geo

There are very few assembly-line type small businesses, where you're making widgets and you need 10 workers, not 9, not 11, to run that line, most small businesses are much more elastic than what you describe. At least in the USA, but I expect everywhere

Most workers being paid minimum wage are in service industries.

They work in industries that you might expect: Just over half (51%) work in the leisure and hospitality industry, about 16% in retail, 9% in education and health services, and the rest scattered among different sectors. Broken down occupationally, the picture is similar: Nearly 44% are in food-preparation and serving-related occupations; 15% are in sales and related occupations, and the rest are scattered.

And there aren't as many as you might suspect.

4.7% of the nation’s 75.3 million hourly-paid workers and 2.8% of all workers. In 1979, when the BLS began regularly studying minimum-wage workers, they represented 13.4% of hourly workers and 7.9% of all wage and salary workers.

http://www.pewresearch.org/fact-tank/20 ... imum-wage/

But this is the floor... And if the floor is raised there is pressure for all wage levels to increase,...
In the past, in the US, it was the pressures from Unionization that saw workers wages grow. And,the middle class grow substantially. (Yes, mostly due to the effects of unionization driving up the value of labor)
With unions losing ground today and globalization, the value of labor has decreased.
Without some other influences, like a higher minimum wage pegged to inflation the floor sinks - in relative terms - every year. And as the floor sinks the value of everyone's labor decreases.
So, although there are significant arguments to be made about eliminating social assistance expenses by insisting that a 40 hour week be compensated enough to let working people avoid the use of social assistance - there is also the significant contribution to be made to the middle class . Increase the value of labor generally and the shift in wealth that currently is concentrated in the top 1% shifts slightly.
And that's a good thing for almost everyone.

Just prior to President Obama's 2014 State of the Union Address, media[3] reported that the top wealthiest 1% possess 40% of the nation’s wealth; the bottom 80% own 7%. The gap between the top 10% and the middle class is over 1,000%; that increases another 1000% for the top 1%. The average employee "needs to work more than a month to earn what the CEO earns in one hour."[4] Although different from income inequality, the two are related. In Inequality for All—a 2013 documentary with Robert Reich in which he argued that income inequality is the defining issue for the United States—Reich states that 95% of economic gains went to the top 1% net worth (HNWI) since 2009 when the recovery allegedly started.[5]

http://en.wikipedia.org/wiki/Wealth_ine ... ted_States

Ricky, I would thought have thought that those who are making a bit more than the minimum wage would see their wages go up but the CEPR analysis I cited above finds differently. It found that one of the reasons unemployment does not go up is due to a reduction in the wages of higher earners. So raising the minimum wage does not have a positive ripple effect-- the opposite occurs. For workers above the minimum wage, increased bargaining power is the solution. The minimum wage is not a cure-all.

freeman3

The minimum wage is not a cure-all.

Other than the Power of Love, what is?

freeman3 wrote:For workers above the minimum wage, increased bargaining power is the solution. The minimum wage is not a cure-all.

So who is saying that it is? It's part of a solution, along with other measures, and you can look at ways to mitigate the potential negative effects if you try.

But on the other hand, how do you make it so that work pays, providing an incentive, and how do you avoid a race to the bottom (which against China the west will lose)

Dan,

The only thing I was responding to was Ricky's point that by raising the minimum wage it would help other non-minimum wage workers. And that may not be true. I have been a consistent supporter of raising the minimum wage substantially in these forums. Low-income and middle-income workers in the U.S. are getting a declining share of the economic pie for two reason (I believe): (1) Unequal bargaining power vis-a-vis corporations that are essentially oligopolies or monopolies in a particular industry, and (2) globalization creating a massive labor supply so that companies can either move their plants to low-wage countries or they can leverage that threat.

