The Cost of Poverty
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Benn @ Tue May 10, 2011 11:53 am
andyt andyt:
Benn Benn:
Benn Benn:
Your argue against this in your later posts. BC just raised the min wage from $8 to $10.25. Do you really think
Actually Andy I said I was leaning that way, after saying I saw good points from both sides, so was not making an argument, just mulling things over. If I was arguing against you I would not be helping you make your points
Ok, smarty. But how can you lean that way when your own arguments statements go against it?
God dude it's called I have a position but am open to other arguments and learning. I said I had a soft position, noted you had some good points, I never said I wanted an argument or was an expert. Relax, just because someones not cheering you on explicitly does not mean they are against you.
You want someone to argue for the other side, keep looking cuz it ain't gonna be me.
andyt @ Tue May 10, 2011 12:00 pm
Benn Benn:
The priorities of both the rich and the struggling can both be messed up. SOME of the top rich say "if you work for it you'll get it so why should I share" while SOME of the struggling (like my future brother in law) say minimum wage is too hard to live on and wishes he could afford to live at home, meanwhile he goes to work in a $40,000 car. Until we can make priorities straight on both sides and convince everyone what a happy standard of living is then no middle aged person with two degrees a wife and 3 kids and in their second career will want to make $5 an hour more than the guy pouring his coffee who is 18, some things don't mesh with Human Nature, no matter how noble the principle is.
If your bro in law is driving a 40k car he's not working at min wage unless he's dealing drugs on the side.
That middle ages person isn't going to make $5 more unless their second career isn't one. Even at min wage of $10, he won't be making $15.
We need a reasonable spread between high achievers and low, to reward initiative and appease as you say human nature. Paying a min wage that at least is a living (no house, no 40k car, probably no car at all) isn't going to rob the people doing better so much that there's no incentive and no acknowledgement of their superior status. It's only a slight shift, is all. In Deutschland, they still have rich people and much poorer ones. Just not the degree of working poverty we have here.
What this post, and the other one I put up that got ignored are saying, acutally, is that if we address poverty to lessen it, it can actually save us all money. It seems to be a win win situation. Alleviate poverty and we pay less in health care and justice system costs, and well as having less social disruptions.
Khar @ Tue May 10, 2011 12:05 pm
The point of those "ignoring" that post is that the methods you put forth simply will not reduce poverty the way it needs to be reduced as is suggested by those posts. The reason people are not posting about it is because we don't really have a drive to argue with the end result, just with your method of getting there.
andyt @ Tue May 10, 2011 12:19 pm
Khar Khar:
The point of those "ignoring" that post is that the methods you put forth simply will not reduce poverty the way it needs to be reduced as is suggested by those posts. The reason people are not posting about it is because we don't really have a drive to argue with the end result, just with your method of getting there.
Since you've made such a nice, short and succinct post, let's try a little operant conditioning and I'll respond. The methods of getting there in that other topic I posted were not my suggestion, but mostly seemed to come from the business community.
None of them involved the minimum wage. If people think using taxe rebates a better way to go to bring up the earnings of poor workers, so be it. It means the govt will have to find the money somewhere to pay for those rebates, so instead of Tims costing a nickel more, you'll pay more in taxes. Is that preferable?
BartSimpson @ Tue May 10, 2011 12:52 pm
Andy, your heart is in the right place but you're just wrong about using the force of government to impose a poverty-free society.
Cuba, after fifty years of the extreme version of this nonsense is now embracing market reforms and today they are allowing people to buy and sell their homes. The prospect of a renewed real estate market in Cuba is the building block for that country to become a capitalist economy! 
Cuba will soon have rich people...by that I mean aside from the Castro brothers. 
andyt @ Tue May 10, 2011 12:58 pm
BartSimpson BartSimpson:
Andy, your heart is in the right place but you're just wrong about using the force of government to impose a poverty-free society.
Cuba, after fifty years of the extreme version of this nonsense is now embracing market reforms and today they are allowing people to buy and sell their homes. The prospect of a renewed real estate market in Cuba is the building block for that country to become a capitalist economy!
