From what I understand, a full-time job that pays $12 a hour would lift a family of four out of poverty. Here is a study of what would happen if Wal-mart paid its workers $12 an hour. http://www.ilsr.org/walmart-could-easily-pay-12-hour/
Here is another article that discusses the causes of poverty and possible solutions. http://www.nytimes.com/2012/07/29/opini ... wanted=all
Here is a story in the food stamp program and the fact that many people who get food stamps work. http://mediamatters.org/mobile/research ... ncy/190375

I realize the risks of businesses cutting jobs (one way to deal w that problem is to phase the minimum wage in gradually), but the economics is not that simple because a lot of the increased wages would be funneled back into the economy. It also would be a great way to reward work.
I would argue that a worker putting in full-time hours should be able to support a family--clearly the current minimum wage does not do that. One way or another we have to make sure everyone has a minimal standard of living and better to do that through rewarding work rather than providing government benefits

Wouldn't you also have to take into consideration of what the increased wealth would do to prices as well? I will be the first to say that my grasp on larger economics is very small. However, it is my understanding that part of the concept of supply and demand is that as demand raise prices rise as well.

If this is true, then for how long would that $12 an hr be effective in keeping people out of poverty? Wouldn't a possible unintended side effect of your plan be to actually put more people in poverty if the resultant price increase wasn't followed by an across the board salary increase for everybody?

Like I said, I have a very general grasp on economics so perhaps I am incorrect in my understanding.

You're right, archduke, that increases in prices due to higher labor costs is something that has to be factored in. There is some discussion of this in the Wal-mart study I initially forgot to link. But I think there are several reasons to think workers' standard of living would be better: (1) some employers will elect to not pass on higher labor costs to customers by raising prices , (2) the biggest expense people have is rent or a mortgage and that is not likely to go up (is it hard to see how housing prices or costs of rentals would be that sensitive to changes in wages paid for low skilled workers), (3) some things purchased by minimum wage workers would be produced by high wage workers and thus the cost of those items would not necessarily go up (though there may be a bumping up of wages for workers who already make the minimum wage, sort of a domino effect). I suspect the biggest concern would be that workers could not be retained either because their employer's profit margin is too thin to sustain the increased labor costs or that the employer could go elsewhere for low-wage workers. That may happen to a certain extent but I believe it is better to mandate that an employer pay a living wage rather than have the government have to provide food stamps to workers because they cannot afford both food and shelter.

Question. Do you have many welfare or benefits that come from government (federal or otherwise) to people who are in work but on low pay? I see Food Stamps have been mentioned.

Tax credits would count as well, I reckon.

If so, an increase in the minimum wage could mean a decrease in government payouts, and less of an inflationary impact. The experience in the UK of first introducing a minimum wage, and the increasing at a faster rate than inflation and median wages for a while, was that unemployment was not increased and inflation remained low.

If the minimum wage is such that people are getting assistance from the state, then isn't that actually the taxpayer subsidising low pay (and thus company margins)?

I feel for those people who can only earn a minimum wage job at the moment. This may be a gateway for them to learn about the working world and eventually have more success. Many very successful people started out with minimum wage jobs.

Plans to raise the minimum wage will result in fewer entry level jobs and fewer opportunities for success for these people.

Good points, Danivon. Your points bring the next question, however. If food stamps and tax subsidies are beneficial to helping people be self-sufficient (assumed from freeman2's premise concerning 12 dollars per hour lifting a family out of poverty), why is the food stamp program increasing, and LBJ's war on poverty programs not short-lived? There are some successful stories of families coming out of poverty while on food stamps (I am one of them), but there are many more long-term poverty NOT being cured from assistance.

In my case it was not the food stamps that got us out of poverty, but it was the fact that my mom re-married. This would have data backing up my personal story at familyfacts.org

http://www.familyfacts.org/charts/325/single-mother-families-make-up-half-of-all-households-in-poverty

I am not mandating marriage, so don't go there. I am making the point that it is not the assistance that makes people get out out of poverty. It is changing their circumstances, by and large.

Ray Jay wrote:Plans to raise the minimum wage will result in fewer entry level jobs and fewer opportunities for success for these people.

Do you have evidence to back this up, or just theory? As I've said, it does not seem to have had that effect elsewhere.

Why, perhaps? Increasing the minimum wage directly affects people with the lowest disposable income. This means they have more to spend, and are also less likely to save it (perhaps they should if they could, but that's a different argument). This means more money around for goods and services. Which prompts pearl-clutching about inflation, but can also have a different effect - that the increased demand doesn't lead to price increases because supply increases to match. How does that supply increase? In part through greater employment and that includes minimum wage entry-level jobs.

Brad, you anecdote does have some relevance, but perhaps not in the way you think. It's not welfare that beats poverty (my opinion is that it should alleviate it, but it cannot ever eliminate it). But perhaps one way to lift people out of poverty would be to have work pay a decent living wage. That would provide a great incentive to get out of poverty. If the minimum wage is so low that it's no better than no work at all, and it it is so low that it is augmented by benefits that mean an increased wage results in a high marginal 'clawback' of them, then what incentive is there to find a job?

We have so much 'structural' unemployment, and that depresses wages, while those low wages also contribute to unemployment itself.

