The Cost of Poverty
Khar @ Wed May 11, 2011 11:56 pm
andyt andyt:
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.
No, that is not how it would usually work.
Since you did not read the last two times I wrote this, or do not remember, I shall reiterate this once more (ironically, the reason I write long posts is so that I don't have to deal with these back and forths, and can talk about negatives and positives).
The way these programs work is typically a plateau method. As workers make higher amounts of pay, the amount of money available to bring up their pay increases. At a low enough level, there would be little to no government intervention, and hence no one would accept those jobs (although people's demand for jobs would have more of a driving force in deciding whether or not to accept jobs than if minimum wage was in effect). Eventually this rises and drops, until those people no longer recieve assistance. This gives incentive to get better jobs and better wages, and severely restricts the ability of businesses to simply minimize pay.
Few things work if only implemented in the most extreme point of view.
Did I not say that this had already been in use? Did that not imply that those workers were not paid 1 dollar an hour, since I had called it a success? It does and can work, and has in the past in a limited capacity. This money tends not to be wasted. Could a more general method work? That is entirely possible.
Of course, I am not an expert.
andyt @ Fri May 13, 2011 12:55 pm
I know, I know, I don't understand business and Lemmy and Khar are the final word on economic matters. The economists here, including nobel prize winners obviously also don't know what they are talkign about.
http://www.msnbc.msn.com/id/15227667/ns/business-stocks_and_economy/t/economists-call-minimum-wage-be-raised/
$1:
More than 650 economists, including five winners of the Nobel Prize for economics, called Wednesday for an increase in the minimum wage, saying the value of the last increase, in 1997, has been “fully eroded.”
Economists including Nobel prize winners Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego said in a statement released Wednesday that the real value of today’s federal minimum wage is less than it has been at any time since 1951...
More than 650 economists, including five winners of the Nobel Prize for economics, called Wednesday for an increase in the minimum wage, saying the value of the last increase, in 1997, has been “fully eroded.”
Economists including Nobel prize winners Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego said in a statement released Wednesday that the real value of today’s federal minimum wage is less than it has been at any time since 1951...
The economists wrote that they share the view of a 1999 Council of Economic Advisors Economic report that found “the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.”
The economists wrote, “While controversy about the precise employment effects of the minimum wage continues, research has shown that most of the beneficiaries are adults, most are female, and the vast majority are members of low-income working families.”
Economists including Nobel prize winners Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego said in a statement released Wednesday that the real value of today’s federal minimum wage is less than it has been at any time since 1951...
More than 650 economists, including five winners of the Nobel Prize for economics, called Wednesday for an increase in the minimum wage, saying the value of the last increase, in 1997, has been “fully eroded.”
Economists including Nobel prize winners Kenneth Arrow of Stanford University, Lawrence Klein of the University of Pennsylvania, Robert Solow of the Massachusetts Institute of Technology, Joseph Stiglitz at Columbia University and Clive Granger of the University of California, San Diego said in a statement released Wednesday that the real value of today’s federal minimum wage is less than it has been at any time since 1951...
The economists wrote that they share the view of a 1999 Council of Economic Advisors Economic report that found “the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.”
The economists wrote, “While controversy about the precise employment effects of the minimum wage continues, research has shown that most of the beneficiaries are adults, most are female, and the vast majority are members of low-income working families.”
BartSimpson @ Fri May 13, 2011 1:51 pm
Khar @ Fri May 13, 2011 2:18 pm
The federal minimum wage of $5.15 in the States, and the economists stated that slow phased-in progression towards $7.25 reduces negative impacts to areas where the market can still be fairly flexible. Notice that, even adjusting for PPP, this would be a fairly reduced amount compared to current minimum wages here in Canada -- the reason this came out is because this was the lowest real minimum wages have been in sixty years.
Indeed, the article states that a modest, low-end increase has limited impacts. It does not state that this is the best way, the only way, or that it would have positives outweighing negatives if you increased it much higher.
