I wasn’t surprised to see that Oregon’s unemployment numbers have steadily risen over the past five years. I’m even less surprised that it has reached a whopping 12.4% and is second in the country.
A lot of people will point to the recession as the chief culprit for high unemployment - not merely in Oregon, but around the world. And while it is true that businesses closing puts immediate pressure on unemployment figures, it doesn’t tell the whole story.
The state of Oregon, for example, decided to tie the minimum wage to rising prices in 2004. This was put to the voters as a way to “lift all boats” in a rising tide of wage-increase and general prosperity. It was argued that the poorest would benefit as employers were forced to pay them more and that the increased wages would stimulate the economy.
Oregon now has the second highest minimum wage and the second highest unemployment rate (behind Michigan). These two statistics are directly correlated. The minimum wage is not a rising tide that lifts all boats - rather it is a barrier over which one has to jump to get a job. Raising the minimum wage does not force employers to pay their employees more - rather, it forces them to fire anyone who is not productive enough to earn for them at least their worth in the new minimum wage. Any employer who continues to employ a worker who earns them less than the minimum wage will eventually go out of business (or at least he will have to subsidise this worker by taking from other employees, investments or profits).
If the federal and state governments want to see employment numbers go back up, they should abolish the minimum wage.
Of course the first fear is that existing workers would suddenly have their wages dropped drastically. But this is fundamentally false - as these employees are currently demonstrating that they can produce at greater than the minimum wage (otherwise they would not be employed). What would happen is that companies, even individuals, would suddenly be able to afford more help. This would increase their efficiency, their profits and money moving into the least productive members of society.
But governments have an interest as well - they would see their revenues rise as more employment and more income means more revenue.
At the very least, it would put downward pressure on unemployment - working against the increase that are being facilitated by the recession.
Please feel free to read my full analysis of the minimum wage:
The Minimum Wage I: Economic Analysis
The Minimum Wage II: Social Analysis
In many ways, I do agree with you, but there’s a big problem with this. By abolishing a minimum wage, you are assuming that employers will pay livable wages, which stems from an idea (in my opinion) that corporations will act “ethically” or consumers will take their business elsewhere. That doesn’t happen anywhere. I’ve worked three jobs in which I was well aware that I was not being paid any kind of “competitive salary.” Any corporation that is motivated by the accumulation of wealth will do its best to keep that wealth, which means paying a little less than “as little as possible” and selling as much as possible. It’s efficient, but how many people in the service industry made enough to live (especially those that had an exception to that minimum wage, such as food servers)? One could also look at France which has very high minimum wages, 6 weeks of paid vacation, a 35 hour work week, plus various sick leaves and socialised medicine, yet it has seen in recent years gains in national production levels. I’d suggest that abolishing minimum wages isn’t enough because if there isn’t a corresponding paradigm in place, the reduced wages will only lead to more abuse.
cchrisr, were you forced to take any of those three jobs?
Colin, would you say that if the minimum wage was abolished that living expenses would drop? In other words, does the minimum wage inflate prices of most market goods?
I don’t know anything about economics, I don’t pretend to. I don’t know if a minimum wage is a good thing or not. But I do think that it would be beneficial to have a lower minimum wage for after school or summer jobs for students. As a parent I’ve seen what benefits come when your teenage kid gets his or her first real job with someone other than yourself telling them what to do. It gives them a whole new view of the world! And it gives them valuable experience in multiple arenas–learning new skills, learning social skills, learning how to manage their personal finances and personal schedules, etc.
If employers were able to offer these young beginners a lesser amount, maybe more of those type of beginning jobs would be available.
Chris, your thoughts require a longer answer. I’ll get back to you within the next day (though some of this might answer your comment).
Darius, I used to think that the minimum wage had a hand in price rises. I now no longer think this is true.If the minimum wage is a barrier over which you have to jump to get a job, then it isn’t raising anyone’s wages - it’s just preventing people with lower productivity from getting a job.
For example, let’s say a barista who makes $10 an hour provides $20 worth of productive value per hour to her employer. If the minimum wage is $25 an hour, then she is unemployed. If the minimum wage is $0 (and all factors remain the same) then she still makes $10 an hour. This is because her wage is determined like any price - supply and demand. Her wage is not affected at all by any legislation under her productive value.
In other words, the minimum wage has no power to increase or decrease an employees productive value - which is what is responsible for their wage. If wages were independent of productive value (say based on how “nice” or “socially responsible” your employer was), then minimum wages could artificially drive up other prices.
Thainamu, excellent suggestions. And the fact that the wage needs to be lowered to accommodate inexperienced teenagers (who often have a lower productivity value) shows my point. You bring up another critical point - a high minimum wage prevents lower-productivity individuals (young people, mentally challenged people, people learning new skills, etc…) from gaining useful on the job training. Moreover, those who are at a higher risk for anti-social behaviour would benefit greatly if they could chose to have a job rather than engage in such behaviour.
cchrisr - “livable wages” has very little meaning. Is it $5 per hour or $20? Is it the same for you as it is for me?
Really, the easiest way to create full employment is through the use of nuclear weapons. Set a couple of them off in each state, and everyone will be employed fulltime trying to survive. Just like it was in the stone age.
This isn’t actually accurate.
Let’s take lemonade stands as an example. If there are no minimum wage laws, every child on a block of houses next to the park can start their own stand, and sell lemonade at $0.25 a cup to anyone who wants one. Each child makes very little, but what else would they do to make a buck? Anyone wanting lemonade has a huge selection, and can pick from the best supplier. Now lets impose a minimum wage of $5/hr. Suddenly, all these kids need to shut up shop. The weather still gets hot though, and people want to get a drink after playing in the park. Now though, the lemonade stand is run by an adult who charges $1.50 a glass for lemonade. Fewer people get lemonade and they have less choice, but if he sells just 4 in an hour he can make minimum wage.