You can qualify for Medicaid (like Medicare except covers low-income people) and you can receive food stamps. See article on how federal government indirectly subsidizes Wal-Mart. http://m.dailykos.com/story/2012/10/10/ ... safety-net

The food program exploded under Bush II, apparently because of elligibility changes. http://econopolitics.com/2012/06/08/geo ... president/. Why would Bush II do that? It allows companies like Wal-mart to pay its employees peanuts, not provide insurance, and reduces demands that companies pay their workers better and provide health insurance. Great for corporations, not so great for tax-payers who ate subsidizing these corporations

RJ, Every time there is a minimum wage law proposed businesses say they will have to cut jobs--proof of said effect is generally lacking, however. I suspect a lot of jobs cannot be moved and marginal businesses that are affected may be better closing anyway if they can't afford a small increase in labor costs. Also, the fact that low-wage workers who get higher wages probably will spend will have a positive effect on consumer demand. It's just not that simple to say that there will be a large net loss of jobs.

(cross-posted with Danivon's excellent post)

Danivon:

Ray Jay wrote:

Plans to raise the minimum wage will result in fewer entry level jobs and fewer opportunities for success for these people.

Do you have evidence to back this up, or just theory? As I've said, it does not seem to have had that effect elsewhere

There's a tremendous amount of research on this, some of it dating back to the 1930's. We can all find articles that support our position.

Freeman:

however. I suspect a lot of jobs cannot be moved and marginal businesses that are affected may be better closing anyway if they can't afford a small increase in labor costs.

I like you but you scare me.

freeman2 wrote:You can qualify for Medicaid (like Medicare except covers low-income people) and you can receive food stamps. See article on how federal government indirectly subsidizes Wal-Mart. http://m.dailykos.com/story/2012/10/10/ ... safety-net

The food program exploded under Bush II, apparently because of elligibility changes. http://econopolitics.com/2012/06/08/geo ... president/. Why would Bush II do that? It allows companies like Wal-mart to pay its employees peanuts, not provide insurance, and reduces demands that companies pay their workers better and provide health insurance. Great for corporations, not so great for tax-payers who ate subsidizing these corporations

Do you suppose that Democrats might find a reason over time to raise the income levels at which one becomes eligible for food stamps and other assistance?

After all, costs will rise. No matter what anyone thinks, if you tell an employer his labor costs are going up x%, he doesn't just eat the cost. He raises prices.

The more government attempts to engineer this, the worse things will get.

Look at the current attempts to deal with Obamacare. I read of restaurant chains scaling back hours, businesses laying people off and cutting benefits. Why? Because Obamacare increases their costs and they will not absorb them.

I know a man who owns a small business. His employees (all union) cheered when Obama won. He told them he's cutting all their hours and eliminating benefits. Suddenly, they're not quite so thrilled.

Business owners are not non-profit. Democrats seem to lose track of that in their zeal to extend "fairness."

Ray Jay wrote:Freeman:

however. I suspect a lot of jobs cannot be moved and marginal businesses that are affected may be better closing anyway if they can't afford a small increase in labor costs.

I like you but you scare me.

Look at Hostess. 18,000 workers are going to lose their jobs. Again, I know a man who is going to lose his and has talked to me about this for months. The union would not bend. The ownership said it could not afford to concede to the union. The union went on strike. The company is shutting down.

In a down economy, the concept of anyone being better off if any business that produces anything shuts down is indeed frightening.

fate

In a down economy, the concept of anyone being better off if any business that produces anything shuts down is indeed frightening.

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

If you want to eliminate as many from the welfare rolls as possible, the alternative, working, should be significantly different to staying on welfare.
If the minimum wage, with part time hours (in order to make sure employees don't qualify for health care benefits) is only marginally better than welfare.....(with medicaid) why work?

The most prosperous countries in the world all have minimum wages that are much larger than the US. Are they prosperous in small part because of healthy minimum wages or despite the minimum wage? Doesn't matter, because it points to the fallacy that a decent minimum wage is unsupportable by prosperous thriving economies. If 11 nations are considered more prosperous than the US and have minimum wages that offer a living, not working poverty, why can't the largest economy in the world?
http://www.prosperity.com/
http://en.wikipedia.org/wiki/List_of_mi ... by_country

A minimum wage will create some small adjustments in the short term and produce large long term benefit. So would universal health care paid through taxation....

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?

Or,... You could continue to increase benefits and gripe that there is not incentive to work. Perhaps the US should pay EVERYONE a 100K package of benefits, and then there would be even greater need for the minimum wage to be higher to have a "significant difference"

I do mean to be flippant on this issue. To raise minimum wages causes increases of product costs, and that sounds self defeating.

Who made you "Jello Sheriff of the World" to decide which business is good and which is deserving of going out of business?

Actually, brad, I agree that single mother households are correlated with poverty. However, why are there single mother households? A major factor has to be, in poor neighborhoods, that men cannot make enough to support a family. I suspect when your mom remarried it was to someone making more than the minimum wage. Raising the minimum wage would promote marriage, as young men in poor neighborhoods could afford to get married. Right-wingers focus on welfare as causing single mothers to go on welfare, but the real problem was a lack of jobs that paid enough to support a family

So I can count on your support for raising the minimum wage since it would promote marriage, right Brad!