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Minimum Wage: Pros and Cons

GeoLaureate8
Posts: 12,252
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12/6/2013 12:49:39 AM
Posted: 3 years ago
There are a lot of arguments put forth by Libertarians and Liberals about minimum wage. Do both sides have good points?

Liberals: Minimum wage does not affect prices, it affects profits because employers know that they can afford to cut profits but can't afford to raise prices that will turn away consumers. Rich people's money doesn't circulate in the economy, it stays in the bank, they already bought the house and boat. If you raise minimum wage, the workers will have more money to consume and put back in the economy. Minimum wage, when adjusted for inflation, has decreased in the last 50 years while corporate profits have increased 800%. That's the best Liberal argument, the majority of Liberals just argue "wah it's not fair I want more."

Libertarians: Minimum wage is mandatory unemployment that outlaws all voluntary job contracts that pay below X amount. It prices unskilled workers out of the job market and denies them the ability to gain valuable work experience and skills to move up the economic ladder. It closes the window of opportunity. It's the cause of unpaid internships because it's legal to pay $0 but illegal to pay $5.

Minimum wage does force small businesses to make tough budget choices. When you increase the cost of labor through government force, it creates a barrier to hiring. It distorts the free market because big corporations can afford mandatory increases in the cost of labor, small businesses can't. Not all workers need what is called a "living wage" which entails a family of four. Only 1 in 5 people on minimum wage have a wife and kids, most live on their own.
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
GeoLaureate8
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12/7/2013 12:54:26 AM
Posted: 3 years ago
Any rebuttals to the Liberal argument?
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
TheHitchslap
Posts: 1,231
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12/7/2013 11:11:24 AM
Posted: 3 years ago
At 12/6/2013 12:49:39 AM, GeoLaureate8 wrote:
There are a lot of arguments put forth by Libertarians and Liberals about minimum wage. Do both sides have good points?

Liberals: Minimum wage does not affect prices
Actually .. we agree that it DOES impact prices, we just contest as to how much that impact is .. we believe that it's so small it's almost not even worth mentioning.
it affects profits because employers know that they can afford to cut profits but can't afford to raise prices that will turn away consumers.
...no...we maintain that profits increases are correlated with minimum wage increases dependent on sector. Those most sensitive to the increases are the fast food industry, hospitality, and retail. Those will notice the increases, and profits, Donald Trump on the other hand will not. (assuming they're all paid over 50k per year)
Rich people's money doesn't circulate in the economy, it stays in the bank, they already bought the house and boat.
True, would also like to add: this is a consumer based economy, businesses open up based on the assumption that a mass of people have access capital with which to spend. If they do not, then businesses won't survive. Ergo minimum wage is good.
If you raise minimum wage, the workers will have more money to consume and put back in the economy. Minimum wage, when adjusted for inflation, has decreased in the last 50 years while corporate profits have increased 800%. That's the best Liberal argument, the majority of Liberals just argue "wah it's not fair I want more."

We're not whiners. Last time I checked Geo, it's normally you complaining about taxes, min wage increases, "collectivism" of angry minorities voicing their dissent with Treyvon Martin case, and getting your face plastered on the weekly stupid more times than any other member here.

Libertarians: Minimum wage is mandatory unemployment that outlaws all voluntary job contracts that pay below X amount. It prices unskilled workers out of the job market and denies them the ability to gain valuable work experience and skills to move up the economic ladder. It closes the window of opportunity. It's the cause of unpaid internships because it's legal to pay $0 but illegal to pay $5.

Minimum wage does force small businesses to make tough budget choices. When you increase the cost of labor through government force, it creates a barrier to hiring. It distorts the free market because big corporations can afford mandatory increases in the cost of labor, small businesses can't. Not all workers need what is called a "living wage" which entails a family of four. Only 1 in 5 people on minimum wage have a wife and kids, most live on their own.
Thank you for voting!
James.Price
Posts: 109
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12/7/2013 1:38:02 PM
Posted: 3 years ago
I can add somewhat to the liberal view, by stating that minimum wages will be paid no matter what. The question is "who should pay them?"