Minimum wage CAN help the few at the expense of the many, it CAN raise the price of goods and services, and it CAN reduce choice and value while increasing the total revenue of a market. Services worth less than minimum wage won’t be provided, but by eliminating providers the value of the service to a subset of the customer base will increase allowing the service to still be provided, albeit only to a smaller number of people.
Darius, in some ways, yes. The skill set which appears on my resume, in conjunction with my availability to work and my need for a job at that time required me to get one in the services industry. Even when I was a grad student in the US, I could only get a single job (and this was before the market fell to pieces). The most common thing I heard was that I was “overqualified” for the job. Logically, the person “overqualified” who wants the job would make one of the better candidates, but that is not how corporations hire. I wound up having to lie (by not stating any of my education) in order to appear as a “good candidate.” If you’re point is that nobody had a gun to my head and forced me into slave labour, then sure, I wasn’t…but the best way to enslave someone is to do it so that one doesn’t realise it as such.
Colin, I don’t think your response to Darius touches on what I’m saying. But, I’ll follow that example to re-phrase my original statement (just in case it makes it easier). Take the barista who makes $10/hr and produces $20/hr. Without minimum wage, there is nothing to stop the owner from paying $2/hr. Supply and demand only works if the two are valued relatively equally. The owner values an employee who makes $10/hr at a lower value because there is a perceived endless supply of new employees. This is something that was occurring in my last job (and the senior manager is the one who suggested it, but he wasn’t the one in charge of hiring and payroll).
Greg, I didn’t specify a value of a “livable” wage because it differs in each location. The average cost of living for someone living in southern Louisiana (where I am from) is very different from Glasgow, UK (where I am currently) and also from Philadelphia (where my wife is from). To be even less clear, that wage is very different if one is living in New Orleans, LA and in Lake Charles, LA. I don’t think a federal minimum wage is the answer, but I also think that no minimum wage anywhere is also not the answer. $5/hr is livable in Lake Charles, LA, but it’s not livable in Palo Alto, CA.
A “competitive salary” is by definition similar to what you could get elsewhere. If you weren’t being paid a “competitive salary” I have to wonder why you didn’t look for a job at this competitor that paid more. As someone who likes to buy things, I fully empathize with those employers who like to buy labor for the lowest cost possible. I get my hair cut and “Great Clips” not because I am massively impressed with their credentials or skills, but because they cut my hair for less than I’d pay elsewhere. When they do a particularly good job, I show my appreciation by tipping well in an effort to get them to do it again, but my main expectation going in is that they will make my hair shorter for a low cost. As an “employer”, I try to pay the least I can for the service I want.
Food servers make some of the best income of any service bracket. When my wife was a server, she would regularly bring in bring in $20/hr and sometimes over $30/hr. The reason for the exception at restaurants in many states is because servers make far more in tips than they do in wages. The “real” employer of a server is not the restaurant, but the person being served. Give this person good service, and they will compensate very well. Because of this, people WANT to work at restaurants. Anywhere people WANT to work, supply of workers will drive down the price (much like my lemonade stands above did). A restaurant that attracts bad tippers has a hard time attracting servers. McDonald’s gets the dregs even though they nominally pay more (no minimum wage exception) because the total income potential/probability is lower.
I think the numbers speak loudly here:
http://www.bls.gov/fls/lfcompendium.pdf
United_States________2003|__2004|__2005|__2006|__2007|
All_working_ages______6.0|___5.5|___5.1|___4.6|___4.6|
Under_25_years_______12.4|__11.8|__11.3|__10.6|__10.5|
Teenagers_(1)________17.5|__17.0|__16.6|__15.4|__15.7|
20-24_years__________10.0|___9.4|___8.8|___8.2|___8.2|
25_years_and_over_____4.0|___4.4|___4.0|___3.5|___3.6|
France________________2003|__2004|__2005|__2006|__2007|
All_working_ages_________9.2|___9.6|___9.6|___9.5|___8.6|
Under_25_years_________19.8|__21.2|__21.8|__23.0|__20.2|
Teenagers______________24.4|__27.2|__27.3|__30.2|__27.3|
20-24_years____________18.6|__19.7|__20.4|__21.0|__18.2|
25_years_and_over_______8.0|___8.2|___8.1|___7.9|___7.3|
Atanamis, the numbers do speak very clearly. For France to have that much more unemployed in addition to the cuts in productivity measured per capita against the US, it does amazingly well to produce nearly the same amount of GDP per capita (within $2,000). Looking at the other “socialist” countries (Sweden, Norway, Switzerland, Denmark, Netherlands, etc) which have similar high standards of compensation, it looks like they outperform their hardworking friends (e.g. US, Japan, China, etc). If we want to play numbers, it appears that the exact opposite of Colin’s argument is true…but I don’t think that’s the case.
You can say that the “real employer” is the person being served, but that’s not true. One is paid (or perhaps a better word might be commissioned) to serve as a liaison between the buying customer and the producing business, but it is always ultimately the owner who is the boss. One keeps one job, yes, by satisfying the customers’ reasonable demands (e.g. hot soup), but that is only so that the customer spends money (and hopefully more money) by enjoying himself. The server (as a generic term for anyone in the service industry) is there to promote spending for the owner.
Back to the supply and demand of the service industry: it’s an illusion. Most places that I’ve worked at were understaffed 75% of the time. That would, theoretically, drive the price of wage up, but that never happens. I’ve seen the entire staff of a restaurant walk out because it was so poorly staffed that servers were unable to keep up with the demands of customers and started to lose the commission that is what gives them enough to live (their tip earnings). Wherever I have been, I have had a hard time finding people who really wanted to work in the food service industry. The majority of people I’ve seen there were either temporary (e.g. students) or trapped (e.g. no marketable skills for elsewhere).
cchrisr - I lived in Kenner, LA most of the first 17 years of my life. It’s a small world.
