Minimum wage, the media’s secret
posted at 11:15 am on June 9, 2008 by Ed Morrissey
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Last Friday I wrote that the media had missed an important component of the new unemployment figures — a minimum-wage hike that increased entry-level wage costs to employers by as much as 28%. Yesterday, Jerry Bowyer agreed with me, and the chief economist of the BenchMark Financial Network accused the media of deliberately ignoring the cause:
Ask yourself a few questions: Why did unemployment surge at a time when unemployment compensation claims are historically low? More to the point, how could unemployment spike this much without a coinciding spike in corporate lay-offs?
The answer to all of these questions is same: because very few people lost jobs last month. This huge jump in the size of the unemployed comes from new entrants to the economy – hundreds of thousands of them. In short, well over 600,000 people who were not job seekers in April became job seekers in May. And who starts looking for work at the end of Spring? That’s right – students. Hundreds of thousands of students are looking for work right now, and they’re not finding it.
Congress is to blame. Last year Congressional Democrats (along with some Stockholm-Syndromed Republicans) passed the Fair Minimum Wage Act of 2007, which started a phased hike of the minimum wage from $5.15 an hour to $7.25. Free market economists warned them that this would increase unemployment – that rapid increases in unemployment compensation hit teens and minorities the hardest. But the class-warriors are running the people’s house now, and they would hear none of that, so they took to the floor, let loose the dogs of demagoguery, and saddled America’s pizza parlors, municipal swimming pools, house painting businesses and lawn mowing services with a huge cost increase.
Who got hurt? Overwhelmingly, the job seekers who could not gain employment were teenagers and African-Americans. Those of us who argued against a minimum-wage increase had predicted that exact outcome.
Some commenters from Friday put the blame on the sharp increases in oil prices, but that primarily affects prices, not wages or jobs. It does have a secondary effect of reducing buying power through inflation throughout the consumer market, which means that retailers can’t afford to raise the price of goods now to help offset the increased labor costs that Congress imposed. If they can’t raise prices, then they have to cut costs instead, and that means hiring fewer workers in entry-level positions.
Bowyer points out an ironic twist on these results. The only organizations flush with cash this year and who need entry-level workers are political campaigns. At least a few of these unemployed people will likely end up working for the politicians who put them in that position, and who would make the situation worse in years to come. (via King Banaian)
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The Demand Curve. First day of economics class. Apparently, Congress missed that day.
TritonTR on June 9, 2008 at 11:20 AM
My family went to a big amusement park last Saturday. Half the rides were closed because the park can’t find enough workers. They would rather keep the rides closed than pay inflated minimum wages to unskilled ride operators. In this economy they cannot simply increase the park ticket prices to cover the wage increase.
rockmom on June 9, 2008 at 11:21 AM
Small business can’t afford to hire Summer help without a suitable wage for temporary, unskilled labor.
Does anyone expect members of Congress to understand profit and loss? These are people who get trillions of dollars and spend it on whatever suits them as quick as they can since there’s always more coming down the pike. The business model to them is the Bizarro world opposite.
Hening on June 9, 2008 at 11:21 AM
… the media had missed an important component of the new unemployment figures — a minimum-wage hike that increased entry-level wage costs to employers …
Of course they missed it, because they don’t understand how it works.
Who got hurt? Overwhelmingly, the job seekers who could not gain employment were teenagers and African-Americans. Those of us who argued against a minimum-wage increase had predicted that exact outcome.
Two groups who the left caaaaaares so much about. Again, they don’t understand how it works.
Tony737 on June 9, 2008 at 11:23 AM
The obsession with liberals and the minimum wage is obvious…the uneducated is their base.
It has nothing to do with improving peoples lives, it has only to do with getting more votes. And if that means destroying one entity, to ensure another’s survival, no problem as long as the net is more votes.
Like the inner city school system, imperative that they keep the drop outs high, illiteracy high, out of wed lock high; if they can give the poor just enough to live on, then they will have a vote forever. If they keep the illiteracy high enough, they will have a vote forever.
The two go hand and hand…the liberals have no shame.
right2bright on June 9, 2008 at 11:25 AM
Coincidence I’m sure… >_>
Yakko77 on June 9, 2008 at 11:25 AM
Also, the FBI says crime is going down. Will the lack of jobs cause crime to go back up again?
