can the US afford to move the minimum wage to a living wage?

Question

my summer paper for economics.. based off the book Nickel and Dimed
just post your opinions or any helpful facts
thanks :)

Answer 1

No, governments should never set minimum wages. If someone is willing to work, they should be allowed to work. Minimum wages have been shown to be an important cause as to why the poor get poorer. The loss to the poor is enormous and in fact, there are definite circumstances where a minimum wage raises corporate profitability transferring wealth from the poor to the rich. I suggest you do an IS-LM analysis on a fixed wage. You will see why so much money can transfer to the rich and the poor lose so much.

Think about it. If the minimum wage were raised to $9 from $5, any employee producing less than $9 ignoring benefits etc, for the employer's customers would have to be fired. Likewise, while under a free market people can determine the number of hours they want to work, in a market with a fixed nominal wage, employers alone determine the hours for most workers. Moreso, if you draw a supply and demand curve for labor you will see the price floor cuts off the right side of both curves. So instead of getting the traditional intersection, you get demand stopping at $9 but supply stopping at say $4.

So you have some people paid more than they would ask if voluntarily asked for a price. Further, this reduces the goods output and therefore the national output. This reduces per capita income. There is less to trade in free markets and the prices are higher. So you do get a minimum wage, but if the price spike exceeds the wage spike all you get are profit transfers from the poor to the rich.

If you want to make people poor, give them a minimum wage.

Answer 2

No, because costs will have to rise to meet that living wage.

The minimum wage is a scam anyway (no, not because the poor downtrodden wretches can't make more money... that's their own problem), because the sole reason it was raised this year was to give unions a new baseline to bargain new contracts.

This was a sop from Democrats looking for union support, even though union labor is only 7.9% of the workforce, and more than half work for the federal government. Union contracts define pay for each non-management job as a multiple of the minimum wage. Deviously clever, those dinosaurs.

Answer 3

How was "Nickle and Dimed"? I have to read it this semester for sociology. I read the first chapter a couple days ago, seems kind of week.

If the minimum wage rises, the quantity demanded will fall, the quantity supplied will rise, causing unemployment, in the short-run. In the long-run, all prices will adjust as such. The raise in minimum wage will become rendered meaningless. Money neutrality!

Answer 4

Since we are an 80% service economy much of the economic activity consist of exchanging labor so what matters is how much other peoples services cost compared to your wage rate. The top 20% of the population have grown accoustomed to having cheap labor to do for them what most of us do for ourselves, so the worry about the inflationary effects. The rest of us would hardly notice because it would only be a percent of two of GDP which is not much more than the error in the in inflation measurment.

Answer 5

First, it's irrelevent, since only a tiny portion of the workforce works the "minimum wage".
Second, you can most certainly "live" on 2,000 hours a year of working for the minimum wage--400 million Chinese live on less than $1/day; and closer to home, over 50% of Mexican live on less than $10/day.
Third, do we really want to provide an incentive to encourage people to refrain from moving "beyond" the minimum wage? Instead, wouldn't it be more wise to encourage people towards developing higher skills, so they can earn more ?
Fourth, by injecting an artificial floor on wage prices, we guarantee that the USA will remain at a competitive disadvantage vs non-US companies. Want to know why US manufacturing jobs have moved offshore? Ask the people who support the minimum wage.

Answer 6

When minimum wage jumps dramatically, then you have serious inflation problems, so doing so would be piontless. Also, that would also send many companies over seas because it would be cheaper for them to opporate were there is no minimum wage. So no.

Answer 7

i doubt it. because if the minimum wage goes lets say to 9 bucks, everything is gonna go up. everything from the cost of a whopper to the cost of groceries. thats just my way of thinkin about it

Answer 8

One percent of all the people in the U.S. own 95% of the wealth. What do YOU think? Think an extra buck an hour for the average working stiff is going to break the Big Boys?