Raising the minimum wage is good for the economy.

One question. Let's say you are a wage person making a particular product, and you can make one per day. Over a couple years- Somebody invents a machine tool that not only makes your job easier and safer, but allows you to make two products a day- so your company buys one for your position. Then, your company brings in some automation or other improvements that again makes things easier and safer, and allows you to make three products per day- without working any harder, yet with greater safety... so your work conditions have improved, overall productivity and as competitive position has improved, they wind up giving you nice raises as well.

Do we say that your productivity has tripled, but your wages only went up by 1/3, and that is unfair?

I once had a job foremen that told me whenever a job went well and came in under the budgeted labor amount, he should get the difference as a bonus, because he made it happen. I asked him what he thought we should do when labor costs exceeded the budget, which was actually much more common. He explained that was a different problem and resulted from poor management, and the company was to blame. I told him that since he understood so much of the process- he should go into business for himself. Some months later, he did- and of course, got a very expensive education. Managed to last a couple years before he went under.

Every employer has been an employee and knows the conditions of the situation. Very few employees have ever been employers- but they are experts when it comes to telling us how it works, and what we are doing wrong. That is, until they try it.

 

Forty million predominately working Americans requiring government assistance to buy food is a damn good indicator of the economy and what it indicates is that the employers aren't paying enough to their workers.

Our current economy is generating almost $17 trillion annually and if just 1/4th of that was distributed based upon the labor of America's workers as the "minimum" compensation for labor there wouldn't be any significant poverty in America today. That would leave about $13 trillion to be divided up by those with more desirable skills that receive higher compensation as well as profits for the owners of enterprise.

Anyone that says $13 trillion isn't enough money for higher wages and profits for business simply fails to understand how much money $13 trillion really is. $13 trillion is equal to the entire US economy under the early Bush Adminstration

 

Well sure, but automation isn't the only measure of productivity.

If you give 10 employees the same equipment capable of producing a product in a certain amount and a certain quality, it doesn't mean that the production or the quality of the product will be equal in anything but the most simple circumstances.

And no, the fact that I'm capable of producing 3 per hour due to automation doesn't mean I should get paid more. Pay is based on demand for the product, not how many I produce.

Producing more often actually means a lower per unit value anyway.

Now if I can make 5 per hour when I'm only expected to make 3......

 

Almost correct but before getting into that let's address some things that are correct.

The "price" (wage) for labor is based upon the available workforce that can perform (i.e. has the skillset for) the labor. That market minimum "price" (wage) is unrelated to the "value" of the labor and instead is based upon minimum amount an employer can expect to pay and still be able to staff their enterprise.

This is unlike the market price for goods and services provided for by enterprise because the lowest market price is the cost of providing the goods or services. It doesn't matter if there's one potential supplier or one million potential suppliers none of the suppliers can sell their product or service below how much it costs them to provide the product or service because they would go bankrupt if they did.

In a capitalistic economy if the "price" is below the "cost" then capitalism fails with one exception.

If the supplier receives and external subsidy then they can price below their actual cost so long as the subsidy is equal to or greater than the loss they would have on the sale.

The Market doesn't impose a wage ceiling. The wage ceiling is imposed by how much revenue the owner can generate from the labor of the employee(s). Regardless of how much the market dictates the minimum wage the owner has complete control over how much revenue the employee generates with their labor. The employee only performs the tasks assigned to them by the owner. The owner is responsible for turning tasks into revenue. That is typically laid out in a formal business plan but not all owners are competent and not all owners create and maintain a business plan. If they did they could pay their employees more because they'd be using the employees to generate the maximum amount of revenue and not the minimum amount that only supports the market based minimum wage.

It's really sad that so many argue against a living "minimum wage" which is really just a cover for condoning extremely poor management. The employees are competent and doing the work assigned. The owner is incompetent because they're operating the business correctly and not assigning the work to the employees that will generate the revenue to pay them a living wage.

Here's a fact. If the owner wants to offer a $20/hr starting wage for unskilled labor and also provide health insurance, a pension plan, and profit sharing then they can do that without a problem. Type the numbers into the business plan (including the necessary customer research and marketing strategy), create the training plan and tasks to be assigned to the worker to generate the revenue beginning from the day they walk in the door.

The only necessity is that the owner needs to be a business person first and foremost. Most really aren't. Let me provide an example.

