A $12 Minimum Wage in Retail?
Last week, just in time for the start of what yours truly and the vast majority of Americans call the “Christmas shopping season” — but which the press in virtual lockstep tags as the “holiday shopping season” — a policy analyst at a leftist think tank seriously proposed that all retailers voluntarily raise their employees’ minimum wage to $12.01 per hour, or $25,000 per year for those who work a forty-hour week year-round.
The study (“Retail’s Hidden Potential: How Raising Wages Would Benefit Workers, the Industry and the Overall Economy”; full PDF here) came from Demos, whose nice-sounding goal is to “make equality and democracy more than just ideals.”
Though it is often characterized as “non-partisan,” it boasts of “a partnership” with the openly liberal but really far-left American Prospect. Catherine Ruetschlin, the study’s author, appears to have had some possibly scrubbed involvement with Occupy Wall Street, and to have been a leader of an unsuccessful 2008-2009 effort aimed at “ridding the New School from the tyranny of Bob Kerrey.” Kerrey, the former Democratic U.S. senator, headed that New York City university for a decade before leaving when his second five-year term ended in January 2011.
According to her Demos bio, Ruetschlin “is currently completing a Ph.D. in Economics at The New School.” Before she receives that doctorate, she should be required to retake Econ 101, especially those pesky sections dealing with the profit motive and the law of supply and demand.
I won’t attempt to list all of the weaknesses in the Demos study; it would require at least a term paper to thoroughly expose them all. What I will address will more than suffice to discredit it.
In Ruetschlin’s alternative universe, if retailers raised all employees’ wages to at least $12 per hour, “the new floor would mean a 27 percent pay raise” on average for those earning below that threshold. Then, as if by magic, because of that increase and others granted to higher earners who would also demand to be paid more: “More than 700,000 Americans would be lifted out of poverty, and more than 1.5 million retail workers and their families would move up from in or near poverty.” Employing her trusty Keynesian stimulus calculator, she further projects: “As a result of the economic growth from a wage increase, employers would create 100,000 to 132,000 additional jobs.” And of course, the impact on retailers’ operations would be minimal, because: “The cost of the wage increase amounts to $20.8 billion, or just 1 percent of the $2.17 trillion in total annual sales by large retailers.”
It is here that Ruetschlin’s most obvious slip shows. Instead of framing the increased costs of pervasive pay raises (some of which I believe she failed to consider, including payroll taxes, workers’ comp, and other wage-based costs) as a percentage of what retailers actually have available to absorb additional costs (i.e., before-tax profits or net cash flow, and certainly not sales), she goes into a completely irrelevant rant about how some of them are engaging in stock buybacks. It’s easy to see why she dissembles. A Deloitte LLP study (very large PDF) of retailers’ 2010 financial results revealed that eight of the world’s top ten retailers (the other two are privately held) achieved net profit margins of only 3.0 percent. That is their after-tax percentage; pre-tax, it’s at most 5 percent.
Thus, what Ruetschlin really wants is for retailers to do one of three things: voluntarily reduce their pre-tax profits by about 20 percent ($20.8 billion divided by roughly $108 billion in pretax profit), force these costs on to their customers, or extract an equivalent amount from their suppliers in the form of price breaks. And this is going to stimulate job growth?
No it won’t. Here are just a few of the more obvious effects, depending on whose ox gets gored.
If companies voluntarily take the hit and take no alternative actions, their share prices will plummet, as will their ability to pay dividends. They will be less able to raise capital for future expansion. This will affect not only the so-called “one percent” who own and preside over these firms. It will also strike at the rest of us who directly own shares in these companies or indirectly hold them through retirement plan and other mutual fund investments.
But of course, companies, at least those wishing to survive, will take alternative actions. Some will place more emphasis on their highly automated online efforts. Other will freeze or contract their brick-and-mortar store count. Still others will reduce the floor space at their existing stores. Oh, and one other thing: an entirely government-driven trend which is already underway will accelerate at warp speed. Employers will become even more determined to keep employees from meeting Obamacare’s new definition of “full-time employment,” holding as many of their current and new workers to 30 or fewer hours per week to avoid being fined for not covering them on their health insurance plans.
