When the most recent unemployment numbers were released, the media bleated about the highest percentage increase in the jobless rate since 1986. For example, The New York Times lamented:
The unemployment rate surged to 5.5 percent in May from 5 perce…

jerseyman on June 9, 2008 at 3:46 PM

Absolutely dead on.

MB4 on June 9, 2008 at 4:43 PM anytime ever

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”.

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.

illustrate economic theory and expose the selfish greed of the big government class.More here, here, and here…….

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

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.

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!

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

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.

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.

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.

jerseyman on June 9, 2008 at 4:24 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.

==> 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.

Did I say mandated wage increases were the ONLY inflationary input? Of course not.

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?

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

Maybe someone needs to file suit against you for illegally dumping such poor debating skills into the market.

Please restrict your comments to talking about jobs that actually pay hourly.

mvargus on June 9, 2008 at 3:25 PM

Please restrict your acting like a Queen to when and if you actually become one.

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.

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.

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.

mvargus on June 9, 2008 at 3:22 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.

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

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.

Asher on June 9, 2008 at 3:17 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.

Thanks for the hyperbole…I was getting nervous there because the thread was pretty sensible until your post.

Asher on June 9, 2008 at 3:02 PM

If you can’t do any better than starting off name calling like that, don’t even try.

Did I miss anything?

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.

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

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.

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.

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.

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.

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.

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.

In the greater scheme of things this minimum wage hoopla is largely B.S.

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?

dominigan on June 9, 2008 at 2:03 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.