Chris, Colin’s argument is that high minimum wages result in high unemployment. GDP doesn’t really enter into it. In fact, the fact that high minimum wages don’t have a strong impact on GDP just demonstrates that those who produce low value don’t produce much value. Exactly as would be expected. Such people can be employed at low wages if allowed, and if not allowed remain unemployed. The question is whether it is better for the government to prevent marginally productive people from working (have a minimum wage), or allow these people to work even if they don’t produce much.
The real employer is the one paying for the service. A server is paid primarily by tips, making the customer their “real” employer. They are merely allowed a venue in which to sell their services by the restaurant. It is always better to keep customers happy to get better tips than to keep management happy and get no reward for doing so. Most servers hop around among restaurants at will based on where they can get the best tips. I’d highly advice talking to some servers if this concept sounds foreign to you.
Exactly. This shows who the real employer is. The servers aren’t working for the restaurant, the restaurant is just providing a venue. When the venue is crap, the servers leave. I have talked to very few people in ANY industry that really “wanted” their current job. Nearly everyone does what they do because it is the most valuable skill they can market and they can’t afford to go learn a more valuable skill. Those who do like their jobs are often poorly paid, because it doesn’t take a lot of money to get someone to do something they like to do.
Minimum wage just prevents people from being allowed to work if their skill level is worth less than a specified value. For a family provider, this might provide a valuable incentive to go out and learn a better skill by preventing them from stagnating in a position they never ought to have accepted. For someone who just wants some pocket money, it prevents them finding gainful employment. Minimum wage laws have little effect on GNP because those prevented from working by minimum wage laws add little value to the economy anyway. They DO have a high impact on unemployment rates, particularly among the young and unskilled. The only relevant question would seem to be whether these people have a right to perform marginally profitable services.
And regarding servers in particular, I know a server here in the SF Bay area buying their own house in a place where it is hard to find an home under $400,000 on a server income. This is a guy who takes classes in describing food and is intimately familiar with his restaurant’s wine menu. When I said my wife averaged $20-$30/hr. I meant over an entire shift. Over just a prime segment she would easily average much higher. On the worst days it was rarely under $15/hr. Servers at low end places may have trouble getting decent money, but then they also normally provide pretty poor service. Take pride in your work and do a good job, and you’ll see the money. It’s pretty much like most careers that way. (Though admittedly servers put up with a lot of crap much of the time to earn their money.)
“Without minimum wage, there is nothing to stop the owner from paying $2/hr.”
Actually, there is. If no one is willing to work for $2/hr, or if the owners of the other similar stores in town pay $4 an hour, the aforementioned owner has a decision to make if he really wants another employee.
Also, I affirm Atanamis’ comments regarding the minimum wage effect on living expenses. I don’t see how the minimum wage wouldn’t have at least some negative (or positive, depending on how you look at it) effect on the prices of goods.
Chris, thanks for waiting.
I am not suggesting that employers pay their wages based on ethics, morals or just to be nice. Your thoughts here imply that wages are determined, at least in part, by how “charitable” an employer is.
Say our barista (who produces $20 of value) is getting paid two dollars by Coffee Corp A - which is now making a massive profit on her. Massive. Those high profits will signal market resources, investors and entrepreneurs away from less profitable industries and into the coffee industry where there are obviously profits aplenty. These new entrants might be content with the profit gained from paying the barista $3 an hour. Others 4, and then 5, etc… The bid will be upwards towards (but not quite reaching) her marginal revenue product (in equilibrium: $20).
There is no way any market would tolerate an obscenely low wage relative to productivity without some kind of intervention or force being applied somewhere in the market. Greed, self-interest and profit seeking will require employers to pay as close to the marginal revenue product as possible in order to maximise their own profit.
I have seen the other posts on this topic, so I am including these in here. But let me first state that GDP is an irrelevant statistic (and I am not being flamboyant, it is completely pointless). This is because it included government transactions, purchases and interventions which have no meaningfully quantifiable numbers. Moreover, GDP does not take into account non-montary and opportunity cost gains (say an invention doubles the productivity of the nation and everyone decides, rather than producing twice as much, to use the extra time sleeping or in leisure activity. The economy is twice as well off, yet GDP wouldn’t budge). I suspect France’s “increase in productivity” is not related whatsoever to it’s welfare programs and initiatives, but to the statistical inflation caused by said “investments.”
Atanamis, re: your thoughts on minimum wage and prices rises, you are correct. I should have factored that into my original answer. The point I was trying to make was that minimum wage increases do not have broad effects on price rises to the point where some have made statements like “minimum wage causes inflation.” When in fact, minimum wage and inflation are completely unrelated, as minimum wage increases do not increase the money supply. But yes, an increase in the minimum wage will have an effect on the scarcity of labour, which will drive up some prices directly. But it does not actually “raise” wages, it simply makes employment more scarce.
It doesn’t affect the money supply, but it does affect the amount of goods available. With moderate “minimum wages”, this effect should be low as those whose productivity is outlawed weren’t very productive to begin with. If we make minimum wage very high though, a larger segment of the population is no longer allowed to be profitable which decreases the amount of goods to be consumed and drives up the cost of these remaining goods. Therefore we have “inflation” since prices have risen.
Looking at this from a purely utilitarian perspective, minimum wage laws might be able to increase productivity. Minimum wage laws reduce the standard of living of everyone to generate wage increases for the most productive (who can now charge more since they have less competition). This can actually have a desirable effect on productivity if it forces people to retrain or work harder to meet minimum productivity rules. It does this at the expense of disallowing individuals to choose to do a job that might not be highly productive but which they may enjoy or enjoy not having to work as hard at. This is why most minimum wage laws often have little effect on primary wage earners. These individuals ALREADY have a high incentive to increase their productivity. For a teen though, you MAY be able to coerce them into working harder by not allowing them to take an easier job for lower pay. This can have the effect of increasing productivity at the cost of limiting personal liberty.
