Darlene Sybert wrote:
>
> On Mon, 3 Jun 1996, Nicholas Dronen wrote:
> >
> > There is a tragic lack of knowledge of hard economic issues on this
> > list. For > example, minimum wage laws *do* *lower* employment
> > rates. Talk to any economist (a > person who has *studied* the issue)
> > and s/he will tell you that when a government forces> firms to pay no
> > less than $x/hr. to its employees, there is less money available to hire
> > more people.
>
> Put this way, raising the minimum wage doesn't sound like a
> problem because who is asking anyone to hire MORE people?
Firms in some areas of the country are having trouble filling
positions. They attempt to hire more people when their business "grows."
> The questionable assertion for me is that employers will have
> to dismiss some employees to be able to pay the minimum wage.
I was not clear with this. In the extreme case, in current
dollar terms, of a minimum wage of $100/hr, not many employers (corporate
and privately owned) would be able to afford to retain the people they now
employ. In the mild case of an increase in the minimium wage to $5.25/hr.
(I believe that is what was passed in at least *one* house of Congress)
most employers would be able to keep their current employees on the
payroll, but some will not be able to hire new employees as quickly as
they otherwise would have been.
I equivocated the extreme case with the mild case. However, it
has been borne out by experience that, macroeconomically, minimum wage
mandates do prevent *full* employment.
> This suggests that employers have more people on their payrolls
> now than they need to get the job done, which doesn't seem
> likely. So, if you follow that reasoning to its logical
> conclusion, firing some employees would just mean paying overtime
> at the higher wages or not getting the job done for the stock
> holders.
For purposes of illustration, take the extreme case again. If the
government mandated a $100/hr. minimum wage, many people would be unemployed
and demand for many goods and services would decline. Firms would be both
less able to employ and less in need of employing. Many firms would also
be in less need of existing.
> Hey, this is America, so we know that what will
> happen when the minimum wage is raised is the same thing that
> happens when the price of sugar goes up: candy bars will get
> smaller or cost more.
>
> But the rationale for raising the minimum wage is that no one
> can live on the current one; if raising the minimum wage raises
> prices, also, then it isn't a solution to the problem, is it?
It's not a perfect solution.
> So what is? Any possibility of stock-holders, etc. being satisfied
> with smaller dividends or CEO's,etc, with lower wages? How about
> more taxes for those with incomes over $100,000 a year and no
> taxes for those with incomes under $15,000? (I didn't think so!)
I don't know much about the tax code in the U.S. or anywhere else,
but what you propose is acceptable prima facie. I have to add though that
pure redistribution, where the state only spends what it takes to administer
redistribution, seems more desirable than government programs. That would
keep income distribution more equitable while allowing individuals to
spend and save as they determine is appropriate to their circumstances.
Nicholas
>
> On Mon, 3 Jun 1996, Nicholas Dronen wrote:
> >
> > There is a tragic lack of knowledge of hard economic issues on this
> > list. For > example, minimum wage laws *do* *lower* employment
> > rates. Talk to any economist (a > person who has *studied* the issue)
> > and s/he will tell you that when a government forces> firms to pay no
> > less than $x/hr. to its employees, there is less money available to hire
> > more people.
>
> Put this way, raising the minimum wage doesn't sound like a
> problem because who is asking anyone to hire MORE people?
Firms in some areas of the country are having trouble filling
positions. They attempt to hire more people when their business "grows."
> The questionable assertion for me is that employers will have
> to dismiss some employees to be able to pay the minimum wage.
I was not clear with this. In the extreme case, in current
dollar terms, of a minimum wage of $100/hr, not many employers (corporate
and privately owned) would be able to afford to retain the people they now
employ. In the mild case of an increase in the minimium wage to $5.25/hr.
(I believe that is what was passed in at least *one* house of Congress)
most employers would be able to keep their current employees on the
payroll, but some will not be able to hire new employees as quickly as
they otherwise would have been.
I equivocated the extreme case with the mild case. However, it
has been borne out by experience that, macroeconomically, minimum wage
mandates do prevent *full* employment.
> This suggests that employers have more people on their payrolls
> now than they need to get the job done, which doesn't seem
> likely. So, if you follow that reasoning to its logical
> conclusion, firing some employees would just mean paying overtime
> at the higher wages or not getting the job done for the stock
> holders.
For purposes of illustration, take the extreme case again. If the
government mandated a $100/hr. minimum wage, many people would be unemployed
and demand for many goods and services would decline. Firms would be both
less able to employ and less in need of employing. Many firms would also
be in less need of existing.
> Hey, this is America, so we know that what will
> happen when the minimum wage is raised is the same thing that
> happens when the price of sugar goes up: candy bars will get
> smaller or cost more.
>
> But the rationale for raising the minimum wage is that no one
> can live on the current one; if raising the minimum wage raises
> prices, also, then it isn't a solution to the problem, is it?
It's not a perfect solution.
> So what is? Any possibility of stock-holders, etc. being satisfied
> with smaller dividends or CEO's,etc, with lower wages? How about
> more taxes for those with incomes over $100,000 a year and no
> taxes for those with incomes under $15,000? (I didn't think so!)
I don't know much about the tax code in the U.S. or anywhere else,
but what you propose is acceptable prima facie. I have to add though that
pure redistribution, where the state only spends what it takes to administer
redistribution, seems more desirable than government programs. That would
keep income distribution more equitable while allowing individuals to
spend and save as they determine is appropriate to their circumstances.
Nicholas