Personally I believe crime is down because last year when the murder rate went up, the victims of those murders were other criminals.
Tony737 on June 9, 2008 at 11:28 AM
No it’s that a good chunk of Americans missed the class and Congress likes to pander to them.
Benaiah on June 9, 2008 at 11:29 AM
Well you know that all they do is hand out the sylabus that day, anyway! LOL
Seriously though, I had the same thought. We spend billions pampering these idiots and giving them huge staffs and salaries. They preen and prance around proclaiming themselves the best and brightest the nation has to offer. Yet for all that, basic freshman-level economics seems far beyond their grasp.
highhopes on June 9, 2008 at 11:30 AM
… imperative that they keep the drop outs high, illiteracy high, out of wed lock high; if they can give the poor just enough to live on, then they will have a vote forever. If they keep the illiteracy high enough, they will have a vote forever. - Right2
Exactly right, yet the Dems get 90% of the Black Vote. Luckily, the beautiful Mrs.737 is one of those few Black Voters who sees through this commie scam.
Tony737 on June 9, 2008 at 11:31 AM
That’s certainly true down here in the nation’s murder capital- New Orleans.
highhopes on June 9, 2008 at 11:31 AM
So, when McShame waives his magic wand and makes all the formally illegal workers legal and requires that they are paid more we get a triple whammy.
1) All the employed illegals become unemployed Americans
2) We get to support all the new unemployed:medicaid, Social Security, welfare.
3) A new wave of illegals to fill the void.
I am sure there is a silver lining in there somewhere for everyone but US.
rgranger on June 9, 2008 at 11:31 AM
its also more in red states and rural areas where the cost of living is much lower and a Govt. mandated ‘min. wage’ runs into contact with the actual market wage for low end jobs.
in blue states, like San Fran, the minimum wage as currently set is irrelevant.
jp on June 9, 2008 at 11:32 AM
Ed,
Min wage increases probably did hurt in this area, but in my local area I am seeing fewer and fewer students doing jobs that students once did on a routine basis. My local Wendy’s and Burger King have had a large infusion of nonenglish speaking Hispanics lately, and of course I don’t know that these new workers were illegal, but they could be. You seem to be glossing over this point, in favor of your anti min wage position. Are you so in the can now for McCain that any mention of unskilled illegals competing against unskilled citizens is now taboo?
DFCtomm on June 9, 2008 at 11:32 AM
Does that happen every spring? Be nice to have the numbers to back it up.
MamaAJ on June 9, 2008 at 11:32 AM
I heard on the radio this weekend that these numbers also reflect the new college grads entering the workforce, who didn’t declare an employment status the previous month. I tried looking around the web to verify this, but couldn’t find anything. Makes sense, though.
Rhinoboy on June 9, 2008 at 11:33 AM
And Congress also missed that the increase in “minimum” wage would result in inflation.
Nice going, dumbasses.
Dr.Cwac.Cwac on June 9, 2008 at 11:33 AM
Journalists, and the Left in general, are economic illiterates. Of course, they don’t catch connections between min wage rates and unemployment. Of course, they have no idea of the perverse consequences of the dimwitted policies they advocate. They think you can simply pass a law against low wages, just like you might pass a law against rainy days:
“Do you want high wages and sunny days? Then join the journalists and Democrats! Do you want low wages and rainy days? Then you must be one of those Republicans, and probably a Nazi too, who voted FOR low wages and rainy days.”
Tantor on June 9, 2008 at 11:34 AM
They preen and prance around proclaiming themselves the best and brightest the nation has to offer. Yet for all that, basic freshman-level economics seems far beyond their grasp. - High
Or, maybe they DO understand it, and use it to purposely ‘keep the Black Man down’ while at the same time claiming that it’s the eeeevil RethugliKKKlans who’re keeping them in poverty.
That’s certainly true down here in the nation’s murder capital- New Orleans. - High
Be careful down there, my friend. The socialist utopia is alive and well in N.O.!
Tony737 on June 9, 2008 at 11:36 AM
Greatest.Congress.Evah!