Our society will do what it can to prevent abject poverty from spreading too deeply into our economic structures. This is currently being accomplished with a mix of social-level taxation and distribution to the underpaid, and minimum wage laws. If we agree that minimum payment for the purchase of worker labor is a bad idea, then we must agree that either poverty is 'good' or that taxpayers should subsidize more of the overhead and production costs of private workforces. (With food stamps, rescue shelters and warm bridges for the working class to sleep under.)

I, as a fire-breathing liberal, would like to see this burden carried more by those who enrich themselves with the purchase of labor. I agree that subsidies remain useful - since they make American labor more competitive vis a vis overseas labor pools.

I could go much further with this line of thought.
CarefulNow
Posts: 780
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12/11/2013 1:18:17 AM
Posted: 2 years ago
At 12/6/2013 12:49:39 AM, GeoLaureate8 wrote:
Liberals: Minimum wage does not affect prices, it affects profits because employers know that they can afford to cut profits but can't afford to raise prices that will turn away consumers. Rich people's money doesn't circulate in the economy, it stays in the bank, they already bought the house and boat. If you raise minimum wage, the workers will have more money to consume and put back in the economy. Minimum wage, when adjusted for inflation, has decreased in the last 50 years while corporate profits have increased 800%. That's the best Liberal argument, the majority of Liberals just argue "wah it's not fair I want more."

"I want more"? How dare they be so individualistic? Don't they know that they are just so many blood cells in the national circulatory system, and their incessant complaining serves only to clog its arteries? That's your utilitarianism, which dominates, anyway. Not to take anything away from your latent natural rights libertarianism, which insists that the capitalist who merely allows production (i.e. refrains from exercising his socially-contrived right to inhibit it) actually deserves such a larger share than the producers themselves.

Libertarians: Minimum wage is mandatory unemployment that outlaws all voluntary job contracts that pay below X amount. It prices unskilled workers out of the job market and denies them the ability to gain valuable work experience and skills to move up the economic ladder. It closes the window of opportunity. It's the cause of unpaid internships because it's legal to pay $0 but illegal to pay $5.

The last point is actually a good one, but it undermines the rest of the libertarian argument along with the liberal one. Neoclassical theory oversimplifies labor: quantity and wage. But labor has unique variables, which include payment in kind (which is the proper category of the experience and skills the capitalist graciously allows the intern to acquire during his servitude), really unpaid time (e.g. commute and on-call time), effort (as in the Stiglitz model), etc. So even if employers had no market power and were paying employees all they were worth already, it would only be the most efficient point on a fair frontier, which is to say the most efficient fair combination of effort, unpaid time, etc., for any given wage. Minimum wage outlaws part of that frontier, obviously, but the assumption that unemployment is preferable to buyer or seller than every other point on the frontier is dubious.

Minimum wage does force small businesses to make tough budget choices. When you increase the cost of labor through government force, it creates a barrier to hiring. It distorts the free market because big corporations can afford mandatory increases in the cost of labor, small businesses can't.

That's actually a testable hypothesis. Large firms have been growing in relation to small ones over the long-haul, but maybe that differential growth slows when nominal minimum wages are frozen. Except it doesn't. In fact, the last two complete nominal minimum wage freezes ('91 to '96 and '97 to '07) saw significantly higher than average increases in the Fortune 500's share of capitalization and net profits.
FREEDO
Posts: 21,057
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12/11/2013 1:22:45 AM
Posted: 2 years ago
Instead of having a minimum wage, it would be better to require a certain ratio for employer/employee income. This would make it easier on small businesses and require more of larger businesses.
GRAND POOBAH OF DDO

fnord
Khaos_Mage
Posts: 23,214
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12/11/2013 8:19:10 AM
Posted: 2 years ago
At 12/11/2013 1:22:45 AM, FREEDO wrote:
Instead of having a minimum wage, it would be better to require a certain ratio for employer/employee income. This would make it easier on small businesses and require more of larger businesses.