You appear to be focused on workers making enough so that work is encouraged. I am more focused, I guess, on workers getting the money they would be getting if they were bargaining on an equal basis with employers. I don't think those goals are mutually exclusive and I might have to reevaluate my priorities if it turned out even after workers were able to bargain on an equal basis they still made too little. But I would prefer the government ensure workers get what they should be getting if markets were not getting distorted if possible instead of the government saying to the poor, well, you're not really good enough to make it on your own, here's some extra dough to get by.

freeman3

You appear to be focused on workers making enough so that work is encouraged. I am more focused, I guess, on workers getting the money they would be getting if they were bargaining on an equal basis with employers. I don't think those goals are mutually exclusive and I might have to reevaluate my priorities if it turned out even after workers were able to bargain on an equal basis they still made too little. But I would prefer the government ensure workers get what they should be getting if markets were not getting distorted if possible instead of the government saying to the poor, well, you're not really good enough to make it on your own, here's some extra dough to get by

The minimum wage is a rather broad and blunt tool in achieiving a reduction in social spending that has to alleviate some of the miseries of the working poor because their labor is undervalued.
And no its not going to create an enormous day and night change. But the fact that one cannot reach perfection by raising the minimum wage shouldn't rule out its use... If nothing else, it would . as you say, decrease social spending through remarkably inefficient programs like Food Stamps...
As you point out, there has to be a significant change in the balance between labor and employer if there is going to be a more significant improvement. Organized labor doesn't get the credit for the changes that ocurred to middle class and working class wages from the 1890s on...
But the problem is that the labor management relationship was born in an adversarial manner and has over time has remained largely an adversarial relationship, rather than a partnership.

Partnership as exemplified in German or Dutch tripartite systems of labour relations are great. Or at least better than constant antagonism.

Partnership as I have seen it operate between a union and management lasts only as long as the company wants it to. When it no longer serves their purpose (and when they feel the union is suitably supine) they can end it just like that

Ricky:

Organized labor doesn't get the credit for the changes that ocurred to middle class and working class wages from the 1890s on...

typo?

no typo. 1890s...
Income iand wealth inequality had increased to its highest level and social mobility had decreased as the system of craft labor was displanted by mechanization and mass production. Collective bargaining had been illegal in the US.
But from the 1890s massive gains were made by unions

Nationwide from 1890 to 1914 the unionized wages in manufacturing rose from $17.63 a week to $21.37, and the average work week fell from 54.4 to 48.8 hours a week. The pay for all factory workers was $11.94 and $15.84 because unions reached only the more skilled factory workers.[34]

http://en.wikipedia.org/wiki/Labor_hist ... ted_States

It wasn't government intervention (except in the writing of more favorable labor laws and legalizing collective bargaining) nor the magic if the markets that built the US middle class. It was the increased value of labor brought about by unions.
(Non-union employees benefited from the union effect as nonunion companies had to compete for labor...)

Ray Jay wrote:Ricky:

Organized labor doesn't get the credit for the changes that ocurred to middle class and working class wages from the 1890s on...

typo?

You are missing the point. Unions get the credit for those improvements.

geo

You are missing the point. Unions get the credit for those improvements

Maybe I should have said, "get the credit universally"...
There's a myth amongst conservatives in the US that unions are job killers and have done nothing for the American economy. if the history of the contributions unions made to build the middle class were universally acknowledged there wouldn't be the decidely anti - union bias that is often reflected in the media and conservative politicking...
If there's one bogey man usually trotted out its Unions. Especially teachers unions and major labor. (But seldom fire Fighters associations or police associations) .

http://www.debate.org/opinions/are-unio ... he-economy

Here's an example of some of the negative on a reasonably level headed platform.

geojanes wrote:

Ray Jay wrote:Ricky:

Organized labor doesn't get the credit for the changes that ocurred to middle class and working class wages from the 1890s on...

typo?

You are missing the point. Unions get the credit for those improvements.

I was missing the point. (I thought he meant 1980 and not 1890.) Now I get the point, but don't agree with it.

There is a great ideological divide here. I believe that the vast majority of what we have is attributable to human ingenuity harnessed by the greatest political-economic dynamics in the history of human civilization: liberal democracy and capitalism. We have the best of all previously experienced worlds: a system that retains both freedom and order. It's a system that harnesses human creativity for amazing material and spiritual results for the individual. And we do have a large safety net for those who are less fortunate. We have abundant food and material wealth. We have exploding technology in every conceivable way, especially as compared to the 1890's. What we have is in spite of unions and in spite of often over-intrusive and frequently unhelpful government.