Companies which simply choose to pass on the increased costs to the public will become less competitive. They will lose customers, sales, and market share, and will be forced to shrink their store count and workforce. Some will go out of business.
If suppliers are the ones who get beaten down, their profits and their shareholders will suffer, along with employees who will surely be hurt by some combination of layoffs due to increased automation and compensation cuts.
At the same time, a $12.01 minimum wage in retail would put enormous pressure on those in other lower-paying industries to pay more, forcing them to raise their prices and suffer the consequences of reduced consumer demand for their goods and services.
There is virtually no doubt that if Demos and Ruetschlin were ever to get what they want, the overall economy and total employment would shrink, not grow.
What Demos, Ruetschlin, and their grim band of fellow radicals refuse to recognize is that employment is not some kind of entitlement.
It is instead a mutual business agreement between a worker and his or her employer that the use of their services at a given price is a win-win for both parties. If you make the cost of the agreement too dear for either party, you won’t have an agreement. If you are able to force such agreements on the unwilling anyway, you will end up with fewer of them. In the current case, the result will be fewer jobs.
What I really fear is that leftist efforts such as these are the opening shots in what will become an all-out war on employment practices at companies throughout the land. Using dreck such as that produced by Demos as support, “greedy capitalists” will be blamed for the continued and virtually inevitable failure of the economic policies of the Obama administration. And if these companies won’t do what they “should”? Why, the government will just have to take them over and run them “correctly.”
We’ve seen it happen time and again in other countries. I wish I could be confident that it can’t and won’t happen here.
Why not? Healthcare reform’s already destroyed most entry-level retail jobs more than 29 hours/week. That’d be the equivalent of $8.70/hour full-time now, only w/o any health benefits. (Ain’t left/liberals so nice and caring to the workers of the world?)
You’ve got that right.
That’s why we’re getting ready to emigrate. No hope of making a living here any more, unless something for the better changes awfully soon, and we don’t expect that it will.
Wow! And to think I actually made $1.50 an hr. minimum wage as a kid back in 1970 when kids actually used to be able to add & subtract, speak English & work! Amazing…
That $1.50 in 1970 is equivalent to $8.94 today (BLS inflation calculator). We’ve come a long way baby.
When I was growing up in Asia, my social studies class once discussed why “the country doesn’t just print lots of money and give them to everyone so no one will be poor”. The teacher explained that if we did that, even a pencil box would cost 4,5 times the original amount because everyone had oodles of cash to spend.
Of course, we understand this as “inflation”, but that doesn’t exist in the heads of over 50% of this country.
They’ll learn soon enough.
The problem Tom is that you are still assuming that capitalism and free markets are to continue to be a norm. We are dealing here with FDR’s Second Bill of Rights, which not surprisingly Obama’s Regulatory Czar Cass Sunstein wrote a book to push. It is also being called the Fair Shares society.
While the sought redistribution of wealth and limitations to income inequality are going on, private sector businesses are to be viewed as existing to provide desired benefits and job training.
It’s a nutso world that pretends gravity does not exist if you can get a regulatory edict that says it does not. The assumption is that internal characteristics and individual behaviors do not matter to the overall economy. The fact that the “evidence” cited is bogus will certainly cause much heartache.
We are embarking on an era of Social Engineering-socially, politically, and economically as if it is a crash course to get to a finish line.
It’s not sound but nobody in charge now knows that or seems to care. Crashing just becomes the excuse for more social engineering.
Why be stingy? Let’s raise the minimum wage to $50 hour!
exactly
this is how you deal with this issue and all the tripe regarding a “living wage”
Great point! Why only $12.01? But then again, why only $50?
At the 29 hours per week that healthcare reform will now limit minimum wage people at most places that can’t afford its costs, $12.01/hour comes out to $8.70/hour (about the current min wage now) if the total is divided by 40 (giving ‘em the same, as if, only without any healthcare).
Don’t be such a piker! Raise minimum wage to $120.19 an hour so all full-time employees would make $250,000 a year and cross Obama’s magic “millionares and billionares” threshold. Then, hit them with higher taxes! What could possibly go wrong?
WordPress Sucks! This is the 3rd time trying to make a post. It keeps saying that I’m posting too quickly and wiping out what I said.
WordPress likes liberals.
