So I keep hearing how a minimum wage increase to $10/hr would be bad for business (I'm in Toronto, ON) and many people would lose their jobs.

My counter argument is that at current minimum wage rates ($7.40?), you're actually well below the poverty line. 

Yes, some businesses would suffer at first (eg. restaurants), but should people be taken advantage of just so businesses can thrive?  Isn't there a reason why we have a minimum wage in the first place?

If it happens, it's gonna be hardest on the teens and those in their early 20s to find jobs...

oops, link:
http://www.cbc.ca/news/story/2006/11/02/min-wage.html

I guess it just depends on whether you buy into Reaganomics or not.

I think we've been demonstrating for 2 decades or more that Reaganomics don't work.

Minimum wage actively falls every year with inflation, so raising it to a 'living wage' to keep pace with economy shouldn't hurt the economy.

People who work in restaurants sign waivers that allow them to make less money, in exchange for tips. I forget what my Canuk friend told me about tipping in Canada, but I suspect the rules are similar.

well, there's also a large segment of the restaurant industry that doesn't work for tips.  i don't think every restaurant shares the tips with cooks, bus boys, etc.  plus, there are a whole bunch of fast food and counter service type places as well.

in retail, i think consumers will be hit by higher prices.  i'm willing to pay a bit more money for groceries and clothes if it means that the person serving me will have enough money to afford more than just the basic necessities.

where i'll feel bad about the change is for kids looking for summer work.  the best job i had as a kid was making minimum wage ($4.25 at the time) as a short order cook.  i didn't work for the money.  i just wanted a J.O.B.  my feeling of self worth grew because i was contributing.

hopefully they'll broaden the scope of internships if they go through with the wage hike.  or perhaps government subsidized work programs for young people.

oh shit shit shit.

that was the wrong article.

http://www.cbc.ca/canada/toronto/story/2007/03/21/mcguinty-min-wage.html

"where i'll feel bad about the change is for kids looking for summer work.  the best job i had as a kid was making minimum wage ($4.25 at the time) as a short order cook."

So did your dad in 1956.

Actually, it looks like in the US, minimum wage has been fairly steady in terms of inflation over the years.

http://www.infoplease.com/ipa/A0774473.html

Minimum wage isn't indented to be a living wage.  Yes, you are below the poverty line if a minimum wage job is your only source of income, but there are better ways to help those people than increasing the minimum wage.  Many people earning minimum wage earn it to supplement their income.  (Students, retires, people with a  working spouse.) and aren't necessarily poor.

Which is cheaper/more effective, raising minimum wage, or providing free scholarships to everyone below the poverty line?

Society has to collectively bear the weight of its poorest members.  That's life.  The other option is wholesale slaughter.  Which do you think we should choose?

>>Many people earning minimum wage earn it to supplement their income.  (Students, retires, people with a  working spouse.) and aren't necessarily poor

so i imagine an increase in minimum wage will probably mean fewer jobs for people who are just "supplementing" their income.  i think this is a decent trade off.

>>Many people earning minimum wage earn it to supplement their income.  (Students, retires, people with a  working spouse.) and aren't necessarily poor

Fuck, so that means fewer prostitutes roaming the campuses? Well that's no good for anybody...

"Minimum wage isn't indented to be a living wage.  Yes, you are below the poverty line if a minimum wage job is your only source of income, but there are better ways to help those people than increasing the minimum wage.  Many people earning minimum wage earn it to supplement their income."

Not biting. People who supplement their income are people who do not work a full-time minimum wage job. There is no reasonable argument against making sure that a person working full-time would earn enough to feed, clothe and house himself.

>>so i imagine an increase in minimum wage will probably mean fewer jobs for people who are just "supplementing" their income.  i think this is a decent trade off.

Not really.  It will mean fewer jobs for *all* minimum wage earners.

"Not really.  It will mean fewer jobs for *all* minimum wage earners."

In the sense that businesses only in existence through legalized exploitation will disappear, yes.  But they'll be replaced soon enough.

Most retail/fast-food/etc outfits already operate on minimum staff, so an increased minimum wage won't lead to them working with even fewer.  It'll be impossible.

Isn't there a trickle theory that should work?  If you raise minimum wage, consumers spend more, and businesses make more.

>>
Not biting. People who supplement their income are people who do not work a full-time minimum wage job. There is no reasonable argument against making sure that a person working full-time would earn enough to feed, clothe and house himself.

If your goal is to help the poor than help people who are truly poor. (Total income below whatever).  Assuming all minimum wage earners are poor isn't true. It's only true if that job is their only source of income.

>>Most retail/fast-food/etc outfits already operate on minimum staff, so an increased minimum wage won't lead to them working with even fewer.  It'll be impossible.

but there will be fewer retail/fast-food/etc outfits if prices go up to handle the wage increase, stifling demand.

