Many on the Republican right do not trust Mitt Romney. That’s a foregone conclusion. Recently he made a policy statement which will only increase that mistrust. Last week Romney announced that his position on the federal minimum wage has not changed. When he ran for governor of Massachusetts in 2002 he affirmed his support for the state’s minimum wage and proposed linking automatic increases in it to inflation; as a Republican candidate for president in 2008 he affirmed his support for the federal minimum wage and you guessed it, took the position that it ought to automatically increase based on inflation. With his latest pronouncement, it appears flip-flopping Mitt is immoveable when it comes to his stand on government wage rate fixing. This policy of his is consistent with his distaste for the poor since it will hurt them the most.
You see, government price fixing of any variety simply doesn’t work. Most of the time it hurts those it was intended to help the most – the working poor. In the 1970s, Richard Nixon placed ceiling prices on beef. The price of beef continued to rise anyway and many small plans went out of business because they found themselves selling on smaller and smaller margins. Many of the working poor lost their jobs.
Rent controls are another form of government price fixing that always ends in disaster. Because there is no incentive to provide decent housing at below market rates, laws mandating artificially low rent levels produce squalid units and shortages in housing for those that need it the most – again the working poor.
So it is with minimum wage laws. Their intention is good, but they always hurt those they are meant to help – the working poor. By fixing the minimum price for labor above market value, employers are less willing to hire workers. Looking at a simple supply and demand graph, where the vertical axis represents price, it is easy to see that when the minimum wage is north of equilibrium the quantity of workers supplied is greater than the quantity of workers demanded. This equals more unemployment and particularly more unemployment at the lower end of the socio-economic ladder.
Now imagine as Romney proposes, the minimum wage increasing with the rate of inflation. It would increase every year and given how much new money has been created out of thin air by Ben Bernanke at the Fed, an increase in the minimum wage based on price inflation could be significant very soon. As the minimum price of labor continues to rise above the market price hiring would become even more scarce at the lower socio-economic level.
At the end of the day, you have to question the commitment to the free market of any candidate that endorses the minimum wage let alone indexing it to the rate of price inflation. Price fixing of goods and services by government is what ultimately destroys socialist states. Besides that, it mostly hurts the working poor. Given Romney’s recent remarks about that group, it is consistent that he would support the minimum wage. 
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Michael Andrews
Frank Apisa
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Comments
If you could prove the minimum wage increases unemployment you'd be in line for a Nobel Prize. There are many studies over the years, some say yes, some no. Taken as a whole, the yeas and nays are left to quibble over a very small range above or below zero, as the difference in employment is statistically insignificant.
You're either reading from an old eco textbook, or looking for an article or study that reaches conclusions you like.
Some would replace the min wage with a guaranteed minimum income, where every American (of age, I presume) would receive a government check every month, leaving the market a wider lattitude to set wages.
Damn, why can’t everybody see that!
Currently, very few Americans work at the minimum wage. In other words, employers pay them at a level that exceeds the minimum wage. Now let’s go back to your comment with this fact in mind, if the minimum wage was eliminated why would an employee currently being paid $10 an hour suddenly agree to work for $.75 an hour?
Of all the unintended consequences of the minimum wage the most egregious of all is its attack on personal freedom. Assume I’m willing to work for $5 an hour and an employer is willing to hire me at that rate but not at the minimum wage, why should I be denied the right to work?
What's to protect from the above scenario from deja' vu'ing all over again?
Currently, very few Americans work at the minimum wage. In other words, employers pay them at a level that exceeds the minimum wage. Now let’s go back to your comment with this fact in mind, if the minimum wage was eliminated why would an employee currently being paid $10 an hour suddenly agree to work for $.75 an hour?
Let us suppose nobody currently working for more than the minimum wage ever agrees to work for less…why would that impact on what I said? There are lots of people out of work…according to many, because American manufacturers are out-sourcing jobs to places like India or China. They are not working for $10 an hour. They are not working at all.
Of all the unintended consequences of the minimum wage the most egregious of all is its attack on personal freedom. Assume I’m willing to work for $5 an hour and an employer is willing to hire me at that rate but not at the minimum wage, why should I be denied the right to work?
