Minimum Wage: From the Horse’s Mouth

[GaryC 7]

Minimum Wage: From the Horse’s Mouth

Via the admittedly pro-business Employment Policies Institute, a funny anecdote regarding this whole minimum wage debate:

The generally accepted leading advocacy group for so-called “living wage” laws around the country is the Association of Community Organizations for Reform Now, or ACORN. In its Resource Guide for activists, written by David Reynolds of the Wayne State University Labor Studies Center, ACORN casts aside concerns about minimum wage laws resulting in fewer jobs for low-wage workers, scolding

That’s low road thinking, the kind of philosophy that seeks short-term increases in the bottom-line by directly lowering costs and casts high wages, benefits, and other worker protections as obstacles to competition.

But in 1995, ACORN actually went to court in California in an attempt to exempt ACORN from that state’s minimum wage and overtime laws. Why? Well, according to ACORN’s brief in an appeal of the ruling against them…

…the more that ACORN must pay each individual outreach worker–either because of minimum wage or overtime requirements–the fewer outreach workers it will be able to hire.

The U.S. Chamber of Commerce couldn’t have said it any better.

http://www.cato-at-liberty.org/2006/06/14/...he-horses-mouth

[one...two...tree 2,762]

ACORN is a community based, nonprofit, nonpartisan organization. They're not the ones who invented the concept of a livable wage nor are they the only ones. For example...

http://www.responsiblewealth.org/

Responsible Wealth is a national network of businesspeople, investors and affluent Americans who are concerned about deepening economic inequality and are working for widespread prosperity. Our three primary areas of work are tax fairness, corporate responsibility and living wages.

Why We Take Action

The over 400 members of Responsible Wealth have joined together to speak out publicly to change a growing set of rules tilted in favor of us, large asset owners, at the expense of all others in society. We believe an economy and a democracy which tolerates a widening gap between rich and poor and which concentrates economic and political power in the hands of a few is not sustainable.

We act from conscience and from long-term self-interest. The growing disparities of wages and wealth seen in America and throughout the global village are not healthy for society or for business. As we near the close of the century, we see, throughout our own nation and many other nations, an unraveling of the social fabric, characterized by a loss of community, strained and broken families, loss of loyalty from or to employees, the scapegoating of the poor and vulnerable, and blighted neighborhoods choked by long-periods of disinvestment. We see the increasing polarization of society in which growing numbers at each end of the economic spectrum live behind bars or behind gates.

Healthy businesses and healthy communities have common needs. These can be found in several important words shared in the lexicons of both business and community-building: equity, security, trust, covenant, mutual, and bond. These words define the characteristics of the society and economic system that is needed to carry us into the next century.

Healthy markets need stability and order, elements that are threatened by the social breakdowns that accompany large disparities of wealth and power within a society. This has been exhibited most recently by the growing anarchy in places like Indonesia, Russia and Mexico. Healthy markets need a broad and diversified base of viable customers, a goal thwarted when society's poor are systematically excluded from the marketplace.

[GaryC 7]

hehe, you can't stand it when your wrong. Minimum wage is wrong on all counts. It costs jobs not protects them. Even acorn had to admit that.

[GaryC 7]

Lets play a little "what if" shall we? Most people in America are employed by small and medium sized business. These businesses don't have an endless stash of money to draw on. Now lets say we have company X. Company X has a job to do that only requires unskilled workers. Company X looks at his expenses: cost of materials, cost of energy, overhead ect.... and finds that in order to stay profitable and stay in business he can budget $x.xx for his labor. So here are the alternatives. Hire say 25 people at $6/hr and work them at a humane pace, hire 15 people at $9/hr and work them into the ground or go out of business. What would you prefer?

[Reba 2]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

[GaryC 7]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

That would work for the major companies but most people are employed by small and medium size business's Speaking from experience the owners of these small and medium size business's are not raking it in like the CEO's of the fortune 500 companies. The pro-minimum wage people often hold those few up as a reason for raising the minimum but the truth is the harm would come to companies that can least afford it and who employ the most. It's class warfare at it's worst.

