The drum beat from the left for the past couple of weeks has been about raising the minimum wage. Is this an altruistic endeavor meant to care for the working poor? Hardly. This isn’t about the working poor or American families. Raising the minimum wage is about paying back unions. You might say that this doesn’t make sense – the average union worker makes $22 per hour, not the minimum wage. How could this be?
It was radio host Mike Rosen who first alerted us to this situation via his Facebook page, where he posted the following:
Labor unions are big supporters of minimum wage hikes. Why? Because many of their contracts are indexed to the minimum wage. Here’s an example: Assume a union welder makes $30 an hour. This is $62,400 per year. Now assume Obama is successful in increasing the minimum wage from $7.25 an hour to $10.10 an hour. The union welder will get a 39% salary increase and suddenly he’ll be making $87,000 per year! Not bad, huh?
Wouldn’t it be nice to get a 39% salary increase…just because? But, he’s not the only one who has highlighted this issue. Nearly one year ago, a Wall Street Journal op-ed penned by Richard Berman from the Center for Union Facts also explained how this works.
The labor contracts that we examined used a variety of methods to trigger the increases. The two most popular formulas were setting baseline union wages as a percentage above the state or federal minimum wage or mandating a flat wage premium above the minimum wage.
Other union contracts stipulate that, following a minimum-wage increase, the union and the employer reopen wage talks. The negotiations could pressure employers and unions to hammer out a new contract, regardless of how long their existing contracts last.
Of course, some union dues are based on a percentage of workers’ wages. So, when the minimum wage increases 39%, and union members receive a 39% wage increase, that means that the unions receive more in dues to pay their fat cat executives at the expense of their workers.
We aren’t arguing that workers deserve to be paid what they’re worth. And, wages have suffered due to the disastrous policies enacted by Democrats, but giving unions a handout when businesses haven’t recovered harms the economy and Colorado’s families.
Craig Perry: 1: Personal attack, indicating that I don't understand supply and demand. Here, we have a difference of opinion that I don't think we will be able to resolve.
I also see supply and demand every day. When the price of bacon becomes $6.00 per pound I don't buy it. THAT is the simplest expression of that law of supply and demand that I can think of. I vote with my wallet, allowing the market (that's ME, I am the consumer) to determine what is a fair price for the commodity. The price goes up, I buy less or none. The price goes down, I buy as much as I choose to. The same principle applies to labor. When the price is artificially forced up, employers buy less of the commodity.
Oh, by the way, in a free market, the laborer is free to say "I won't work for that amount," and seek employment (or increase their personal market value) so they don't have to work for less than they are worth. (I have personal experience with increasing my own market value, so I know that this principle also is validated by empirical data).
I said nothing about Reagan or "trickle down." You are assuming (you know what happens when you ass u me) and assigning to me traits without a basis in fact, logic or empical data (refer to my previous analysis of liberal responses, whose pattern you are following exactly).
2: But when you raise the minimum wage you do not increase the overall purchasing capacity of ANYONE! That money has to come from somewhere, and it has to come from increased prices (or decreased margins, which also violates a fundamental principle of economics). When the prices go up to accommodate the increased cost of labor, purchasing power decreases and the system reverts to the same stasis from which it started.
And if what you are positing is valid, then why play small ball? A minimum wage of a million dollars per year and look at all the disposable income that people would be throwing around! (Illustrating absurdity by using absurdity) (Also applying the mathematical principle of boundary conditions to define a mathematical model).
3: When did women (and/or those who earn minimum wage) become a majority? Are you offended that I call them what they are? Darn those facts again! After all, don't women have a BUNCH of federal programs that benefit them specifically because they are a minority? If that status has changed, shouldn't they refuse to accept those minority targeted program benefits? (Another rhetorical question). Those pesky FACTS just keep annoying you by defeating your emotional arguments, don't they?
