Minimum Wage Vicious Cycle

[Xerographica]

First of all I'm not even sure what point you're trying to make, and second your entire argument is an unproven construct and nothing more.

Here are two ways to increase wages...

1. By decree (minimum wage)
2. By demand (more businesses)

By arguing for the first, you're arguing that the second is inadequate.  But you need to explain why the second is inadequate. 

[Aletheia]

Here are two ways to increase wages...

1. By decree (minimum wage)
2. By demand (more businesses)

By arguing for the first, you're arguing that the second is inadequate.  But you need to explain why the second is inadequate. 

The second is inadequate because without increase in minimum wage, there isn't any demand for more business (consumers cannot buy a product if they do not have sufficient income).

Inflation and recession will continue to occur because a single country's economics does not occur in isolation - the global market affects the costs of goods and services. War, poverty, ebargos, sanctions, and mutual agreements all affect the economies of a given country. Political policy affects the value of the labour force. Insufficiently educated workers means more unskilled labour than skilled labour - this affects the quality and quantity of goods and services a country has to offer. Insufficient wages means less opportunity for a labour force to afford an education and therefore remains unskilled labour - causing a surplus of workers with little demand for them. This in turn drives down demand for business since consumers (the mostly unskilled labour force) cannot afford the products or services.

When a country reaches this point, then it seeks external economies to encourage business development and may outsource more skilled labour from other countries. This does nothing for the unskilled labour force of a given country, but keeps businesses going and encourages the development of skilled labour forces in external countries. A possible remedy to such an odd predicament is to use the revenue generated from these outsourced businesses via taxation to  offer incentives and programs for the unskilled labour to better afford an education, increase the minimum wage so they maintain a cost of living, and slowly create new jobs for skilled labour which in turn will increase demand for business at home as the consumer base increases buying power.

Once a country reaches this level, other countries may choose to outsource to them therefore driving the economy of the country to new heights with more creation of jobs.

I'm not an economist, but I suspect the unskilled labour problem isn't going to be fixed by simply dropping the minimum wage.

[stromboli]

Lol. I started typing a response and then Aletheia said it better than I could. The middle class, a robust middle class, is the lifeblood of any country. Upward mobility, adequate wages and job availability is the key.

The minimum wage was created in 1938 by the Fair Labor Standards Act as a means to provide a living wage as part of the cure for the Depression. I do not understand how you see it as any part of the economic problem when it was implemented as a solution. Several countries since than have done the same. I don't buy your reasoning at all.

[GSOgymrat]

I want to live in a world where atheists aren't incredibly incoherent.  Is that really too much to ask for? 

What does atheism have to do with economics?

[doorknob]

I'm not convinced starting a business is easy. It'll be even less easy if no one is being paid a livable wage because minimum wage was dropped.

And any one trying to exploit another persons weakness isn't going to pay their employees a fair wage. They sound corrupt from the start. I guess there will be no ethics in your business plan?

Why can't you have a business that just offers a superior product or service?

[SGOS]

Why can't you have a business that just offers a superior product or service?

I wonder about this all the time.  It seems so straight forward.

[Moralnihilist]

1. Robert, a business owner, either is, or isn't, making a mistake by paying his employees $X dollars.
2. If you truly believe that Robert is making a mistake... then it either is, or isn't, easy for you to start a business to exploit his mistake. 
3. The bigger Robert's mistake, the more profitable it will be for you to exploit it
4. If it isn't easy to start a business, then a minimum wage doesn't solve this problem
5. If it is easy to start a business, then a minimum wage isn't necessary

By arguing that a minimum wage is necessary... you're arguing that it's really not easy for liberals to start businesses to exploit mistakes made by Robert and all the other business owners. 

You can't have your cake and eat it too.  You want to argue that we need a minimum wage?  Great!  But please understand that you're arguing that it's really not easy to start a business.  And who are you going to blame for this fact?  Robert? 

Robert's guilty of...

1. making the mistake of not paying his employees enough money
2. making it difficult for liberals to start businesses that pay employees enough money

Seriously?  Robert's preventing you from starting a business that pays employees the optimal amount?  Robert's preventing you from profitably exploiting his big mistake?  Can you please elaborate?  Can you please explain in great detail how Robert prevented you from starting a business?  If not, then evidently you've never tried to start a business.  Yet, here you are so confident that Robert is making the big mistake of not paying his employees enough money.

I want to live in a world where atheists aren't incredibly incoherent.  Is that really too much to ask for? 

If you truly care about the poor... then think your position through.  Set aside your bias for a few seconds and figure out whether it was a minimum wage... or the demand for labor.... which lifted millions and millions of people in China out of poverty. 

Hi folks, Your friendly multi business owner here. Xero, much like every economist/econ student Ive ever met, you are missing several very important factors in your calculations.
1. The act of starting a business isnt hard, HOWEVER it is expensive, time consuming, draining, risky, and requires an immense level of knowledge in the field of the business.
2. Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Contrary to what you are proposing a business does not go: day 1 start business, day 2 profit. It simply doesn't happen that way.
3. Minimum wages is necessary because there are some shady ass fuckers out there running businesses that would think of nothing to slash their employees pay if it meant more money for them. 