You shouldn’t be. In fact, if you are willing to work for 75 cents an hour, an employer should be able to hire you at that wage.
That is what I said.
Let’s do away with the minimum wage and offer work at a wage comparable to what someone in rural India or China would earn. We would end our unemployment problem, wouldn’t we? If American manufacturers are sending jobs to India and China because they can get the work done cheaper (at 75 cents per hour)…wouldn’t they just keep the jobs here if they could pay Americans that same wage. Hell, they’d save the shipping costs…and time delays.
Right?
(We could also talk about doing away with welfare and unemployment as an inducement for workers to work at those wages, but let's save that for another time.)
My bad, I mistook your earlier comment as sarcasm. I see American employers having a very difficult time finding people to work at $.75 an hour. Afterall, between welfare, housing assistance, food stamps, unemployment and other safety net programs it is far more likely Americans choose not to work. Please redirect my comment to O’Rourke and Aristoxenus and please stop calling me Johnny, I like Fever.
The elimination of the minimum wage could eventually lead to deflation (if our governments could keep their hands off other aspects of our economy as well), where $0.75 per hour might be able to purchase what is needed to hold body and soul together. If you can ponder this, then it might become even more clear what the imposition of policies, such as the minimum wage, might have done to inflate prices and drive jobs off shore.
I just threw in the guaranteed minimum income because several Nobel Prize winning economists support the idea as a replacement for min wage.
Such rabid statist socialists as Friedrich Hayek and Milton Friedman.
Yup, they were both part of the international socialist conspiracy to enslave mankind...
Now I'll kick back and enjoy watching Unc and Fevie, both multiple winners of the I Pulled This One Outta My Ass and Don't Know From Shinola awards.
Fever, Mr. Fever, whatever you prefer...my earlier comment…and the last one…WERE sarcasm.
Eliminating the minimum wage will lead to the kind of thing to which I sarcastically referred…so I think it absurd to suggest that reducing the minimum wage or scrubbing it ought even to be considered.
The problem with employment in America (and in the rest of the world) will require much more drastic operations than raising or lowering the minimum wage. By now, any intelligent individual should see that the demand for the kind of labor most humans can bring to the production effort…is not worth very much.
Yeah, shipping production overseas saves hugely on labor costs…but at some point very soon, the robots, computers and other machines are going to make even overseas labor prohibitively expensive.
We’ve got to start thinking way outside the box on this problem.
We are not even close to doing so.
Feve,
You said nothing relevant to my comment, so I'll just note this isn't about some crackpot mid-18th century mindless idea of liberty. It's about economic function or, in yours and Unc's case, dysfunction. Sounds good to some, doesn't work for anybody.
Unc,
What combination of neurons misfired? You think deflation is good, inflation bad? Either way, somebody gets screwed. But with wage inflation, and even price inflation to match, those who hold loans of fixed amount and payment lose, but can more afford to. This is the inflation we need now, to clear the market while still getting some growth out of the deal. The mortgages are overvalued now anyway, so that's the better way to arrive at a rational value/debt balance.
With deflation, those who have to pay fixed dollar amounts get screwed, so the defaults rise and both lose. You end up with an even larger debt overhang and less ability to arrive at a functional equilibrium. With high and persistent unemployment, wages get lowered and the problem is exacerbated. By the time your .75 cent wager earner could afford survive, the dollar value/exchange rate between US and China would find a proportionate level that wouldn't be any different than now.
The problem with thinking of economics based on a few elementary wage/inflation, supply/demand curves and X-Y axis points is it's seldom so simple it can be expressed by one analysis and one chart, as reality has far more variables, all interconnected.
So, when you get stuck on not being able to make sense, take a cue from the Feve and just whine about the theft of liberty. Hell, that's what all libertarians do, and it works for them.
What evidence do you have that Americans are willing to work for $.75 an hour? As you surf the net looking for answers that don’t exist let me remind you that it’s a free country and less than 2 million people work at the current minimum wage. In other words, despite having the freedom to hire employees at the minimum wage, over 140 million people work at a rate above the minimum wage.
Perhaps that sequence of logic was a little cryptic. The first minimum wage started in 1938; well before 1938 the textile industry had largely vacated the United States for lower-cost employment locations.