Cuba will soon have rich people...by that I mean aside from the Castro brothers.
Cuba, after fifty years of the extreme version of this nonsense is now embracing market reforms and today they are allowing people to buy and sell their homes. The prospect of a renewed real estate market in Cuba is the building block for that country to become a capitalist economy!
Cuba will soon have rich people...by that I mean aside from the Castro brothers.
Sure drag out Cuba. I'll drag out the Scandinavian countries and match you any day. And as I say, the other article I posted was about business people worrying about the cost of poverty. You have those in the US too. Doesn't make them all Fidel's buddy or anything. You're big on going Godwin, aren't you?
Khar @ Tue May 10, 2011 1:04 pm
$1:
It means the govt will have to find the money somewhere to pay for those rebates, so instead of Tims costing a nickel more, you'll pay more in taxes. Is that preferable?
Yes. If we are to work towards that goal, tax rebates are better, and I would be willing to pay this way over paying through other ways.
Tims won't cost a nickel more because of a wage increase. Tims will lose profit, limiting their ability to expand. We end up paying through other negative impacts, like rising prices of consumables.
Unlike minimum wage, tax programs can be targeted and augmented based on need and by situation. They provide a direct route of assistance from fellow Canadians, without the longer process that can cause negative economic repercussions. Most importantly, through providing the right levels of income and without removing economic incentives, RTCs and other such programs can bypass the most virulent of minimum wage problems since spending can go towards areas like investment and education as well (and this has worked well in Canada and the US in sectors using them).
BartSimpson @ Tue May 10, 2011 5:08 pm
Andy, just because you're my pal.... 
http://www.investors.com/NewsAndAnalysi ... m-Wage.htm
$1:
Punished By Minimum Wage
By WALTER WILLIAMS
Posted 05:58 PM ET
As if more proof were needed about the minimum wage's devastating effects, yet another study has reached the same conclusion.
Last week, two labor economists, Professors William Even (Miami University of Ohio) and David Macpherson (Trinity University), released a study for the Washington, D.C.-based Employment Policies Institute titled "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases."
During the peak of what has been dubbed the Great Recession, the unemployment rate for young adults (16 to 24 years of age) as a whole rose to above 27%. The unemployment rate for black young adults was almost 50%, but for young black males, it was 55%.
Even and Macpherson say that it would be easy to say this tragedy is an unfortunate byproduct of the recession, but if you said so, you'd be wrong.
Their study demonstrates that increases in the minimum wage at both the state and federal level are partially to blame for the crisis in employment for minority young adults.
Their study focuses on 16-to-24-year-old male high school dropouts, understandably a relatively inexperienced group of labor market participants.
Since minimum wage laws discriminate against the employment of the least-skilled worker, it shouldn't be surprising to find 16-to-24-year-old male high school dropouts its primary victims.
Among the white males, the authors find that "each 10% increase in a state or federal minimum wage has decreased employment by 2.5%; for Hispanic males, the figure is 1.2%.
"But among black males in this group, each 10% increase in the minimum wage decreased employment by 6.5%."
The authors go on to say, "The effect is similar for hours worked: each 10% increase reduces hours worked by 3% among white males, 1.7% for Hispanic males, and 6.6% for black males."
Even and Macpherson compare the job loss caused by higher minimum wages with that caused by the recession and find between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage across the 50 states and at the federal level.
Why do young black males suffer unequal harm from minimum wage increases? Even and Macpherson say that they're more likely to be employed in low-skilled jobs in eating and drinking establishments.
These are businesses with narrow profit margins and are more adversely affected by increases in minimum wage increases.
For 16-to-24-year-old men without a high school diploma, 25% of whites and 31% of blacks work at an eating and drinking establishment. Compounding the discriminatory burden of minimum wages, not discussed by the authors, are the significant educational achievement differences between blacks and whites.
The best way to sabotage chances for upward mobility of a youngster from a single-parent household, who resides in a violent slum and has attended poor-quality schools is to make it unprofitable for any employer to hire him.
The way to accomplish that is to mandate an employer to pay such a person a wage that exceeds his skill level.
