If I agreed with your premise (which I don't without data supporting your position), it would garner my support.

brad

And yet, RickyP, you think the only bookend of your equation that can move is minimum wage. To make a "significant" difference, could you not also reduce benefits?

Sure.
But is the lavish package of benefits in most US jurisdictions really keeping people in such style that it is incredibly attractive ? The wikipedia link showed an annual income for someone on minimum wage is $15,000... Whats the package of welfare or unemployment benefits worth?

In a nation like Sweden, benefits are enormous. And yet there isn't a problem of long term unemployed dodging work... Are Americans so fundamentally less ambitious or interested in work as your average Swede that they would acccept long term bare subsistence over honest work paying a meaningful wage? I think not.
Besides, if the goal is to make the nation more prosperous it should be antiethical to provide very little to the unfortunates requiring public assistance to live...

Point being that the US seems to be maintaining a permanent under class. The cost of medical care, and education are sky rocketing .... and its education that really drives social mobility. A minimum wage job, entry level someone called it (entry to what?) can fund subsistence. Or if a student living at home part of a secondary education. If there are no medical benefits to working, and no universal coverage medical problems become a source of great insecurity and limits social mobility...

The lesson most people remember from Henry Ford is that he over paid his assembly line workers at the time. And yet the company prospered...
It isn't how much you pay the average worker. Its how productive they are...
The more productive the average person, the more prosperous the nation becomes...
As I demonstrated before, the nations considered more prosperous than the US all have a minimum pay scale greater than the US.... and all (or most) also provide universal health care out of taxes.
If that scenario can exist why can't US businesses afford a slightly higher minimum wage?

To be fair, it's a combination of benefits and low wages. Benefits are designed to be at a level on which a family on them can live, and if work pays a similar amount, or not much more, they combine to disincentivize work.

The problem is that benefits are not all that generous (and frankly, you federal minimum wage is quite low), so cutting them might create a greater incentive but penalise loads of people.

Well, I think there is strong evidence that a decline of manufacturing jobs in the inner city after the 1960s led to reduced employment for African-American males. See http://www.huduser.org/periodicals/city ... ticle3.pdf
Here is an article discussing how In 1950 black women had high marriage rates which has declined substantially since then. http://www.irp.wisc.edu/publications/fo ... foc121e.pd
So what happened is that African- american males were not able to get jobs (or jobs that paid enough to support a family) and then African-American women turned to welfare to support their children.
Based on that, it would appear that raising the minimum wage wouuld promote marriage

Here's an interesting website

http://en.wikipedia.org/wiki/List_of_mi ... by_country

It shows that the US is fairly close to other western countres. Lower than some (Neterlands, UK) but very close to others (Canada, Switzerland).

I think this comes down to whether you trust the market's invisible hand or the government's inherent goodness and intelligence. For reasons that no doubt reflect my own peculiarities, I keep thinking about China's Great Leap Forward so my bias is very clear.

I keep thinking about the end of slavery , child labor laws, social security, the 5 day work week, family leave laws, etc...did the market do that? Free markets allow for prosperity; however, markets are amoral and real progress in basic workers' rights has come from governments and unions putting limitations on the right of businesses to exploit workers to maximize profits. After a somewhat brief period from the 1930s to the 1960s where workers, through unions and a government that was generally speaking work friendly, were able to get a reasonable return on the labor they provided, we have now gone backward and labor is a cost to be avoided so as to maximize profits.

ray

It shows that the US is fairly close to other western countres. Lower than some (Neterlands, UK) but very close to others (Canada, Switzerland).

Besides having higher minimum wages, everyone of the countries ahead of the US also provides universal health care through taxation, and most provide less expensive or even free secondary education. As well, they all have things like 18 weeks of paid maternity leave through government programs like employment insurance.
Almost all are listed ahead of the US on the ranking of prosperity. Thats not a coincidence... (The ranking I linked to earlier with this same link of minimum wages..)
The invisible hand of the market, left to its own devices, would always want an underclass of cheap labour. Recent history has shown that when it can't find it close to home, they will seek that cheap labour force abroad. (Or in the case of some US industries take advantage of illegal immigration to employ a work force willing to work for less.....)
How did that work out for the US? Most of the manufacturing jobs were replaced by lower paying jobs in the service and retail industries. Contributing to a shrinking middle class and the percentage of wealth controlled by the working class and middle class.
The invisible hand of the market, isn't invisible in the labour market. Its very visible and very predictable. Owners always want to pay their labour as little as they can and still not have them quit. The perversity of this, is that when the working class is able to have the security of health care, and a living wage, the entire society benefits and becomes more prosperous. But that's not something the invisible hand of the markets can accomplish, because market forces are reactionary only.

Ray Jay wrote:I think this comes down to whether you trust the market's invisible hand or the government's inherent goodness and intelligence.

What if you trust neither? The 'invisible hand' is not good or intelligent either, it's just a process, like evolution. And it relies on humans acting to work. Just as government isn't inherently good/band intelligent/stupid, but relies on people acting.

For reasons that no doubt reflect my own peculiarities, I keep thinking about China's Great Leap Forward so my bias is very clear.

Yes, a rise in minimum wages is *just like Maoist China*

danivon wrote:

Ray Jay wrote:I think this comes down to whether you trust the market's invisible hand or the government's inherent goodness and intelligence.

What if you trust neither? The 'invisible hand' is not good or intelligent either, it's just a process, like evolution. And it relies on humans acting to work. Just as government isn't inherently good/band intelligent/stupid, but relies on people acting.

For reasons that no doubt reflect my own peculiarities, I keep thinking about China's Great Leap Forward so my bias is very clear.