O’Rourke:
Kudos for staying on message rather than providing us with another personal attack, however, when you respond to my questions I’ll respond to your comment. In case you forgot, I’ve reposted them below:
If the minimum wage was eliminated why would an employee currently being paid $10 an hour suddenly agree to work for $.75 an hour?
Assume I’m willing to work for $5 an hour and an employer is willing to hire me at that rate but not at the minimum wage, why should I be denied the right to work?
Put another way: If minimum-wage laws do not cause unemployment, then why settle for such lousy minimums? Why not have a minimum-wage of $10,000/hr.?
Everybody would be disemployed by such a law, as nobody's labor value is that high. Same logic goes for $7.25 or at any level that is higher than certain people's market wage rates. Lower-skilled people are essentially mandated to be jobless by the minimum-wage.
There, PJO, I just proved, through logic, that the minimum-wage causes unemployment. Do I get a Nobel, or do I still need to go out and do econometric tests to "prove" this?
As to your liberty question, your desire to work cheap interferes with the low-end profile of all wages and the functionality of the economy. That's why you have no right to offer yourself so cheaply.
However, under a libertarian rather than American system of liberty, you would be free to serf the waves of indentured servitude, groveling to whomever you please, or pleases you. So, yours is a problem of birthplace and citizenship, the latter easily corrected and, in your case, certain to be recommended by most of your now fellow citizens.
Set sail for Liberdystopia, Fever. Bon voyage!
You've proven nothing other than to point out your amazing ability to ignore the standard elements of disputation that describe all-or-nothing extrapolations as the product of simpletonism. In your case, motivated by ideology and ignorant of the ever-intruding beast of empiricism.
You have "proven" it on that tattered, surrealistic ledger in your mind, buttressed by elementary models based on those same erroneous ideas that prevailed before all rational economists involved in actually putting the theory to reality showed it to be flawed. But let's not have the weight of such proof crush your ideological aspirations, as that would require you to actually examine the issue and think within the realm of the real.
Now, on your use of the word "logic." I generally use the word in relation to a series of truths designed to arrive at another truth, all necessarily connected by strands of reality, never ignoring any truths that apply.
What did you mean?
That was a powerful rebuttal!
It's always fun watching ideologues fold like cheap lawn chairs when their enthusiasm for their ideological identity is exceeded by their ability to support their robo-assertions.
Sorry if I took you off-script, Kenn. Hell, just recite from Larry's, perhaps by just saying ditto or ibid.
I would say one reason for the problem is the minimum wage which doesn't allow employers to hire workers with minimal skills at entry level market wages
Will you please go back to the WSJ comment pages and let me have my way with the liberals? It's no fun when better arguments are made by better writers. As usual, O’Rourke has responded in the only way a liberal can respond when challenged by the laws of economics, personal attack.
Unclechi:
You should read more of what these people have to say.
What evidence do you have that Americans are willing to work for $.75 an hour?
I have absolutely no evidence. In fact, I cannot imagine any Americans will ever again work for 75 cents per hour. That is part of my point. The work is going to be farmed out to people who will…because getting the work done for 75 cents per hour means more profits for the manufacturing companies…and “profits” is what they are all about.
Rightly so, by the way. Every executive of every company should try to maximize profits in every way possible. I have no problem with that. And I fully expect that the “labor factor of production” will soon be minimized much more than presently by robots, computers, and other machines…particularly when a cheap, renewable energy source is discovered, which shouldn’t be too far into the future.
As you surf the net looking for answers that don’t exist let me remind you that it’s a free country and less than 2 million people work at the current minimum wage. In other words, despite having the freedom to hire employees at the minimum wage, over 140 million people work at a rate above the minimum wage.
Wonderful. Makes me happy as hell. But I doubt that fact makes the millions of people not working at all very happy.
As I said earlier, we’ve got to start thinking way outside the box to come up with any reasonable solution to this problem.
And as I also said earlier, “We are not even close to doing so.”
What is it with you guys? Do you really think that whatever situation you can cobble together represents some kind of valid argument?
Taken together, your argument isn't any different than saying if my cat is blue and yours is red, the one behind the door is purple. Yes, there is an element of some logical progression in that, but it's still a display of fumbduckery.