Context, andyt. Many of these economists are people I sourced myself, because of their response to increases of minimum wage to the degree you wanted. You should not simply dance over lines like "While controversy about the precise employment effects of the minimum wage continues" because they don't necessarily support your point of view, nor should you dance away from the studies these same economists have done. Hell, I have a textbook or two on my bookshelf written by Dr. Solow. Nor was it economic consensus that it would have no negative impacts, even amongst the most respected in the field. At the low-end, for small, progressive raises of the minimum wage when the minimum wage is already small, the effects, positive or negative, are blown out of proportion. I have posted this at LEAST three times, that often it is blown out of proportion. Please do not misinterpret my position.
It should be noted that the program being discussed was lumped with one giving small businesses tax breaks, and that this program does not include any employee who could recieve tips. Those wages continue to be a $2.13 as the minimum wage in the States. This change in wage directly or indirectly (through the wage effects I described in the last thread where those above minimum wage earned more, probably one of the reasons it was supported) impacted around 5% of the American population, or so the estimates stated.
This is all a far cry from the $18 "living wage" and so forth you were discussing, and ignores that we have already provided you alternatives recognized to be better. Nor does this plan target those in poverty (which was your clarion call in the other thread), but the general low-income group. The end result was that 40% of the benefits went to people outside of the low-income bracket altogether (likely one of the reasons it was so supported by economists). You'll notice that parallel programs, like the "$10 by 2010," did not get similar endorsements -- indeed, they didn't get a single Nobel Lauraette at all.
This is all going back around in the same circle again, so I'm not sure if I'll continue discussing it... I'm all tapped out on this topic.
andyt @ Fri May 13, 2011 11:31 pm
I've never discussed a $18 living wage in relation to minimum wage. My point is that it should be set to the LICO, that way it's tied to inflation. In Vancouver that would raise it from $10.25 to $11.11, not a huge jump, the main point being that the wage is tied to inflation, so doesn't keep falling behind./
My reason for posting this is that you and Lemmy like to go on about how there is agreement among economists that min wages are bad policy and that increases to it are a bad idea. Yet here we have a whole slew of economists advocating for raising it, not eliminating it. They may be doing so because any other poverty alleviation measure is politically out of reach, and that would apply here too. It's better than nothing, is the point.
Khar @ Sat May 14, 2011 1:05 pm
... and the point of your article is not that they should get pay raises, but that the minimum wage should be restored to what it was a few decades ago since normal inflation has made it worth far less. The entire article is based around the idea of leaving minimum wages consistent, not raising them. That is an important distinction from previous stances.
They agree with raising minimum wage to where it was -- not to a higher level. The rest of the reasoning comes from that group in particular. The economists simply agree that real minimum wage is not reflected in nominal prices.
I have stated many times that the negatives and positives of minimum wage are blown out of proportion at the lowest levels of minimum wage changes (ie where they have the smallest impacts, like in this case). The end results show that a lot of it did not go to the people who needed it most, even at that level. Did you miss the part where I said that I have quoted those folks previously in my posts? That should have told you one thing -- that the choice of these people wasn't that minimum wage should be raised, and you should have paid more attention to that. This is not about raising the minimum wage, it's about maintaining the minimum wage at a relatively low level. A level far below Canadian levels. It may not be a big deal at that level, and may actually help those in poverty... trying to pass it off at a higher level (when none of those economists would go for a $10 minimum wage) is ignoring why they are straight out not willing to support anything higher than what it was put at.
If your main point is now to keep it tied to general inflation and nothing more, fine -- I point out that the Canadian rate is still higher than these economists would support, even now, and that this is a faulty equivalency if you feel it demonstrates the situation in the Vancouver adequately as a result. I have posted before that frequent changes are better. However, I also reiterate that in reality that would just be keeping the real minimum wage the same, not increasing it. And that is a world of difference in poverty alleviation. The results which display this can be found on the interest group's website.
You have brought up living wages before in relation to the minimum wage ("Nope, any full time job should pay a living wage"). You have also consistently quoted the 18 dollar figure across several threads.
Since people are irritated by this discussion, feel free to have the last word.
Gunnair @ Sat May 14, 2011 1:15 pm
BartSimpson BartSimpson:
andyt @ Sat May 14, 2011 2:11 pm
Gunnair Gunnair:
'Cause you keep posting. I gotta reply, I just can't help myself.
If Khar was really done, would he post a long post first, or would he just not reply? Let's find out.