Eliminating minimum wage would help the very poor!

[Massachusetts]

I think a big misconception is that minimum wage helps the very poor because it forces businesses to pay a minimum wage per hour for employees. I guess the way that some people see it, it is to keep the way employees are treated fair and ensure that the very poor aren't being paid $1.00/hour.

Well I'm here to argue that eliminating the minimum wage altogether would help the very poor. At the very least it would cause the unemployment rate to drop. Companies would be able to hire employees for let's say $5/hour to do a job that brings them in approximately the same amount of money. Instead, with a minimum wage, they are paying employees $7.25/hour for work that is worth $5/hour. This forces businesses to make cuts to their workforce because they can't afford to hire enough people at $7.25/hour when they're only bringing in about $5/hour for every employee they have hired at that wage.

Now, in our country there is a federal minimum wage and states set their own minimum wage as well. I'm not looking at this from a political perspective, moreo from an economic perspective.

From an economic perspective, eliminating the minimum wage allows businesses to hire more employees and overall helps the very poor stay employed. Keeping the minimum wage causes the unemployment rate to rise and is detrimental to the very poor. True or false? Agree or disagree?

[heavenlyboy34]

Most here are aware of this-but if you've persuaded someone new to this, thanks!

[Zippyjuan]

If everybody was willing to take say a 20% pay cut we could reduce the number of unemployed since that would lower the cost of labor. Anybody going to volunteer?

It might create a few new jobs (probably not many). Poor would still be poor.

What are minimum wage workers today (figures for 2010 so pretty recent)?
http://www.bls.gov/cps/minwage2010.htm

In 2010, 72.9 million American workers age 16 and over were paid at hourly rates, representing 58.8 percent of all wage and salary workers.1 Among those paid by the hour, 1.8 million earned exactly the prevailing Federal minimum wage of $7.25 per hour. About 2.5 million had wages below the minimum.2 Together, these 4.4 million workers with wages at or below the Federal minimum made up 6.0 percent of all hourly-paid workers.

So if six percent of hourly wage workers in the US (aged 16 and older) and 58.8% of all workers are hourly, then that would mean that of all workers (hourly and otherwise) 3.5% receive the Federal minimum wage or less. SInce those already being paid less would not see a reduction we would be left with 2.4% of hourly workers or 1.5% of all workers.

Take a dollar or two an hour from a worker and how many jobs could you create? If we assume that they worked 40 hours a week (and many minimum wage earners don't) that would save a company $2000 (a $1 an hour pay reduction) or $4000 a year in wages (not counting taxes including Social Security payments). Would that be enough to encourge a company to hire more people?

[Keith and stuff]

Of course it would. We made some progress in NH when the Democrats were in control and reduced the minimum wage for some jobs. NH managed to tie the state minimum wage to the federal, thus ending the state minimum wage for most workers and let the default be the federal level. That's the most pro-liberty position possible for most workers. Several other states have always been that way. We tried to reduce the minimum wage for card room/casino workers last year but the bill failed.

I really enjoyed the chapter on minimum wage laws in Economics in One Lesson. It was more than enough to sell me on the idea.

So far, these are the best states when it comes to the minimum wage for most workers. WY, MN, AR, LA, MS, TN, AL GA, SC and NH.
Technically, MA and then OK have the lowest on the book minimum minimum wages at $1.60 and $2 according to Wikipedia.

The worst states are in this order:
Santa Fe, NM $10.29
San Fran, CA $10.24
1. WA $9.04 (increases yearly)
2. OR $8.80 (increases yearly)
3. VT $8.46 (increases yearly)
4. CT $8.25 now, $9 in July 2012, $9.75 in 2013
IL/DC/NV $8.25
7. CA/MA $8
8. AK $7.75
9. OH $7.70 (increased yearly)
10. FL $7.67
11. AZ $7.65 (increases yearly)
MT $7.65
13. CO $7.64 (increases yearly)
and so on

http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

[tttppp]

I think a big misconception is that minimum wage helps the very poor because it forces businesses to pay a minimum wage per hour for employees. I guess the way that some people see it, it is to keep the way employees are treated fair and ensure that the very poor aren't being paid $1.00/hour.