Face reality, at least for a moment. The fact is none of you have more than the slightest clue of how the real world works, you only know it must work like your spoon-fed ideology says it should.
Absent any true ability or desire to consider reality -- and I admit it takes some effort -- you fall back on ethereal, supposedly "big picture," supposedly philosophical, meanderings designed around that limited ideological twaddle. You all think it represents advanced thinking, but it's really just blather. A chimp could learn your arguments in the time it takes to eat a banana.
Proven economic laws, Kenn?
That's laughable horseshit. You're having to run counter to empirical studies that, even if some marginally support what you say is certain, agree the model you cite is flawed.
The difference between you and Larry as opposed to Fever and Unc is you simply think making the statement makes it true, and leave it at that. This is less egregious a crime against reason than Fev and Unc trying to put a barb on a display of inadequacy, but both are described on a scale of mental flatulence.
Now, let me help you get started on the road to being able to make sense and argue like you actually do have an ability to think for yourselves. Just remember this simple maxim:
Reality first, ideology last.
Get informed, synthesize a thought without some hack pundit feeding it to you, then argue what you truly KNOW. Then you can set yourselves to pinning whatever label you want on it, because it's freakin' irrelevant outside of discussing the ideology per se.
Trust me, it works a hell of a lot better, and saves you the sting of righteous ridicule, than trying to bend reality to fit your shit-for-brains ideology.
If the minimum-wage law does not cause unemployment, then why not have a minimum-wage of $10,000/hr? It won't cause unemployment, right?
Let me introduce you to "reductio ad absurdum," which says that your logic, fully extended, collapses, and is therefore falsified. We all know, without question, that a $10,000/hr minimum-wage will make us all unemployed. (Well maybe not Mark Zuckerberg.)
You can not disprove the basic economic law that says that artificially fixing a price above market equilibrium will result in greater quantity supplied than quantity demanded. Any "studies" trying to show the opposite are basically saying that economic law does not exist in certain areas, which is silly and must be flawed.
There are people whose wages are $0.75/hr. Mentally handicapped people are given employment across the country for wages like this. I know local businesses that hire these kinds of people -- with the supervision of caretakers -- from homes for the disabled.
Now, it's obvious that these people's skill levels are not the same as ours, which explains why their market wage levels are much lower and why the types of jobs they have seem simple to us.
But -- thank goodness -- these people are exempted from the minimum-wage. If they weren't, they would be totally unemployable; nobody would hire them for $7.25/hr or higher. But because employers can freely employ them at market rates, they can have jobs, and can enjoy the satisfaction and sense of accomplishment that comes with working, and the means to save and buy stuff they want. Employers obviously benefit from their work as well.
PJO, if the exemption that mentally handicapped people have from the minimum-wage were lifted, would they not be totally disemployed? Again, more questions that you will never answer because they all point to the fact that the minimum-wage causes unemployment.
First, you have already shown Mr Reductio to the room, but you don't know who he is. It doesn't mean that, in any case, if you can show a ridiculous extrapolation won't work that the premise on a normal scale is flawed. Wage and employment is not straight math and isn't a linear concept. Did you know that if a bridge to the moon won't work it means no bridge will work?
Damn, dude. Your mind needs serious work. I don't know whether to just laugh, or continue bursting your bubble point-by-point. Variables exist in abundance, so there is no comparison. False dichotomies can't be made true by obscuring them in a theory of any type.
You must be the biggest, most ignorant horse's ass on Earth if you think that by extending the minimum wage to 10K per hour and showing it wouldn't work means you have "logically" debased the concept of a minimum wage. I don't know what asylum inmate educated you in "logic", but if the lessons cost a dime you paid too much.
I was operating on the assumption that we knew certain exemptions apply. One rarely mentioned, but that I know is true by experience, is that Fed min wage laws don't apply if your biz doesn't deal in interstate commerce. Very difficult to do for most businesses as one purchase or sale can mean interstate commerce. Regardless, the state laws still apply.
If I had wanted to, I could have pointed out I hired literally hundreds of min wage shop help employees over the years, and never once thought I would hire somebody if min wage didn't apply. You either need a worker or don't. But that's anecdotal, though it is the real world experience you think you can defeat with your (gotta laugh) "logic."
