By an overwhelming majority of 315-116, the House passed H.R. 2, to increase the federal minimum wage to $7.25 an hour. It has been over ten years since the last increase, which raised the minimum wage to $5.15 an hour.
During that time, Congress has given itself a pay raise almost every year. Since 1997, Congressional pay has increased by over $31,000. CEO pay is increasing every year:
With CEO pay up sharply and the minimum wage falling farther and farther behind inflation, the average CEO’s compensation outstripped minimum wage pay by a ratio of 821 to 1 last year. At the current minimum wage of $5.15 per hour it took a full 52-week year of work to earn what the average CEO earned before lunch on the first day of the year.
Republicans will grandstand about small business, but what they are really talking about is big business. They aren’t working for the small business owners. They are working for their contributors. They should be working for the American people. The bipartisan support for this bill speaks to the incredible popular support for an increase in the minimum wage. Another promise delivered by House Democrats. The bill will now move on to the Senate, and then, hopefully, to the White House for Bush’s signature.
I’ll have more on this later, including the Nebraska delegation’s votes. Also tonight, Bush will announce his plan to escalate the war in Iraq. Expect some reaction on that, as well.
quote: Republicans will grandstand about small business, but what they are really talking about is big business. They aren’t working for the small business owners. They are working for their contributors.:endquote
It’s no small coincidence that Walmart supports minimum wage, as well as most large corporations. It’s because the large corporations pay more than minimum wage. Their smaller competitors do.
Go Democrats. Pass the minimum wage. Subsidize Walmart.
Their smaller competitors do what gb? I think you’re confused. Also, subsidize Walmart? Is that really what you think the minimum wage is? If you didn’t know, the government is not making up the difference between the current wage, and the increased wage. That would be a subsidy. The government is now just requiring that workers be paid a wage that they can -gasp- actually live on. Crazy I know. Those liberals are nuts for thinking that a person should be able to work a 40 hour week AND not live in poverty at the same time.
Republicans have been responsible for massive cuts (almost 50%) in the budget of the Small Business Administration, resulting in the loss of millions of dollars in federal small business loans.
Republicans refuse to acknowledge the growing health care problems in this country, while rising health insurance premiums are placing an increased burden on employers and employees.
Republicans have increasingly allocated funds for small businesses to large corporations, instead.
Republicans are not, nor have they been for some time, friends of small business. In the next two years, Democrats will pursue policies that will help small businesses, including possible tax breaks, as well as comprehensive immigration reform. And a Democratic President will be able to do far more, allowing us to pursue real health care reform.
I should also mention that a significant effect of a raise in minimum wage will be a raise in those wages just above the minimum wage – such as the wages paid by Wal-Mart. So your argument on its face is false, because Wal-Mart will likely raise its wages.
You’re absolutely right, gb. Big corporations and big labor LOVE a moderate MW, just enough to keep upstarts out.
I’ve detailed time and again how the MW causes unemployment precisely among the people it ostensibly helps, but no one, either liberal or conservative, seems to care about economic reality. A minimum wage law does not force an employer to hire or retain a worker at the minimum wage. It’s quite simple, if a worker can’t produce $7.25 per hour in revenue, they just won’t be hired. It’s really not that fucking complicated people.
Also, I’ve never gotten a response to the question that if the government can raise the living standards of the poor by simple decree, why not raise the MW to $20 an hour? Why not $200 an hour, that way we can all be rich, right? I WANT AN ANSWER TO THIS.
Oh, and this is undoubtedly coming, so I’ll go ahead and preemptively refute it:
“But Tyler, won’t greedy employers ‘exploit’ workers and pay them starvation wages in the absence of a minimum wage law?”
No. This argument is self-defeating. It assumes that employers are motivated by self-interest, yet denies that selfish employers won’t bid underpaid workers away from other businesses in an effort to increase their profits, which is what happens. If a worker who can produce $25 in gross revenue per hour for an employer, but is only being paid $15 per hour, another employer will be willing to pay more. This bidding war will continue upwards to the $25 level. Employees will tend in the free market to be paid their marginal revenue product. In other words, wages rates will tend towards equaling productivity.
From Media Matters
The question isn’t whether or not some people will loss their job from an increase in minimum wage increase, the question is how many.
No one can deny that the wages are elastic: mandate the price higher and some employers will refuse to pay it.
Conservative economists contend that the harm caused by jobs lost exceeds the benefit of the raise to those who retain their job, but at the higher wage.
Liberal economists contend that the harm caused by the jobs lost is less than the benefit.
No one knows for sure until after the fact, yet the Democrats are willing to adopt the higher rate, hoping that 1) they get some good soundbites and 2) hope maybe they’re right, but don’t really care because the poor minimum wage worker doesn’t usually vote.
Dave, those statistics are utterly irrelevant, since they don’t give us the market rate for unskilled labor in those areas. For instance, a MW of $8 in Alabama would likely do tremendous harm to poor workers, while the same rate in New York City would have little, if any, impact.
You cannot deny that raising the MW above a worker’s MRP will eventually put him out of a job. No business will knowingly operate at a loss in the long run. So I’ll ask again: if the MW is so great, why not raise it to $200 an hour?