Yes, a rise in minimum wages is *just like Maoist China*

Re the 1st paragraph, you are right they are both processes. My experience is to trust the invisible hand of the market. Your experience is to trust the government's involvement. My experience is that the unintended consequences of government involvement in this particular issue are way more detrimental as a result of human limitations and the magnification thereof as a result of the political process. Freeman is cool with marginal factories closing down as a result. The employees and owners may feel differently. Their economic involvement also has multiiplier effects. That marginal factory may have transformative potential just like one of those bankrupt solar companies that many of you praise.

Re the 2nd paragraph, I was just joking (although it is an example of political wisdom vs. market wisdom). Your comment in another thread about the type of pavement used for the road to Hell is more apropos.

Here's another question for the mix. Why does this need to be a federal as opposed to a state decision? Do the good people of Texas need the good people of California telling them what to force on their own businesses?

Minimum wage is a rather blunt instrument for poverty alleviation. Seems to me, a more effective way to raise incomes of the working poor without the supply side cost effects is to increase the Earned Income Tax Credit. Another alternative might be to lower FICA withholdings at the bottom end. I'm not against a minimum wage - it does have some benefit in preventing the exploitation of labor (below market wages) where such conditions are possible.

They made twinkies. I'm not sure that some good doesn't come out of shutting down the Twinkies factory.

Your morality has no place in my selection of what I deep fry.

RJ, yes some marginal businesses might close or some workers be let go or maybe their increased labor costs will be off-set by increased demand for their products due to increased consumer demand.Or maybe other businesses will add employees and grow to make up for the loss of those businesses. The important question is the net effect and i am not convinced it will be negative.

What about the fact that wages are not keeping up with productivity gains? Should the government not do anything about that? Here is an interesting article on that and some negative consequences.
http://www.brookings.edu/~/media/resear ... istral.pdf

(ah,darn, so inconvenient to have an economist on-site--I thought I could just blather on!)

Should the government not do anything about that?

Yes, it should not do anything about that. When the government shows competence in the other jobs that it does, we can then look at expanding its responsibilities.

Well said RJ

regarding the invisible hand... Greenspan once said that he believed in the rationality of the markets.... he changed his mind after the crash of 08.

I can't remember who said it but "The markets can remain irrational longer than you can remain liquid".

Left to their own devices business like BP take short cuts on safety killing 11 and causing enormous ecologiacal and economic damage. Companies like Massey energy take short cuts and thier mines have accidents killing dozens.
There is a balance that can be achieved between govenernment involvement inregulation of business operation and business finding its own efficiencies. Over time, business have come to accept, only through govenrment regulation that slavery, child labour and many other noxious practices, once deemed vital to the economic health of industries involved could be eliminated and the industries continue to thrive...
In other nations Ray, with healthy economies, and soceities more prosperous than the US - .the minimum paid to workers in benefits and pay is far greater than the US. Why can't the US afford the same minimums? Whats exceptional in the US that demands that their citizens can't enjoy the same minimum standard of living as elsewhere.?

ray

Do the good people of Texas need the good people of California telling them what to force on their own businesses?

Its happened before that certain states had to have their peculiar laws changed to accept standards in areas of employment and civil rights. If they need to be drug kicking at screaming out of the dark ages due to ignorance,and prejudice or the desire of an elite to maintain a dominant political and economic position then thats what needs to happen. The Confederacy was not tolerated in 1861, the vestiges of its racial policy were finally eliminated in 1961... and its exploitive attitude towards labor should not be tolerated in an adhoc fashion in 2012.

Ray Jay wrote:Re the 1st paragraph, you are right they are both processes. My experience is to trust the invisible hand of the market. Your experience is to trust the government's involvement. My experience is that the unintended consequences of government involvement in this particular issue are way more detrimental as a result of human limitations and the magnification thereof as a result of the political process.

Hold your horses there cowboy...

You have much experience, directly, of the increasing of the minimum wage? I've been watching it happen here over the past 15 years. And not long before then, I was working at minimum wage rates (for the particular industry I was in) and remember when they went up it didn't result in job losses and businesses closing.

Freeman is cool with marginal factories closing down as a result. The employees and owners may feel differently. Their economic involvement also has multiiplier effects. That marginal factory may have transformative potential just like one of those bankrupt solar companies that many of you praise.

But the 'invisible hand' does the same thing, doesn't it? It results in factories closing and there are detrimental effects to the employees, owners and the wider economy.

I think freeman and ricky have both gone too far in how they express the sentiment. However, I don't have a lot of sympathy for companies that are clearly reliant on keeping wages below living standards. Especially if (to bring it back to your thing about government), they are also partly able to do so because the state is picking up some of the tab.

Re the 2nd paragraph, I was just joking (although it is an example of political wisdom vs. market wisdom). Your comment in another thread about the type of pavement used for the road to Hell is more apropos.

Oh, yes, I get it. And that's why it was interesting in the UK to see how the dire prognostications of the impact of a minimum wage and all the unintended consequences that would arise from increasing it faster than inflation or median wage worked out to be unfounded.

Still, I'd like to see these studies you could show us.

Here's another question for the mix. Why does this need to be a federal as opposed to a state decision? Do the good people of Texas need the good people of California telling them what to force on their own businesses?

Does it need to be Federal? Not necessarily. Of course the effect of having different state minimum wages requirements could cause various issues, such as keeping some states behind - and I can imagine that those states would be the ones with higher federal subsidies too. Mind you, I'm not sure why this really is such a big deal for you folks. Your question may as well be "Do the good people of Houston need the good people of Austin telling them what to force on their own businesses?".