Imagine that a worker's skill level is such that he can only contribute $5 worth of value per hour to the employer's output, but the employer must pay him a minimum wage of $7.25 per hour, plus mandated fringes such as Social Security, unemployment compensation and health insurance.
To hire such a worker would be a losing economic proposition. If the employer could pay that low-skilled worker the value of his skills, he would at least have a job and a chance to upgrade his skill and earn more in the future.
Minimum wage laws have massive political support, including that of black politicians. That means that many young black males will remain a part of America's permanent underclass with crime, drugs and prison as their future.
• Williams is a professor of economics at George Mason University.
By WALTER WILLIAMS
Posted 05:58 PM ET
As if more proof were needed about the minimum wage's devastating effects, yet another study has reached the same conclusion.
Last week, two labor economists, Professors William Even (Miami University of Ohio) and David Macpherson (Trinity University), released a study for the Washington, D.C.-based Employment Policies Institute titled "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases."
During the peak of what has been dubbed the Great Recession, the unemployment rate for young adults (16 to 24 years of age) as a whole rose to above 27%. The unemployment rate for black young adults was almost 50%, but for young black males, it was 55%.
Even and Macpherson say that it would be easy to say this tragedy is an unfortunate byproduct of the recession, but if you said so, you'd be wrong.
Their study demonstrates that increases in the minimum wage at both the state and federal level are partially to blame for the crisis in employment for minority young adults.
Their study focuses on 16-to-24-year-old male high school dropouts, understandably a relatively inexperienced group of labor market participants.
Since minimum wage laws discriminate against the employment of the least-skilled worker, it shouldn't be surprising to find 16-to-24-year-old male high school dropouts its primary victims.
Among the white males, the authors find that "each 10% increase in a state or federal minimum wage has decreased employment by 2.5%; for Hispanic males, the figure is 1.2%.
"But among black males in this group, each 10% increase in the minimum wage decreased employment by 6.5%."
The authors go on to say, "The effect is similar for hours worked: each 10% increase reduces hours worked by 3% among white males, 1.7% for Hispanic males, and 6.6% for black males."
Even and Macpherson compare the job loss caused by higher minimum wages with that caused by the recession and find between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage across the 50 states and at the federal level.
Why do young black males suffer unequal harm from minimum wage increases? Even and Macpherson say that they're more likely to be employed in low-skilled jobs in eating and drinking establishments.
These are businesses with narrow profit margins and are more adversely affected by increases in minimum wage increases.
For 16-to-24-year-old men without a high school diploma, 25% of whites and 31% of blacks work at an eating and drinking establishment. Compounding the discriminatory burden of minimum wages, not discussed by the authors, are the significant educational achievement differences between blacks and whites.
The best way to sabotage chances for upward mobility of a youngster from a single-parent household, who resides in a violent slum and has attended poor-quality schools is to make it unprofitable for any employer to hire him.
The way to accomplish that is to mandate an employer to pay such a person a wage that exceeds his skill level.
Imagine that a worker's skill level is such that he can only contribute $5 worth of value per hour to the employer's output, but the employer must pay him a minimum wage of $7.25 per hour, plus mandated fringes such as Social Security, unemployment compensation and health insurance.
To hire such a worker would be a losing economic proposition. If the employer could pay that low-skilled worker the value of his skills, he would at least have a job and a chance to upgrade his skill and earn more in the future.
Minimum wage laws have massive political support, including that of black politicians. That means that many young black males will remain a part of America's permanent underclass with crime, drugs and prison as their future.
• Williams is a professor of economics at George Mason University.
And there you have it from a black man: the minimum wage is racist and anyone who supports it hates black people!
BartSimpson @ Tue May 10, 2011 5:09 pm
andyt andyt:
You're big on going Godwin, aren't you?
By that if you're equating Fidel Castro with Hitler, then yes, I guess I am.
andyt @ Tue May 10, 2011 11:55 pm
BartSimpson BartSimpson:
andyt andyt:
You're big on going Godwin, aren't you?
By that if you're equating Fidel Castro with Hitler, then yes, I guess I am.