I think that most economist fail time and time again to consider the human factor in all of their "Fantasy Land" ideas. In fact every conversation with an economist reminds me of this:
https://www.youtube.com/watch?v=YlVDGmjz7eM

[Xerographica]

1. The act of starting a business isnt hard, HOWEVER it is expensive, time consuming, draining, risky, and requires an immense level of knowledge in the field of the business.

I think you and I have different definitions of "hard". 

2. Most people don't have the ability to take 2-5 years of sub minimum wage pay to get a business off the ground. Contrary to what you are proposing a business does not go: day 1 start business, day 2 profit. It simply doesn't happen that way.

Where did I propose overnight profits?

3. Minimum wages is necessary because there are some shady ass fuckers out there running businesses that would think of nothing to slash their employees pay if it meant more money for them.

According to you, a minimum wage is necessary because business owners would slash wages.  But business owners would only be able to slash wages if workers could easily be replaced.  Business owners really wouldn't be able to slash wages if workers could easily replace their jobs. 

When there are too many workers and too few jobs... then bosses have the upper hand.  When there are too few workers and too many jobs... then workers have the upper hand.

Right now you're arguing that the US has a surplus of unskilled labor.  However, you don't think that the surplus of unskilled labor has anything to do with the minimum wage.  So if you don't attribute the surplus of unskilled labor to the minimum wage... then what do you attribute it to?

[AllPurposeAtheist]

Starting a business is more than just difficult for someone making minimum wage.  I've tried several times and failed every time to one degree or another. The only one I did succeed at to any level was in scrap metal and that was only because of extreme luck and a good knowledge of metals and even then I  ended up selling appliances instead because a close friend taught me how to repair appliances and I was able to get my hands on plenty of used appliances that needed repairs.. Even though I was able to sell maybe 20 refrigerators a week it was never enough to move to the next level and when my best asset fell apart I was out of business..First my truck died then my health . I could never afford to pay for help so when my legs fucked up I was shit out of luck. Perhaps I could have found someone desperate who might have worked for a buck a day,  but hey, I'm not a Republican...

Anywhoooo..

From the Dailykos... http://m.dailykos.com/stories/1377628
Republicans tend to talk like there are two distinct groups of people: working people, and moochers on government aid. This doesn't mean Republicans support policies that benefit working people, like a minimum wage increase or paid sick leave, but it's a strong moral distinction they like to make. In reality, though, most peopleâ€"73 percent of themâ€"receiving government aid are from families where at least one adult is working at least part-time.

A new study from the University of California Center for Labor Research and Education looks at participation in four key aid programsâ€"Medicaid and the Children's Health Insurance Program, Temporary Aid to Needy Families, the Earned Income Tax Credit, and the Supplemental Nutrition Assistance Programâ€"finding that:

    ...  between 2009 and 2011 the federal government spent $127.8 billion per year on these four programs for working families and the states collectively spent $25 billion per year on Medicaid/CHIP and TANF for working families for a total of $152.8 billion per year. In all, more than halfâ€"56 percentâ€"of combined state and federal spending on public assistance goes to working families.

More than half of fast food workers are enrolled in one of these programs; nearly half of child care and home care workers are, as are one in four part-time college faculty. That means these are industries where low pay from employers is subsidized by public assistanceâ€"by taxpayers. Some states are looking to combat this, and not just by raising the minimum wage:

    In Connecticut, for example, a legislative proposal calls for large employers to pay a fee to the state for each worker who earns less than $15 an hour. In 2016, California will start publishing the names of employers that have more than 100 employees receiving Medicaid, and how much these companies cost the state in public assistance.

On April 15, workers in several of the industries where low wages force high use of public assistanceâ€"fast food and home care and, yes, higher educationâ€"will be joining together to fight back with a national day of action. With median wages stagnating and economic inequality soaring, this is a fight for the broader middle class.

[doorknob]

people remain unskilled for various reasons some to complicated to list here. Not all minimum wage workers are unskilled though, some have college educations and couldn't find work in their field of study. So now you have skilled workers competing with unskilled workers for the same entry level jobs. It has little to nothing to do with minimum wage. It has more to do with the fact that there are less livable wage jobs to go around than people needing work. Educated or not.

[AllPurposeAtheist]

I think you and I have different definitions of "hard".

Ever even attempt hard physical labor as a means to make a living?  I hauled scrap metal for many years in 100+ degree weather.. Tell me oh sage one..WHAT exactly is hard for you?

[Xerographica]

So it's entirely impossible for labor (unskilled or otherwise) to be inefficiently allocated? 

[doorknob]

No one is saying it isn't possible to be inefficiently allocated what we are saying is that dropping minimum wage is not a good solution to the problem.

[Xerographica]

So it is possible for labor to be inefficiently allocated.  Great, glad we can agree on that!  The next question is... how does labor become inefficiently allocated? 

[doorknob]

Ah I said it's possible. First we have to prove that, that is the case.