Of course, I wouldn't be so foolish as to think I could make a valid rebuttal by comparing an exempt job to the non-exempt. You, on the other hand.... Anyway, saying that because there wouldn't be a job for that handicapped worker if there was a minimum wage law is kind of silly, as that exemption is part of the min wage law. It does not apply to the argument in the main in the least.
As far as your insistence that your (laughing again) "logic" shows that min wage causes higher unemployment and that your theory prevails over real world studies because of its rock-solid certainty...well...damn...I'm running out of expressions of ridicule. I'll have to stop and reload.
While I reload, here's the Fed minimum wage law for disabled workers:
"The sub-minimum wages are commensurate with wages paid to workers without disabilities."
In those and other words, that wage is also not set by the market, but by its relation to the standard minimum, so it IS A MINIMUM WAGE, meeting a set standard.
You have been answered. Seriously, Larry, your reply was just about the most pig-ignorant display of (laughing one last time) "logic" I've seen since Unc attempted to explain the 10th amendment (or most anything). Even worse as far as train wrecks go. I don't mind a reasoned discussion, so if you ever get horse-whipped into understanding logic by a sadistic Jesuit, or anybody, let me know and we'll give it a shot.
You should be embarrassed. Let's hope the previous 2,999 Larrys fared better on their educations.
I'll close with what is known to be true, again. It has never been proven to a certainty that min wage laws raise or lower unemployment, and you haven't proven it here. You or anybody, including me. It might add to employment in some cases, subtract in others or be neutral in some. The conclusion involves the aggregate, and in that, it's inconclusive other than the effect is statistically insignificant, either way.
PS--lose the bearded guy icon. It's not helping you look smarter. Maybe one with glasses and a pipe would help. :)
I still haven't heard you disprove the economic principle that says the higher the price of something the less buyers there are, the lower the price the more buyers. You talk a lot of bluster but no argument.
That is totally irrelevant to the wage/employment issue as a given or a guide, and not true in every instance anyway.
Economists have long recognized, as does the market, that sometimes a lower price reduces sales because it draws suspicion to the product's quality and doesn't supply the cachet the buyer wants to display by purchasing it. You can deny that is true, but only for the sake of weak reply. You know it's true.
Drink a Perrier as you admire your Nikes and ponder the issue.
So, once again, you are defeated by clinging to simplistic concepts without knowledge of and/or attention paid to, valid variables.
I can "bluster" y'all all around the block, all day long. Throw away the cookie-cutter and learn how to think.
So, once again, no score.
You are talking in absolutes. Of course there are times when cheaper products lack quality and therefore strong demand from consumers. But the overall economic maxim is at low prices a good or service will be demanded more than at a higher price. Someone's labor is a service that a business buys by paying wages. The lower the labor price the greater the profit for business, thus it will seek to hire what it needs at the lowest possible cost. The minimum wage interferes with that dynamic and causes unemployment at the lower economic end - especially with young folks both white and black.
When a business hires, it's because they need a job filled. They will not hire 2 people if the wage is lower. They'll just hire 1 and pay the lower wage. Just because the price of Walt's Wobbly Widgets is lower at Target than at Macy's and Target sells more Widgets doesn't mean if the "market wage" is 2.50 instead of 5 more people will be hired.
To think otherwise is to not think.
You close your comment by again returning to what hasn't been proven and stating it as proven, and again base it on an idea that doesn't make the least little bit of sense.
Have Larry's misguided Mr Reductio introduce you to Mr Post hoc ergo propter hoc. He'll resemble you, Unc, Larry and Fever so much you're gonna call him daddy.
I give up. Y'all ju
All those on OS who have pinned PJOR as you have are grateful for your efforts in this comment thread. However, as you can observe, such expenditures of intellectual energy are futile if your objective is to have an informed, insult-free, objective, and substantive dialogue governed by rational and reasonable thinking.
It is likely that Paul has discovered the following, and may have obliquely referenced it, in his " . . . studies have shown . . ." remarks:
http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
Consequently, one wonders, especially in the context of his own ‘bridge to the Moon’ analogy why he won’t explicitly admit that there might be a level at which a minimum wage would lead to less employment within the jurisdiction in which it was imposed in favor of greater employment in those jurisdictions where market, or government imposed minimum, wages were lower. Perhaps this is our reminder why the donkey is the symbol of the political party favored by Liberals.