/heavy sarc
Dr.Cwac.Cwac on June 9, 2008 at 11:39 AM
Another aspect worth considering is if you keep the minimum wage low, you can hire more workers. By hiring more workers, employers will be paying more payroll taxes to the government. Seems like a win-win to me. Am I missing someting?
DCA on June 9, 2008 at 11:39 AM
It doesn’t look like it. Here’s unemployment figures by month. This site comes in handy when you’re arguing with Libs about who was the worst President. Jimmy Carter is demonstrably awful.
trubble on June 9, 2008 at 11:40 AM
Nice going, dumbasses. - Dr.Cwac
And the scarey thing is, we ELECTED these morons!
It should be a requirement to have Military and Business experience to be a Congressman.
Tony737 on June 9, 2008 at 11:41 AM
I agree. Due to local differences in cost of living the federal government should avoid mandating a minimum wage and leave it to the states, but many states like CA and NY already have a state min. wage.
DFCtomm on June 9, 2008 at 11:41 AM
I don’t think that’s necessary, instead all that is needed is integrity, intelligence and the desire to do what is right for the country first, and your constituents second.
DFCtomm on June 9, 2008 at 11:43 AM
By hiring more workers, employers will be paying more payroll taxes to the government. - DCA
Also, lowering taxes has the same effect, but ya just can’t get through to some people.
Tony737 on June 9, 2008 at 11:43 AM
Instead of teaching economics, the schools teach victimization. Generation after generation is led into orchestrated ignorance of the subject. Then the media get away with preaching total falsehoods that become universally accepted.
whitetop on June 9, 2008 at 11:48 AM
When the plantation owners in the Old South had to free their slaves I’ll bet their costs for workers went up a whole lot more than that.
Any business man or business woman who can’t pay the measly minimum wage and be successful in their business is either in the wrong business or should not be attempting to run a business.
How about this - stop the anti-American Later Day Slavers from using illegal serfs from doing that and I don’t think that the measly minimum wage would even be much of an issue. Let’s give it a try and find out.
MB4 on June 9, 2008 at 12:00 PM
Great points you made, hopefully this gets a bigger push. Figure for the same $15/hr or so, last summer, you could get 3 workers, now your only able to get 2.
Rbastid on June 9, 2008 at 12:01 PM
We don’t have a free market. Not with farmers getting so many subsidies just for one glaring example and the bail outs of so many on Wall Street for another glaring example and all the pay backs from congress for campaign contributions for another glaring example and not a legal free market with all the use of illegals for another glaring example.
MB4 on June 9, 2008 at 12:06 PM
The states that have high minimum wage, and high taxes don’t get the new jobs/business. Business goes to the low cost states. So the high wage, high tax states go to the federal government to demand a ‘level playing field’, and federal intervention in the market.
As others have pointed out, it’s simple macro economics, and politics with the more skilled political operatives winning the argument.
Bottom line is ignorant and foolish voters, kept ignorant by the skilled political operatives, who cause the problems in the first place.
rockhauler on June 9, 2008 at 12:08 PM
A couple of years ago, Morgan “Supersize Me” Spurlock, on his “30 Days” series, did an episode where he spent thirty days trying to live on minimum wage. The only problem was that while the MW was $5.15, he could not find a job that paid less than $7. Of course, this Michael Moore wannabe failed to draw the obvious conclusion that the market had its own minimum wage, making a government-mandated one unnecessary.
Kafir on June 9, 2008 at 12:10 PM
The problem for most businesses in my area is the ripple effect. The guy that was making $7.25 per hour before the increase now wants to be paid $9.35 per hour. The guy who was making $9.35 per hour before the increase now wants to be paid $11.45 per hour. It goes right up the chain. Everybody wants that $2.10 raise to keep their wages in proper relationship to other employees.
txsurveyor on June 9, 2008 at 12:10 PM
They could find enough workers if they paid enough and if riding around, mostly in circles, was enough of a plus for people they would pay the increased prize of a ticket. Sounds like a service that people don’t put much of a value on. Econ 101.
