curvesahead said:bogalusa said:WalStMonky said:...The diatribe in the OP is propaganda and nonsense.Well, it is from CNN, after all.

I'd like to see some serious data to back up either side's contention.

And what does an increase in the minimum wage to $7.25 mean for those whose pay is, say, $7.50-$8.00?

ITA - regarding the meaning for those folks making $7.50 - $8.00 not much of an impact other than feeling a little bitter perhaps that they are only making a little bit more than new hires.

I do not know even teenagers that are making minimum wage, the fast food places and retail stores in my area pay them slightly more than the minimum wage required in PA

Those workers earning $7.50-8.00 will feel the increase in prices to offset the new wage increases. So their spending power will decrease while the people who get a raise to the new minimum wage will see their spending power stay the same. Do you really think that companies won't markup prices as a response to the new minimum wage? Companies that voluntarily pay more than minimum wage might not, but do you expect anything different than what the credit card companies are doing? They are slashing their rewards offers in response to tightening of credit and the new credit card legislation.

nycll said:You would think the purpose of forming a Union is to aim higher than the minimum wage.
The unions do aim higher than the minimum wage, and expect a certain premium over it. When the minimum wage increases, unions use that increase to justify changes to their collective bargaining agreement. As magika pointed out, many CBAs are tied to the minimum wage, in the same manner that a variable rate might be tied to LIBOR.

The same also applies to non-union supervisory positions. Supervisors have come to expect a certain margin over the minimum wage.

It doesn't necessarily make logical sense, but people see themselves as being worth a certain premium over what a minimum wage worker receives.

geebeebee said:
You obviously don't understand unemployment insurance. You "pay" for unemployment insurance by being employed, and you collect if you become unemployed, like car or homeowner's insurance, which you pay premiums for, and then collect if needed. I know that, to you, everything is a burdensome social program (well, for people that currently work), but you're barking up the wrong tree here.

You obviously don't understand how insurance pools work. An insurance program does not magically deliver benefits simply because a person paid into it. Rather, the pool only functions so long as it is solvent, and premiums in exceed payments out and the costs of administration and fraud.

When the number of unemployed workers increases, this puts a strain on the State and Federal trust funds responsible for unemployment compensation. If the unemployment rate returns to normal rather soon, then there is no problem. Extended periods of high unemployment can and do deplete these trust funds, which require raises to premiums in order to maintain solvency. The recent stimulus bill bailed out several state unemployment trust funds, and required all states to raise unemployment insurance premiums to cover future claims at new, higher benefit levels.

To keep these trust funds solvent, they must maintain balanced budgets. When unemployment spikes, and employment remains scarce, the depletion of funds must be made up for with higher unemployment insurance taxes by those who remain working.

Furthermore, the unemployment insurance tax rates are regressive, as they only apply to the first $X dollars of an employee's pay. Due to this, high turnover by lower-end employees, in both part-time and full-time positions, creates heavy strain, as these are the people who draw larger proportions of unemployment compensation in proportion to their employment pay, and these positions are responsible for the highest levels of contributions to the trust funds relative to employment pay.

Unemployment insurance functions much like a private property and casualty pool. If your house burns down, the pool is capable of covering the loss with minimal effect. If your entire city burns down, the excess fires drastically raise payouts, and all homeowners will be paying more in insurance premiums.

Weren't all these same arguments used in the 90s to oppose the increase in the minimum wage? And didn't they all fail to materialize then too?

staci86 said:
The unions do aim higher than the minimum wage, and expect a certain premium over it. When the minimum wage increases, unions use that increase to justify changes to their collective bargaining agreement. As magika pointed out, many CBAs are tied to the minimum wage, in the same manner that a variable rate might be tied to LIBOR.

The same also applies to non-union supervisory positions. Supervisors have come to expect a certain margin over the minimum wage.

It doesn't necessarily make logical sense, but people see themselves as being worth a certain premium over what a minimum wage worker receives.Yep, it would have served the unions well to simply index the wages to COL or CPI. See here, the real minimum wage declined from 1970 to 2005. (Note: the chart is from a random source on the net but the story is what I think is true.)

IrishTomBunny said:Weren't all these same arguments used in the 90s to oppose the increase in the minimum wage? And didn't they all fail to materialize then too?
Yes, they were used in the 90's, and yes, they were valid then.

As time progressed from the 90's to today, we now have more:

1. Telecommunications
2. Technology
3. Automation
4. Outsourcing
5. Illegal immigrants

The above five factors have, in conjunction with pressures created by minimum wage laws, worked to eliminate millions of menial positions, creating in the process a new class of permanently unemployed, underemployed, and under the table workers.

The unemployment statistics have been cooked up by government bureaucrats to appear less than the true rate. The published statistics do not take into account the discouraged workers, or the permanent non-working class, who are classified as not seeking jobs (due to futility), and therefore, not part of the labor force. According to the BLS, people who do not seek work they know doesn't exist are not considered unemployed.