Greg, that’s amazing. I spent a lot of time in and through Kenner, depending on where I was living at the time (Metairie, Laplace, Kenner, Bucktown, etc).
If they do have low productivity, then it could be argued that a higher minimum wage which excludes them from employment may actually save a company money, eh? If their contribution to the “greater scheme” is negligible, their exclusion means that only more productive people work and are not interrupted (or worse, replaced by!) the less productive people.
Bull. If that’s the case, then the customer is always ultimately the employer. There are two situations which go hand-in-hand here that confound this ideal. First is the situation in which a company has a good product but horrible service (e.g. that restaurant people will still go to even though it has poor service). If what you say is true, then this company should not be able to persist, yet somehow it does so (and, given enough time, it may even becomes the dominant one in the market). The second situation would be the places with bad products and good service; according to the ideal you seem to promote, these companies should survive (sadly, they don’t). It is only an illusion that the customer who pays for a service (and/or a product) is ultimately the one in charge. In reality, it is only the accumulation of self-valued illusions (wealth and money) which drives the desire that fuels the production of corporate dreams. It has nothing to do with genuine needs of peoples (there’s marketing for that one).
I’ve worked in enough different food service settings (yeah, I’ve “hopped around”), but thing most striking is that regardless of the restaurant, the type of service expected is always the same. No customer wants poor service and they tend to have the same expectation if they’re eating in a Michelin starred restaurant or if they’re eating at a unnamed truck stop. The only difference is that they plan to pay more for the exact same service if it is in a setting of “fine dining.” That’s the only difference. I don’t need advice from you on how to work as a food server. I’ve gone from “fine dining” to a “casual” dining setting, providing the same quality of service, yet I got paid a lot less (percentage wise) at the casual places. I’ve even worked both types of places in the same weekend (so it can’t be argued that I was simply a poor server), yet the tip money never equated with the quality of service. It’s only ever equated to an imagined quality of product based on the price of the food and the dining setting…never was it about the quality of service I or my colleagues provided.
Is that really the case? From what I’ve experienced, it is more likely that the new entrants will offer a “competitive salary” of $2/hr. Never have I seen companies increase their offers beyond a small percentage of the “average pay.” I’ve seen them start lower (primarily to see what they could get for cheaper) and then increase their offer to the average if the candidate was strong. Last year before I left my job in the US, there was already a shortage of staff. It was a well-known problem that a handful of our locations were well understaffed. I was already working three different people’s jobs (the IT guy, the graphic designer, and the printer), and they had known well in advance that I was leaving (I gave them 3 month’s notice!). When I left, they still hadn’t begun interviewing replacements for me because there were few applicants. Here’s a classic example of low supply, high demand. That means prices go up, right? Wrong. In fact, the company decided it was overspending and called a hiring freeze a month before I left, even though everyone in management (including some of the national big-wigs) had the same criticism of our store: they need to hire more people. I’m still in touch with some of my colleagues and they still haven’t filled any of the positions I was filling, they never offered more money, and they (ironically) never got more applicants.
Sure it does. It does it all the time. Isn’t that why multinational corporations utilise the globalised economy and outsource everything for cheaper. Isn’t that why “sweatshops” persist? Isn’t that why every single graduate from a university in India speaks English (and tend to do so better than the “average American”)? The market itself tolerates it until someone markets some kind of ethics as a new item to value (a current, trendy example would be Fair Trade). Then that item is also consumed in much the same way, but never is there actual change in the ethos of the market. It always takes intervention, typically by groups that radicalise a liminal ideal (e.g. it’s not the “treehuggers” but rather the ecoterrorists that affect change). This is the mighty power that Hegel saw in “The Terror” (of the French revolution) and that people after him (e.g. Marx, Nietzsche, the French students and workers of May 1968, etc) have seen and realised. As an ideal, these radicals are untenable, but as something that interrupts and short circuits the production of desire that is currently capitalism (don’t worry, it’ll survive as another name in the future), it is frighteningly powerful.
Lastly (wow, this is a long response!), I don’t disagree that GDP is an irrelevant statistic. My (implied) point to Atanamis was that nothing ever speaks for itself. It always requires interpretation (and it is always interpreted before it is read!). We can make a number of statistical measurements regarding economic progress and yet never say anything about the actual progress (or lack thereof).
Not to be a stickler for terminology, but I worded my sentence very carefully. Inflation is not an increase in prices, it is, at least in the neo-classical framework, an increase in the money supply. An increase in money supply is inflation and inflation puts upward pressure on prices.
There is no question that it would increase productivity in certain field, but it would decrease it in others. A minimum wage increase acts just like a subsidy in this sense - it will “stimulate” some teenagers to increase their skills, but it will do so at more than just the cost of liberty. There is also opportunity cost - perhaps those low-wage jobs would have been more in-demand, created more profits and hence more wealth. Perhaps a bubble is created in “training” or “education” that these teens normally wouldn’t be able to afford/aquire. Perhaps in pursuing this education, more resources must be employed than many other workers (to whom the training would have come easier) and therefore these are not invested in other naturally more productive sectors of the economy.
Your second and third sentences answer the first. Let me translate:
New entrants enter an industry at a lower than marginal revenue product wage (this is the monetary cost of risk and inexperience). Most companies will not pay more than marginal revenue product (this is a given). Once an employee acquired the skills, proved they had the skills, a company could no longer afford to pay them so far below marginal revenue product and their wage worked up to a much closer one.
