New Minimum Wage Proposal (1 Viewer)

Obama's minimum wage proposal:

  • Good idea

    Votes: 38 50.0%
  • Bad idea

    Votes: 37 48.7%
  • Other (explain)

    Votes: 1 1.3%

  • Total voters
    76

mister pc

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Raising the minimum wage: Trickle-up economics | The Economist

America’s minimum wage has long been low by international standards, equalling just 38% of the median wage in 2011, close to the lowest in the OECD (see chart). Congress changes it only occasionally, and in the interim inflation eats away its value. The wage was last raised, to $7.25 per hour, in 2009. Since then its real value has slipped back to where it was in 1998. Twenty states now have minimum wages above the federal rate, compared to 15 in 2010, according to the Economic Policy Institute, a liberal research group.

Mr Obama’s proposal would boost the nominal wage to $9 per hour by 2015, restoring it, in real terms, to its 1979 level, though relative to median wages it would still be lower than in many other rich countries. Thereafter, it would be indexed to inflation. He would also raise the minimum wage for workers who receive tips for the first time in over 20 years.
Obama has proposed raising the minimum wage and tying it to inflation so that the real value stays fixed, rather than constantly diminishing with inflation. What does SR think about this proposal, Yea or Nay?
 

MLU

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I have never liked raising the minimum wage. I know it means well, but the cost of living just increases well in advance of any wage increases offsetting a lot of the individual gains. Not many people are hired at minimum wage that I'm aware of anymore and if they are, they don't stay there very long. Merit-based pay increases are not as widely used anymore; It's an automatic bump now for most businesses.

I like the idea, but I'm skeptical of it being successful...
 
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mister pc

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I have never liked raising the minimum wage. I know it means well, but the cost of living just increases well in advance of any wage increases offsetting a lot of the individual gains. Not many people are hired at minimum wage that I'm aware of anymore and if they are, they don't stay there very long. Merit-based pay increases are not as widely used anymore; It's an automatic bump now for most businesses.

I like the idea, but I'm skeptical of it being successful...
Wouldn't pegging minimum wage to inflation go a long way towards keeping wages up to speed with cost of living increase?
 

Cosmic201

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I have never liked raising the minimum wage. I know it means well, but the cost of living just increases well in advance of any wage increases offsetting a lot of the individual gains. Not many people are hired at minimum wage that I'm aware of anymore and if they are, they don't stay there very long. Merit-based pay increases are not as widely used anymore; It's an automatic bump now for most businesses.

I like the idea, but I'm skeptical of it being successful...


I just don't get the cost of living will go up argument.


For that too work we would have to assume that the majority of products and services are priced around the average person making minimum wage to the point that adjusting that wage will adjust the price for the majority of products and services.

But that is simply not true. It is extremely difficult, if not impossible, to live on a single minimum wage salary. Most people making this amount have to depend on roommates or boy/girlfriends to help meet obligations like rent.



3.8 million workers with wages at or below the Federal minimum made up 5.2 percent of all hourly-paid workers.

The states with the highest proportions of hourly-paid workers earning at or below the Federal minimum wage were Georgia, Mississippi, and Texas (all between 8 and 10 percent
Characteristics of Minimum Wage Workers: 2011


By major occupational group, the highest proportion of hourly-paid workers earning at or below the Federal minimum wage was in service occupations, at 13 percent. About 6 in 10 workers earning the minimum wage or less in 2011 were employed in service occupations, mostly in food preparation and serving related jobs.

What that tells me is those jobs aren't simply going to go away if the minimum wage is increased. Mcdonalds isn't going to suddenly have less business because the minimum wage is increased (you can even argue that they'll have more business).





The only way I can see doing away with the minimum wage is if we're willing to implement something like the British Dole, which would guarantee every American a certain level of living regardless if they are working or how much they are making if they're working. But that will never happen.
 

J-Donk

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I have never liked raising the minimum wage. I know it means well, but the cost of living just increases well in advance of any wage increases offsetting a lot of the individual gains. Not many people are hired at minimum wage that I'm aware of anymore and if they are, they don't stay there very long. Merit-based pay increases are not as widely used anymore; It's an automatic bump now for most businesses.

I like the idea, but I'm skeptical of it being successful...
The Aussies make it work with a 15 dollar minimum wage. They have higher cost, but overall better buying power.


There is a root issue though that no one is really addressing. This fixes nothing. The real problem is that these are menial jobs that take no real skills. A lot of the jobs are going to be first go when "big automation" hits. We already see it in manufacturing, but it's going to start to hit the service industry next. Raising the minimum wage will only quicken this conversion.

What we need to do is retrain these people for a new economy. I wish we could start a conversation about the possibilities of starting up "big education". Retraining those that need it, free college education via state schools, and paid government/company internships.

