Minimum wage increase... helps the economy?? Wait, wait a sec. Didn't we hear all the right-wingers say an increase would flush the economy down the drain?

http://www.msnbc.msn.com/id/15227667/

Yes, I can't wait to hear how the Right-wing will spin this. I can almost hear Rush Limbaugh, the college drop-out, saying his research debunks the conclusion of.... 650 economists.

I prefer to listen to the small business owners that actually have a stake in this, rather than ivory tower academics that coudn't find their asses with both hands and printed directions.

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Believe me, the small business owners will insist the sky is falling, but it doesn't.

So long as the increase is reasonable (ie: not insane) companies absorb it.

And this coming from someone who is both a small business owner *and* a minimum wage earner.

In my province, we have annual increases to the minimum wage, which I was initially opposed to. But I just saw some research from the Canadian Federation for Independent Business and economic growth has continued year over year since that measure was introduced. Additionally, the unemployment rate is even smaller and jobs have been added to the sector that saw the increases.

As for your white tower professor analogy...

It may have some merit, occasional. But by and large, many economists and other specialists have studied years in their field. Just like dentists, doctors, electricians... yet no one accuses them of being out of touch because of the long duration in school. And many have wives, husbands, children, siblings that may own business and at the very least, operate in the real world.

The ivory tower thing is just... poor marketing and cheap discrediting to support an indefensible argument.

I am a con…..first the sky I agree is not falling; a) there is a justification to raise the minimum wage 1997 dollars compared to today adds up to their claim that there has been erosion in what the 1997 dollar can buy you, BUT 2 dollars’ and change may be a bit much...1.25.1.50 that’s tops imho.
Also lets remember these are not meant to be living wage jobs......these are entry level jobs and only 2.9% of the working pop. actually work for minimum wage.

Conversly, I have been a small biz owner and there is truth to the old saw that you raise it to much at a time or have a city like the Socialist Republic of San Francisco that goes off its head and makes it $10.00 an hour, that DOES cost jobs and its at the level where these folks need and want a Job more than the extra dollar....

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

No, the sky won't fall and the economy won't collapse, so long as the increase is moderate and gradual. And some companies will absorb the increase, but I suspect more often the Consumers will absorb the increase. And in some cases jobs will be lost (or more likely foregone) and/or businesses will close.

Despite these negative effects, a minimum wage increase Can be good for the economy as a whole. The main driver of the economy is consumers. Poor consumers spend more of their income. So by putting more money into poorer hands, you can boost overall consumer spending.

But there's no such thing as a free lunch. This increased velocity of money comes at the expense of the least employable segment of society by knocking out the bottom rungs of the employment advancement ladder.

So the question becomes where (or if) the 'increased poor spending' effect outweighs the 'increased poor unemployment' effect for net improvement in the economy. Ironically enough, I'd think if/when one finds that point, the real winners are the (presumeably rich) stockholders of the companies that are on the receiving end of those 'poor dollars'. So the real battle cry should be "Screw the poor - Help the rich, Raise the Minimum Wage!"

(And even if one misses the mark and Hurts the economy, that doesn't necessarily mean it Trashes the economy. Without a lot of research, Arachnodisiac's observations could just as easily indicate a great economy hobbled back to a good economy as a mediocre economy boosted to good economy.)

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Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

Yeah, of course.

But with a little research, at least in this market, you'd find my observations to be correct.

One trend that has changed both the face of the minimum wage industry and our economy as a whole is the fast food and restaurant industry.

Literally exploding grease down our streets, this has been one of the biggest job creation segments in the past 40 years.

There are more now than ever, more entry level jobs - jobs that used to be temporary, but as you examine industry and especially the manufacturing segments of the economy, much less than a gateway to the workforce.

As such, we often have two and three part-time jobs (rare is it that these places offer full-time on the books) with one individual working them.

Now, if this is the case, and this is what the new economy looks like, fine. But one only need look at the profit margins of the industry to understand that it is not especially hurting...

One of the problems that is dealt with when this industry is examined is that most are franchised.