McDonald's uses franchises and McDonald's creates the business plan for the franchise owner. The McDonald's business plan for the franchise owner assumes that the franchise owner doesn't know their ass from a tea kettle. It's a business plan based upon incompetent management because if it wasn't then the franchise owners would be going out of business all over the United States.

 

Pure B.S.

 

LINK?

 

"We have been raising the minimum wage for 78 years, and as a new study clearly reveals, 78 years of minimum-wage hikes have produced zero evidence of the "job-killing" consequences"
http://www.businessinsider.com/minimum-wage-effect-on-jobs-2016-5

http://www.hamiltonproject.org/papers/the_ripple_effect_of_the_minimum_wage_on_american_workers/

http://www.epi.org/publication/the-...-on-education-and-the-workforce-member-forum/

https://www.nytimes.com/2015/07/27/...wage-rise-has-experts-guessing-at-effect.html

Want more, including studies on the ripple effect through the economy?
http://bit.ly/2t4voUg

 

I didn't *try* to get down to localities and regional increases. It's enough to show that NATIONAL increases affect employment.

You simply continue to amaze me with your inability to grasp the most basic of concepts.

Again, the 16-19 age cohort is the cohort that is hurt the worst by MW increases. They are the canary in the mine for the impacts on the rest of the economy.

Again, you simply continue to amaze me with your inability to grasp the most basic of concepts.

 

The fact is-----------------raising the minimum wage will only cause another round of inflation. So-------------in the end no one wins.

 

If you can produce 5 parts per hours when the job rate is base on three, then you are producing 2/3 more than the average, and one or more of these things is appropriate:

A. your employer gives you a 66% raise.
B. Your employer makes you the supervisor or trainer, with appropriate salary, and that helps all people to increase their productivity.
C. Your employer doesn't give you that recognition- but his competitor is willing to hire you at a 66% raise.
D You fail to market your skills and expect recognition to happen and life to improve all by itself, so someone just takes you for granted... but that is in your power to change; and if you fail to do so- nothing will change. There will always be those who will take advantage in every situation, on either side of a relationship.

Automation and fine machinery have a great deal to do with quality. Unless a CNC milling machine or welding robot is broken or improperly programmed, it will produce identical parts 24/7. There are virtually no craftsmen that can do that. It is why we have high quality cars, super miniaturization and a host of wonderful products. A few people- with the creativity and insight to envision these things bring them about, and then millions benefit from them in terms of life quality, jobs that are safer and easier, and less work hours. On the other hand- the variations in skill, attitude, ethics and mood of labor is huge and inconsistent. That is why automation is so beneficial to both industry and labor.

My parents ran their own small business, and worked 14 hour days- 6 days a week. My grandfather was 15 in 1894, and he lost his father and three brothers to a typhoid epidemic is less than one week, because there was no medication yet to save them. My wife's parents were share croppers, and she was literally dragging a sack and picking cotton at age 8- and her family included 13 children, yet they didn't own a car or washing machine yet. Her mother made all their clothes, they raised almost all their own food- yet they never went hungry and were provided education and encouragement.

Today, there are 6 people left on my immediate side of the family, (brothers and children) and three of us are self-made millionaires. If look back at the difficulties and conditions of life over a few generations, you quickly see that there have been massive increases in the quality of life along with huge decreases in the difficulty of life. People have so much more, opportunity is so much greater- but the increase in complaining about how hard life is today outpaces the recognition of how easy we have it, thanks to the generations before us that have done so much with so little. At what point do we quit whining and arguing, step up to the plate and become grateful enough to leave our children a better world than ours, as our parents did for us? It is work, not whining, that makes it happen. It's up to us- not government, to make the process continue.

 

So high school students are the bellwether of our entire economy?

Who knew...

Jesus that's stupid

 

Yea except that never happens as noted repeatedly

 

That's actually an interesting question. Having spent much of my career reducing labor costs with automated processes I'm very much aware of the cost/benefit analysis that's necessary for the above situation. Generally the return on investment must be five years or less to justify the purchase and that could easily be assumed in the above. The first machine doubles production while the second increases it by 50% and there are numerous considerations as to whether it's fair or not.

Let's address a few:

It was the employee's labor that made the purchase of the machines possible. It was his/her output the provided the income for the enterprise which provided the foundation for the financing of the purchase.