I’ve also had this problem recently. If you go back, your text should still be available in the edit box. Copy and paste it somewhere, then go out of PJM or even out of your browser. Then go back in and try reposting. If what you have to say is important enough to go to all that trouble, that is.
Welcome to Zimbabwe – land of the starving “billionaires.”
Like many of todays college graduates, I also struggled to find a job after college during the stag-flation days of the late 1970s. Working for $2.40/hr. in one small department store, we heard that a few of us might be laid off after that minimum wage was scheduled to go into effect. Sure enough, when it went to around $2.75 a few *were* laid off. The company’s margins were rather slim, and it went out of business a few years later.
As one who *did* take Economics 101, I’m surprised how the basics, like those relating to the supply/demand curve, are routinely ignored. Just a year or two later, I concluded using back-of-the-envelope graphs, that government subsidies *raised* prices. This was confirmed not long after when, in an attempt to deal with high oil prices during that second oil shock, Carter briefly instituted a $5.00/barrel subsidy on imported oil. The end result: Oil prices went up almost … $5.00/barrel.
And how curious that three sectors of the economy with extensive government involvement and subsidies – health care, housing, and college education – have all experienced inflation rates notably higher than the overall rate.
Very few people in the US get any education in economics and most of what is taught has a Keynesian bias. In other words, most people know nothing about real economics. Because of that they don’t understand things like profit margins and costs. They think tax increases mean more revenue and nothing will change, in part because they don’t even understand personal finance (another subject not taught) and don’t even think how their spending habits would change if someone snatched 10% of their money from their wallet.
Carter did take a minor crisis and make a disaster of it. What really made things was the fixed pricing he imposed. Normally gas companies will deliver to demand and even pump gas from low demand stations to transfer it to areas of high demand. That became impossible because of Carter because of expense of shipping ate up the profits. So, areas with high demand ran dry while other areas were little effected. I was a child back then and I remember seeing the lines on TV, but we didn’t really have that here. There were some lines now and then but nothing like what one saw in the big cities.
As for college debt: there was an article in the last couple of days about how student debt levels have surged since Obama took over the industry. That’s really why college costs have inflated so sharply over the last couple of decades: government backed student loans. College know those loans will be made good so they ramp up the rates each year as much as they can. At the same time they dumb down academic and moral standards going for that high “party rating” so bring in numbskulls. They know that 50% of these people won’t finish 2 years, so that’s a savings for them in the long run and those college loans will still be out there raking in the jack. Never mind that US higher education is a bad joke around the world, they’re making money!
“in part because they don’t even understand personal finance (another subject not taught)”
I knew The End was here 7 years ago, when a saw a billboard off Rt 95 in Philadelphia:
A sad-faced college-slacker type, cool-unkemp hairdo and chin stubble, with the message “have you been the VICTIM of EASY CREDIT?” and an 800 number to a law firm.
Imagine this 50 years ago.
A college graduate “victimized” because they didnt understand how credit works, completely ignorant of the concept of “interest” on borrowed money, and now in need of legal recourse to avoid paying for that cool MP3 player and I-phone.
No wonder they all vote Obama, and think 16 trillion in debt is the way to make us all “rich”
The schools have done a first rate job of producing economically illiterate youngsters to be “vote fodder” for the Democrats.
Glad their self-esteem is so high though, arent you?
If I wanted to hurt the poor in general, and young people and minorities in particular, I can think of no better way to achieve that than by sharply raising the minimum wage.
Of course, I’d have to be an immoral monster to do such a thing, given the costs to society as a whole…
Unmentioned in the article is that an increase in the minimum wage will result in an increase in union pay scales because many of them are linked to be “x” above minimum wage.
In addition, the high minimum wage forms a barrier to entry, making it easier to keep new people from gaining any experience in their field. That makes it harder to hire strike-breakers if the union decides to go on strike.
However, I wouldn’t be so quick to see this as all bad. One of the reasons that public employee union members are able to benefit from their stunningly expensive pensions and benefits is because the rest of us don’t get those things. So why don’t we take this a step further and let’s use the Keynsian multiplier affect to justify and mandate retirement at 55 with full pay and benefits for private sector workers also. Same contribution levels as public unions and whatever is unfunded will be covered by the government. What would be the push back on that by Democrats? If they are willing to meddle in the private sector a little, why not a lot?