There is no question that this “average pay” is low relative to other industries (IT, Logging, Finance) - but this is probably because restaurants aren’t the most profitable of endeavours and the marginal revenue product on employees is thus very low. It is not surprising that in similar regions, in similar establishments and for similar employees - the pay is also similar. Any employer who tried to pay drastically lower than “average” would have big problems very soon - and not survive (or it might survive, but only at the cost of something else - food quality, sanitation, etc…). In other words, it’s not minimum wage or “ethics” that is keeping the wage from being bid down - it’s greed.
I am not saying that all companies will adhere to this model. I am also not saying there aren’t poor owners and managers out there. I am saying that those which don’t will be disincentivised through normal market functions - competition, supply, etc.
Was this company still earning a profit on its employees? Were the employees there not striking or quitting? If both parties are making a profit, then the business is working. No question it can run better. But if everyone is still earning a profit, it’s technically working.
There is a reason there are “sweatshops” in China now and not so much in 1890. That is because China competitors in labour, say the US, Europe, Canada, etc… have interventions requiring employers to pay labour prices either above marginal revenue product or radically higher than China. For the longest time, these costs were still offset by the costs of travel, connectivity, transport and infrastructure (the lack thereof in some countries). But since about 1980ish, these costs have gradually been dropping as places like China, India and others have become more free-market oriented - while at the same time, North America and Europe have been acting in ways that have increasing the costs of employment. It is no surprise that the marketplace has responded and that such a disparity has “suddenly” (HA!) appeared.
If these requirements were to drop, “sweatshops” would virtually disappear (as prices would even out far faster - some countries having reductions in wages and others increases). Some “sweatshops” would persist, as there are some that exist because the employees there are, frankly, not productive enough to get a higher wage. It has nothing to do with ethics and everything to do with market forces. Unfortunately, the market will continue to be slow to reach equilibrium if western governments keep building in so many costs in their labour markets.
I know. My use of quotes on “inflation” was meant to indicate that it wasn’t REALLY inflation in the technical sense. I am sorry I was unclear.
Absolutely agreed, but the loss of liberty is the only certainty. While there are many other possible costs, it it theoretically plausible for a minimum wage to have a net benefit on everyone other than those whose liberty is being infringed upon. I’m not intending to imply this would be moral, merely that from a utilitarian perspective that it is possible.
The one contention I would make here is that sweatshops operating by deceiving their employees about the risks of employment or by otherwise coercing their employees to make decisions they would not make voluntarily are operating immorally. Providing sufficient safety equipment and maintaining the facility in a way to protect ones employees IS a moral responsibility of an employer. That said, most workers in a Chinese sweatshop are moving up from subsistence farming where a bad growing year can result in starvation. Buying Chinese saves lives.
Chrisr wrote:
1) Article is written suggesting that minimum wage raises unemployment
2) You suggest that France, a country with notoriously high unemployment was evidence against this premise.
3) I post statistics demonstrating that France has had notoriously high unemployment using historical data.
4) You posted random statistics with no connection to anything to make a point about how statistics can be used randomly? Is this the kind of “logic” you get to use in philosophy?
Admit it, you picked a really terrible example to use, and are now just trying to obfuscate your mistake.
I see your point, but I don’t think it’s really getting at my critique here. Employers start and do their best to continue paying below “average” and proliferate this by any means necessary. If it means having a setting in which there is high turnover so that they can continuously hire “cheap labour” or if it means redefining “competitive pay” as less. In other words, It is also greed that keeps the wage from being bid up as well. Just because an employee is finding ways to survive on a poor income doesn’t validate the system at all. People will put up with a lot of shit if it means the difference between a paycheck and being unemployed. Unemployment will still exist if the minimum wage is abolished because, while companies will be able to hire marginally productive people, there will be no incentive to do such. Why would a company hire an unproductive person? There is no logic there. Getting rid of a minimum wage only means that a company will offer less for jobs it does create in order to accumulate more wealth. There is no set of values that will overcome unemployment.
It’s a Fortune 500 company that owns this company. The parent company makes good profits overall, but this particular company they bought out has yet to run the same profit margins as its siblings and it is for many different reasons (image, marketing, product offerings, etc).
I disagree with this. It sounds like an idealist view of capitalism, but it seems to base itself on an image that man will help man. These “sweatshops” will continue to exist even in a completely free market economy. The only difference is that the market economy will validate such actions. If, as you say, the market economy is amoral, then it will continue to do things according to the accumulation of wealth, ignoring any concerns for health, safety, quality, quality of life, pay, etc. None of these things factor into an economic formulation in today’s paradigms, except as disruptive forces when they are radicalised and translated into a social economy of values. The move to abolish minimum wage is an anachronistic step to separate the two economies (one of monies and the other of social values) as we saw in 19th century industrial America.
There will never be an equilibrium in this market economy because the market is based on the move of desire. Desire first and foremost desires itself (Zizek writes that “desire’s raison d’être is not to realize its goal, to find full satisfaction, but to reproduce itself as desire”). There is always the desire for something else the moment one desire is satisfied. It is for the reason that the market economy will always be in a state of disequilibrium unless desire itself is destroyed…and that will not even happen in a utopian Marxist fantasy (as Zizek imagines). Sweatshops will always exist (even in the ideal free market “capitalist” fantasy) because there is always the desire for more for cheaper. The desire that haunts capitalism (to borrow some more of Zizek’s language) is such that there must be something somewhere that has huge profit margins in order to fuel an market which exists on any profit margins. The only options that are afforded to corporations is to either find a way to abuse the system as much as possible (e.g. sweatshops) or to lose money. The market economy doesn’t care about either unless they affect the market itself and it is only truly concerned with “inflation” (or the devaluation of the money it already has).