MB4 on June 9, 2008 at 12:11 PM
Employers become more discriminating when a wage increase is mandated, and they hire experienced, mature employees. Why hire an inexperienced youth when you are seeking maximum productivity to overcome the higher cost of help?
T J Green on June 9, 2008 at 12:11 PM
BINGO!
MB4 on June 9, 2008 at 12:15 PM
Just say no.
MB4 on June 9, 2008 at 12:17 PM
Or the alternative. It is worth it for an employer to hire a young person if it costs minimum wage “X” but will do the work without that extra person if labor costs are increased to minimum wage “Y.”
It’s basic economics in either case. Percieved and actual value needs to exceed costs.
highhopes on June 9, 2008 at 12:17 PM
Well, you sure don’t see a jump in the rate every spring. But that’s the rate; if there were jumps in the numbers of people looking for jobs AND an increase in the number of jobs, the rate would stay the same. You’d need to look at the numbers that lead to the rate. I’ll poke around a little more because I’m still not convinced that it’s just a whole lot of college students…
MamaAJ on June 9, 2008 at 12:18 PM
Don’t I have the right to a “livable wage” as an amusement ride operator?
If you answer with anything other than a “Yes” then you’re a racist. And by racist I mean a person that disagrees with the God of Racial Harmony Senator Barack Obama.
gabriel sutherland on June 9, 2008 at 12:21 PM
I just looked at some stats and Michigan has the highest unemployment rate in the U.S., even higher than Alaska. Does anyone know if among the states Michigan has the highest minimum wage? I’m guessing not.
MB4 on June 9, 2008 at 12:21 PM
Libs wont be happy until there is over 20% unemployment.
That is what they need to get the people to move toward complete communism.
TheSitRep on June 9, 2008 at 12:22 PM
I remember Bill Klinton debating the Min. Wage with Herman Cain, the CEO of Godfather’s Pizza, who told him ‘If you raise the M.W., I’ll have to lay off some of my employees.’
Klinton tells him ‘Well, all ya gotta do is raise the price of your pizza just a few bucks, I like your pizza, I’ll keep on buying it.” Duh, what a moron.
Cain took him to school and said “Well sir, you make $200,000 a year, not many of my customers make that much.’
(Suggested reading for HotHeads: “They Think You’re Stupid” by Herman Cain)
Tony737 on June 9, 2008 at 12:22 PM
I can’t find the stats immediately but I’ve read that of those who earn the minimum wage or less, the percentage of those who earn exactly the minimum wage is fairly small.
Translation: Minimum wage laws have exceptions that apply in the majority of actual cases. Of course, the Democrats would never repeal those as it would be a huge swipe at small businesses.
The whole issue of minimum wage is nothing but class warfare and a feel-good solution to the problem: “how do we publicly pretend that we hate Wal-Mart?”
Fixed prices cause deficit. In this case it is deficit of work, i.e. minimum wage means higher unemployment. It needs to be abolished, not increased.
freevillage on June 9, 2008 at 12:23 PM
People. Keep up. How are the Democrats going to win the White House with a low unemployment rate?
The Democrats have a stake in doom and gloom. If their votes create that doom and gloom we will get to the bottom of it starting on a date no sooner than January 21, 2009.
You see, there are textiles still produced in the United States. Wool is produced in the halls of Congress. The Media just fits us for the proper sweater size.
gabriel sutherland on June 9, 2008 at 12:25 PM
The plain, I think undeniable, fact of the matter is that the federal government, by it’s actions and by it’s inactions, and I’m talking about illegals, millions, probably tens of millions of them, has stacked the deck against people at the bottom end of the wage scale.
MB4 on June 9, 2008 at 12:25 PM
I’m starting the PANDER Party so my elected officials will pay attention to me because, in the end, I’m all about feeling good about myself.
Dread Pirate Roberts VI on June 9, 2008 at 12:33 PM
True, but not an argument for a minimum wage as you imply above.
My favorite question for min-wage lovers: Why not make it $15/hour? Or $50? Because it will just lead to no jobs - same but greater impact as ANY artificial min wage does.
peski on June 9, 2008 at 12:34 PM
I regularly hire temporary employees. My labor provider told me today that the min. wage increase has just killed their business.