Employee safety is the responsibility of the enterprise that cannot be considered a benefit to the employee. The real question relates to why the owners/management were allowing unsafe conditions that needed to be rectified to begin with.

The employee, management, and owner(s) must all benefit proportionately based upon their contribution to the enterprise because those contributions of each are required for the success of the enterprise. The increased production and resulting revenue must be addressed on the long term basis.

The owner maybe just an investor (i.e. stockholder) or may be both an investor and manager of the enterprise and each deserves a part of the increased revenue.

As an owner the person deserves a reasonable return on investment. There was an initial investment by the owner that allowed the enterprises to operate and generate that return on investment. A reasonable return on investment in an enterprise is about 10% per year so if the owner invested $100,000 then just based upon their investment they deserve $10,000/yr in income. Above there's a re-investment that will be made from the future profits that would go to the owner and the owner is entitled to 10%/yr based upon the costs for funding the investment. If the machinery cost $200,000 then the owner is entitled to an additional $20,000 in income based upon the reinvestment of profit. While this might seem limited or "unfair" we also need to remember that with the increased production the value of the enterprise is also increasing so in addition to the annual income the owner is also increasing their assets. Their "stock" in the company has tripled in value with the tripling of production.

The management of an enterprise also deserves an increase in compensation based upon their successful management. This could be an employee or the owner working as a part of the management team. Management compensation is fair when it's based upon a percentage of compensation paid to the employees. This relates to both the level of management and the number of employees working below the manager. There can be multiple layers of management receiving proportionate compensation as well as non-production hourly labor that must be calculated as a part of the total labor compensation expenditure but there is a guideline that should be adhered to. The CEO is the top executive/management position in the enterprise and the CEO's compensation should be roughly 20-times the compensation paid to the production worker. If you take the production worker and the CEO's compensation and maintain that relationship then the proportionate compensation for all other employees can be calculated.

Finally there's the "size of the pie" which is the actual long term revenue increase to the enterprise that establishes how the compensation is to be divided (excluding the owner's investment share that's based solely upon the initial investment to cover start-up costs and re-investment of profits to expand the enterprise). To do this it requires a ten-year analysis where the first five years are covering the costs of the investment and the next five years are pure income from the investment. The analysis also has to consider potential pricing changes that could be required because increased production typically requires an increase in market share.

Now run the numbers now with the above criteria and it can be determined if a 33% increase in the production workers hourly is "fair" or not. Over the ten year timeline, if productivity is increased by 300% with the introduction of two automated processes, then typically the 33% is unfair to the worker because of the huge increase in productivity. There are ways other than the wage increase to address the inequality. The enterprise can increase other benefits to the employee such as more paid vacation time, the addition of profit sharing, adding/improving medical benefits or adding/improving retirement benefits that all provide compensation to the worker.

The key is that the "pie is larger" and no one should receive a disproportionate piece of the pie. Not the worker, not the management, and not the owner.

 

The thread is as false as false can be. It's akin to thinking
that handing Barack Obama a Nobel Peace Prize will make this
world a better place.
Sheer nincompoopery.Is what.Is all.

 

But it does. It is just like when labor unions kept asking for and getting wage increases. It was the beginning of another round of inflation. Example-------------the 69 Chevelle that I bought then for $3300 now cost $30,000. Explain that if you can.

 

Some short term job losses do occur when "less than full employment exists" (5% unemployment typically indicates full employment) related to the 16-19 year old workers but the studies also indicate that this is short term and by the end of the fifth year the employment statistics show that the 16-19 year old demographic has returned to the pre-minimum wage increase level.

Our current unemployment rate was 4.3% the last time I checked and in this economy there would be virtually projected job losses in the 16-19 year old demographic or in any demographic group.

Of importance is that the 16-19 year old demographic doesn't represent a "head of household" situation where the worker is supporting household expenditures. A downturn in employment this labor demographic group does not result in underfunding of household expenditures.

From an economic perspective our primary concern is the funding of household expenditures based upon compensation from employment because this is the demographic group that requires welfare assistance if they're not receiving adequate income from employment. The 16-19 year old group doesn't statistically require welfare assistance if they're unemployed because overwhelmingly they're still living at home, most are still in high school, and are supported by their parents income.

 

From someone that's obviously never created a business plan.