[dani_christine 0]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

that's faulty thinking.

like it or not, there has always been and always will be a divide between the wealthy and the poor...between the educated and the uneducated.

raise the minimum wage, and all that happens is a very temporary relief. consumer prices will rise to reflect the higher labor costs experienced by businesses. it's called inflation. there's a reason that a loaf of bread used to cost 29 cents and now costs $2.

the only thing that is guaranteed by raising minimum wage is a further squeezing out of the middle class.

the answer to getting out of poverty is education. plain and simple. in this country, if you are poor, you will qualify for grants and loans to go to college. unfortunately, many people will simply prefer to sit back and feel sorry for themselves and hate "the man" for keeping them down.

[Fandango 1,439]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

that's faulty thinking.

like it or not, there has always been and always will be a divide between the wealthy and the poor...between the educated and the uneducated.

raise the minimum wage, and all that happens is a very temporary relief. consumer prices will rise to reflect the higher labor costs experienced by businesses. it's called inflation. there's a reason that a loaf of bread used to cost 29 cents and now costs $2.

the only thing that is guaranteed by raising minimum wage is a further squeezing out of the middle class.

the answer to getting out of poverty is education. plain and simple. in this country, if you are poor, you will qualify for grants and loans to go to college. unfortunately, many people will simply prefer to sit back and feel sorry for themselves and hate "the man" for keeping them down.

[Fischkoepfin 1]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

That would work for the major companies but most people are employed by small and medium size business's Speaking from experience the owners of these small and medium size business's are not raking it in like the CEO's of the fortune 500 companies. The pro-minimum wage people often hold those few up as a reason for raising the minimum but the truth is the harm would come to companies that can least afford it and who employ the most. It's class warfare at it's worst.

You keep saying that most Americans are employed by small businesses. That seems strange to me, as there don't seem to be many small businesses left thanks to conglomerates and giant corporations..

Also, it seems that the bigger the corporation the less money they pay their employees, as small companies have a much larger stake in keeping their employees happy. Content employees, namely those who make more money plus benefits, are not only more productive but also less likely to quit their jobs, leading to lower overheads, and thus higher profits.

Let's face it, the most prosperous era in American history, the post-WW II years, were marked by high wages for employees (so called family wages, allowing one person to feed his family and live comfortably), realistic salaries for CEOs, and a progressive tax structure. Ever since the model was abandoned (in the late seventies) the wage gap has grown, employees' wages have stagnated if not fallen, CEOs' salaries have skyrocketed, and social inequality has been on the rise. The economic policies we have now resemble those of the late 19th century, which, while great for the ones on top, inevitably bred social resentment, violence and the like. I, for one, prefer social justice to violence.

[Carol&Marc 0]

how 'bout we also implement a MAXIMUM wage? I'm quite certain that the CEOs of major petroleum companies and whatnot can never spend the 6 billion dollars they were paid last year.

If they'd just give up their freakin' bonuses, which in most cases a one year bonus for these meatwads are more than I'll ever make in a lifetime, then maybe, just maybe, they could afford to pay their worker bees a dollar or 2 more per hour than they do now

=envy, Do you get a xmas bonus? give it to someone that needs it!

Take from the Motivated, give to the Unmotivated!

AKA, distribution of wealth!

Edited October 9, 2006 by Carol&Marc

[one...two...tree 2,762]

from the Economic Policy Institute:

Living wage: Facts at a glance

Living wage ordinances have been enacted in over 70 localities.

* A living wage ordinance requires employers to pay wages that are above federal or state minimum wage levels. Only a specific set of workers are covered by living wage ordinances, usually those employed by businesses that have a contract with a city or county government or those who receive economic development subsidies from the locality. The rationale behind the ordinances is that city and county governments should not contract with or subsidize employers who pay poverty-level wages.