He could retain a debate, with his unspecified ‘variables and nonlinear relationships’, about whether $7.25 is lower than, equal to, or higher than the point at which it reduces employment. He could produce a link to one of the studies he claims exists that prove that today's minimum wages have not caused unemployment.
Perhaps, however, he can see that surrendering this much ground in your debate is an effective loss. In that case, PJOR deserves more credit for intelligence than I have been giving him.
At the moment, it’s much more important to him to argue by insult that the minimum wage has never done harm, does not do harm, and will never do harm. For him, the concept of the minimum wage appears too precious be undermined, no matter how powerful the opposing-argument.
It’s no wonder his avatar leaves the impression of a deeply depressed Liberal contemplating suicide off a four-foot bridge into a half of a foot of water. If any one can talk himself into that as an effective form of recklessness, Paul can.
Nevertheless, Larry, thanks for trying.
@ Kenn,
I thought you knew better. . . .
Each .25 represents 10.00 in a 40 hr week. If you're stuck not being able to afford to hire somebody @ 7.25 based on an added cost of 90 dollars a week (5.00 per), then your business is heading for the grave anyway. Unless you just like hiring for the hell of it, you hire due to increased business. If that increase can't support the 90 bux, your business is headed for the grave anyway.
Each employee is a profit-generator. If your margins are so slim 90 makes a do-don't difference in enabling the increased sales, then you don't have any employees anyway, as you can't sustain a business based on a structure so shaky.
And, of course, your theories are defeated by reality anyway, as illustrated a few times above.
Why do people feel that inflicting poverty on working class people is some kind of high-minded moral value?
The inflationary policies of the Federal Reserve is what devastates the working poor. Since 1914 the dollar has lost over 95 percent of its value. Fed policies erodes the purchasing power, savings, and retirement prospects of all Americans but the working poor in particular.
You are easily one of the largest "logical" disaster areas on OS.
As a bloviating jackass, you openly lie about my position, as you argue like a fool. The issue is whether min wages laws increase, decrease or have no effect on employment rates. I quite plainly said it hasn't been proven to a certainty, and what has been observed is statistically insignificant. This is the data from many studies over the years. You can find them also. Have an able adult show you how to use Google. Hit the nurse button. Maybe you'll get lucky.
I did not argue that there is no point where a law COULD become counter-productive, so your mealy-mouthed babbling is just more see-through stupidity. The issue -- the topic at hand -- the point of the post --the thing being argued -- is whether extant min wage laws increase unemployment. Read that twice, even though not much penetrates that wall-to-wall skull of yours.
Had Larry offered something remotely resembling logic, I would have refrained from such a strident trashing. However, his reply exceeded even the bounds of ignorance, launching into the moronic oxygen free environment one finds in outer space, or your brain. That he presented it as logic was an open invitation and encouragement of a spanking.
Adding to the crybaby stupidity your laughable comment displays redundantly, you say this:
"At the moment, it’s much more important to him to argue by insult that the minimum wage has never done harm, does not do harm, and will never do harm. For him, the concept of the minimum wage appears too precious be undermined, no matter how powerful the opposing-argument."
I made no such argument. You're again doing, as any insipid dunderhead would, what I have properly accused you of several times-- framing your argument as mine, and then arguing with yourself.
The 'powerful opposing arguments" so far have been spit-up pablum. It's hard to call unproven theories powerful arguments when real world empiricism shows them to be false. Also, if you're so sure of your position; if it's so obvious it compels you to bray like a jackass to announce it's certainty, then you should be able to prove it. Not in theory, but in reality. I haven't noticed any of you reaching for Earth instead of ethereal.
I can't be held responsible for your lack of education and absolute inability to find your logical ass with both hands or Mapquest.
I know you obsess over me, but I'm simply far more intelligent and informed than you are, and that will never change. Whipping on you is as close to child abuse as I'll ever get.
However, the moment you feel brave enough to back up your simp-wit sniping, just challenge me by name with a post, and have the exchange scored by standard debate rules.
Face it, chris. You're too damn ignorant to be arguing with me, and what you just presented wasn't an argument, but the cry of a bawling baby.