Uhh, no. My response has always been about the accumulation of wealth (go re-read my first post). I have been consistent in reading your responses as responding to that (which is why I chose France as an example of a country who has been able to produce the same amount as the US while having significantly higher standards of compensation). I won’t argue that France has “unemployment.” However, that misses my point in that even though France has high unemployment, high minimum wages, less work hours, more vacation time, and anything else that would suggest that it produces less than its “hard-working” counterpart, it doesn’t. In fact, every anti-”free market” society in Western Europe produces on average the same (or even more) than the pro-”free market” societies. Unless Europe has some magic efficiency machine that it hasn’t shared with the rest of the world, it seems that unemployment as a measure of the production of goods and accumulation of wealth (which I take as the goals of a “free market” economy) is a very poor indicator.
If this is true, then why does any employer anywhere pay more than minimum wage? No union forces my employer to pay me more than minimum wage, but I wouldn’t have accepted the position if they didn’t pay enough. I actually turned down a job offer last time I was laid off because they weren’t willing to pay enough. The only way someone can pay a low wage for a job is if someone is willing to accept that wage.
An employee who is productive can be productive without an employer. If nobody will pay me a fair wage, I can produce my own goods and support myself. For an employer to attract my interest, they have to provide me more compensation or more security than I can make on my own. It is the responsibility of each individual to make decisions for their own health, safety, and quality of life. In cases of fraudulent representation of the risks, the worker has the moral right to appeal to a wielder of force to correct the dishonesty.
This is why infinite productivity is possible. No matter what needs the wealthy may have had met, there are ALWAYS other wants that they will generate. There are two ways to get stuff. Make it yourself, or find someone who has stuff you want and give them something they want to get what you want. Since EVERYONE has wants, it is always possible to find a good or service that someone else wants and sell it to them. A lack of wants would be deadly for the poor, since they would be entirely unable to get goods or services from the rich.
Yeah, that really seems like an honest analysis of the data…
International Productivity
Revised estimates for 2007
Groningen Growth and Development Centre, University of Groningen
Rank ↓ Country ↓ GDP
per hour 2007 ↓
1 Norway 37.44
2 United States 35.90
3 Luxembourg 35.72
4 France 35.09
5 Belgium 34.39
Like Darius, you seem to believe you can make up “facts” that everyone else just has to accept on faith. This might be a valid approach in the halls of philosophy, but in the real world we tend to require that your “facts” have some relation to observed phenomenon.
Accepting a low wage when the only other option is no wage at all doesn’t validate or justify the low wage.
I’ll be blunt and so no you can’t. You can probably produce something that you can then sell to purchase goods, but I highly doubt that you have the skill set necessary to live on a piece of land you own without interacting with the external society (e.g. as a farmer).
I don’t disagree with that. What I disagree with is the paradigmatic belief that both production and consumption are necessary for human life (even a life in society).
It is. Even according to the estimates you gave, the level of productivity in the anti-”free market” countries of Western Europe do as well as the US even though there are many policies they utilise which should have them place otherwise. I gave GDP numbers which corroborate that analysis and the Groningen index also corroborates it. Even the productivity estimates can be interpreted as corroborating that to a lesser extent. You’ve not presented any statistic that paints a radically different picture. I’ve not “made up” any of these numbers and your trolling my discipline isn’t a mark of a reasonable speaker in a “real” discussion. Further, picking out the examples in my argument and trying to argue against them instead of the actual argument is a bad tactic. Try re-reading my actual argument and not just the “real world” examples (which are much more “made up” than the statistics I’ve cited).
Chirs, if there is such high supply of workers than there is no reason why they should be paid very much money at all. The market is obviously screaming at them to do something else. It’s tough to blame an employer from turning a profit if employees are acting like lemmings.
Low-skill workers cannot hope to obtain much money - this is especially true in a society where the value of physical labour is not very high. What do they expect? A person working all day with only primarily “physical skills” (that is, skills with no intellectual merits: communication, salesmanship, etc… to get an idea of the extremity of the term here, I mean little more than a farm animal - we have almost no jobs like this in the western world today) barely produces more than substance on their own. The profit margin on such a worker is virtually nil. But most workers around the margins of minimum wage have plenty of intellectual skills that are transferable to other fields. But because these people are competing with loads of other people who can “diversify” in this way, then this is going to keep wages (almost regardless of the industry) very low.
I am not suggesting that we can achieve full employment. That’s silly. I am suggesting that any unemployment being caused by a price floor would be abolished if minimum wages were abolished. This is axiomatic.
Wealth is not merely money. Wealth is also “health, safety, quality, quality of life, pay, etc.” You and I could both make more money in other fields. Yet we are doing what we are doing because we are “profiting” in other forms of currency like those you mentioned. Health, safety, quality, quality of life, pay are currencies and things of value to be traded just like money. Some people will value money more than these things (hence, of course sweatshops will still exist for those who want to see “health, safety, quality, quality of life” monetised into a larger paycheck). But those who want health, safety, quality, quality of life, pay more than money will see smaller paychecks. Just because “health, safety, quality, quality of life, pay” are not money, does not make them free goods - they take real productive value to create and sustain. In free societies, people will chose between these - and indeed, they have (in spite of unfree societies such as ours). Some employers provide lots of social benefits, but less money. Some places give you more money, but your work environment isn’t the best.
Re: Zizek and desire.
I don;t disagree with these statements. They echo economic principles of scarcity - unless humanity can live forever and have anything it wants at anytime, there will always be this unattainable desire. I am not offering capitalism as a way out of this problem. As you say, there really isn’t one unless desire itself is destroyed.
In 1969, the min. wage was $1.80/hr. I was 16 and working at a gas station and making $2.10/hr. A gallon of gas costs 30 cents. With my $2.10/hr , I could buy 7 gallons of gas. Today, min. wage should be about $21 to $25/ hr. to keep up our std. of living. And they say our standard of living is getting better. What a joke.