I'm using Godwin as an analogy of over the top examples.
andyt @ Wed May 11, 2011 12:01 am
Khar Khar:
$1:
It means the govt will have to find the money somewhere to pay for those rebates, so instead of Tims costing a nickel more, you'll pay more in taxes. Is that preferable?
Yes. If we are to work towards that goal, tax rebates are better, and I would be willing to pay this way over paying through other ways.
Tims won't cost a nickel more because of a wage increase. Tims will lose profit, limiting their ability to expand. We end up paying through other negative impacts, like rising prices of consumables.
Unlike minimum wage, tax programs can be targeted and augmented based on need and by situation. They provide a direct route of assistance from fellow Canadians, without the longer process that can cause negative economic repercussions. Most importantly, through providing the right levels of income and without removing economic incentives, RTCs and other such programs can bypass the most virulent of minimum wage problems since spending can go towards areas like investment and education as well (and this has worked well in Canada and the US in sectors using them).
So then we would remove the min wage, Tim's could pay $1 per hour and expand like crazy and we all pay taxes so a Tim's worker get's $10.11 an hour from the government? Sounds crazy to me, but like I say, if that's what it takes to alleviate poverty, I'm in. Sounds expensive tho, meanwhile that Tim's franchise holder has maybe 500,000 in net profit now? Sounds like it's just a business subsidy.
BartSimpson @ Wed May 11, 2011 8:35 am
Andy - I'm curious on your take of Walter William's essay?
OnTheIce @ Wed May 11, 2011 8:39 am
BartSimpson BartSimpson:
Andy - I'm curious on your take of Walter William's essay?
The best piece but forth so far. Thanks for posting that
![[BB]](./images/smilies/beers.gif "Beers")
andyt @ Wed May 11, 2011 8:47 am
BartSimpson BartSimpson:
Andy - I'm curious on your take of Walter William's essay?
I found a paper that said just the opposite - increase in min wages didn't cause any job losses. Here's another one: $1:
Abstract:
In July 1988 California's minimum wage rose from $3.35 to $4.25. In the previous year, 11 percent of California workers and fully one-half of its teenage workers earned less than the new state minimum. The state-specific nature of the California increase provides a valuable opportunity to study the effects of minimum wage legislation. As in a conventional non-experimental program evaluation, labor market trends in other states can be used to infer what would have happened in California in the absence of the law. Drawing on published labor market statistics and microdata samples from the Current Population Survey, I apply this strategy to estimate the effects of the rise in the minimum wage on various groups and industries in the state. Special attention is paid to teenage workers and employees in retail trade. The results are striking. The increase in the minimum raised wages of teenagers and other low wage workers by 5-10 percent. Contrary to conventional predictions, however, the employment rate of teenage workers rose, while their school enrollment rate fell.
In July 1988 California's minimum wage rose from $3.35 to $4.25. In the previous year, 11 percent of California workers and fully one-half of its teenage workers earned less than the new state minimum. The state-specific nature of the California increase provides a valuable opportunity to study the effects of minimum wage legislation. As in a conventional non-experimental program evaluation, labor market trends in other states can be used to infer what would have happened in California in the absence of the law. Drawing on published labor market statistics and microdata samples from the Current Population Survey, I apply this strategy to estimate the effects of the rise in the minimum wage on various groups and industries in the state. Special attention is paid to teenage workers and employees in retail trade. The results are striking. The increase in the minimum raised wages of teenagers and other low wage workers by 5-10 percent. Contrary to conventional predictions, however, the employment rate of teenage workers rose, while their school enrollment rate fell.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=226937
Benn pointed out that in Germany, kids aren't allowed to work. Jobs are for adults, kids are supposed to be in school. Now as you say, Germany is re-experiencing it's Weimar days and in total collapse, while the US rises ever upward...
Lemmy @ Wed May 11, 2011 8:47 am
You may also be interested in this essay, which uses Walter Williams' most famous work (Minimum Wage - Maximum Folly and Demagoguery in Journal for the Institute for Socioeconomic Studies (Winter, 1983), pp. 22-34.)
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