Wrong again Karl because you don't even understand the basics of supply and demand while I on the other hand, I see it on a daily basis. When wages stagnate as they have for the past 30 plus years, demand falls and unemployment rises. You're obviously bamboozled by the supply side or"trickle down" economic theory that was implemented when the country made the huge mistake of being duped and electing Raygun as POTUS.
You're right that labor is a commodity but what you fail to realize is that when people have more disposable income, consumer confidence goes up and they tend to purchase more goods and services. In turn, that creates more demand and employers start hiring people to meet that increased demand.
And it's so nice to see that you consider women and low wage workers as a minority. If you weren't so myopic and mathematically challenged, you'd realize that what's good for those on the lower end of the wage spectrum is also good for the rest of the country. But upward mobility is obviously something you don't believe in and in true contradictory GOP fashion, I'm sure you're the first one to complain when poor people that work full time have to rely on government subsidies just to make ends meet.
And nice try with the spin on "Opinion whose basis is emotion, no basis in logic, fact, or empirical data." I can provide all the necessary data to back up my arguments but you, not so much. And why? Because anything you bring to the table will just further prove that you subscribe and condone an economic theory that's an unsustainable, morally bankrupted FAILURE.
Kaboom! We're done here.
Craig Perry: So why limit the minimum wage to such a small amount? Why not raise it to — oh, how about $100,000 per year. Then EVERYONE would have a luxurious lifestyle… I mean, after all, who in America can't live VERY WELL on a hundred grand a year? Does this also make good econonmic sense to you?
Craig Perry:
Predictably, your responses follow tha liberal pattern: First : Personal attack. (I do, in fact, have all the credentials that I cited. Second: Resort to profanity — your "theory" is both wrong and its expression is offensive. Third response: appeal to emotion while disregarding logic and facts.
1: It does NOT make economic sense. I refer to the fundamental principle of supply and demand. When you raise the price of a commodity (and labor is a commodity) the demand for that commodity will decrease. Unless, of course, the democrats can be successful in getting congress to repeal the law of supply and demand. When demand for labor goes down, people will lose their jobs. This has been empirically demonstrated EVERY TIME the minimum wage has been raised. (Note my reference to logic, facts, and empirical data as opposed to reliance on emotion).
2: So it is good (in your opinion) for a minority. How about we stop pandering to every minority and start doing what is good for the USA? (Rhetorical question, your response will be steps 1, 2, and 3 as I outilined above). BTW, What percentage of American workers receive the minimum wage? And of them, how many intend for that to be the peak of their earnings?
3: Opinion whose basis is emotion, no basis in logic, fact, or empirical data.
And lastly, did you forget to list your own credentials for this meaningless "spitting contest"?
Craig Perry Is that crickets I hear?
Sure you do Karl. That's what all the Republicons say, LOL! Let's face the hard facts here, you're probably a high school drop out and you don't even remotely understand the basics of sound economic principles, let alone mathematics and grammar. And to prove my theory that you're completely full of shit, let's test those "credentials" of yours out here.
Please feel free to elaborate and in significant detail, your argument against the following three reasons for increasing the minimum wage.
1. It makes good economic sense. The federal minimum wage is currently $7.25 an hour. Adjusted for inflation, that's lower than it was in 1968. Raising the minimum wage to $10.10 an hour nationally will provide 28 million Americans with more money to spend and to invest, increasing economic activity and growth by as much as 22 billion. In fact, recent studies conclude that raising the minimum wage makes workers more productive and therefore helps businesses retain profitability – a conclusion affirmed by Gap Inc.'s recent decision to raise the minimum wage for its employees to $10.10 an hour.
2. It's good for women. Women account for roughly two-thirds of workers whose incomes would rise by increasing the minimum wage to $10.10 an hour. The average median income for women in 2013 was 37K versus 45K for men. Therefore, women's incomes are 81% of their male counter parts. These women are our daughters, sisters and mothers who are often the only breadwinners in their families. Our country is in a stronger position when women are in a stronger economic position. We need to make that a reality.
