Skip to comments.CA: The Minimum Wage Calamity
Posted on 01/05/2006 9:06:49 AM PST by NormsRevenge
As the year begins, we find Sacramento once again considering raising the minimum wage. Only this time, Governor Schwarzenegger has indicated he might support a bill raising the minimum wage to $7.25 next year, and $7.75 the year after.
In the wake of high energy costs, high building costs, high liability insurance costs, and workers compensation reform that doesnt reduce costs nearly as much as we need to, we cannot afford to drive up the costs of doing business in California even higher. Even if you do not pay the minimum wage to more than a handful of employees, the inflationary impact it has on the entire salary scale can be significant.
The current federal minimum wage is $5.15 per hour. In California the minimum wage is $6.75 per hour. Left wing political rhetoric has succeeded in confusing the people into thinking that a wage is an entitlement, not the price that the worker is worth in the marketplace for the job performed, the skills possessed, or the desirability of the worker to the employer. I think it is time we remind ourselves that wages are, in fact, a price paid for labor.
Everyone is familiar with the harmful economic effects of arbitrary government price controls in other aspects of the economy. Rent control results in fewer rental units. Price control on any goods results in fewer of those goods. Price control on labor results in fewer jobs.
It is an emotionally charged issue, which fails to take into account the side effects of the law. If an employer has to pay an employee more than that employee produces for the company, the employer is losing money. So either the employee is fired, or the company goes bankrupt. Either way, the employee loses the job. This is government forced unemployment.
A forced minimum wage deprives the workplace of some lower skilled workers who would be capable of rendering beneficial services to an employer if that employee were allowed to be paid what his effort was worth, making that employee a productive member of society. The worker has been deprived of independence and self-respect which comes from self-support, even though he or she would otherwise be willing to do the work at a lower wage. Even worse, the best way to get a higher paying job is to do well at a lower paying job.
According to an analysis produced by the National Center of Policy Analysis, The primary cause of low income, , is no wages, not low wages. They conclude that most of those who earn low wages are either teen-agers or other secondary earners spread rather evenly across the income distribution scale. According to a summary of their analysis, While the single mother trying to support her child on a full-time minimum wage job is a better story, the 16-year-old hamburger-flipping student with college-educated and employed parents is a better fact. Low-income families have a large number of people without jobs and without the skills to get a job. A mandated minimum wage forces them even further out of the job market.
Increasing the minimum wage increases the cost of goods and services, forcing many of the people who lost their jobs as a result of this government intervention to either pay higher prices, or do without. The government has deprived them of a job they could perform, and which would form the basis of further training to acquire higher wages, and has increased the price of goods that they might otherwise have been able to buy. All of this is sold to the public in the name of helping the poor. Some help!
Low-income families do not benefit from a minimum wage, and neither does the taxpayer. Once again we will consider increasing the cost to employers in California for a program that has never shown any legitimate long-term benefit to the poor, and that has far more often been shown to be a detriment not only to employers, but to the very poor the program is supposed to help. After all, you can only make the minimum wage if you have an employer who is providing a job.
Make the minimum wage $20.00/hr and they will be happy........
It's enough to make you cuss.
As a former employer, I can say that by the time you pay a wage, a social security contribution equal to the wage-earner's contribution, unemployment tax, pension fund contribution, and health insurance, you have nearly paid enough to hire another entire worker (sans those contributions).
If you raise the minimum wage, you are going to create LESS jobs, not more (as you will be further hiking all those other payments which are dependent upon the amount of the wage)
Oh what a lot of poo-poo!
Paying your workers enough to stay alive is not a bad thing.
Conservatives should be in favor of EMPLOYER RESPONSIBILITY,
not in favor of employer looting. Looting is what happens when you
pay a worker too little to live on and expect the taxpayer to pick up the difference.
parsy, who has some sense.
I know, I was being sarcastic............
If you raise the minimum wage, you are going to create LESS jobs...
The libs know that but THEY DO NOT CARE. They are BUYING VOTES, while they are destroying businesses that need minimum wage workers and making ILLEGAL IMMIGRATION for jobs more attractive to Mexicans...Vincente and El Presidente Jorge are smiling!!!
They will be happy until all the prices for goods and services triple. Then they will be screaming that they can't make ends meet on just $20 an hour!
Mr. Haynes is a smart man.