Trickle theory usually goes "Give the money to the rich people and they will create more jobs with their grand endeavors."

It's real 1850's style thinking.

> i'm willing to pay a bit more money for groceries and clothes

In these parts labor is dear and short, stores have been implementing self-check out lines. Every grocery store has them, Home Depot, Wal-Mart, etc.

With a little more work our retail stores won't have many minimum wage jobs. Just the IT folks to maintain the systems (woot! more jobs for us, or people like us).

There's no evidence that raising the min wage hurts the economy. As sharky said it helps because people have more money. Unfortunately having more money gives you a little more time in which to notice how you are being screwed by the rich, so we can't have that.

"Isn't there a trickle theory that should work?  If you raise minimum wage, consumers spend more, and businesses make more."

That worked for Henry Ford (increasing wages enough that every assembly line worker could afford a Model T), but isn't likely to be quite as effective these days.

"If your goal is to help the poor than help people who are truly poor. (Total income below whatever).  Assuming all minimum wage earners are poor isn't true. It's only true if that job is their only source of income."

I say again: minimum wage should be high enough that a person working full-time would be able to subsist on it.

Also, anyone working a minimum-wage job does it because they have to, and are not enjoying the lack of money.

"but there will be fewer retail/fast-food/etc outfits if prices go up to handle the wage increase, stifling demand."

I think we've discussed this, either here or on Blah: you cannot model economic trends with *just* supply and demand. It's one very simplistic factor in a very complicated system.

Prices tend to congregate at the extreme highs and lows - the maximum amount people are willing to pay for an item, and the minimum amount the companies are willing to sell an item for. In both cases the company makes a profit. An increase of the minimum wage will not bankrupt KFC and WalMart; competition and customer expectations will drive down prices to the previous level, and the companies will have to either cut back on their profits, or optimize elsewhere. It may mean more demands upon the staff, but you can think of that as the opportunity for minimum wage earners to work harder for more money. Which is fair enough for the absolute majority of minimum wage earners.

Minimum wage is sold as an attempt to legislate prosperity. It doesn't work that way.

The long-term effects of increasing minimum wage is legislated inflation, which in elastic markets causes no long-term change but in inelastic markets destroys jobs and devalues securities.

"Little Eichmann!" shouters rationalize minimum wage as an attempt to increase the poor's buying power relative to the middle/upper classes.  In the short term this does happen, but the effect is equivalent to decreasing the buying power of the middle and upper classes which puts pressure on markets whose revenue consists of discretionary income spending.  It may actually cause the poor (and others) to lose their jobs.

I'm not an economist or anything, but the minimum wage seems like an imaginary number politicians play with to get votes.

right now, unemployment is at an all time low in ontario.

> but the minimum wage seems like an imaginary number politicians play with to get votes.

Yes, they vote it down to appeal to their "christian" voters.

Mark,
Ignoring the fact that federal minimum wage isn't really relevant to anything, that link shows:

1 - It hasn't increased in over 10 years
2 - It's lost 20% of its value since then
3 - It's at an alltime low

Which is hardly holding steady.

"The long-term effects of increasing minimum wage is legislated inflation"

Inflation happens in a growing economy whether the minimum wage gets raised or not. So you increase minimum wage by the inflation percentage.

Minimum wage as a bulwark against poverty is an economic myth (*). But like free will it's a useful myth as it makes those on the bottom feel like they can't keep falling, and those near the bottom feel like they are above, better than the minimum. Feelings are important too.

(*) As was mentioned above if one wants to help the poor one should target the poor specifically through negative tax and etc, or pay for high rates of inefficiency (like teens driving their parents' Suburbans while making a minimum wage of $15/hr). A higher minimum wage doesn't do that.

I agree that there are more efficient ways to help the underclass than minimum wage, but what do you think is more likely to be implemented in the US - a higher minimum wage or a massive program of public works in poor states, subsidizing the setup costs of businesses capable of employing lots of unqualified labor by government-sponsored construction of infrastructure?

> (*) As was mentioned above if one wants to help the poor one should target the poor specifically through negative tax and etc, or pay for high rates of inefficiency (like teens driving their parents' Suburbans while making a minimum wage of $15/hr). A higher minimum wage doesn't do that.

I wholeheartedly agree with this.  Minimum wage is sold entirely on feeling, not science. Its effects are incalculable and can just as easily be negative.

Actual programs to target poverty are a much better idea.

The funny thing about the minimum wage issue is that the same wrong arguments are always trotted out, i.e.

1) That it always causes inflation. It doesn't.
2) That it hits small businesses hard. It generally doesn't - small businesses generally pay above minimum wage.
3) That unemployment will always go up. It doesn't. Sometimes it goes down.