T J Green on June 9, 2008 at 12:36 PM
You will never get anyone on the left to AGREE to this one!!! Even though the MSM reported (yuk, yuk) the huge increase was due to young people LOOKING for summer JOBS… Well, there is only one or two reasons they can’t find summer work. Either the MINIMUM WAGE increase, or DARE I SAY, ILLEGAL IMMIGRATION, doing the jobs AMERICAN YUUTS won’t do…
pueblo1032 on June 9, 2008 at 12:39 PM
Oh, I give up. I can’t analyze data and take care of small children at the same time.
Not everyone agrees that it’s students:
But of course not all students are teenagers…
MamaAJ on June 9, 2008 at 12:41 PM
Peski, you surprise me as you usually seem to be so logical. Isn’t that one of them thar reductio ad absurdum thingamajigs, or something like that?
MB4 on June 9, 2008 at 12:43 PM
Then they probably weren’t cut out to run a business and should work for someone else. Tough love.
MB4 on June 9, 2008 at 12:44 PM
Will somebody tell me which schools are teaching that price controls work? Because I feel the urge to send some nasty letters.
And why doesn’t MB4’s “if they can’t afford to run their business on what they’ve got when prices go up” mentality apply to workers? If you’re mad about illegal immigration, fine, I am too. But that doesn’t mean that slapping everyone ELSE around economically is the answer.
The whole thing is a damned mess because people have been taught to EXPECT these increases, and IGNORE the aftershock of price rises. Raising the minimum wage is an INFLATIONARY act that hits the working poor hardest, not only because of job losses but because of what they spend most of their money on - goods and services impacted by wage rises.
But the left, with the help of the press, just blames everyone else for the mess they made.
Merovign on June 9, 2008 at 12:47 PM
I think that it is a pretty safe bet that if you were to do a survey of employers, about a qazillion times more would say that the rapidly increasing cost of energy/fuel is their main problem for every one who says that damn minimum wage increase.
MB4 on June 9, 2008 at 12:52 PM
One thing that no one has mentioned yet is that the increase of the minimum wage was a pay-off for the unions. With a higher minimum wage that increases fairly rapidly, the unions have a large hammer against management for increasing union wages a lot at the next negotiations
maxine on June 9, 2008 at 1:03 PM
Labor vote.
moxie_neanderthal on June 9, 2008 at 1:09 PM
And guess what the minimum wage laws due to the desirability of hiring illegals? Amnesty means a big bump in pay and the real risk of unionization. Amnesty immediately makes former illegals less attractive in the work force. Why invite the culture clash, why deal with the EOC lawsuits from black people who’ve been discriminated against?
Theworldisnotenough on June 9, 2008 at 1:23 PM
Not quite the highest but damned close. Michigan’s rate is $7.15 now scheduled for $7.40 on July 1 this year. The highest is Washington with $8.07 followed closely by Mass and California at $8.00. The federal minimum is $5.85.
Oldnuke on June 9, 2008 at 1:26 PM
OMG! Not in the Chocolate City?
Squiggy on June 9, 2008 at 1:30 PM
Disneyland has hiked entry fees in the last couple of years because it is cheaper to have fewer customers and to hire part-time workers than to open full bore. Something is wrong!
Even Reason and Democratic economists agree that the wage is self-defeating: Worst summer job market since WWII
PattyJ on June 9, 2008 at 1:49 PM
The increase in the federal minimum wage nudges other wages up as well. If a worker is making $2 more than minimum wage and the feds then increase the minimum wage by $1, that wage earner is going to demand a raise and likely get it. With so many other wage related expenses like FICA, state unemployment, and workers’ comp tied to payroll, there’s a snowball effect to employers. That said, the biggest obstacle to entry-level employment currently is economic uncertainty. Most of us are tightening our belts and waiting to see what’s going to happen. If business remains decent, we’ll do some hiring. If not, we’ll sit on our hands for a while. Anytime the government gets involved in setting prices (wages) bad stuff usually results.
Laddy on June 9, 2008 at 1:51 PM
You’re making some big assumptions there. Let’s look at this from the standpoint of a small business (of which most of the economy is built on!)…
Increasing from $5.15/hr to $7.25/hr is a 40% price increase!