This may not even bring the whole system crashing down -although it will certainly cause hyper inflation. But at least we in the private sector will have the same number of those worthless dollars as the government folks. Now that’s fairness in action!
The unions would love this as it’s another plank in their platform.
As 1389AD points out barrier to entry is what they(unions)thrive on.
When they realize that artificially fixing wages will result in more unemployment, the libs will then come to the daffy conclusion that they must somehow regulate the size of the workforce (“create jobs”). They want private industry to operate the same way government does – at a loss (deficit). Let’s see how that brilliant plan works out.
I see it every time I go to the Post Office. The lines suck and their attitude toward service is such that I’d never go back if I didn’t have to. Thanks to email, UPS, and FEDEX it’s not that often.
$12 an hour is actually past due. I made $17 an hour in 1979 as a skilled construction worker. You could buy a new Silverado or Explorer that would turn every head in the neighborhood for $9K. I bought a modest home and 12 acres in 1982 for $22K. Too spend $100 at the grocery would have drawn some attention.
In today’s economy we’re seeing Walmart worker saying the hell with it. Just today, fast food employees in NY are protesting. We’re seeing Hostess employees uninterested in having their wages cut below $12 and hour. In the meantime, companies are making record profits and (or, in Hostess’s case) handing out huge payments to CEOs and stockholders. I suspect we’ll be seeing a rise in disgruntle workers as well as a rise of unionization unless things change.
But from an economical perspective, consider Walmart. From a UC Berkeley’s report, if Walmart paid $12 per hour minimum wage for all employees, it would cost the company $3.2 billion. Now that sounds like a chunk of change but it’s just 1% of their overall annual $305 billion in sales. But let’s say Walmart wants to pass that on to the customer. The study says it would only average out to a cost increase of $.46 per customer per shopping trip. Now if you want to argue that it would force Walmart to cut hours or layoff, that’s not likely as they already run as lean as possible. Plus, there’s this huge spur of business from all these folks eager to spend that extra cash they’re making.
According to the Congressional Budget Office, extending the current unemployment benefits would create around 300K jobs next year. That’s because the GDP adjusted for inflation would be 0.2 percent higher in the fourth quarter of 2013 and that full-time-equivalent employment would be 0.3 million higher at that time than it would be under current law. So using this same logic, this minimum wage increase would go directly back into the economy and accordingly raise the GDP and produce jobs. And this isn’t talking points but rather proven policy. Minimum wage increases have statistically worked well in states that have raised them. It’s reimplementing the Henry Ford theory that worked well. It’s rebuilding the middle class which in turn will put that money back in the investors hands. It’s bring back that “keeping up with the Jone’s” mentality that made industry thrive.
And like it or not, as we’re seeing with the present wages unacceptable to lower end workers, the demand for higher wages will likely prevail. And as it is, tax payers are now paying on average $1000 a year in gov assistance to Walmart workers because they fall in or near the poverty level-while Walmart’s raking it in. And like it or not, gov assistance is not likely going away. So $12 an hour would be a fine start in slowing the government “handouts” and rebuilding our middle class while pulling our country away from the Plutocracy and Social Darwinism that slave wages are driving us to.
“From a UC Berkeley’s report, if Walmart paid $12 per hour minimum wage for all employees, it would cost the company $3.2 billion. Now that sounds like a chunk of change but it’s just 1% of their overall annual $305 billion in sales.”
It doesn’t really matter what percent of sales the wages amount to. Wages are just one piece of the expense of operating a retail establishment. To start with, some products are sold at a loss. Add to that the expense of maintaining a retail establishment and the expense of manufacturing and delivery of the product being sold. Sales and profit are not the same.
It all gets back to using “confusing” words to deceive. Words like revenue and profit and sales and gross margin and net margin.
The great unwashed have no idea of the difference between revenue and profit and sales. Gross margin and et margin probably have them thinking about vertical lines on a writing paper page.
The populace at large is economically illiterate.
I also meant to add that groups with an agenda play on the use of those words to paint the corporations as evil.
We all know that the figures presented should have been based on profit, perhaps excluding exectutive level salaries to make the pie a little larger if you want to go for the fat cat angle with some degree of honesty.
That they used renevue has “agenda” written all over it.