The glass is 4/5ths filled. My friends Ricky, Danivon, and Freeman will object and suggest ways to help the 1/5th for the rest of their lives, even if their proposals jeopardize the 4/5ths (and tend not to help the 1/5th anyway) based on the evidence of the last many years.They have great empathy for those less fortunate, but it is also their nature to see the glass as half-filled or even dry. The net will never be large enough to accommodate their sympathies.

P.S. Yes, there were many improvements from 1890 through about 1950.

Geo, I guess Ray makes my point about Unions not getting credit?

ray

There is a great ideological divide here. I believe that the vast majority of what we have is attributable to human ingenuity harnessed by the greatest political-economic dynamics in the history of human civilization: liberal democracy and capitalism

well, there's ideology and then there's historical evidence.
The USA in the gilded age was a capitalistic free market with few regulations. Economic conditions were actually causing the previously middle class artisans to see a reduction in their social mobility and their standard of living because their labor had less value in a market dominated by mass production then previously. Until they were allowed to form unions and bargain collectively ...

For instance, in Boston in 1790, the vast majority of the 1,300 artisans in the city described themselves as “master workman”. By 1815, journeymen workers without independent means of production had displaced these “masters” as the majority. By that time journeymen also outnumbered masters in New York and Philadelphia.[5] This shift occurred as a result of large-scale transatlantic and rural-urban migration. Migration into the coastal cities created a larger population of potential laborers, which in turn allowed controllers of capital to invest in labor-intensive enterprises on a larger scale. Craft workers found that these changes launched them into competition with each other to a degree that they had not experienced previously, which limited their opportunities and created substantial risks of downward mobility that had not existed prior to that time.[4]

Until this collective bargaining the capitalism you espouse as wholly beneficial was benefitting only the small percentage of people at the top of the pyramid. Wealth was even more concentrated in the Gilded Age than it is now.
Capitalism by itself doesn't produce a middle class. It must be fettered by a liberal democratic government that ensures that everyone can benefit from the economic system, not just some. And its liberal democracy that brought this about ...when ordinary people had the ability to express their needs at the ballot box and project their democratic power.
Democratic power, in the Gilded Age, brought about changes that allowed the creation of Unions that won a fair wage and created the substantial middle class that unfettered capitalism was destroying as mass production moved the economy forward.

And thats historical record. But it is comparable to today.
Today, the US has the greatest wealth and income inequality since the 1890s. Much of this was brought about by the deregulation of the financial markets, but the erosion of strong unions by globalization and legislative pressures hasn't helped.
without government intervention the middle class gets pounded and shrinks. And a small part of that government intervention is a minimum wage that is actually livable.

"in spite of unions"?

I literally do not know where to start. Do you hate weekends, working days less than 12 hours, safety rules for working, maternity leave, protection from arbitrary sackings, the end of 'company towns', etc?

Liberal democracy and Capitalism is what the US had for all of its history. It didn't even srop slavery without a bloody war. You are right that it is an ideological divide, RJ, but I seeit as a divide beyween those who hae a free market ideology against the facts on the ground.

I do not have a "1/5 glass full" view (whatever that actually means". I get capitalism - having seen it 'working' all my life and for many years before. The market is not majickal, it is simpy an expressipn of aggregate views, and the real issue is that capital tells, nothing else. So morality has.nothing to do with it, ans neither does majority opinion. It comes down to price. When everything becomes commodified, price becomes superior to value.

You appear to think I believe there is a simple cure for poverty. I do not. But there is a price to pay for it, ay some point.

Also, it is not the 4/5 who profit most (and so who should be bearing the true costs), but the 1% (or whatever proportion the super-rich are). They love it when the middle class blame the poor or measures to mitigate poverty, because such false-conciousness diverts attention from what is really going on.