I am curious how this works...

McDonalds has an EPS of about $1/share, so each year each owner makes $1 for every share they have. Or is the ratio the aggregate? But, is it the individual's wage, or the total cost of labor?
I want to say McDonalds profits about $5 billion, yet has over 1 million workers, which is likely to have a total labor cost of more than $5 billion ($5K/ employee), so their ratio would be less than 1:1.
Conversely, a small business owner may make $100K, while their one employee makes $20K. This ratio is 5:1.
My work here is, finally, done.
CarefulNow
Posts: 780
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12/11/2013 1:22:15 PM
Posted: 2 years ago
At 12/11/2013 8:19:10 AM, Khaos_Mage wrote:
At 12/11/2013 1:22:45 AM, FREEDO wrote:
Instead of having a minimum wage, it would be better to require a certain ratio for employer/employee income. This would make it easier on small businesses and require more of larger businesses.

I am curious how this works...

It's executive-to-worker pay, not capitalist-to-worker pay. More precisely, it's the ratio of the highest salary to the lowest wage. Profits and dividends and capital gains don't factor into it, as far as I know.
Khaos_Mage
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12/11/2013 3:05:11 PM
Posted: 2 years ago
At 12/11/2013 1:22:15 PM, CarefulNow wrote:
At 12/11/2013 8:19:10 AM, Khaos_Mage wrote:
At 12/11/2013 1:22:45 AM, FREEDO wrote:
Instead of having a minimum wage, it would be better to require a certain ratio for employer/employee income. This would make it easier on small businesses and require more of larger businesses.

I am curious how this works...

It's executive-to-worker pay, not capitalist-to-worker pay. More precisely, it's the ratio of the highest salary to the lowest wage. Profits and dividends and capital gains don't factor into it, as far as I know.

So, is the small business owner a capitalist or an executive?
Plus, it is a poor way to gauge "unfairness" or anything.

If I am a manager of a restaurant, I make $X and manage Y employees, if we expand and we now have 3Y employees, is it unfair for me to make $2X? The other employees are not getting raises.
My work here is, finally, done.
FREEDO
Posts: 21,057
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12/11/2013 4:42:35 PM
Posted: 2 years ago
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.
GRAND POOBAH OF DDO

fnord
Khaos_Mage
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12/11/2013 5:47:02 PM
Posted: 2 years ago
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

How, then do people obtain the capital to buy their first job?
Why would people want to hire others, if that means they are automatically making less profits (as percentage).
My work here is, finally, done.
GeoLaureate8
Posts: 12,252
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12/11/2013 7:17:15 PM
Posted: 2 years ago
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

That is interesting idea, I kind of like it.

Peter Schiff explained that company owners are directly affected by how their company performs in the market. Do the employees really want their pay to decrease when their company stocks are down in the S & P and increase when stocks are up?

The owner absorbs all the risk and fluctuation, the worker gets a guaranteed wage rate each month that only increases every promotion.

If it was based on equity, it'd be about as popular as commission jobs, another unsecure situation.

In the free market, all 3 of these payment methods (equity, wage, commission) are allowed.

Also, what do you mean by organized labor? Unions?
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
TheHitchslap
Posts: 1,231
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12/11/2013 10:04:57 PM
Posted: 2 years ago
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

....theoretically what's the difference between raising minimum wage and this?
Thank you for voting!
FREEDO
Posts: 21,057
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12/11/2013 11:15:26 PM
Posted: 2 years ago
At 12/11/2013 10:04:57 PM, TheHitchslap wrote:
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

....theoretically what's the difference between raising minimum wage and this?

It's very different.