Earl, I absolutely agree with you that sales and profit are two totally different things. With that said, Walmart showed a 15.4 billion profit for the 2011 fiscal year. So a $3.2 billion raise would not be out of line. I’ll give you credit for finding a flaw in my argument albeit quite irrelevant. Rising above these slave wages is the ticket for rebuilding the middle class and accordingly, once again growing the economy.
Like it or not, if your business is too tight of margin to survive in an environment where you pay enough wages to your employees to keep them out of poverty, then the country at large has absolutely no interest in the continuation of your business. You could say, we would rather these people be unemployed than continuing to subsidize your failed business model by torturing people via paying them too small an amount.
Fortunately, when you change the rules, the entrepreneurs adapt to them. If they have to pay $12/hour, then they’ll find a way to make money paying people $12/hour. If they can’t, I guess some investors will have to take a loss. I’ll try not to lose any sleep over it.
Employees are tortured by agreeing to accept low wages?
They are restrained and subjected to physical and/or mental torment that forces them to apply for and remain working at such jobs?
What is being tortured is the language with such parsing and the debate with such rhetoric.
The employees, showing up and applying of their own free will, remaining as long as they feel appropriate and leaving when they choose, are free from any such excesses.
Again, you’re falling into the Lefty belief that nothing else will change, raise minimum wage and prices won’t rise to reflect the fact people have more money to spend. And unicorns will be free to all who ask! The fact that then it will cost more to hire and keep employees, who will pay that cost? Walmart makes a net profit of around 3-4% on each sale, that’s what they feel is acceptable, they will make adjustments to keep it there whether it’s getting rid of people or raising prices. Corporations aren’t in business to provide jobs and services, they do that only to make profits. I know, profits, it’s what the Left hates…unless of course said profits are their profits.
It’s as if you didn’t read the column.
$3.2 bil would be 14% of WMT’s worldwide pretax profit and a larger percentage of its domestic profit (probably about 20%, as the column estimated):
http://www.nasdaq.com/symbol/wmt/financials?query=income-statement
All of the effects noted above (and many more which weren’t) would kick in. If you don’t care, just say so, tell us that you’re just fine with a high-employment, low-growth economy, and stop pretending that unemployment benefits stimulate anything real.
does the ever liberal UC Berkely consider this in their study:
I have my own biz and make about $35.00/ hour. That wage allows me to meet my needs. Not get ahead but…
I have a huge responsibility to pay my workers $20.00/h plus taxes, and now Obamacare. Remember, cash flow is always a problem in a small biz.
At $12.00/h working at the grocery store, my life would be stress free and free up my time. But, no more employees and no more taxes collected from my company, no more $ for childcare, etc.
Oh, and I then could apply for all the free stuff.
Don’t forget that the government will get their cut as well – any taxes based upon the gross pay will increase. How much will each employee really get if minimum wage is increased with taxes being taken out (and the company will have to pay half of the increase for the social security tax)? And will the company decide to make the employee pay more for health care (after all, with min wage of $12 the employee can afford to pay more, right)?
The latest figures I can quickly find for Walmart are from 2011. In that year, they had $422 billion in sales and a net profit of $15.4 billion. For sales that large, that isn’t a lot of profit (3.65% net profit). That wage increase would’ve reduced their profits by 21% for starters, but the cost would’ve been even more. Like the article stated, it costs a lot more than just salary to have an employee. Higher salaries also mean higher payroll taxes, worksman’s comp rates and unemployment insurance rates for starters. Lower profits would mean Walmart would have to pay less in business income taxes but that wouldn’t come close to making up the difference. Lower profits would also mean a huge drop in their stock prices that are components in many retirement plans.
“According to the Congressional Budget Office, extending the current unemployment benefits would create around 300K jobs next year”
OK then we have our solution. Instead of the average unemployment check of $300 per month, lets make it $10,000 per month. According to your theory we will then create 10,000,000 new jobs. Unemployment gone. Everyone happy.
Fantasy economic theories are so great for projecting fantasy results.
