”
EITC is out-and-out welfare.
So what?
Let's talk about whether it is an effective way to solve problems, not what synonyms it may or may not have.
172. Msivorytower - Jan. 28, 1999 - 7:14 PM PT
re Message #141
I haven't come across any studies yet that compare the two effects. I'm looking though, and if I do will post a cite.
As to the declines in poverty rates due to increased social services and transfer payments, by far the single most important contribution to increased poverty rates in the 80's was the decline in social services and transfer payments that occurred as a result of Reagan's social welfare policies.
Much of this was disguised in the form of transferring the burden of providing social services that aided the poor to the states (and at the same time reducing the total amount allocated to states for such services).
In addition, changes in tax policies, with redistribution switching directions (changing from rich to poor, to poor to rich) during the Reagan administration further eroded the incomes of the poor.
Given these effects, the impact of the falling minimum wage over the same period on increasing poverty rates was probably not very significant. However, it could be argued that had the minimum wage been increasing over that period, it could have helped mitigate the effects of these deleterious policies on the poor.
173. Msivorytower - Jan. 28, 1999 - 7:17 PM PT
The EITC is problematic if it is seen as welfare because there is a strong movement in this country to eliminate social welfare and make people work.
Now, anyone who says that a significant expansion of the EITC could be implemented and maintained with the current mood of the country toward the less fortunate (get them off welfare, get them working, give them a sense of pride, accomplishment, yadda, yadda, yadda) is lying through their teeth.
174. thomasd - Jan. 28, 1999 - 7:17 PM PT
FTC -
In my opinion, only the Democrats possess the kind of political capital to have a chance in hell to eliminate the minimum wage in today's America. And you know what the chances of that are.
The Republicans would be politically tarred and feathered if they made the slightest move in that direction. As it is, not indexing the minimum wage to inflation allows the Democrats to score partisan points on a regular basis.
175. aldavis - Jan. 28, 1999 - 7:28 PM PT
Democrats use economic issues to score political points. Even when enough Dems. favored a cut in Capital Gains Tax, Mitchell would not let it come up for a vote; he could use it better in a polical fight. Smart politics, bad for the Country. Minimun is much the same.
176. thomasd - Jan. 28, 1999 - 7:35 PM PT
Re. 172 -
MSIT pegs the dishonesty meter here. The increase in poverty in the early '80s was due to the Carter recession and the increase in single parent families. To try to pin it on 'Reagan's social welfare policies', when his administration made no significant changes to such existing policies, or to say that the poor began to subsidize the rich instead of the other way around in the '80s is really the worst kind of logic and fact deprived lying partisan horseshit.
177. Msivorytower - Jan. 28, 1999 - 7:41 PM PT
ThomasD
Take a look at the tables bubba......
Changes on Poverty over Time.
The trend clearly shows the poverty rates rising sharply after Reagan came to office, and instituted his first set to tax changes in 1981. The recession certainly had something to do with rising poverty numbers, it always does, but look at the trend, that is, if you can read it.
Not only that, during the recessions of the 70's, when the social welfare system was still well supported by the Federal government, poverty rates never rose to the levels of the 80's.
Recession alone cannot explain the consistently higher poverty rates in the 80's.
178. thomasd - Jan. 28, 1999 - 7:42 PM PT
The real howler, of course, is MSIT claiming that Federal revenues from taxation were actually being transferred from the poor to the rich in the '80s. Say 'good-bye' to any pretense of credibility about economics on MSIT's part for making this laughable claim.
179. Msivorytower - Jan. 28, 1999 - 7:44 PM PT
And for those interested in poverty rates by age, and how they've changed over time see this.
180. phillipdavid - Jan. 28, 1999 - 7:51 PM PT
thomasd
178
Laughable? Take a look at thist;.
181. Msivorytower - Jan. 28, 1999 - 7:57 PM PT
reMessage #178
There is no question that changes in tax policies, both at the federal and state level, served to increase the after-tax incomes of the top 5th of the income distribution and decreased the after-tax incomes of the bottom two 5ths of the income distribution. One of the congressional committees issued a report, in the early 90's showing exactly this.
The cite is at my office, and the study is not online, but according to the CBO (I think they did the stats), after tax real incomes rose about 17% between 1979 and 1989 for the top quintile. It fell about 8% for the bottom quintile, and about 5% for the second to the bottom quintile.
182. FreeToChoose - Jan. 28, 1999 - 7:58 PM PT
Umm phillipdavid
It looks to me like the income tax changes are put together by the same people who put together the bogus living wage information. Until I see some justification for the living wage “statistics”, I'm not about to accept anything uncritically from this crowd.