It turns all businesses into worker co-ops. Meaning they get to run things themselves. Which is essentially Mutualism. Socialism through Capitalism.
GRAND POOBAH OF DDO

fnord
TheHitchslap
Posts: 1,231
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12/12/2013 3:34:49 PM
Posted: 2 years ago
At 12/11/2013 11:15:26 PM, FREEDO wrote:
At 12/11/2013 10:04:57 PM, TheHitchslap wrote:
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

....theoretically what's the difference between raising minimum wage and this?

It's very different.

It turns all businesses into worker co-ops. Meaning they get to run things themselves. Which is essentially Mutualism. Socialism through Capitalism.

I don't know if they still do it, but my mother when she worked for mcDonalds told me they use to do the same thing (have the managers buy shares of the company)

problem is is when your a manager on min wage, those shares are expensive and you cannot afford....

interesting idea tho, some companies do run this way, seems to generally workout.

As with the owners, they simply could not be present, otherwise they still have unfair power to dictate wages via market forces. OR workers rebel and kick them out for not doing anything. This is the only problem I see with this.
Thank you for voting!
Khaos_Mage
Posts: 23,214
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12/13/2013 9:28:14 AM
Posted: 2 years ago
At 12/12/2013 3:34:49 PM, TheHitchslap wrote:
At 12/11/2013 11:15:26 PM, FREEDO wrote:
At 12/11/2013 10:04:57 PM, TheHitchslap wrote:
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

....theoretically what's the difference between raising minimum wage and this?

It's very different.

It turns all businesses into worker co-ops. Meaning they get to run things themselves. Which is essentially Mutualism. Socialism through Capitalism.

I don't know if they still do it, but my mother when she worked for mcDonalds told me they use to do the same thing (have the managers buy shares of the company)

Are you sure she wasn't talking about stock options?
Where employess (or in this case managers only) can buy stock at a set price (which is hopefully less than the current market price).

problem is is when your a manager on min wage, those shares are expensive and you cannot afford....
Managers don't make minimum wage.
If they did, who would be manager, when they could just be a lacky with no responsibility for the same pay?

interesting idea tho, some companies do run this way, seems to generally workout.

As with the owners, they simply could not be present, otherwise they still have unfair power to dictate wages via market forces. OR workers rebel and kick them out for not doing anything. This is the only problem I see with this.

My issue with this plan is:
1. How do you get working/starting capital for the business?
2. As more employees come on, it dilutes my shares, which, as a founding member, is not appealing. I buy 10 shares of 50, I get 20% of profits. If more employees are hired and now I own 10 shares of 100, I get 10%, but that is less unless profitability is doubled, which is unlikely.
3. What happens when employees quit? Do they still own the company?

This idea makes sense, but not if the company expands, nor is there is large turnover.
So, it basically sounds like a partnership.
My work here is, finally, done.
ClassicRobert
Posts: 2,487
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12/13/2013 10:22:38 AM
Posted: 2 years ago
At 12/11/2013 1:22:45 AM, FREEDO wrote:
Instead of having a minimum wage, it would be better to require a certain ratio for employer/employee income. This would make it easier on small businesses and require more of larger businesses.

It's too easy to get around that through stock options.
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CarefulNow
Posts: 780
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12/13/2013 12:16:40 PM
Posted: 2 years ago
At 12/11/2013 3:05:11 PM, Khaos_Mage wrote:
So, is the small business owner a capitalist or an executive?

Both, in function, but according to the wage ratio he's a capitalist because his entire income takes the form of profits; he doesn't need to indicate what part is from his own labor and what part is economic rent.

Plus, it is a poor way to gauge "unfairness" or anything.

Agreed. And I would add that the preference for small businesses is misguided as well. Granted, it would be more efficient if large firms were broken up into medium-sized firms, because large firms don't have economies of scale with respect to medium-sized firms (their production units are no larger) but amalgamate instead for the sake of market power. However, small businesses (say, fewer than 50 employees) get into duplicate infrastructure territory, and that's probably not something we should be subsidizing.