 

Sorry but minimum wage has little or nothing to do with union wags or your hatred of unions.

But it's interesting seeing right wing Republicans attacking higher wages for middle class and poor across the board.

Shiva above is correct. The "market" is skewed and we can see that simply because millions of workers are paid so little that they live in poverty and can't afford to pay for healthcare. In fact not only is it skewed to lower wages in general, it REQUIRES millions to be unemployed and "available" to jump at whatever job is offered at whatever wage is offered. Of course that means that WE have to pay out those unemployment benefits to keep those millions alive until those job scraps are offered.

 

I suppose that's where the relevance of "TAX cuts for small business and corporation" meets conservative logic

 

What good does higher wages do for "the middle class" if they have to pay MORE for every thing they buy. It is called inflation.

 

Income taxes do not impose a financial burden on the enterprise because they're unrelated to the operational expenditures of the enterprise. Income taxes are imposed on net profit and profit is not a cost to the enterprise. It's what's left over after all of the costs are accounted for.

That's where "conservatives" get it wrong because they claim that the income taxes increase the costs of the enterprise when in fact they don't because the income taxes are not based upon the operating costs.

There are other taxes that are based upon gross revenue (not at the federal level but at the state level where some business taxes are determined by gross revenue) and those taxes do increase the operating costs because the tax is predominately based upon the revenue to fund the operating costs.

 

Oh! I didn't know that! So I can "declare" or "demand" from someone a minimum wage, and I can stay home and not work and collect. Wow. I'll have to try that.

 

Inflation is due to an increase in the money supply that's unrelated to the costs of producing a product or providing a service.

Increasing the minimum wage provides additional and necessary income to lower income workers and the impact on the overall price of goods and services is only a very small percentage of the percentage of the Minimum Wage increase. In fact it's so small wouldn't even be noticed in the overall economy.

Raising prices is the last option for the enterprise and the increased minimum wage only affects those enterprises that have been under-compensating their employees to begin with. Revisions to the operations of the enterprise can easily increase gross revenue to cover the increased cost of labor. Improved customer service is something that virtually all enterprises can provide at no additional costs where the improved customer service alone will increase revenue enough to cover the additional expenditure.

The increased wages are only a percentage of costs for the enterprise so the impact on pricing is minimum to cover the increased expenditure. For example if labor compensation is 25% of gross revenue and that is increased 10% then the percentage of gross revenue increase to 27.5%, It only requires a 2.5% increase in the prices to cover the entire increase in the compensation for labor. The "middle class" household wouldn't even notice a 2.5% increase in the cost of goods they purchase at Walmart.

A minimum wage increase does not increase price for goods and services that are provided for with compensation above the new minimum wage. For example the worker compensation for the production of automobiles is typically a middle income wage that would be unaffected by an increase in the minimum wage. The price of a car will not go up because the compensation for the workers will not increase because of the increased minimum wage. New home prices, a major household expenditure, would not go up because construction jobs typically pay well above minimum wage.

The middle class benefits financially because of the increased minimum wage because it dramatically reduces the necessity of government welfare assistance because it reduces under-compensation that requires welfare assistance. I don't have the numbers memorized but the federal government spends about $400 billion on welfare assistance and most of that goes to working households. Increasing the minimum wage reduces that expenditure significantly because the household now has the income from employment and doesn't need the income from welfare assistance. They would no longer qualify for the welfare because of the increase in their wages.

People freak out believing that an increase in the minimum wage creates a "dog chasing tail" situation where the percentage increase in the wage creates the same percentage increase in the cost of living so that it become an endless cycle just to break even. That never happens.

 

Ya think?

http://www.hamiltonproject.org/papers/the_ripple_effect_of_the_minimum_wage_on_american_workers/

http://www.epi.org/publication/the-...-on-education-and-the-workforce-member-forum/

https://www.nytimes.com/2015/07/27/...wage-rise-has-experts-guessing-at-effect.html

Raising the MW worked pretty well in the past when we had rising incomes, prosperity, and rising standard of living, like since 1968 for example.

 

http://www.hamiltonproject.org/papers/the_ripple_effect_of_the_minimum_wage_on_american_workers/

http://www.epi.org/publication/the-...-on-education-and-the-workforce-member-forum/

https://www.nytimes.com/2015/07/27/...wage-rise-has-experts-guessing-at-effect.html