183. Msivorytower - Jan. 28, 1999 - 8:00 PM PT
Here's a look at changes in the distribution of income in the US between 1947 and 1994.
184. CalGal - Jan. 28, 1999 - 8:02 PM PT
Rask,
You know, I was driving home and was thinking SURELY I would have remembered that the minimum wage in my county was $10/hour. And of a sudden, went DUH. I hadn't realized that you were talking about the local restrictions back that far in the thread.
"The problem is that the perception creates a barrier to implementation. "
No, I realized that is what you meant. I probably wasn't clear. I was thinking about this more on the way home. Is it harder to get the EITC increased or push through a big increase in the minimum wage?
185. Raskolnikov - Jan. 28, 1999 - 8:03 PM PT
FTC: PD's and MsIT's claims match everything I have seen in the literature as well. I know Paul Krugman tackled this issue head on in Peddling Prosperity, where I saw an almost identical chart. Unfortunately, my copy is on loan to my father-in-law, in a desperate, futile attempt to convince him that Ross Perot is a nut.
186. CalGal - Jan. 28, 1999 - 8:05 PM PT
Tommy,
For a centrist, you seem to get more than a little obsessed with party politics. There wasn't a mention of either party til you got here. Can you make any points without mentioning the perfidies of the Dems or the heroics of the Republicans?
187. Msivorytower - Jan. 28, 1999 - 8:09 PM PT
One doesn't need to go to crank sites to find such analysis, there are now several official studies that have been done on the widening income gap since the early 80's.
As I said, one of the congressional committees issued a study, the census bureau has mucho data on this, in fact it's been examined extensively in the last few years.
188. Raskolnikov - Jan. 28, 1999 - 8:09 PM PT
Cal: I agree with MsIT partially, in that any EITC argument faces an uphill fight with a GOP Congress (although I have NEVER understood the GOP's current opposition to the EITC - Reagan started the damn program, and it is quite similar to the negative income tax proposals championed by Nixon and Friedman - I find their opposition sickening), and a public that hasn't been too keen on welfare programs lately.
But given the state of the economy, and the ability to spin EITC as a "tax cut for working families", while reminding the GOP that this was the GOP's brainchild, so they can take some credit, we might be able to get a substantial increase with a full court press. However, getting a minimum wage increase is unquestionably easier.
189. enochsmoky - Jan. 28, 1999 - 8:19 PM PT
As I stated in post #149, my wage costs in my 20 employee company would rise by approximately $100, 000 per year with a $2 per hour increase in wages. The usual responses to my dilemma were volunteered:
1) Pass the costs on to my customers.2) Lay off some employees.3) Take less in profits4) Go out of business.
I am in a highly competitive business and passing costs on to my customers is not a viable alternative. I could lay off some employees, but the remaining employees would be burdened with extra work. I could take less in profits, but that leaves less for future expansion and would put me in a loss position in some years. Would a living wage apply to a business owner who is losing money because he has to pay someone's idea of a "living wage" to his employees?
190. CalGal - Jan. 28, 1999 - 8:20 PM PT
Rask,
But isn't the subject under discussion a "living wage"? I'm not disputing the popularity of a simple minimum wage increase.
Would the GOP be more likely to support EITC increases as opposed to a $1-2 increase in the minimum wage?
And if that's not the type of increase we're talking about, then what's the big deal of this whole "living wage" thing?
191. phillipdavid - Jan. 28, 1999 - 8:21 PM PT
FTC,
182
Well, just because you didn't like the comparison they made between the budget of the average working person and a scaled down subsistence budget necessary for a family of four doesn't mean any of the numbers they used are bogus.
As one who works for a modest wage myself, I easily understand the comparison they made. And the bottom line point they were making is valid, imo. That is, the wages earned by those working in the type of jobs most often created in our economy do not lead to anything resembling material prosperity, or even material well-being. I know that if I tried to raise a family with the budget numbers they came up with I would be hard pressed -- which is their point! I could pay rent, buy food, but never be able to buy a car, save money to buy a house, pay for my kids' education, buy health insurance, life insurance, eat out at restaurants, nor be able to afford a new refrigerator. It is unfair an unrealistic to characterize the numbers they came up with as "bogus", imo.
192. Raskolnikov - Jan. 28, 1999 - 8:45 PM PT
A few things:
enoch: as I said, your competitors would be in the exact same bind you are, so you would certainly have some wiggle room to pass prices on to customers.
Cal: well, if you present it to the GOP as a choice, you might be able to get them to go for the EITC instead. But I have no idea what a "substantial" increase would cost. Currently the EITC is a pittance which maxes out at about $1000, as I recall.