If I am a manager of a restaurant, I make $X and manage Y employees, if we expand and we now have 3Y employees, is it unfair for me to make $2X? The other employees are not getting raises.

If you're doing less than twice the work you were before (which is by no means precluded by the tripling of the employees), then either your new wage is unfairly high (relative to your underlings' wages), your old wage was unfairly low, or both. In all likelihood, the ratio of your wage to that of your underlings will be unfairly high before and after such expansions, with or without na"ve (na"ve if gains in fairness are expected, not necessarily if other benefits are expected) interventions like minimum wages and wage ratios: your relative labor and market power will be unchanged; if they can't find expression in differential wages they will find expression elsewhere.
CarefulNow
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12/13/2013 1:24:45 PM
Posted: 2 years ago
At 12/11/2013 11:15:26 PM, FREEDO wrote:
It turns all businesses into worker co-ops. Meaning they get to run things themselves. Which is essentially Mutualism. Socialism through Capitalism.

Mutualism was put to rest pretty much as soon as it was proposed, and the death of the labor theory of value on which it was based was obviously fatal to it as well (unlike neo-Marxists, who can plausibly argue that the LTV isn't essential to Marxism, modern-day mutualists, which as far as I know include only one notable individual, are left to try to resurrect it by methods circular enough to make even neoclassicists blush).

Your proposal in particular, which requires workers to compensate capitalists for their shares, is especially problematic because it's indistinguishable from the status quo. Workers can already, if they so choose, exchange their low-risk, liquid financial capital (i.e. money) for high-risk, illiquid industrial capital, including shares of their own firm, on the stock market. The fact that they choose instead to exchange it for commodities reproductive of their human capital does not make this any more or less a socialist system.
Tophatdoc
Posts: 534
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12/13/2013 4:31:10 PM
Posted: 2 years ago
At 12/6/2013 12:49:39 AM, GeoLaureate8 wrote:
Liberals: Minimum wage does not affect prices, it affects profits because employers know that they can afford to cut profits but can't afford to raise prices that will turn away consumers. Rich people's money doesn't circulate in the economy, it stays in the bank, they already bought the house and boat. If you raise minimum wage, the workers will have more money to consume and put back in the economy. Minimum wage, when adjusted for inflation, has decreased in the last 50 years while corporate profits have increased 800%. That's the best Liberal argument, the majority of Liberals just argue "wah it's not fair I want more."


To quote Sam Gompers, "We do want more, and when it becomes more, we shall still want more." But seriously minimum wage is good for some and bad for others.

Large corporations should enjoy minimum wage because they can price their potential competitors out of the market. New businesses have to worry about start up costs, entry fees, paying for financial consultants, and obtaining licenses. Nevertheless, they won't be able to afford the costs if they can't turn a profit. Then eventually they will go under. Majority of small businesses fail inevitably.
http://www.forbes.com...

The real question is who is on minimum wage? If you think it is a grandpa with five grand kids your sorely mistaken. It is usually inexperienced teenagers and unskilled laborers. We will get pictures of teenagers flipping burgers and serving fries. It was an absolute before that raising the minimum wage hurt unskilled employment. I will dispute the claims of Card and Krueger another time.

Nevertheless, who will be unemployed by minimum wage increases, unskilled laborers and teenagers. Businesses will become more capital intensive(and have). This is true for the long term. For example, once there were elevator operators, gas pumpers, movie ushers, and dish washers but those days are over. Wages increases are high among those who are more productive. They are more productive because they have more capital invested in them(education, training).