Wal-Mart pays its unskilled, entry level employees, more than minimum wage. It is a business; it exists to make a profit. It determines how much an unskilled job is worth per hour. Are you saying that because it still makes a profit, it should then pay more for unskilled labor? Why? When I was a kid, all I was trained to do was pump gas and be a cashier. For that, I worked for minimum wage, which I think was $2.75, and as I gained in experience and knowledge, I gradually increased my earning power. When I left the job five years later, I was earning $4.85 and hour and had moved up to a first-line supervisory position. From that job I entered a retail management training program. When I started the job, I lived with my parents; by the time I left, I had figured out how to get an apartment, taking a second job delivering papers. Eventually I worked my way through college, and before the economy was trashed a few years ago, I was a highly skilled person earning six figures. Along the way, I raised a family on my own.
I’m sorry that the people working for retailers feel that earning slightly more than minimum wage isn’t enough to live on, but perhaps a modicum of ambition while in high school to combat illiteracy and a bit of ambition once entering the job market would go a long way towards eradicating this feeling that the world owes them a living, and that they can hold their employers hostage. As for those employers, at some point in time they have had a long, hard slog to be profitable, and probably were struggling themselves at one point. Why should they be guilted into giving away the store?
Welcome to another massive round of layoffs. People who have no business experience other than what they read in textbooks should not be allowed to make laws/rules/regulations concerning business.
Because many corporations do not pay a living wage, many people are forced to take food stamps and get their health care need satisfied through emergency room. You are paying for this through your taxes to, inadvertently, fund this type of corporate welfare, and put more money in the pockets of such corporations as the Walton family.
What’s your suggestion for people who can’t/won’t provide enough value to EARN a living wage?
I suggest that society provide, as a baseline right to sentient human beings, no more than a secure place to live with clean, cold water, a minimum of living space (50 square feet/person?) heated above 60 and cooled below 90 degrees with basic sanitation and light, adequate clothing and basic staple food, with community access to library-style facilities providing education in all basic matters.
That’s no electric power, no hot water, no snack/luxury foods, no cigarettes or alcohol, no television, no internet, no convenient parking, nothing that is by any means luxurious. If you’re happy being bored out of your mind taking cold showers and eating boring staple foods, then go for it.
But at least when you’re down and out, you aren’t required to struggle to make your next meal or find a roof overhead, enabling you to move forward with the real things that get you productive – education.
People have better conditions than that in prison. If criminals were forced to live under a regime like that, it would be called “cruel and unusal punishment”. Why do you hate poor people so much that you’d make them live like that?
I hear some prisons are pretty nice. The above description is in some ways nicer than my high school.
This false narrative is one of the common anti-capitalist rants I hear. Nobody is “forcing” anyone to live like anything. The operative phrase is “life, liberty and the pursuit of happiness,” not “eternal life, freedom to do whatever you want and everything you want to fulfill your least wish and impulse.”
Nobody is owed anything. I believe in helping out someone who truly can’t take care of themselves (ie no arms, legs or higher brain functions) but not someone who just hasn’t got it together enough to make as much money as they want.
Full disclosure: I was homeless for about six months. I started making better decisions and my life got a little better. Eventually, though hard work and not depending on someone else or blaming anyone else, I had a good life, then a great life. I am not rich, but I don’t have to worry about a roof over my head. I never demanded any handouts and never took government money (which would be tantamount to enslaving someone else to support me, something I couldn’t live with).
If a man has a horse, or an automobile, he understands there is a minimum required to keep his horse and automobile functioning.
He doesn’t say, oh I will not put enough gas in my automobile for it to take me to work and back. Maybe the automobile can get gasoline stamps, or a second job,
You know. Don’t muzzle the mouth of the ox that is grinding out the cheerios.
Tadfc, some of that concern has been alleviated through the deficit reducing Affordable Health Care Act. The next step would be to establish a higher mandatory living wage in order for more people to become even more independent of government assistance. That’s the big misunderstanding of the water toters for the most wealthy. The less regulations, less taxes, and lower pay puts the burden back on the working class while the upper class cleans their clocks, which is precisely what we’re seeing by taxpayers footing an average of $1K a year for the average Walmart worker, all while Walmart rakes in the cash. They just don’t get that.
If labor demands were reasonable throughout the economic industries chains there would not be the high desparity of wealth. There use to be a time when there was a 33 1/3% rule business and labor accepted. Everybody in the chain had a gross markup of 33 1/3%. Seemed to work very well until the early 70s when labor had other ideas. There also used to be a time when labor took care of their own healthcare and retirement or an employer might offer a small insurance annuity as retirement. That again, worked very well until the late 60s.