In Canada at least, this means high franchise fees that need to be factored in between food cost and labour and fixed expenses such as rent. Yet the same (if not a greater) profit margin is expected as the establishment with no franchise fees to pay.

Food costs can only be squeezed so much, and boy, have they ever. The poultry industry, potato industry, beef... has changed so much in response for the steady supply of uniform food that it is virtually unrecognizable from what it was previously.

Bottom line is that these industries are loathe to pay more than minimum, even in situations of labour shortages because labour is the easiest way to cut costs. As a result, without advocates and forced minimum wage raises, this segment would not individually choose to overall raise wages themselves.

But because so many jobs are now from this segment, it is pivotal to the economy that the working poor are not so poor they can't afford to work.

I agree that too sharp of increases are absolutely bad for business - I own my own business - I understand the deal. But this minimum wage issue is often polluted by lobbyists for the fast food and restaurant industry - and is not representative of many industries that employ some people at minimum wage.

It is a misrepresentation and a grave error to let the issue remain at a conclusion of:
"If wages are raised, there will be less jobs and will negatively affect the economy"

In most cases, this is flatly false and a position that one very dominant industry has taken in an effort at profit margin protectionism that by any other standards (than theirs) is reasonable and above average in tracking and performance.

I agree that minimum wage is better when it's bigger for exactly the same reasons stated above; poorer people spend a larger percentage of their money on consumable goods and consumer products, and after housing generally don't have enough to keep themselves out of debt let alone start saving (which makes them more vulnerable in a recession). The argument that this is bad for small businesses is one to be considered, but I drive around a few small business owners (bars) and the biggest complaints I've heard have been about the local <a href="http://en.wikipedia.org/wiki/Oregon_Liquor_Control_Commission">liquor control commission</a> and taxes. We hear about large companies getting huge bailouts from the government, but there doesn't seem to be the same sort of thing available for the small businesses that support communities and are the meat and potatos of mainstreet, USA which have to compete with entities like Wallmart.

Arachnodisiac, my father and I owned a 200 seat restaurant in New York city.....Queens...our profit margin was 10% and thats pretty good….are you familiar with the profit margins in the food service industry? They are narrow.

If you told me I had to pay 2 $ more an hour for my bus boys, I have 2 choices…ask my waiters to put up more of their share ( which they already do by sharing 10% of their tips to share with the busboys) and /or cut costs..how do I cut costs?..by asking one of my busboys to hoof it….thats the hard reality……….

__________________
No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

I have mixed thoughts about this topic…..Part of me say’s no to raising min wage because it is meant to be a starting point in wage earning and that few people actually just earn min wage. It also raises questions to the folks that are earning slightly more than min wage.

But then I also know one individual that is very hard working but is held back because he is slightly mentally challenged and that he could use the extra money….He is also too proud to accept government help even though he knows he is qualified.

So I guess I can see both sides of the issue.

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Anyone who thinks freedom comes cheap, please put the blindfold on and stand against the wall.

Many times I believe Americans will have to take back the country and start a new government.

I think after 10 years, it's about time to raise the minium wage.

I would like to listen to the business owners and workers and consider all involved. Plus I know you don't like academics but they have spent more time considering these things and analyzing them than you. When you are really sick do you try to heal yourself or do you go to somebody that has been to medical school?

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"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

I always just tough it out and drink lots of water.

Sorry, when really sick. Such as pneumonia.

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"Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

It doesn't exist, just a medical "professional" conspiracy.
...just kidding.
I agree that "ivory tower academics" is a laughable insult to hurl at people who work hard to get an education to work hard to get a research position where they work hard to come out with information that can be proven accurate by their peers so they can get the respect necissary to get a position where they don't have to work so hard, which is pretty much the equivalent to retirement. Having a problem with academicians in principle is akin to hating facts and science.

Exactly.

As for profit margin, I am well aware. But when minimum wage is implemented in smaller doses, .25/yr, as an example, it is much easier to absorb.

In my experience, menu prices were adjusted - and not by much, hence inflation.

However, the effect on grocery stores is much different than at restaurants, therefore, the inflation caused by the increase still leaves the worker better off with a bit more take home pay.