So, if Congress decided to hike taxes by 40% across the board, you wouldn’t have a problem? I would! We couldn’t afford to live with 4 kids, a mortgage, a car payment, utilities, etc.
I’m seeing the effect on the economy right now. My 3 teenagers are having a terrible time finding jobs… because businesses are cutting back. The 1 daughter who does have a job, is telling how they’ve been cutting back on hours and positions for cashiers and other entry-level positions.
dominigan on June 9, 2008 at 2:03 PM
Thoroughly wrong-headed. You’re saying that if something can’t be made profitably with one of its input prices artificially set at above a market-clearing level, it must be because of poor management skill.
I don’t know where to begin.
DrSteve on June 9, 2008 at 2:03 PM
If you want to talk INFLATIONARY, don’t look at the measly minimum wage, turn your eyes to the Federal Reserve and to our lack on any decent energy policy..
MB4 on June 9, 2008 at 2:21 PM
And Washington state has an unemployment rate of 4.7% as of April, 2008, the stats that I’m looking at.
MB4 on June 9, 2008 at 2:31 PM
http://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007
The minimum wage was passed by the House and the Senate on May 24, 2007 as part of HR 2206, the supplemental aid to the Iraq War.
(So The only way that Democrats can get horrible legislation through even with majorities it to tie it to something thats important.. )
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=1&vote=00023
Obama Voted Yea
McCain Voted NAY
Chakra Hammer on June 9, 2008 at 2:42 PM
Not everyone is cut out to be a business man or woman any more than everyone is cut out to be a scientist or doctor or athlete or Indian chief or pain in the neck like me.
And how about someone not being able to find a job or one that pays more because the cheap labor force is artificial set high because of all the illegals that some anti-American employers draw in?
MB4 on June 9, 2008 at 2:46 PM
There are very few business where minimum wage labor costs are anything like their whole cost of their doing business, so your comparison is invalid.
MB4 on June 9, 2008 at 2:52 PM
When I was a kid I picked strawberries for 50 cents a grate of 12 pints or about 4 cents per pint. The cost of a pint of strawberries in the grocery store was about 40 cents, so the cost of my somewhat less than minimum wage labor was about 10% of the end price.
In the greater scheme of things this minimum wage hoopla is largely B.S.
MB4 on June 9, 2008 at 3:01 PM
Thanks for the hyperbole…I was getting nervous there because the thread was pretty sensible until your post.
Why is a bureaucrat better at determining the economic worth of a particular kind of labor than the market? A minimum wage presupposes that all labor has value of at least X. This is despite the fact that X may only provide Y of labor value to an employer. If X is higher than Y, then employers restrict hiring to skilled employees that can do multiple tasks and refuse to hire inexperienced workers with little or no experience.
You end up with far fewer jobs for first time job seekers and fewer opportunities for those who with little experience.
It’s not that complicated, really. Unless you prefer the government to make your choices for you…which seems to be more and more commonplace these days, sadly.
Asher on June 9, 2008 at 3:02 PM
Wow…you’ve obviously never cracked an economics book or owned a small business. In any business endeavor, your labor costs account for 40-60 percent of your total expenses. Since most companies, (large and small), generally operate with single digit profit margins, an increase in minimum wage is significant.
Not all employers pay minimum wage to their employees, but they generally get their material and supplies from businesses that do. When cost go up for suppliers, they go up for everyone else that has to buy from them. And in the end, business has to pass along the increase to the consumer.
This has an added effect of making American business less competitive in the world market, leading to more failures and increasing the incentive to outsource jobs to Mexico or contractors in India or elsewhere.
Asher on June 9, 2008 at 3:17 PM
MB4 on June 9, 2008 at 2:52 PM
Well, MB4 as the Bard once put so well. “Methinks he protest too much”
You ahve been all over the board about how the minimum wage increase didn’t hurt anyone, yet you have ignored how your own arguments became tangled.
Sooo. Lets look at what the minimum wage increase really means
1) increased labor costs for just about all businesses (most unions set their wages to minimum wage plus X. So if the federal minimum wage goes from $5.15 to $5.65, they all get a $0.50 increase in wages; also someone who was maing $7.15 isn’t going to be happy if the minimum wages earners get an increase and they don’t, so business has to increase their wages.)