Further elimination of low-paid positions only contributes to a growing number of permanently discouraged non-workers.

http://www.heritage.org/research/labor/wm456.cfm
http://articles.moneycentral.msn.com/learn-how-to-invest/The-rea...

Of course, none of this has any bearing on moral arguments concerning minimum wage. The cold economic reality, however, implies that when unskilled workers are permanently replaced due to wage pressures, those jobs disappear for quite some time, if they return at all.

nycll said:Hold it right there. You need to be economically blind to think minimum wage (or any US wages) can still play a major role in change in inflation in this day and age. Oil and other commodities are the source of inflation.
Future inflation will be heavily influenced by the monetary base and mushrooming trade deficits. As more and more money enters circulation, and as America's aggregate debt from trade deficits increases, the weakening of the dollar will accelerate and hurt those who spend the greatest portions of their income on commodity-based necessities.

staci86 said:nycll said:Hold it right there. You need to be economically blind to think minimum wage (or any US wages) can still play a major role in change in inflation in this day and age. Oil and other commodities are the source of inflation.
Future inflation will be heavily influenced by the monetary base and mushrooming trade deficits. As more and more money enters circulation, and as America's aggregate debt from trade deficits increases, the weakening of the dollar will accelerate and hurt those who spend the greatest portions of their income on commodity-based necessities.Exactly. Good charts. I am telling you oil import is going to kill us again.

staci86 said:You obviously don't understand how insurance pools work. An insurance program does not magically deliver benefits simply because a person paid into it. Rather, the pool only functions so long as it is solvent, and premiums in exceed payments out and the costs of administration and fraud.

When the number of unemployed workers increases, this puts a strain on the State and Federal trust funds responsible for unemployment compensation. If the unemployment rate returns to normal rather soon, then there is no problem. Extended periods of high unemployment can and do deplete these trust funds, which require raises to premiums in order to maintain solvency. The recent stimulus bill bailed out several state unemployment trust funds, and required all states to raise unemployment insurance premiums to cover future claims at new, higher benefit levels.

To keep these trust funds solvent, they must maintain balanced budgets. When unemployment spikes, and employment remains scarce, the depletion of funds must be made up for with higher unemployment insurance taxes by those who remain working.

Furthermore, the unemployment insurance tax rates are regressive, as they only apply to the first $X dollars of an employee's pay. Due to this, high turnover by lower-end employees, in both part-time and full-time positions, creates heavy strain, as these are the people who draw larger proportions of unemployment compensation in proportion to their employment pay, and these positions are responsible for the highest levels of contributions to the trust funds relative to employment pay.

Unemployment insurance functions much like a private property and casualty pool. If your house burns down, the pool is capable of covering the loss with minimal effect. If your entire city burns down, the excess fires drastically raise payouts, and all homeowners will be paying more in insurance premiums.Much ado about nothing. You said the 85% pay the unemployment insurance. Since you've gotten stuck being incorrect, you're trying to wriggle out. Firstly, the employer pays the insurance, so the 85% isn't accurate. You can say what you want about the companies "lowering" wages to make up for this, but I've never heard of it. Nice try, though. I'll give you a break, though. When you work, you'll understand this stuff.

TheMeliorist said:nycll said:Hold it right there. You need to be economically blind to think minimum wage (or any US wages) can still play a major role in change in inflation in this day and age. Oil and other commodities are the source of inflation. While I wholeheartedly agree those whose wages are raised gain significantly from that, minimum wage employees do consume a sizeable portion of fast food (what they can afford), the price of which is considerably affected by labor pricing. It will also have significant affect on prices of certain fruits and vegetables.The effects of higher wages are certainly true. But in the current environment the US businesses have very limited pricing power since there are so much excess capacity. The higher among of dollar will first translate into higher price of imports, oil being the most obvious one.

On an unrelated note, I'm a little disturbed by the dismissive attitude displayed by some in this thread, ie the "doesn't effect my area" claims. Who cares about your area; of course we shouldn't focus on what the change doesn't effect. I can show you guys how to live in 90% of the US on $5/hr and even in the places where you can't (reasonably) do so it still makes sense for those who need not fully support themselves on that income (teenagers living at home, elderly WalMart greeters, non profit/charity/church employees).The dismissive tone is perhaps more or less based on the fact that most the minimum wage earners are teenagers working in food service industry.

If I remember correctly, there have been multiple threads about this, especially when the new law with increases was being voted on. The pro minimum wage crowd will claim all those against it as being haters of the poor, the anti-minimum wage crowd will claim that by being against the minimum wage they are helping the poor because in the market their wages would be higher. We'll go in circles on this for about 20 pages before everyone is done, and in the end neither side will have changed the opinion of anyone.