3. It's the right thing to do. No American working 40 hours or more a week deserves to live in poverty.
And lastly, good luck because you're going to need it if you want to get into a "spitting" contest with me. 🙂
Betty Butler Unfortunately, the politicians are really worried about that. They say they are, but they aren't really.
Okay Pete…. let's see YOUR math….
Inflation is very bad for those on fixed incomes. How can retirees live with skyrocketing prices? How can young people plan for their retirement?
I was pro-raising the minimum wage until I read an article that compared stats.
Most Minimum Wage jobs are in the food industry, which has been going *down* in productivity, not up. (Unlike a lot of other things, such as computer jobs, which have been going up in productivity)
Master of Business Administration, 2007. Yours? I also have a BS in engineering, and minors in mathematics and religion. Wanna compare credentials and experience? Okay. let's start with what I posted. What do you have? There's more… you really wanna have this spitting contest? I love it when people question my qualifications…
http://www.epi.org/minimum-wage-statement/
"Over 600 Economists Sign Letter In Support of $10.10 Minimum Wage" and your economic degree and credentials, Karl, are? What year did you win the Nobel?
Great article, worth reading
Please see my comment above about the laws of economics and empirical data. Unfortunately for Mr. Kolbenschlag, the laws of economics do not respond to any mortal sense of morality or "fairness." While the concept of "giving" more to those who earn the least "feels good," logic, reason and empirical data are contraindications.
No one who has passed (or is capable of passing) a freshman economics course would support a federally mandated minimum wage…to believe that such a mandate would have a positive effect on the labor market (especially the lower end of the labor market) is to deny the most fundamental laws of economics and about 200 years of empirical data. But that has never been a hindrance to the federal government, which operates without the encumbrances of logic and reasonng.
Bill Gates says it's a bad idea. One thing I agree with him on.
I recently wrote an article about how an increase in the minimum wage rate increases unemployment. You can read it here: http://wp.me/p3N9zD-4e
And basic ignorance of how economics work. (Not the insult 'ignorance.' The real meaning of 'ignorance.' They just don't know.) A hike will look good at first and for a very little while, but before long prices will rise to offset the raise.
There is also another reason back in the shadows, I think. Inflation. No one wants to admit they actually want inflation, so they work on things that will create it disguised as other, more palatable, actions. Like raising minimum wage, which results in higher prices (so really, the cost of living will rise to offset the raise and it doesn't really benefit anyone).
How can we pay off the enormous government debt in 'today's' dollars? We can't – without raising taxes enormously or cutting spending deeply. Voters would revolt at the former and, we know all too well, no one in government will do the later.
So, inflation is allowed/encouraged. In a few years we are paying back '2014' dollars at '2020' value. After inflation, the 2020 dollar is worth much less (buys you less) but the face value of income has increased relative to the inflation, so there are more dollars to pay back the old debt. Those 'underwater' homes? Don't have to forgive the debt – just let it ride on the books until inflation balances the ledger. (England did this years ago when their housing bubble burst.)
Hard to explain, but by letting inflation run, the 'cost' of current debt is reduced because it is being paid back with less valuable dollars.
The problem is, interest rates will rise along with inflation. And no one will like that. And controlling inflation once it gets started is as difficult as using monetary policy to 'recover' the economy. So, they don't admit what they are doing – but they are doing it just the same.
I don't believe the "majority of Americans" are in favor of an increase in minimum wage. It's very important for all Americans to understand the true impact of a minimum wage increase. How do you go about defining "fairness?" Minimum wage jobs were never intended for someone to raise a family on. These jobs should be held by, High School/College students/young people just getting started, to help them understand the basics of a work ethic, showing up to work on time, customer service, receiving a paycheck for work performed and the sweet concept of taxation.
Well, people like me and I would say the majority of Americans that support an increase in the minimum wage would disagree. First, Rosen's figuring [and math] is suspect and anyone that goes to Rosen for figuring and math is a fool; and Second, the reason a wage hike has broad support from Americans has little to do with unions and more to do with our basic sense of fairness.