2) you aren’t just increasing the minimum wage, when you increase the minimum wage, you also increased unemployment insurance (based off wage), social security co-pay (based off wage) and all the other little cost increase associated with that little 40% increase in minimum wage, you’ve probably increased their costs by 60% or more.
3) margins are low in many industries that pay minimum wage. McD’s may pull in $750,000 or more annually per store, but most net, after taxes and costs less than $50,000. The franchisees that make big money have multiple shops and employ a lot of family as owner/managers who don’t have to be paid directly. Chain stores can be even more tight with the money because the margins are so low.
Realize that for a retail store 70+% of their business is in the months of October, November, and December. For them to pay an extra 60% to some high school student for the summer, is pointless, they are already losing money for the summer, why lose more for little benefit.
4) companies don’t hire illegals to get around the wage law, they use it to get around the other labor laws. They actually pay the illegals the minimum since they have to show FICA and other taxes collected, but… they can ask the illegal to work through breaks and get them to, as well as get them to work harder than any teenager will, and they don’t have to fear that the illegals will form a union.
But you don’t seem to care about any of that, as long as you can demagogue against business.
mvargus on June 9, 2008 at 3:22 PM
Ah, but that wasn’t an hourly wage, it was piecework and farm work. We are talking about hourly work where they can’t underpay because they pay by the piece.
Please restrict your comments to talking about jobs that actually pay hourly.
mvargus on June 9, 2008 at 3:25 PM
The liberals (Democrat and Republican) are not stupid or idiots. This was the expected result all along and they knew it (they just can’t own up to it in public.) They want the young, college, minority students mad and without jobs so they will vote for the Democrats in November. They want high gas prices so everyone is mad at big oil. They want expensive medical care so everyone can complain about the pharmaceutical companies. They want higher prices so they can blame Walmart, Microsoft and all the other companies that provide goods, services, and jobs for America. They will not stop until they have sufficient power that can not be taken away at the ballot box. Then they can marginalize or eliminate all the suckers who helped them (media, labor unions, academia, RINOs). The plan is proceeding on schedule. I know this sounds crazy and it would be if it was not happening right before our eyes.
jerseyman on June 9, 2008 at 3:46 PM
You can’t argue with someone like MB4, because what they’re doing isn’t actually arguing.
I mean, what, exactly, kind of logic is it that if there’s more than one problem you can’t address one of them?
Did I say mandated wage increases were the ONLY inflationary input? Of course not.
Somebody needs to file suit against that guy for illegally dumping strawmen into the market below cost.
Merovign on June 9, 2008 at 3:54 PM
It is all about smoke and mirrors and sowing confusion so at least 1/3 of the population is confused and goes along with what sounds and feels good. It doesn’t change the fundamental issues at stake:
undermine business/capitalism
undermine America and the military
undermine personal freedom (expand government) by increasing taxes, regulations and an activist judiciary
undermine faith in political process
undermine family and morality
promote death (abortion, euthenasia, Schiavo case etc.)
Did I miss anything?
jerseyman on June 9, 2008 at 4:06 PM
If you can’t do any better than starting off name calling like that, don’t even try.
MB4 on June 9, 2008 at 4:07 PM
You blockquoted my short comment but do not give any indication that you actually read much of it. I said, “where minimum wage labor costs” and “anything like their whole cost of their doing business”. Maybe you’ve obviously never cracked a book. Please try to do better.
MB4 on June 9, 2008 at 4:16 PM
I never said that “the minimum wage increase didn’t hurt anyone”. Do you think that I am even going to read the rest of your comment when you start out by saying that I said something that I didn’t say? Why do you do that? Never mind, I can guess. Try to do better. At least start out better than that anyway.