These wrong arguments can usually be attributed to big business lobbies, for whom a raised minimum wage would impact upon their bottom line. They fund think tanks which try and "affect" the way economics is taught so that those who learn a very basic level of economics learn things that are either fairly wrong or completely wrong.

'Practical economist' is a very good example of somebody who has learned up to a very basic level of macroeconomics which is more akin to propaganda than a proper science. There are plenty of suckers like him.

I would suspect that Dennis Forbes is, too. Basically anybody who uses the word "leftist" in a non-ironic fashion and people who still believe in communists are primary suckers for this kind of propaganda.

I think there was a study that very sensibly noted that the effect minimum wage has on the economy is directly related to what percentage of people in the economy were earning minimum wage.  That is, if a large percentage of businesses were actually paying minimum, it had a large impact on the local economy (fewer jobs, etc).  Otherwise, it bumped the salaries of the lowest paid people without really affecting the overall economy much.

It's good to have a minimum, and that minimum should just barely pay the bills.  Otherwise business has no reason to play fair.

In keeping with my belief that there are limits to plausible rationality when it comes to comparison of human value over time...

I have to say that raising minimum wage makes perfect sense. The sheer gap between the least people are paid and the most is atrocious.

It ain't 'help the poor'. It's pay people what they are worth! Since people are pulling millions per year I have to think that it is pretty rational to call it askew. Their paychecks have been going up, %-wise, quite a bit more than even the median wage earner.

If you subscribe to this philosophy of being remotely rational it's hard to say otherwise, but I know there are plenty out there that are batshit crazy...

The minimu wage increase is merely a gesture from the leftist government.

In my opinion, Chinese goods and Walmart really help the poor people in these days.

If the government wants to help the poor, they should lower the sales tax so the poor people can afford more essentials. They won't do that any time soon. Instead, they need more money to fund programs for themselves and their friends. Just look at that last year they voted the 25% salary increase for themselves.

Underscoring my point...

"Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980."

http://www.nytimes.com/2007/03/29/business/29tax.html?em&ex=1175313600&en=311ab7d3df477c4e&ei=5087%0A

Of course, it is purely a matter of opinion, but I truly fail to rationalize a valuation of time at Forty-Four Thousand Percent!

If minimum wage were $10, this means one person's hour is worth $4,400 and another is worth $10? How do you possibly account for such massive discrepancy without the admission that something is seriously askew?

Ok, so hourly isn't truly correct, they could well work different hours. Even if you go with something like 100 hour work weeks, it is still ridiculous.

Are we trying to limit how much Howard Stern can make a year?

Maybe Walmart is "helping" some poor people by giving them a cheaper place to shop, but Walmart's success is predicated on relatively inexpensive oil, since most of their goods are imported.

In a few years when oil prices skyrocket, you're going to see some interesting shifts in the economy.

"Are we trying to limit how much Howard Stern can make a year?"

I don't know that I think artificial ceilings on wealth is a great thing. Minimum wage seems like a good mechanism to mitigate the gap without a cap.

Japanese innovation, investment, and entrepreneurship doesn't seem to be crippled by their gap mitigation policies... Or maybe they are just so much more innovative that the crippling makes us look closer, comparatively.

"Maybe Walmart is "helping" some poor people by giving them a cheaper place to shop, but Walmart's success is predicated on relatively inexpensive oil, since most of their goods are imported."

The joke is "Ironically, Wal-Mart becomes the only place your average Wal-Mart employee can shop."

"An increase of the minimum wage will not bankrupt KFC and WalMart; competition and customer expectations will drive down prices to the previous level, and the companies will have to either cut back on their profits, or optimize elsewhere. It may mean more demands upon the staff, but you can think of that as the opportunity for minimum wage earners to work harder for more money"

You're so close.  What is the most common way for a company to "optimize" its labor?  Fire them.  This is the economic theory behind why an increase in the minimum wages helps some folks and causes greater unemployment among the lowest end.

> Minimum wage seems like a good mechanism to mitigate the gap without a cap.

Only if you can enforce inflation limits.

The effect raising the minimum wage has on the economy depends on what you raise it to. If you raise it too close to the median earnings than it may well effect employment, as seems to have happened in France. Whether the trade off is worth it is debateable.

Nobody has mentioned the costs to the taxpayer of a low minimum wage. The case of meatpackers who import workers direct from Mexico and then send them to the state subsidized hostel is one notorious example. So was the large number of people receiving social security payments in the UK to supplement their income until the minimum wage came in.

One of the biggest problems in the UK and the US is that of the working poor. The minimum wage can go some way to palliating those problems.

"Only if you can enforce inflation limits."

I'm not sure I buy into the increase in inflation as a certainty.

Especially when it comes to the more basic of needs, I believe we are more than capable of a supply that meets demand.