This is not going away. The question of what do we do with those that society is passing by is not easy to answer. I like the idea of society lending a helping hand vs the law of the jungle. You never know it could be you one day on the other side of the aisle.
 

the-commish

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Raising the minimum wage is a good idea, as well as indexing it to inflation. Inflation will eventually rear its head, even though for the past 6 or so years it has been nil, because of the recession, and because the Fed has artificially deflated interest rates, and kept them low, to try and stimulate the recovery. I think in a way this did more harm than good because, instead of people borrowing from banks at reasonable interest rates, the banks have kept a tighter rein on lending, and people have been forced to borrow from credit cards or even worse, from check cashing or payday loan companies at almost usury-like interest rates.

But, getting back to minimum wage, anything that would take these minimum wage earners off the public dole (many of these workers also get welfare and/or food stamps, because their minimum wage jobs are not enough income to keep them above the poverty line). Raising the minimum wage would mean fewer resources spent by welfare and SNAP.
 

krushing

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That's a tough one. Hard to believe it ring push up prices and create inflation. If its indexed, could it not create an infinite loop?
 

dtc

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That's a tough one. Hard to believe it ring push up prices and create inflation. If its indexed, could it not create an infinite loop?
Yes, it will. Still, it's better imho to make it go directly to the employee than to have to filter it through welfare, wic, eitc, etc.

Also, many jobs are mw period. There's no raises or increases except when MW laws change. As such, the only way a dishwasher at some buffet gets a raise is if the MW goes up.

Tying it to inflation makes sense so that it's no longer a football in congress.
 

Galbreath34

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Look at the old WM thread here. Every single increase in the minimum wage in history has actually increased the number of jobs. It has always been stimulative. Look at the map of states that already have minimum wages above the Federal minimum now: hint these states are not the poor or struggling ones and WM and McDonald's have not gone out of business in these states.

Over 90% of Minimum Wage workers work for corporations and companies with over 100 employees.

The problem is 5 years ago as a Senator and candidate Obama was looking to raise the minimum wage to $9.50. Certainly the $9 wage was overdue, but some states already are over $9 (a few, but I live in one). The real baseline for this bill and 2013 should be $10/hr IMHO.
 

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Wouldn't pegging minimum wage to inflation go a long way towards keeping wages up to speed with cost of living increase?
Like I said, it sounds good but I am skeptical.

I just don't get the cost of living will go up argument.
If you force a business to increase it's overhead, do you think the business will just accept that their profits are going to just shrink or do you think they will pass the costs of higher wages on to the consumer?

The Aussies make it work with a 15 dollar minimum wage. They have higher cost, but overall better buying power.
I don't know enough about the Asutralian business environment to make an intelligent comparison. I do know the American business environment. American businesses have pushed productivity to it's limits and then they push it more. Creative thinking in reducing costs can lead to some poor working conditions and every time the cost of business rises (like the price of fuel for example) the costs are passed on to the consumer (like fuel surcharges tacked on after the charge for goods and /or services) in an effort to maintain the same level of profit. Essentials that every person needs (like car gas, milk, etc.) always increase in advance of minimum wage increases take affect.

I think what this will lead to is a perpetual annual wage increase every year or however often they law will require legislators to re-visit he relationship of the minimum wage to inflation. For that reason alone I cannot see businesses allowing this to pass.
 

drob8785

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It should be pretty obvious to anyone who does some digging that the minimum wage is too low.

In no state can a minimum wage worker afford a two-bedroom unit at Fair Market Rent, working a standard 40-hour work week. In Louisiana, they'd have to work 78 hours.

Working minimum-wage earns $15,080/year -- meaning if you have to support anyone but yourself, you end up below the national poverty line thresholds.

When the minimum wage is too low, these workers and their dependents end up on welfare, whether it's Section 8 housing, food stamps, or Medicaid. The "cost" to bring them to a livable "wage" is passed on to government (and taxpayers, but really it just adds to the debt).
 

Cosmic201

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If you force a business to increase it's overhead, do you think the business will just accept that their profits are going to just shrink or do you think they will pass the costs of higher wages on to the consumer?

I don't think enough businesses pay enough workers minimum wage to the point that the entire economy would have to adjust it's prices due to a minimum wage hike.


And the businesses that will be most effected by an increase of the minimum wage are the businesses we should be least concerned with (I.E. Mega corporations) Roughly 70% of the companies that pay workers minimum wage are companies with over 100 workers.


Frankly, I'm tired of protecting the big corporations profits, specially when they are making record profits by screwing over the consumers and their employees.
 

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I'm not protecting the big corporations. I'm protecting me, the guy who is now paying more for goods and services because they're passing the cost of higher overhead onto me.

Other businesses purchase goods as well. Now that these are costing them more, they're going to be passing THEIR higher costs into the consumer. See how that works?
 

drob8785

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I'm not protecting the big corporations. I'm protecting me, the guy who is now paying more for goods and services because they're passing the cost of higher overhead onto me.

Other businesses purchase goods as well. Now that these are costing them more, they're going to be passing THEIR higher costs into the consumer. See how that works?
"We" already pay those costs, either in the form of government assistance or the societal costs of having a legal minimum wage that places far too many below the poverty line.
 

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