Then make it $50.00/hr!..........
If not this year, in 2010 he should be considered for the GOP ticket for either Lt Gub or Gub.
He isn't perfect and doesn't have a huge Q factor , but he shoots as straight as he can. We could do a lot worse.
Newsflash: Employers don't owe you a job.
parsy, who has LOST YOUR senses
I agree with you. I used to go for the line that it will hurt employers but I see to much gouging by employers to belive that anymore. I see employers living the extremely high-life while they pay their employees a meager salary. The first example I could give of that would be nursing home owners, but I could go on.
This is not looting. This is one of two things. (1) The employer is paying less-than-market rates, and will soon find that his best employees are leaving for greener pastures. (2) The work done by the employees is not highly valued by the market, and the employer cannot afford to pay higher-than-market wages.
... and expect the taxpayer to pick up the difference.
Why should the government force taxpayers or businesses to subsidize poor people? If there were no minimum wage and no welfare, people would work hard enough to eat and live. Some people would choose to work harder for the rewards of a larger paycheck; some people would work just hard enough to feed themselves. Why does government need to stick its nose in the equation?
Uh, huh. And is it looting when you don't hire that worker at all? Who picks up that difference in that case, do you expect?
BREAKING NEWS - we don't live in the old Soviet Union. The government should not be "setting wages." Wages are set by the competitive marketplace.
Please see 'Capitalism & Freedom' by Milton Friedman if you need further reading on this subject.
All the arguments you are hearing are the same ones you hear all the time. I think, in my opinion, that it hurts Republicans when we don't think people that work in hotels, nursing homes, fast-food,etc....deserve to be paid better. We all talk advantage of the services they provide, or probably will one day.
Oh, the horror.
Go out and invent something useful, and you too can live the high life.
Neither the employer or the tax payer owe you anything, either work and pay your own way in this world or lay down and die!
Eliminate welfare and the minimum wage.
Who says the worker has to work for THAT employer? Employers will pay what the workforce market requires.
And who says the taxpayers have to pick up the difference? Ever hear of people working more than one job? I've done it, my husband's done it, my son is doing it now.
Market forces should determine wages paid.
Actually, the best thing we can do for wages is not to make more laws, but to enforce the IMMIGRATION laws we have.
I wish I could agree with that but I just cannot anymore. Market forces are manipulated by the wealthy (usually) and they live like Kings and Queens while paying their workers a meager salary. I wish we could leave it up to market forces, but I just can't believe that McDonald's or Wal-Mart, etc... cannot afford to pay their workers more. I just can't believe that.
Watch the Live Webcast of the Governor's 2006 State of the State Address here Thursday, January 5 at 5:00pm.
Live Stream will be made available shortly before the webcast begins.
So maybe their employees should find better jobs. That's what I did.
I can't believe people settle for that kind of job. We should just outlaw fast food jobs and save the workers from having to work for only $7 an hour.
Market forces are entirely voluntary. In a real free market, those who aren't making enough would obtain the skill level necessary to better themselves on their own, and earn more money without the need for artifical controls or regulations that do more harm than good.
Nobody owes you anything, and nobody is forcing you to perform a job you find unsatisfactory.
I wish we could leave it up to market forces, but I just can't believe that McDonald's or Wal-Mart, etc... cannot afford to pay their workers more. I just can't believe that.
Most of the Wal-Mart and McDonald's workers are part-timers, kids in high school or college, or those using it as a 2nd job. If you consider Wal-Mart or McDonald's a lifetime career choice, then something is seriously wrong with you.
Fair enough. But can you believe that many Wal-Mart customers cannot afford to pay Wal-Mart's workers more? They are the ones who would bear that cost.
Last time I checked, McDonald's here locally was paying $10/hour. They had to because of competition for workers.
Market forces do work, and would work even better if we stopped making new laws and enforced the IMMIGRATION laws that we have.
Perhaps you should join the ranks of the "live-like-kings" wealthy and run your own McDonald's franchise. You will get the joys of only having to work 16 hours a day, seven days a week; dealing with problem employees; dealing with government regulations and paperwork; wondering how you're going to cover payroll this week; suing customers who don't pay and suppliers who don't deliver; and so on. Everyone I know who runs a small business deals with these risks, and none of them "live like kings". Some may live well, but none are super-rich.
Hey, I want $100/hr for minimum wage here in Calif!