* The living wage level is usually the wage a full-time worker would need to earn to support a family above federal poverty line, ranging from 100% to 130% of the poverty measurement. The wage rates specified by living wage ordinances range from a low of $6.25 in Milwaukee to a high of $12 in Santa Cruz.

* In addition to setting wage levels, many ordinances also have provisions regarding benefits (such as health insurance and paid vacation), labor relations, and hiring practices.

Living wage ordinances provide much needed raises for low-income workers.

* Wages for the bottom 10% of wage earners fell by 3.9% between 1979 and 1999.

* The number of jobs where wages were below what a worker would need to support a family of four above the poverty line also grew between 1979 and 1999. In 1999, 26.8% of the workforce earned poverty-level wages, an increase from 23.7% in 1979.

Living wage ordinances can ensure that pay for contractual workers does not fall behind the pay of city workers.

* The trend toward privatization of services formerly provided by public sector workers is well documented.

* These privatization efforts have often resulted in decreases in wages for the private sector workers in the same job categories. A study by the Chicago Institute on Urban Poverty, which compared the wages and benefits of Chicago city employees to contractual employees for low-skill jobs, found that privatization led to compensation losses for entry level workers ranging from 25% to 46%.

* Since government agencies disproportionately hire (and advance) female and minority workers, these changes have meant the loss of relatively high-quality jobs for these workers.

Living wage ordinances promote responsible economic development policies.

* Living wage ordinances have the potential to counteract the destructive race to the bottom wherein cities and counties try to attract businesses by offering larger subsidies than their neighbors. The more prevalent living wage ordinances are, the less firms will be able to shop around for the cheapest locality on the basis of cutting wages.

* Recent research focusing on the number and quality (in terms of wages and benefits) of jobs created by tax incentives has found that many economic development subsidies are not tied to job quality. A study of tax incentives in Minnesota by Good Jobs First found that 72% of subsidized jobs paid below the average for their corresponding industry.

* Some detractors argue that the living wage will create a "hostile business climate." But most living wage ordinances cover too small a proportion of the labor force to have such a profound effect. Most living wage ordinances cover less than 1% of the local workforce. In addition, for most firms, the increase in labor costs is expected to be less than 2% of total production costs.

Living wage ordinances have no negative effects on a locality's contracting process.

* An EPI evaluation of a living wage ordinance in Baltimore found no significant cost increase to the city. The 1.2% cost increase for the contracts examined was less than the rate of inflation for the same period.

* An evaluation of the Baltimore ordinance by the Preamble Center also found that the ordinance did not reduce the competitiveness of the contract process. The small decrease in the number of bids per contract wasn't high enough to lower competitiveness or raise contract costs.

* Even if the costs to contractors do increase, it is still profitable for these firms to do business with the city. Most firms will choose to sacrifice some of their profit margins, which are estimated to range from 10% to 20% of production, since wage increases from the ordinance only amount to an estimated 2% of production costs.

There is no evidence of job losses as a result of living wage ordinances.

* The EPI evaluation of Baltimore's living wage ordinance found no job loss as a result of the ordinance. The workers interviewed for the study reported no changes in the number of hours they worked after the ordinance went into effect.

* Employers interviewed for the study reported that although wages increased, these costs were absorbed by improvements in efficiency. By raising wages, they decreased employee turnover rates, which decreased recruitment and training costs.

Sources:

Chicago Institute on Urban Poverty. 1997. Does Privatization Pay? Chicago: Chicago Institute on Urban Poverty.

LeRoy, Greg, and Tyson Slocum. 1999. Economic Development in Minnesota: High Subsidies, Low Wages, Absent Standards. Washington, D.C.: Good Jobs First.

Mishel, Lawrence, Jared Bernstein, and John Schmitt. 1999. The State of Working America 1998-99. Ithaca: Cornell University Press.

Niedt, Christopher, et al. 1999. The Effects of the Living Wage in Baltimore. Working Paper No. 119. Washington, D.C.: Economic Policy Institute.

