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Lowering the minimum wage = crazy?

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Buzz Killington posted on Fri, Sep 7 2012 11:30 AM

http://oi48.tinypic.com/2m3fupf.jpg

One free market/libertarian answer to unemployment and poverty is lowering the minimum wage. My question is, how the heck are people supposed to live off a lower minimum wage?

The minimum wage is already pretty low, if we lower it to say 3-4 dollars an hour, how is someone supposed to survive off that income?

"Nutty as squirrel shit."

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Characteristics of minimum wage workers:

http://www.bls.gov/cps/minwage2011.htm

these 3.8 million workers with wages at or below the Federal minimum made up 5.2 percent of all hourly-paid workers.

Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less

Among employed teenagers paid by the hour, about 23 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over.

Never-married workers, who tend to be young, were more likely than married workers to earn the Federal minimum wage or less (about 9 percent versus about 2 percent).

Conclusion? The minimum wage affects the young, never married people. Not established families with children.

By creating a disemployment effect at younger years, the minimum wage prevents young workers from gaining the work experience that results in higher wages. If child labor and minimum wage laws were repealed, kids could 1) Earn some money while still with their parents so that they could start off life with a financial cushion, and 2) Gain work experience which makes them more attractive for better employment.

I'd really like to see their data. I want to do a regression analysis controlling for marital status, age, and hours worked per week. Especially since for people who work at least 40 hours of week who are paid at or below Min Wage sum to 1.7%. Older married people with children who work full time appear to be exactly NOT the demographic that works at or below min wage.

Remove other harmful things like the drug war (and consider the industry it would allow to create), and you have yourself a very likely improvement in the lives of people.

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All out of http://candlemind.com/projects/progclub/file/michael/SSN.php

 

And from the "Costs" article above,

 

Robert L. Woodson (1989, p. 63) calculated that, on average, 70 cents
of each dollar budgeted for government assistance goes not to the
poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split. 
In contrast, administrative and other operating costs in private
charities absorb, on average, only one-third or less of each dollar
donated, leaving the other two-thirds (or more) to be delivered to
recipients. Charity Navigator (www.charitynavigator.org), the
newest of several private sector organizations that rate charities by
various criteria and supply that information to the public on their
web sites, found that, as of 2004, 70 percent of charities they rated
spent at least 75 percent of their budgets on the programs and services they exist to provide, and 90 percent spent at least 65 percent.
The median administrative expense among all charities in their sample was only 10.3 percent. 
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Levon replied on Fri, Sep 7 2012 11:46 AM

Working in a company that is heavily vested in public funds being directed to private firms, I am not surprised that I am rarely able to convince anyone that minimum wage laws create surplus labor, leading to unemployment. And those negatively affected are typically younger and/or minorities, so wage laws are also discriminatory (reading Block's Case for Discrimination now).

I'm curious about something else related; what would happen to existing job wages if wage laws were scrapped? Are jobs compensating at or near current minimum wage rates likely to increase or decrease?

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Answered (Not Verified) Esuric replied on Fri, Sep 7 2012 12:08 PM
Suggested by John James

3-4 dollars an hour is better than 0 dollars an hour, right? How is someomne supposed to live off of 0 dollars an hour?

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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Suggested by John James

The minimum wage is already pretty low, if we lower it to say 3-4 dollars an hour, how is someone supposed to survive off that income?

To use poker language, I see your question, and raise you my question: How is someone supposed to survive at zero dollars an hour?

The idea is that minimum wage does not raise anyones salary. A worker gets paid what his work is worth to the employer. If a law insists that he get paid more than he is worth, he will not get paid the higher wage; he will be fired, or not hired in the first place.

So that all a minimum wage law does is make sure that anyone not worth the minimum wage gets zero, instead of getting something. How is he supposed to survive off that income of zero?

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Yes, 3 dollars an hour is better than 0 dollars an hour, but it's still crap, my solution would be to support them via welfare while they're working for that much and developing their skills (the conservative idea of a moderate welfare state to get people back on their feet).

"Nutty as squirrel shit."
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Buzz Killington:
Yes, 3 dollars an hour is better than 0 dollars an hour, but it's still crap, my solution would be to support them via welfare

"welfare" meaning money you've stolen from other people.

 

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John James:
"welfare" meaning money you've stolen from other people.

Yes, what is a better alternative? The disincentive to work isn't really a problem if you make working a requirement for welfare.

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Buzz Killington:
John James:
"welfare" meaning money you've stolen from other people.
Yes, what is a better alternative? The disincentive to work isn't really a problem if you make working a requirement for welfare.

...you're asking what is the better alternative to stealing from people?  I don't know...not stealing from people?

 

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Work for a wage? That's not welfare, bud. That's a job. Now we've gone full circle.

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HabbaBabba:
Work for a wage? That's not welfare, bud. That's a job. Now we've gone full circle.

Not exactly, they would be working, and yes for minimum wage, but they would also have a little additional welfare to support themselves until they developed their skills more.

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If they're working full time, how are they going to develop skills more? And why? They get 2 paychecks.

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HabbaBabba:
If they're working full time, how are they going to develop skills more? And why? They get 2 paychecks.

By working, they get experience and develop their skills. And like I said, working would be a requirement, and the amount given wouldn't be enough on it's own anyways.

"Nutty as squirrel shit."
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Doing so completely destroys the price mechanism and results in large amounts of money being transferred from productive enterprise to low utility labor, making everyone worse off. Only the market can determine what value a given job provides to people and, therefore, the wage it can earn.
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Buzz Killington:
The minimum wage is already pretty low, if we lower it to say 3-4 dollars an hour, how is someone supposed to survive off that income?

Why do you implicitly assume that everyone working for the minimum wage has no other means of support whatsoever?

The keyboard is mightier than the gun.

Non parit potestas ipsius auctoritatem.

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Buzz Killington:
I said, working would be a requirement,

Ah I see.  So you're against unemployment payouts.

yes

 

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