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The Politics of Wage

bballcrook21
Posts: 4,468
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1/20/2016 12:21:25 AM
Posted: 10 months ago
One common fallacy is that raising the minimum wage will reduce welfare spending. Many on the left believe that welfare essentially subsidizes Walmart, which allows them to pay lower wages. If the employer knows you"ll receive $X from welfare for making minimum wage, then they have no incentive to pay you more " or so goes the narrative.

Contrary to this belief, welfare does not subsidize low income wages, but rather it"s the other way around. If not for employers willing to hire low skilled labor, total welfare expenditures would be much higher.

Once we get beyond stage one, the logic makes sense.

By definition, you cannot have full employment under a wage price floor. Let"s say there is a $10 minimum wage. Everyone valued under $10 will not be hired and their income will be zero. Since their income is zero, they receive $12 an hour in subsidies. However, those who are hired for $10 will receive $2 an hour in subsidies " bringing us back to our $12.

Under the minimum wage, if you"re a poor family, your teenager might not be able to find a job that contributes to your household income. As a result, you receive even MORE welfare subsidies than you would if there was an additional $5 an hour income.
Thus, it is not welfare subsidizing low wage employers, but the employer reducing total welfare expenditures.

If this were true, one would expect to see some kind of inverse relationship between minimum wages and per capita welfare spending. However, as I posted about last week, the opposite is true even when adjusting for cost of living " states with higher minimum wages tend to spend more on welfare.

Always remember that, regardless of legislation, the real minimum wage is zero.
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
kevin24018
Posts: 1,951
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1/20/2016 12:32:21 AM
Posted: 10 months ago
At 1/20/2016 12:21:25 AM, bballcrook21 wrote:
One common fallacy is that raising the minimum wage will reduce welfare spending. Many on the left believe that welfare essentially subsidizes Walmart, which allows them to pay lower wages. If the employer knows you"ll receive $X from welfare for making minimum wage, then they have no incentive to pay you more " or so goes the narrative.

Contrary to this belief, welfare does not subsidize low income wages, but rather it"s the other way around. If not for employers willing to hire low skilled labor, total welfare expenditures would be much higher.

Once we get beyond stage one, the logic makes sense.

By definition, you cannot have full employment under a wage price floor. Let"s say there is a $10 minimum wage. Everyone valued under $10 will not be hired and their income will be zero. Since their income is zero, they receive $12 an hour in subsidies. However, those who are hired for $10 will receive $2 an hour in subsidies " bringing us back to our $12.

Under the minimum wage, if you"re a poor family, your teenager might not be able to find a job that contributes to your household income. As a result, you receive even MORE welfare subsidies than you would if there was an additional $5 an hour income.
Thus, it is not welfare subsidizing low wage employers, but the employer reducing total welfare expenditures.

If this were true, one would expect to see some kind of inverse relationship between minimum wages and per capita welfare spending. However, as I posted about last week, the opposite is true even when adjusting for cost of living " states with higher minimum wages tend to spend more on welfare.

Always remember that, regardless of legislation, the real minimum wage is zero.

consider this, I'm only speaking from experience of real live people I have personally talked to. Many have had their hours cut to under 30 because of the Affordable (can't say it w/o laughing) Care Act. So those people have already been given a huge pay cut. So now you need an increased hourly wage to make up for the lack of hours. I have said before once automation is cheaper than labor there goes those jobs.
burger maker
http://www.gizmag.com...
Self-Checkout Kiosks
http://www.businessinsider.com...
self check out at stores have been in place for a while now. I hate them and don't use them, but lots of people do. And there's what, one person watching them all in case someone needs help?
these minimum wages jobs are becoming extinct to technology so this is a loosing fight, just like the military these jobs where never meant or intended to support families. We need more manufacturing and technical jobs and give people the training they need, help up rather than a hand out.
bballcrook21
Posts: 4,468
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1/20/2016 12:37:20 AM
Posted: 10 months ago
At 1/20/2016 12:32:21 AM, kevin24018 wrote:
At 1/20/2016 12:21:25 AM, bballcrook21 wrote:
One common fallacy is that raising the minimum wage will reduce welfare spending. Many on the left believe that welfare essentially subsidizes Walmart, which allows them to pay lower wages. If the employer knows you"ll receive $X from welfare for making minimum wage, then they have no incentive to pay you more " or so goes the narrative.

Contrary to this belief, welfare does not subsidize low income wages, but rather it"s the other way around. If not for employers willing to hire low skilled labor, total welfare expenditures would be much higher.

Once we get beyond stage one, the logic makes sense.

By definition, you cannot have full employment under a wage price floor. Let"s say there is a $10 minimum wage. Everyone valued under $10 will not be hired and their income will be zero. Since their income is zero, they receive $12 an hour in subsidies. However, those who are hired for $10 will receive $2 an hour in subsidies " bringing us back to our $12.

Under the minimum wage, if you"re a poor family, your teenager might not be able to find a job that contributes to your household income. As a result, you receive even MORE welfare subsidies than you would if there was an additional $5 an hour income.
Thus, it is not welfare subsidizing low wage employers, but the employer reducing total welfare expenditures.

If this were true, one would expect to see some kind of inverse relationship between minimum wages and per capita welfare spending. However, as I posted about last week, the opposite is true even when adjusting for cost of living " states with higher minimum wages tend to spend more on welfare.

Always remember that, regardless of legislation, the real minimum wage is zero.

consider this, I'm only speaking from experience of real live people I have personally talked to. Many have had their hours cut to under 30 because of the Affordable (can't say it w/o laughing) Care Act. So those people have already been given a huge pay cut. So now you need an increased hourly wage to make up for the lack of hours. I have said before once automation is cheaper than labor there goes those jobs.
burger maker
http://www.gizmag.com...
Self-Checkout Kiosks
http://www.businessinsider.com...
self check out at stores have been in place for a while now. I hate them and don't use them, but lots of people do. And there's what, one person watching them all in case someone needs help?
these minimum wages jobs are becoming extinct to technology so this is a loosing fight, just like the military these jobs where never meant or intended to support families. We need more manufacturing and technical jobs and give people the training they need, help up rather than a hand out.

I don't see what this had anything to do with my post. The ACA is driving healthcare costs up, which is not doing any good for anyone.

Regardless, min. wage jobs were also not meant for families, but many of them want to be stupid and breed endlessly, and then cry out for help. It's all a lack of self-accountability and responsibility.
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.