I think the main difference between our perspectives, Colin, is that I don’t see unemployment as being related to a wage floor. I’ve known enough people who have worked ‘under the table’ and such to know that if a job needs to be done that isn’t worth minimum wage, people find a way. The problematic which economics does not address is the ‘psychoanalytic’ one that is pulled from Marx, through Freud and Lacan, and finds its way to some continental philosophers who talk about desire (Zizek being one). For a noncorporeal corporate entity, wealth is strictly the accumulation of value (i.e. monies). Saying that the people who work in sweatshops (especially those who do so virtually against their will thanks to human trafficking) do so because they value money over XY is plain wrong. The problem with corporations is that they are not people with human desires. A corporation is a machinic body without organs that produces its own desire for the desire of value (and that’s not a typo). This desire fuels the cycle of valuation that things need to be valued by some spectrum of differentiation (so that X is ‘worth’ 14 Ys). The post-Marxist critique of capitalism is always couched in a reaction against that cycle. The valuation of all things according to a single economy (that of money) is an illusion created by capitalistic desire and is not a necessary part of human life. Granted, the post-Marxist view has problems of its own, but this particular point condemns capitalism as much as the failure and corruption of the USSR condemns Leninist/Marxist communism.
Lew wrote:
You’re seriously using gasoline, a limited resource that we know we will eventually run out of entirely and which has an rapidly increasing demand as your primary inflation measure?
cchrisr wrote:
What you are refusing to acknowledge is that all these ‘under the table’ workers are still considered unemployed and the jobs themselves are by definition illegal. Just as the drug war doesn’t eliminate the availability of drugs, a wage floor doesn’t eliminate low end jobs. What both DO accomplish though is to reduce the supply since the provider must risk government punishment to provide the product (drugs or job). The fact that people can evade any law doesn’t mean that all laws are moral.
cchrisr wrote:
A corporation is nothing more or less than a grouping of individual people working toward a common task.
Shareholders: At the base of it, the shareholders in a company hold full moral responsibility for the actions of that company. If I own shares in Nike and Nike employs slave labor, I am responsible for having employed slave labor. The mask of being a “corporation” is simply an excuse for individuals to refuse their moral obligations.
Board of Directors: In a corporation, the shareholders are hired with the responsibility of communicating to the shareholders about the state of the company and making sure the company is run in the way that the shareholders demand. They also have a personal moral responsibility to not take any action they believe to be wrong. If the shareholders demand an immoral act, a board member has a moral requirement to oppose the action and to leave the company if the act is severe enough. Again, hiding behind being a corporation is no moral excuse.
Executive Management: The executive management is hired by the board to actually run the company. They are responsible for pursuing the goals specified by the board, and running the details of the company. They ALSO carry a moral responsibility for actions taken by the company, and for ensuring that no immoral acts take place within the company. If they fail in this goal, the board should demand explanation and remove them from the position if they cannot properly address the problem. All actions taken by any employee in the company are at some level the responsibility of the executive management.
Individual Employees: No matter what your employer demands or expects, it is the responsibility of every employee to not act immorally. The only excuse for performing an immoral act would be ignorance, and only then of not willful or negligent ignorance.
At no level is the corporation anything but people with direct responsibilities to uphold a moral code.
There is only one economy, and that is made up of time, skills, and resources. Time I spend doing one thing I cannot spend doing another. Time I spend getting tired or injured will cost me time later recovering. Skills include physical fitness and permanent injuries as well as learning and native abilities. Resources include all relationships and items. Among these inputs we all must choose goals and how they compare against one another. Anything you have in life you must invest in, and anything you don’t invest in you don’t value. There IS only one economy, but currency is just paper and minerals. No educated economist would suggest otherwise, and you are creating a straw man by suggesting otherwise.
Capitalism is probably the best system if ethical procedures are followed. We have allowed corruption and greed to go unchecked and perverted the system. It no longer works and the effects are begining to show. I don’t think we’ve seen the tip of the iceberg of this depression yet.
Actually, it’s not corruption and greed that have gone unchecked (unless you mean the corruption of many lawmakers). It’s that capitalism has been suppressed and beaten til what we have has very little to do with free markets.
Darius, I find it funny that in a religious context, you want to emphasise the fallibility and corruption of mankind, but when it comes to the ‘real world’, only the people perceived as being against your beliefs are corrupt. Either man is corrupt or he isn’t and no system of politics, governance, economics, trade, language, etc, can change that. Further, no man-made system can rise beyond that imperfection, including corporations, denominations, political parties, and sports clubs.
The problem with capitalism is ultimately the same as the problem with communism, anarchy, democracy, and dictatorships: men are always already corrupt and those who are such seek power and the accumulation of whatever is valued within that particular economy (whether it be wealth, power, etc). There are many economies (and this is not limited to those related to trading goods). As I told Colin, I’m not looking at this as an economist but as a psychoanalyst, as a critical/cultural theorist, as a ‘philosopher’. Darius, your response goes very little because you refuse to respond outside of the small realm that you are in (and further, you create a very silly argument in which only the ‘educated economists’ can be trusted, excluding practically everyone in this discussion).
While it is definitely in fashion at my university to use this exact analytic you are talking about here, I haven’t yet absorbed it enough to properly go into it. I understand this “desire” question, but that is about it. I hope you’ll forgive this.
If people are working “against their will” then this is not an economics problem either - it’s one of force - it moves into the realm of politics. But those who are not being forced to work in sweatshops are indeed choosing it for some reason - even if it is merely to continue to exist at subsistence.
The valuation of things, I would argue, cannot be done by corporations or even individuals - that is in the objective sense. Value is subjective (i.e. - I don’t value the pen with X units of value and the headphones with Y units - I simply value one more than the other) and I don’t think that corporations (the entity) can do anything to change this. The only people who can affect “valuation” are the individuals within a corporate structure. If these individuals are allowed to freely communicate, trade and contract based on these subjective values (within the corporation, and between other “collective entities” as through shareholders, management, employees, etc…) then these associations are de facto voluntary, and they are also satisfying these subjective values.