This article perfectly explains the ACTUAL EFFECTS (as opposed to the fanciful rhetorical promises) of the Minimum Wage:
http://www.lewrockwell.com/ostrowski/ostrowski77.html
Tyler, I’d refer you to this Min. Wage article in the NY Times which does a good job engaging the economic myths that seem to hold you captivated.
http://www.nytimes.com/2007/01/11/us/11minimum.html
No offense, but you’re not one to take much offense so I’m not worried:
I think you have been very swayed by the economic arguments of the type of thinking that seems to run the UNO Economics Dept. Unfortunatley, none of those arguents have ever ended up being true (case in point, the 80s) because they’re overly simplistic, among other reasons.
The conservative school of economics that hopes to eventually write a mathmatics based rule-book which functions with mechanical percision to explain economic process has failed on many fronts. The idea that all actions are driven by ration self-interest has been disproven and disproven again. It is not a contridiction to say that it is both in the self-interest of employers to pay a living wage (because it increases the over-all economy and increases worker-retention, etc… see the 1950s or 60s or 90s for example) and yet that employers will not do so usually unless forced (see the 1890-1920 for example… or the 80s or today).
The reason we don’t increase the Min Wage to $200 an hour is because that’s significantly more than the living wage needs to be. Because a culture-wide living wage is good for all business, but in bad economic times like today, businesses can afford to under-bid the standard of living when it comes to wages and therefore businesses that choose to pay employers a living wage are penalized, the best way to be fairest to everyone and increase everyone’s profits is to mandate a universal living-wage. We call it a min. wage in america, and 5.15 is too low. State-wide minimum wages are sometimes better to create, except that they can create bad situations near the edges of states.
That’s why there are a large number of studies showing that raising the min. wage can actually pull a country out of a recession by increasing the money in the pocketbooks of the bottom 20% of the country, which leads to increased consumer confidence and less debt.
John:
“I think you have been very swayed by the economic arguments of the type of thinking that seems to run the UNO Economics Dept.”
First of all, I’ve completed exactly one econ class at UNO (currently taking another), and I get in daily arguments with my professors. I am involved with the Ludwig von Mises Institute (an economic and political think tank), but I’ve essentially taught myself advanced econ.
“The conservative school of economics that hopes to eventually write a mathmatics based rule-book which functions with mechanical percision to explain economic process has failed on many fronts.”
You are absolutely, 100% correct about that. Although it wasn’t the Chicago School that began attempting to explain human action and happiness in mathematical formulas, but the left (ala Keynes, Galbraith, etc.). I am most certainly NOT a conservative, but a liberal in the true sense of the word (although today the term used to describe this in the US and Canada is “libertarian”).
“The idea that all actions are driven by rational self-interest has been disproven and disproven again.”
Wrong and wrong. Humans act purposefully to satisfy wants; this is axiomatic. They may not end up satisfying those want, but by virtue of the fact that they act, they benefit ex ante. Wants and satisfaction can’t be cardinally quantified, you know, and when you try to do so you will come to the conclusion that people are at times acting irrationally, when the fault really lies in the original measurement. You should really read “Human Action.”
“It is not a contridiction to say that it is both in the self-interest of employers to pay a living wage (because it increases the over-all economy and increases worker-retention, etc… see the 1950s or 60s or 90s for example) and yet that employers will not do so usually unless forced”
Even assuming that the MW is perfectly redistributive (which it most certainly is not) and doesn’t decrease total output, it increases present consumption in lieu of future consumption. To repeat the old cliche: there’s no such thing as a free lunch.
“The reason we don’t increase the Min Wage to $200 an hour is because that’s significantly more than the living wage needs to be. Because a culture-wide living wage is good for all business, but in bad economic times like today, businesses can afford to under-bid the standard of living when it comes to wages and therefore businesses that choose to pay employers a living wage are penalized, the best way to be fairest to everyone and increase everyone’s profits is to mandate a universal living-wage.”
You didn’t answer the question at all, you just begged the question (restated the original premise). I’ll ask once more: If the MW (or whatever you want to call it) is so great, why not raise it to $200 an hour? Also, the living/minimum wage is a completely arbitrary number, so your argument is doubly screwed.
“That’s why there are a large number of studies showing that raising the min. wage can actually pull a country out of a recession by increasing the money in the pocketbooks of the bottom 20% of the country, which leads to increased consumer confidence and less debt.”
I can’t really respond to this as it pertains to the MW, since here you show you don’t understand the causes of the business cycle at all. That’s alright though, a great many, if not most, “economists” don’t either.
The only way to legitimately get out of a recession is to let the businesses that became over-capitalized during the boom – due to the expansion of the money supply faster than the growth in productivity by the fraudulent fractional-reserve central banking system – be liquidated. A collapse in outstanding credit (deflation) that brings about a recession is the nicer of the possible results to this expansion (which Austrian economists properly refer to as “inflation”), the other is continually escalating price inflation, eventually resulting in hyperinflation if the artificial expansion of money and credit by the central bank is allowed to continue.
Also, the last part you wrote makes no sense; Keynesianism basically says that a recession is the result of people not spending enough on consumer goods, therefore government should increase the money supply (inevitably devaluing the currency in the process) to reward debtors and punish savers. That’s one of the many nonsensical implications of Keynesian economic thought – saving leads to poverty (an especially stupid idea, since when one gives a bank money to save the bank is not just holding idle cash), and debt leads to plenty. Anyways, I’m getting off topic here. Stay tuned for the debunking of the NY Times article you posted.
Tyler and gb, your words are like sweet music against a backdrop of people banging their heads into the wall. Good show. I wonder how those who can’t get a job now will “thank” the democrats for ignoring all economic rationality.