MB4 on June 9, 2008 at 4:22 PM
Unfortunately for your argument this is precisely why slavery, serfs, and tenants became obsolete as society and economics advanced through the industrial revolution. Manual labor was superseeded by mechanical tools and inventions. Many of the Founding Fathers and early opponents of slavery argued that slavery would die off by itself as economically bankrupt. Slavery only held on (and still exists in parts of Africa) not so much because of economic justification but purely as a power/control issue more in tune with social class and dominance (think prostitution / sex trade). The Southern supporters of slavery did not argue slavery so much on economic terms as on the basis of racial inferiority and the ‘right’ to own slaves as property.
jerseyman on June 9, 2008 at 4:24 PM
Please restrict your acting like a Queen to when and if you actually become one.
MB4 on June 9, 2008 at 4:26 PM
O.k. now who wants to argue for slashing the minimum wage? That`ll be a fun debate to watch on the House floor. :)
ThePrez on June 9, 2008 at 4:27 PM
Did I say that you said that mandated wage increases were the ONLY inflationary input? Of course not.
Mandated wage increases are ONLY a very small inflationary “input”.
Hello! Most people are not even paid the minimum wage. Are you?
Maybe someone needs to file suit against you for illegally dumping such poor debating skills into the market.
MB4 on June 9, 2008 at 4:35 PM
To clarify my point, slavery/serfdom was only viable in an primitive, agrarian/feudal society. The cost of manual labor increased reagardless of status as slaves, serfs, tenants or wage laborers. In fact, wages released the slave owners of previous costs/responsibilities (food, lodging, health care, the capital cost of ‘buying’ a slave). When costs were more predictable, they could be dealt with accordingly (seasonal, improved efficiency). Changes not mandated by the market impose costs that can not be captured through the market.
==> If selling prices are set by the market at their maximum level, changes in costs can not be reflected in the price without further loss (price increase results in lower sales and revenue) - sorry, back to Economics 101.
jerseyman on June 9, 2008 at 4:36 PM
That is not unfortunate for my argument as I agree with that, although there were other reasons too. Perhaps I should have said, “I’ll bet their costs for workers went up a whole lot more than that initially” to prevent any false assumptions about what I said, like that it would go on in perpetuity.
MB4 on June 9, 2008 at 4:43 PM
I’ve seen the same thing with my kids. When Number One Daughter was 15, about 6 years ago, she got a job with the first place she applied. She held it for nearly 3 years.
Last year, when Only Son graduated from H.S., he got a summer job at a movie theater. When the minimum wage went up, his hours were cut.
This year, Number 2 Daughter just turned 16 and is putting in applications just about anywhere that doesn’t serve food, with nary a response. I suspect she’s losing out to older teenagers and adults, or the jobs are just going unfilled.
doppelganglander on June 9, 2008 at 5:27 PM
MB4,
In a competitive labor market at equilibrium labor will receive the value of its marginal product. That is, laborers will receive the value of the next thing they can produce. If the government places a floor under wages then those laborers whose marginal product is not worth the wage floor will lose their jobs, ceteris paribus. It doesn’t matter whether the bulk of an employer’s costs come from workers who are currently being paid below the new minimum wage or not. No employer will pay someone more than the value of what that person produces, just as no one will stay in business selling dollar bills for 95 cents.
Even though the difference is just a nickel!
jl on June 9, 2008 at 6:51 PM
Slash it? eliminate it! Now that would be an interesting debate. Does anyone think wages would go to zero? The real effect of the minimum wage (politically) is its tie in to union wages and the resulting increases for union contracts and other payments linked to minimum wage (these are the Democrat voters who benefit and will vote for the Dems next time around). This is just one of many scams the Dems have hung around our necks (withholding is another one). The payola comes out of OUR OWN POCKETS!
They have successfully framed the debate around the poor individual working for the basic minimum wage, when it is really about the higher paid union workers and their vote.
jerseyman on June 9, 2008 at 9:05 PM
Im all for the reasoning behind this, but arent unemployment figures seasonally adjusted to take into account things like graduates in June and bad weather in the winter?
But this is a good point… the payroll figures were very muted compared to the rate, which means the lower end is suffering on this one.
Chuck Schick on June 10, 2008 at 9:43 AM
Absolutely dead on.
Wrong. Just wrong. You are like the poster-boy for all liberals.
Websters def: Liberal - adjective, usually used as a pejorative. Synonyms - “idiot, moron, totally non-thinking individual”.
Squiggy on June 10, 2008 at 11:39 AM