The minimum wage is a devil's deal between Labor and Corporations. The objective is to defeat and regulate their opponents out of the market. The deal is between insiders to keep outsiders and upcoming competitors out. At least allow a youth minimum wage(lower then the minimum wage) would not hurt teenagers and other young people as much.
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TheHitchslap
Posts: 1,231
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12/13/2013 6:56:35 PM
Posted: 2 years ago
At 12/13/2013 9:28:14 AM, Khaos_Mage wrote:
At 12/12/2013 3:34:49 PM, TheHitchslap wrote:
At 12/11/2013 11:15:26 PM, FREEDO wrote:
At 12/11/2013 10:04:57 PM, TheHitchslap wrote:
At 12/11/2013 4:42:35 PM, FREEDO wrote:
On second thought, it's better to just abolish wages and replace it with equity. If labor were organized, it would be the rational decision.

This would work by employees paying a price to have an equal share in the company, making them worker-owners. The original owner retains an equivalent share but isn't required to work and can't be fired.

Wages are the single biggest issue with Capitalism and yet it isn't an inherit feature of Capitalism, it's simply an idea with a heavily rooted precedent.

....theoretically what's the difference between raising minimum wage and this?

It's very different.

It turns all businesses into worker co-ops. Meaning they get to run things themselves. Which is essentially Mutualism. Socialism through Capitalism.

I don't know if they still do it, but my mother when she worked for mcDonalds told me they use to do the same thing (have the managers buy shares of the company)

Are you sure she wasn't talking about stock options?
Where employess (or in this case managers only) can buy stock at a set price (which is hopefully less than the current market price).

problem is is when your a manager on min wage, those shares are expensive and you cannot afford....
Managers don't make minimum wage.
If they did, who would be manager, when they could just be a lacky with no responsibility for the same pay?


I was gonna leave all of your points alone till I saw the one above.

It's called "the Great Recession" dude. Yes actually some managers make minimum wage, because they have no other choice than to take on those responsibilities otherwise they face not having a job

I work in retail; my managers make min wage full time. The only reason why I know this is because they offered me a job for the same thing.

interesting idea tho, some companies do run this way, seems to generally workout.

As with the owners, they simply could not be present, otherwise they still have unfair power to dictate wages via market forces. OR workers rebel and kick them out for not doing anything. This is the only problem I see with this.

My issue with this plan is:
1. How do you get working/starting capital for the business?

Either 1) venture capitalist (as what OP states which as I noted might cause problems), 2) loans, or 3) collective pools of money from everyone (Ethiopians in DC use what are called "ekubs" which is the same thing)

2. As more employees come on, it dilutes my shares, which, as a founding member, is not appealing. I buy 10 shares of 50, I get 20% of profits. If more employees are hired and now I own 10 shares of 100, I get 10%, but that is less unless profitability is doubled, which is unlikely.

agreed as a possible outcome
3. What happens when employees quit? Do they still own the company?

no.

This idea makes sense, but not if the company expands, nor is there is large turnover.
So, it basically sounds like a partnership.
Thank you for voting!
CarefulNow
Posts: 780
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12/13/2013 8:42:10 PM
Posted: 2 years ago
At 12/13/2013 6:56:35 PM, TheHitchslap wrote:
Either 1) venture capitalist (as what OP states which as I noted might cause problems), 2) loans, or 3) collective pools of money from everyone (Ethiopians in DC use what are called "ekubs" which is the same thing)

(1) increases the buyers' share of the firm only inasmuch as it decreases the workers' share of the buyers. (2) decreases profit only inasmuch as it increases interest. (3) gives workers, in the theoretical ability to collectivize, nothing capitalists don't have as well.

The question that still hasn't been answered is why workers, if they could somehow attract venture capital or get loans or pool their vast riches, would start co-ops, of all things. I think it's far more rational for them to do what they usually do when they organize, which is force better wages (i.e. money), which is every bit the capital stock is, only with a level of risk that's more appropriate to their circumstances. To the extent that they've failed to achieve "socialism through capitalism" within that paradigm, if it has anything to with irrationality, is because of the prohibitive proposition that the expropriators may only be expropriated if it's at a price of their choosing.