Pollin, Robert, and Stephanie Luce. 1998. The Living Wage: Building a Fair Economy. New York: The New Press.

Weisbrot, Mark, and Michelle Sforza-Roderick. 1998. Baltimore's Living Wage Law. Washington, D.C.: Preamble Center,

http://www.epinet.org/content.cfm/issuegui...livingwagefacts

[one...two...tree 2,762]

Lets play a little "what if" shall we? Most people in America are employed by small and medium sized business. These businesses don't have an endless stash of money to draw on. Now lets say we have company X. Company X has a job to do that only requires unskilled workers. Company X looks at his expenses: cost of materials, cost of energy, overhead ect.... and finds that in order to stay profitable and stay in business he can budget $x.xx for his labor. So here are the alternatives. Hire say 25 people at $6/hr and work them at a humane pace, hire 15 people at $9/hr and work them into the ground or go out of business. What would you prefer?

From what I understand about livable wage - it only applies to local government contracts. Jobs that were once done by city or state employees are now being contracted out to private companies. It's our tax money really that's paying their wage, not the companies.

[Reba 2]

raise the minimum wage, and all that happens is a very temporary relief. consumer prices will rise to reflect the higher labor costs experienced by businesses. it's called inflation. there's a reason that a loaf of bread used to cost 29 cents and now costs $2.

so how 'bout at least raise minimum wage to reflect inflation? The minimum wage hasn't been raised since what, 1997? And cost of living has gone up considerably. Why not just keep up with the cost of living, at the very least? At least so those folks who are receiving grants and such from the government to pay for their schooling can also afford to eat breakfast before they go to class.

We could go round and round, but fact is, employers here in my area of NC (and likely other areas of the US) pay even educated people with 2 and 4 year degrees a paltry salary. There are employers around here who require a 2 year business degree before they'll even consider you for a Receptionist position at 7.50 an hour. So much for education

[ieldanth 0]

raise the minimum wage, and all that happens is a very temporary relief. consumer prices will rise to reflect the higher labor costs experienced by businesses. it's called inflation. there's a reason that a loaf of bread used to cost 29 cents and now costs $2.

so how 'bout at least raise minimum wage to reflect inflation? The minimum wage hasn't been raised since what, 1997? And cost of living has gone up considerably. Why not just keep up with the cost of living, at the very least? At least so those folks who are receiving grants and such from the government to pay for their schooling can also afford to eat breakfast before they go to class.

We could go round and round, but fact is, employers here in my area of NC (and likely other areas of the US) pay even educated people with 2 and 4 year degrees a paltry salary. There are employers around here who require a 2 year business degree before they'll even consider you for a Receptionist position at 7.50 an hour. So much for education

You will never keep up. The cost of living is based on the average wage. That is why stuff is far more expensive in California than it is in Mississippi. As the minimum wage rises, so does the average cost of living, which in turn causes the minimum wage to rise...

In about a year, that loaf of bread will require a second mortgage on your house.

Education is still very important, but you also must consider the demand vs supply of the skill you bring to the table. If you are just one of thousands of receptionists, you will have a low wage as competition for the hundreds of positions is tight. You may scoff at that $7.50/hr but remember, the HS graduate will be getting $0/hr from being disqualified for the position. Also, that is probably starting pay and you have competition from other Business students working their way toward a four-year degree or greater. They are willing to take a lower wage since they are probably not raising a family on it and it serves them as a useful educational experience(honing people skills).

[one...two...tree 2,762]

raise the minimum wage, and all that happens is a very temporary relief. consumer prices will rise to reflect the higher labor costs experienced by businesses. it's called inflation. there's a reason that a loaf of bread used to cost 29 cents and now costs $2.

so how 'bout at least raise minimum wage to reflect inflation? The minimum wage hasn't been raised since what, 1997? And cost of living has gone up considerably. Why not just keep up with the cost of living, at the very least? At least so those folks who are receiving grants and such from the government to pay for their schooling can also afford to eat breakfast before they go to class.