This is the only way to explain the notion of “profit” (monetary, psychological, etc…) being able to increase in a finite universe where matter is neither created or destroyed.
Fair enough. I presume you take the same argument as me, that the failure of the USSR has no bearing on the validity of communism.
I don’t know where your comment came from, Cchrisr. I readily agree that humanity is corrupt, but point out the fact that capitalism is the only system that recognizes that.
Like most liberals, you look at economies with your feelings, while Colin looks at it with facts and evidence and reasoning. You don’t “feel” good about the greedy capitalist, so you smear him even though it is only by free markets that societies thrive.
To you, freedom is secondary to force. You would force your economic sense (if I dare call it that) on others rather than allow (as much as the rule of law does) people to do as they see fit.
Then again, I’m just the silly guy in my “small realm,” while you’re the big educated academic (who doesn’t let anyone forget it for a second). So what do I know?
Darius, my personal feelings have nothing to do with the (post-)Marxist critique of capitalism. I’m ambivalent to ‘greedy capitalist’ because ultimately it’s still an imperfect system. Capitalism is not the only system that recognized the nature of man; in fact, it is often deluded into thinking that if the market is ‘free’, it’ll get over such petty things. I’m critical of all economic systems, just as I am critical of all political systems. I didn’t smear any ‘capitalist’ because of his affinity to capitalism (please try to point that one out) but because he, like all other humans is human. Where one believes a corporation will somehow ‘do good’ for humans or collapse to the competition of one which ‘does better’, others believe corporations do the exact opposite and only collapse on their own weight. It has nothing to do with ‘feelings’ and everything to do with psychoanalysis and culture theory (which says that we’ve seen this happen many times before under many different guises as the economy of politics is as much of an economy as the economy of monies and trade). My comment regarding humanity comes from this response of yours: ‘Actually, it’s not corruption and greed that have gone unchecked (unless you mean the corruption of many lawmakers). It’s that capitalism has been suppressed and beaten til what we have has very little to do with free markets.’ That’s a standard response of Republican conservatives who value ‘free market capitalism’ over anything else. It’s an idealism that doesn’t work in the ‘real world’ just like Leninist Marxism.
You’re deluded if you think that I believe ‘freedom is secondary to force.’ I’m a classical anarchists, not a liberal and not a libertarian: ‘freedom’ is the ultimate goal of my socio-political beliefs; but freedom is more than the freedom to persist in a particular economy of beliefs. But if you think free market capitalism is the only route to freedom, then your response here is more of a partisan name-calling and not of any serious weight. I’m not forcing anyone to do anything and never have I suggested any answers to these issues (here or elsewhere). If you re-read what I have actually posted, you’d see that I’m not fond of the alternatives either.
Oh, and my comment about your ’small realm’ was a pointed response to your lack of responding to what I’ve actually written/said (something that Colin has been doing quite well). I have yet to talk about my academic qualifications. The only time I mentioned anything related to any academic qualifications was in response to your trolling that ‘no educated economist would say X’ (a fallacy in and of itself) as it doesn’t appear that you or I are ‘educated economists’ (as most of the people who have commented here). I honestly don’t know what an ‘educated economist’ would say as I’m not one nor am I knowledgeable enough in the education of economics to make such a claim. I have spoken from the realms of academia where I am knowledgeable (and possibly even an ‘expert’). Did I lose you in the many nuances of thinking yet? I understand that you seem to be largely against anything associated with Marxist thought, regardless of its usefulness to this dialog, but dismissing it outright isn’t part of an actual dialog. Perhaps it’d make things easier if you say when you want to be taken seriously rather than assume that your ridiculous comments (such as ‘To you, freedom is secondary to force’) are worth acknowledging.
Cchrisr, until my last comment, I hadn’t been responding to you. I was talking to Lew… which explains your comment more properly, since I’ve largely ignored your Marxist-loving ways. Marx was a monster, to put it plainly.
Darius, again you ascribe something to me that I’ve blatantly denied. What you seem unwilling to admit is that even ‘monsters’ make valid points at times. I use post-Marxist thought as a time-saving measure not because I necessarily agree with Marx, Marxists, neo-Marxists, or post-Marxists. In good conversations, it is much easier to simply use a few words which describe a particular notion (in this case, the ‘Marxist critique of capitalism’) rather re-invent the freckin’ wheel because someone likes to play with guilt-by-association games instead of actually engage the discussion. I was well-aware that you were responding to Lew when I responded to your post–that doesn’t make my response suddenly null and void.
Howdy.
The minimum wage cannot be changed. It cannot be voted up or down. It cannot be legislated.
That’s because the minimum wage is zero dollars per hour, the amount paid by businesses that decline to open in an area with high minimum wages.
People who work, sell, swap or barter try to receive as much as possible for their work, merchandise, or garage sale junk. But let’s look only at selling work. I’m willing to work for a million dollars an hour all the way down to, say, $25.00 an hour.
People who purchase the labor of others, much like people who purchase toothpaste, toilet paper, gasoline, or garage sale junk, try to pay as little as possible. But let’s only look at purchasing “work”. Let’s say you are willing to hire someone for anywhere from 10 cent an hour up to $30.00 an hour.
Somewhere in that $25.00 to $30.00 an hour range, you and I could make a deal. If I want $35.00 an hour, I’ve got to look elsewhere, because you won’t be willing to lose money on my labor.
No amount of legislation can change this, and it applies to other government lunacy as well. Set the maximum selling price of something too low, and less and less of that commodity will be brought to market. Set the minimum selling price too high, and less will be purchased.
(One other thing….you guys don’t really believe the minimum wage is increased to help the poor, do you? The minimum wage is occasionally increased in the U.S. because union contracts, especially for government projects, are priced in multiples of the minimum wage.)