Take a good look at the historical data on wealth desparity prior to the 60s and 70s and what has happened since then. As a side note, take a look at historical poverty data during the two eras.
The minimum wage has always been one of the tools that established workers wield in order to keep younger and less skilled workers from competing for their jobs. Anti-competitive rules have been around at least as long as the medieval guilds. Like union rules, it has nothing to do with fairness or standards of living or any of that other cr*pola. It is all about the greed of people who want to shield themselves from fair competition.
Tom,
You poor, well meaning, schnook. You have just given the left all the reasons they need to take over the entire economy and country. Even though you are absolutely right about all the “unintended consequences”, they will realize you are right and “have to do something about it!!” Their only recourse is to take total control. You really messed up, man. Where is Milton Friedman when we need him?
I’d rather have Murray Rothbard but I’ll Milton over this group of idiots (Krugman, Bernanke and Geithner) and sycophants (again Krugman, Bernanke and Geithner)
Look, one of my two jobs is at a retail giant. That job only pays about $10 an hour, which for a part time job with health benefits, is perfectly fine to cover my rent and part of my utilities each month, as well as building stock and a 401K at a relatively young age. The problem with raising the minimum wage is that you destroy all the wage gains I have made in my career with inflation of prices. I started out working in a grocery store at 16 pushing carts and stocking dairy and frozen at $5.85/hr (before minimum wage was raised to $7.40 in my state). Then I moved on to an amusement park for several years, and ended up making $6.85/hr the first year, then $7.50/hr the second, then $7.75 the third. The problem was that between the second and third year, Nancy Pelosi and her progressive friends decided I wasn’t making enough in my first years of work, and raised the minimum wage. Price hikes followed soon after, and eliminated my actual wage gains. Then, after a fourth year, in which I didn’t make any progress in wages (my boss literally told me sorry, we can’t afford any more than $7.75 since all the lazy butts have to be paid $7.40 now, but since we were seasonal and exempt from overtime, she gave me about 5-10 extra hours a week to make up the difference). If they raise the minimum wage to $12, my buying power will be decreased by inflation, no matter what the good intentions of the folks pushing for it.
If asked, I bet that most Americans would think that raising the retail minimum wage to, say, $12 an hour is a good idea and they would gladly support it — at least verbally. On the other hand, most would decline, if asked, whether they would be willing to voluntarily add another 5% to their bill at the cash register — “to pay for a living wage for our workers.”
This concept is in existence in a few states. The liberal state of Massachusetts, for example, has an optional .5% addition to the income tax which very, very few volunteer to pay. Even the very compassionate Elizabeth Warren has never volunteered to check the box and pay a little extra.
Why is it liberals/progressivies fail to understand the basic principal that business will pass on any significant cost increase to consumers. As a result the cost of living will also increase which in turn creates a new, higher value for the “poverty level” followed by a need for yet higher wages … higher costs of doing business … higher cost of living and on and on and on.
Then again maybe they do understand.
Some peoples ignorance can sadly be very entertaining. Everybody wants more money, never mind what its worth. Everybody has that labor union mentality when it comes to wanting more money for labor, never mind it is passed through to the consumer and arbitrarily inflates the prices of goods and services. Then as witnessed over the past several decades it begins to snowball and becomes a continuum motion of inflation throughout all the economic systems.
If you want to know what inflation (not exclusively labor costs) has done to the value of the dollar try this experiment. Compare the value of todays dollar to lets say the mid 50s. $12.00 in 2012 has the same buying power as $1.43 in 1956.
The mantra of the Left, raise the minimum wage, raise taxes on the rich, raise the debt-ceiling. When they get it, does anything change? And when they can’t get it, they raise Hell. You’re talking like this is going to alter the shape of things to come. Re-building the middle class? Are you joking? There is an economic tsunami about to hit come the first of the year and your discussing the difference of 4.00 dollars an hour like it’s a cure all. There is some serious $h!t about to hit the beach and people are sitting on the shore, taking in the sun and discussing the fair percentages of the social contract, while having drinks. Here’s some math for ya’ Distraction+DeflectionxDenial=Destruction. There is no escape.