We could go round and round, but fact is, employers here in my area of NC (and likely other areas of the US) pay even educated people with 2 and 4 year degrees a paltry salary. There are employers around here who require a 2 year business degree before they'll even consider you for a Receptionist position at 7.50 an hour. So much for education

You will never keep up. The cost of living is based on the average wage. That is why stuff is far more expensive in California than it is in Mississippi. As the minimum wage rises, so does the average cost of living, which in turn causes the minimum wage to rise...

In about a year, that loaf of bread will require a second mortgage on your house.

Education is still very important, but you also must consider the demand vs supply of the skill you bring to the table. If you are just one of thousands of receptionists, you will have a low wage as competition for the hundreds of positions is tight. You may scoff at that $7.50/hr but remember, the HS graduate will be getting $0/hr from being disqualified for the position. Also, that is probably starting pay and you have competition from other Business students working their way toward a four-year degree or greater. They are willing to take a lower wage since they are probably not raising a family on it and it serves them as a useful educational experience(honing people skills).

That's the argument that opponents of minimum wage use everytime, yet the statistics show otherwise...and holy shiite...the prices in California for groceries are comparible to most everywhere else. What elevates the cost of living here in CA is Real Estate, not state minimum wage standards.

Raising Minimum Wage Increases Growth

I always believed, as do most Democrats, that the minimum wage should be increased and tied to the poverty level because of pure fairness. If we raised the minimum wage to about $8 an hour, it would reinforce the social contract that says, If you have a job you can support yourself. Ravi Batra, however, has demonstrated that increasing the minimum wage would increase economic growth, boost employment and be economically beneficial to all Americans.

Republicans are dead set against increasing the minimum wage. Big Republican Alan Greenspan told the House Banking and Financial Institutions Committee in 1999:

"My main concern is ... the issue of individuals who become unemployed because of the minimum wage."

Republicans argue that small companies would have their expenses increased to the point where it would kill their profits, which would force them out of business. When this happened more employees would be out of work. Batra's argument is the reverse: increasing the minimum wage would not change the profit picture of companies involved, but would boost overall economic activity that would lead to more employment.

The logic is straightforward. It starts with the following simple equation that defines the simple case of economic balance:

SUPPLY = DEMAND

When the economy is in balance, suppliers produce enough to satisfy the demand of all consumers. There are no goods unsold. There are no unsatisfied buyers. When productivity increases, that is, we can build more products with the same workers, the supply rises. If we increase wages a similar amount, consumers will be able to buy more to keep the system balanced.

Of course, nothing stays in balance long. Inflation is always with us to some degree. When inflation rises, workers' wages don't buy as much as they used to. We say that real wages have decreased. With the decrease of real wages, demand decreases. This means that some products are not sold, a situation that may lead to lower profits and retrenchment through worker layoffs. This is negative growth. It's no good for business and it's no good for labor.

It's especially bad for workers at the lower end. They had been struggling to make ends meet before their real wages declined. Now they are worse off. What would happen if we increased the minimum wage they received? Their real wages would increase. And since they spend every penny they get, this would increase aggregate demand. Companies on the supply side would sell more, make more profit and perhaps hire more workers. This is positive growth. It's good for business and it's good for labor.

How would raising the minimum wage affect the fortunes of companies hiring minimum-wage workers? Not much; maybe they would need to charge their customers more. Their expenses would rise. But so would the expenses of their competitors.

The improvement in the economy is better than what could be achieved by raising the minimum wage alone. Many low-end workers who make a little more than the minimum wage would probably soon get increases too. When they go spending, it would increase the aggregate demand further, thus enriching companies more and raising the possibility for more employment.

Let's increase the minimum wage to about $8 per hour and let's tie it to the poverty level. When the poverty level increases, the minimum wage should automatically increase a similar amount. Democrats are promoting this because it is good for business and good for labor - it's good for everyone.

Posted by Paul Siegel