MsIT: I did some more research on who receives the minimum wage. I couldn't find a primary source online (there is an awful lot of clutter out there on the minimum wage) but I did find the abstracts of two studies at policy.com that state that about 1/4 to 1/3 of minimum wage earners are not adults. One was by the Electronic Policy Institute, the other was by the Department of Labor. Both studies found in favor of the minimum wage and were emphasizing that the majority were 18 or over. When you add this to the 1/4 to 1/3 of minimum wage earners you found who were in the 18-24 range, we have somewhere in the neighborhood of 50-67% of minimum wage earners who would generally be called "young".
I also found several other studies, by places like Heritage or Cato, which made blanket statements like "the minimum wage primarily benefits the young" without seeing supporting numbers or sources in the abstracts that policy.com lists.
So, it looks like the numbers don't quite reach the "vast majority" that I stated in one of my earlier posts, and there is still the open question of whether age matters, but it looks like at least a majority of minimum wage earners are under 25.
193. CalGal - Jan. 28, 1999 - 8:56 PM PT
Rask,
It's just that I'm unclear why a push to increase the EITC would automatically be less popular than a $1-2 increase in the minimum wage. And that's the low end of what the living wage proposals are, I believe.
I think both of them are unlikely to win massive support, of course.
194. Raskolnikov - Jan. 28, 1999 - 9:03 PM PT
FTC: the definition of "living wage" is going to be arbitrary, any way you do it. I know a guy who once lived an entire month eating only potatoes and carrots. I am sure he has a lower threshold for how much money one needs to eat than I do.
Yeah, it is certainly inconsistent to use some proportion of an average single wage earner as a benchmark for a family of four, and it doesn't say a whole lot for their logical processes, but they could easily have kept the benchmarks consistent and just changed the proportion.
Rather than using benchmarks against an average wage, I would personally use the standards I mentioned earlier. What does it cost to rent an apartment that passes health and safety codes? How much is a reasonable grocery bill for one month? What does public transportation cost, or if there isn't any, what does a cheap car with minimal insurance cost?
But even this requires some arbitrary decisions about groceries, housing codes, etc.
195. Raskolnikov - Jan. 28, 1999 - 9:21 PM PT
Cal: "It's just that I'm unclear why a push to increase the EITC would automatically be less popular than a $1-2 increase in the minimum wage. And that's the low end of what the living wage proposals are, I believe."
You would have to ask the GOP why it would be less popular. They have recently taken to condemning the EITC, but they did pass the last minimum wage hike in 1996, and don't seem to be grousing about doing so again.
196. elliot803 - Jan. 28, 1999 - 9:30 PM PT
enochsmoky:
An increase in the federal minimum wage will increase the labor costs of your competitors as well as yourself, assuming the workers are in the U.S., so it should not put you at a competitive disadvantage.
As others have pointed out, there really is no evidence that a modest increase in the minimum wage will have a dramatic adverse impact on the unemployment rate. It should, however, help to correct the injustice of the current near record-high levels of income and wealth inequality in this country.
So yes, it can come out of your profits. I'll shed a crocodile tear for you.
197. CalGal - Jan. 28, 1999 - 9:35 PM PT
Rask,
Hmm. I don't disagree with anything you're saying.
But I said a $1-2 raise in the minimum wage. Isn't that the lowest rate mentioned by those supporting the living wage?
Are you saying that no one on the right would squawk at a $8 hour minimum wage? No one would argue that it would hurt the economy, particularly the people who it is supposed to help?
I don't wish to imply that they would trot instantly to the side of an EITC increase, of course. Merely that it seems equally unlikely to be successful.
198. elliot803 - Jan. 28, 1999 - 9:35 PM PT
Rask:
"[The Republicans] have recently taken to condemning the EITC, but they did pass the last minimum wage hike in 1996, and don't seem to be grousing about doing so again."
They only passed it in 1996 because it was an election year, they were on the ropes politically, and the polls showed massive public support for a minimum wage increase. The GOP may oppose a minimum wage increase less strenuously than an EITC increase, but that ain't saying much.
199. CalGal - Jan. 28, 1999 - 9:38 PM PT
Elliot just mentioned a "modest increase" in the minimum wage won't impact the economy. But a "modest increase" isn't going to get us to a living wage.
Will a substantial increase in the minimum wage impact the economy?
200. elliot803 - Jan. 28, 1999 - 9:43 PM PT
"Elliot just mentioned a "modest increase" in the minimum wage won't impact the economy. But a "modest increase" isn't going to get us to a living wage."
Depends on how you define "modest" and "living wage."
"Will a substantial increase in the minimum wage impact the economy?"
Defends on how you define "substantial."
It is certainly not the case that reducing economic inequality necessarily reduces economic growth.