Thus we can instantly create a society of affluence and wealth, eliminating not only poverty but the middle class.
We will all be wealthy elites.
Wonder if it would affect prices at Burger King though.
There are people who just can't believe that...
...George Bush won fairly in 2004
...George Bush won fairly in 2000
...George Bush is not a racist
...9-11 was not a Jewish conspiracy plot
...The NOLA levees weren't blown up on purpose
...Texas beat USC
...Bill Clinton would abuse women
...The Air Force does not have a UFO hidden in Area 51
...the moon landings were not faked
and so on.
Have it your way, for a $60 Whopper. I'm lovin' it.........
You betcha! But when has the left ever allowed reality to intrude into politics?
The real effect of this "raise" will be to drive more jobs out of the state and increase the number of "under the table" jobs worked both by both citizens and illegal immigrants.
Irrational, unsubstantiated SUPER-SCARY!!! conspiracy theory (from someone who has WAAAAAAY too little experience in struggling to beat competitor after competitor after competitor?).
"Can't?" You mean you've been REFUSING to understand. Suggestions: Keep taking Econ 101 until you pass, and build a business up to where YOU're becoming wealthy.
"Politics is all about getting and keeping power, and in politics, the professionals in the business soon learn that the only way to get and keep power is to force people to talk to them. A full-time legislature thinks of more and more things to regulate and discuss." -- California Assemblyman Ray Haynes, here: http://freedomkeys.com/politicians2.htm
And "MINIMUM WAGE, MAXIMUM FOLLY" by Dr. Walter E. Williams, here: http://www.capmag.com/article.asp?ID=4173
Minimum wage = Full employment for Illegals
All those 'hidden' costs for employees is true, plus workman's comp. Which is a killer in CA.
Everyone here seems to be missing a key issue. Many (if not all) unions use the minimum wage as a bargaining tool. Increase the minimum wage, the unions will want higher wages too. And we have a lot of public unions going into contract negotiations soon..........
How, precisely, is one person doing something one time a "good experiment"? Her book is on par with the anti-capitalist propaganda pushed by Morgan Spurlock (who did a similar "experiment" on his TV show, rigged to fail).
All a higher (or any) minimum wage law does is encourgage disobedience to the law and lower rates of lawful employment. There are plenty of tasks that need doing that simply aren't worth x dollars per hour to do, whatever x happens to be. The real minimum wage is and always will be zero, and in every study of the policy (as mentioned in the article), minimum wage laws only serve to increase the number of those earning zero.
This tells me that your employer is paying market rates for the services you provide.
It is simply not possible to just uproot if your employer tells you he can't pay you more than X.
Why not? In the last two centuries, a lot of people uprooted themselves for an uncertain future in this country. A lot of people still do, legally and illegally.
(2) The work done by the employees is not highly valued by the market, and the employer cannot afford to pay higher-than-market wages. I have many skills that are in high demand, most importantly a brain.
"Demand" and "value" can be two different beasts. "Demand" may exist when there is high turnover in a company. If my burger flippers quit every 3 months, I will have a lot of "demand" for new employees. However, I will not pay these employees more than what I think they're worth.
I've met very very few 'lazy' poor people. Most of them work their butts off and can't ever get ahead. Our courier works three jobs, sleeps a couple hours a night, just to support his ex-wife and their two kids. I know, that's just one guy, right...
I know people like that, too. But then again, I doubt either one of us hang out in the 'lazy poor' crowd. Wasn't there a recent post on FR about poor people and their big-screen TV's?
How many people on here would actually hire a poor person to do... anything? Or would you go out and hire the GQ-looking guy with the schnazzy care and the professionally-edited resume?
I don't think the Mexican day laborers would make the cover of GQ. Nor would migrant farm workers. Yet they still come here and work.
Quite frankly, the government sticks its nose in because nobody else will.
The government sticks its nose in because people in government profit, professionally, from being busybodies, and the People let them do it.
Because most people are too stupid to come in out of the rain, let alone develop the skills necessary to earn a living or to defend themselves from evil, greedy capitalist employers who, naturally, will exploit the workers and force them into abject poverty in order to line their own pockets.
Of course the Government must set wages, prices too....Its for the children.
Projectile horse vomit.
I am very blessed and fortunate to have been born in a nice community, nice schools, etc.....I never forget that.
You bet it is!