The government setting wages? This is communist insanity straight out of Lenin’s handbook. My biggest fear is Obama setting himself up for a 3rd term, which I explain here http://francisbarrington.blogspot.com/ .
There shouldn’t be any salary or payment with any job. If you have a job, any job, you get a government backed card which entitles you to purchase anything you want, or whatever you can haul off.. Sure some people will hoard stuff, others will not, it will average out. Then money can be done away with, bank accounts, bills, debt.. it fixes everything. Oh, if you don’t have a job, tough toenails. Starve to death. The only problem I see with my scheme is there will probably be only a couple million jobs total in the US.. mostly in the burial service industry.
One thing I have noticed in my 60 plus years is that no matter what your field and expertise, someone with a college degree but no experience will always show up to tell you that you’re doing it all wrong.
Like someone said, if they’re so smart why aren’t they rich.
The Walmart critics are more than welcome to establish and run their own stores. If they’re right they will drive Walmart out of business with their superior methods.
Walmart is mostly getting by on its foreign revenues these days. Many Americans can’t even afford to buy all that much at Walmart any more! For me, it’s dollar stores, thrift shops, or do without. Mostly the latter.
There is a big box retailer which pays $12 (or more), namely Costco. Anyone who has been to a Costco knows that the employees they hire and retain are exceptional. Costco is the anti-Walmart in terms of speed and service. Costco can afford to pay employees above-average wages because they exhibit above-average productivity.
If the left wants $12 and hour, just impose it via minimum wage laws. In that way, we’ll know who is responsible for the resulting debacle.
Be weary of wage-price spirals. Prices can go up or down easily (see oil, see Bush, see Obama, see Romney..oops, see Obama, again). Wages are not as flexible. A business has to bet on wages that won’t bankrupt the store. If prices go down and the owner is stuck with high paid employees, somebody’s losing a job- or a business.
As wages ratchet up, prices tend to follow with a new ‘floor’. The only way for the Left’s utopian plan to work would be for wage flexibility similar to prices- one year you make $12 an hour, the next $10 an hour (prices went down). So, if utilities, for instance, “necessarily skyrocket” and profits dip, so will your wages. If workers want a bigger slice of “the take”, they’ll have to sign-on for the roller coaster ride that is the business cycle. And, if the government syphons too much liquidity from the markets (hello deficits) both you and your boss will be out of a job. Ain’t government grand?
Unless something’s changed in the past couple of years, Costco requires a membership, IOW, you have to pay a fee for the privilidge of shopping there. The business model is completely different from a Walmart or Target so any comparison is not valid. That said, there seems to be a significant difference in the quality of Walmarts by region. I don’t care for the Walmarts in the Mid-Atlantic region, but the Walmarts in the South are really nice. There’s a huge difference in the shopping experience between a Walmart where I live and the ones I go to when we visit my wife’s family in Texas.
Well, I personally think it is a very good idea, which can be connected to left, but is also justified by its pragmatic value. It is something that promotes equality in the society, which should be our goal in times of economic crisis It is easy – you provide worker an additional money so that he can spend more. And he will. By either way, it can only boost consumption. And you should not worry about off-shoring of businesses, because there is still a lot of fields in which is better to hire educated and professionally working American worker. Just check the efficiency of a US worker and compare it with the rest of the world.
If your goal is promoting equality in society, wouldn’t a maximum wage be a better tool? For that matter, if your goal is to promote equality in society, why limit it to salary? There are lots of people that are smarter, harder working, and better looking than me, and because of this they have access to opportunities that I don’t. Why should I be penalized for being fat, dumb, ugly, and lazy? I’m an American dammit; I’m entitled.
“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded—here and there, now and then—are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as ‘bad luck’.”
– Robert A. Heinlein
In 1996 I made $4.15 an hour. With that I could buy 4 gallons of gas or 2 packs of cigarettes. Therefore minimum wage should be $12. With $12 I could buy 4 gallons of gas or two packs of cigarettes.
If $12 minimum wage is good then $50 is better. Minimum wage laws cause unemployment for the people that need a job the most.
Quindi è una buona notizia per pochi disoccupati e spero solo il diritto andando ottenere posti di lavoro nel negozio di cui sopra determinato!