Well I'm here to argue that eliminating the minimum wage altogether would help the very poor. At the very least it would cause the unemployment rate to drop. Companies would be able to hire employees for let's say $5/hour to do a job that brings them in approximately the same amount of money. Instead, with a minimum wage, they are paying employees $7.25/hour for work that is worth $5/hour. This forces businesses to make cuts to their workforce because they can't afford to hire enough people at $7.25/hour when they're only bringing in about $5/hour for every employee they have hired at that wage.

Now, in our country there is a federal minimum wage and states set their own minimum wage as well. I'm not looking at this from a political perspective, moreo from an economic perspective.

From an economic perspective, eliminating the minimum wage allows businesses to hire more employees and overall helps the very poor stay employed. Keeping the minimum wage causes the unemployment rate to rise and is detrimental to the very poor. True or false? Agree or disagree?

Also, eliminating the minimum wage reduces people's reliance on government handouts. Instead of picking up unemployment checks, people are working.

Eliminating the minimum wage is a good thing and it does help out the poor. But in order to get people better jobs, the education system has to be improved so that people can quickly and easily get the skills they need to enter a new field.

[seraphson]

If everybody was willing to take say a 20% pay cut we could reduce the number of unemployed since that would lower the cost of labor. Anybody going to volunteer?

It might create a few new jobs (probably not many). Poor would still be poor.

What are minimum wage workers today (figures for 2010 so pretty recent)?
http://www.bls.gov/cps/minwage2010.htm


So if six percent of hourly wage workers in the US (aged 16 and older) and 58.8% of all workers are hourly, then that would mean that of all workers (hourly and otherwise) 3.5% receive the Federal minimum wage or less. SInce those already being paid less would not see a reduction we would be left with 2.4% of hourly workers or 1.5% of all workers.

Take a dollar or two an hour from a worker and how many jobs could you create? If we assume that they worked 40 hours a week (and many minimum wage earners don't) that would save a company $2000 (a $1 an hour pay reduction) or $4000 a year in wages (not counting taxes including Social Security payments). Would that be enough to encourge a company to hire more people?

What if we inverse your entire example? Add a dollar or two. See the arbitrary properties inherit in minimum wage laws?

For the sake of increasing employment perhaps; maybe these workers only do 15-20 hours a week with differential shifts or other extenuating circumstances. The market should be the ultimate determinant in deciding what jobs are worth by the production of goods and services said jobs provide; not an arbitrary iron fist. Anything is better than the iron fist. *tightens cheeks*

[The Gold Standard]

The point to eliminating the minimum wage isn't to lower people's wages. If they banned the minimum wage tomorrow there aren't going to be mass pay cuts. All it would do is allow people that aren't worth $7.25 an hour to get a job making less than that.

[Keith and stuff]

What if we inverse your entire example? Add a dollar or two. See the arbitrary properties inherit in minimum wage laws?

Of the states with the highest min. wage, only VT is one of the states with the lowest unemployment.

Lowest unemployment rate:
1. ND effective min. wage $7.25 (lowest legally possible)
2. NE effective min. wage $7.25 (lowest legally possible)
3. SD effective min. wage $7.25 (lowest legally possible)
4. VT effective min. wage $8.46
5. NH effective min. wage $7.25 (lowest legally possible)

[Zippyjuan]

Of the states with the highest min. wage, only VT is one of the states with the lowest unemployment.

Lowest unemployment rate:
1. ND effective min. wage $7.25
2. NE effective min. wage $7.25
3. SD effective min. wage $7.25
4. VT effective min. wage $8.46
5. NH effective min. wage $7.25

Interesting figures. Thanks!

[Keith and stuff]

Interesting figures. Thanks!

It doesn't end there. I beleive WY, IA, VA, UT, OK and MN have the next lowest unemployment rates.
6. WY effective min. wage $7.25 (lowest legally possible)
7. IA effective min. wage $7.25 (lowest legally possible)
8. VA effective min. wage $7.25 (lowest legally possible)
9. UT effective min. wage $7.25 (lowest legally possible)
10. OK effective min. wage $7.25 (lowest legally possible)
11. MN effective min. wage $7.25 (lowest legally possible)