Source: NY Times

See also
The Minimum We Can Do

Category: Economy, Employment, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “The Rise and Fall of Minimum Wage”

  1. chartist says:

    Income inequality is the ultimate end of our society. The problem just hasn’t reached those who read Rolling Stone Magazine. Because when it does, there’s just enough guns in this country that NY city is going to wish it was part of a different country.

  2. ironman says:

    There’s a problem with the NYT’s chart on the left, showing how the minimum wage would have changed if it tracked the changing income of the 1%. It’s not considering the situation where, when times are good for the Top 1%, they can also good for the Bottom 1%, where the reason that wages at the low end of the income spectrum don’t grow is because of a flood of people, who previously hadn’t been employed, into the job market.

    Believe it or not, I can demonstrate with a single graph that this scenario is exactly what played out during the years of the Dot-Com Bubble (1997-2003). And will, later this week or early next (I still have to write the post around the graph, and I’m procrastinating by commenting at other people’s blogs for no good reason….)

  3. mpappa says:

    There’s no demand for labor so it’s easy for companies to take their pick of the litter. Without organic economic growth it won’t change. Artificial sweeteners like the minimum wage doesn’t help long term. When average wages for the bottom 1/3 are higher than minimum wage we are in good shape. When I was in high school, late 1980′s, McDonald’s was paying significantly more than min. wage to attract workers. Sadly, I think they are paying less per hour now but of course I haven’t checked.

  4. BottomMiddleClass says:

    Trying to play Devil’s Advocate… Where are the stories of companies that shut down or really fire employees because of Raises in the minimum wage. I’ve been honestly looking and I can’t find any. Many anonymously claims to run a company where they’ll have to fire people or cut back on hiring or they “know someone”, but where is the real honest to goodness article about a real company that was no longer sustainable when the minimum wage was raised? I’m not saying these stories don’t exist, but I can’t find them with my weak google-fu.

    The closest I could find was Walmart threatening to pull out of Washington DC. In the end, Walmart succesfully lobbied the mayor who vetoed a $12.50 an hour minimum wage, even though the DC Council approved it.

    • DeDude says:

      The interesting thing is that it actually doesn’t matter for overall employment if there were a company or small business that closed because of a minimum wage increase. The work and services provided by that company would still have to be done. So some other business would take over doing that work and they would have to hire someone to do it. So if McD close down because of increased minimum wage, then Burger King will have to make all those burgers that people in the area need – so they hire all those laid off McD burger flippers and society as a whole see no difference.

  5. slowkarma says:

    I’m certainly no wild-eyed radical, but I look at a minimum wage as a kind of relatively insignificant tax generally on people who could afford to pay more for their product/service if they had to. And it’s a good kind of tax, if you have to have taxes at all, because it goes directly to the user with no government middleman to take a big bite out of it, and has all kinds of other benefits — it encourages work, it supports the poor, it helps young people who need money for things like education. When I go to a McDonalds and see twelve people working in there, ten of whom are making close to the minimum wage, I wonder how much it would cost to kick up their wages, say, $2 an hour…it seems to me that this might be a quarter a meal, if that much. I’d actually like to see a minimum wage up around $15 an hour. I think it would solve a huge number of problems, and while some companies would squeal, they’d learn to live with it. And somehow I doubt that they’d start dumping employees — how many good companies really employ people simply as charity? Most of them employ people because they need them, and even after a big minimum raise increase, thy’d still need somebody to put the pickles on the buns…

  6. The North Coast Curmudgeon says:

    I’m not all that smart about all this, but I seem to recall a film strip when I was in grade school that explained that the way the economy works is that the guy who makes refrigerators is supposed to make enough money to buy the product of his labor.

    So, if companies continue to reduce the pay of their employees to where they are unable to purchase any of the goods produced, even cheap imported goods, how is the economy supposed to keep going?

    Maybe I’m missing something here.

  7. 4whatitsworth says:

    Yes the minimum wage should go up this is just another tragic example of our dysfunctional government. When Obama was first elected he had the power and support to do just about anything. The United States was ready for some real change. The democrats were completely in control they could have effectively reformed health care, put in a public option, raised the minimum wage, and increased inheritance tax to appropriately redistribute wealth. You can’t blame the tea party or the republicans for the mess we are in now.

    Today even the working poor are disenfranchised these well deserving folks are working part time for minimum wage, collecting government benefits, and operating their private enterprises on a cash basis. What a mess!

  8. Brendan says:

    There are many theories about why the Japanese started dominating the car market in the 80′s, but most seem politically motivated. The most convincing argument I have heard is that: A. They had the right product at the right time (whether by stroke of luck or genius is debatable, but inconsequential to my point here) and B. They were forced to and had the ability to mechanize. In the grand scheme, Dollar/Yen day-to-day wages were similar and so were benefits at the time, even though the mechanisms by which Japanese workers received healthcare and retirement were different. The primary difference was a manual labor shortage in Japan and a highly educated workforce that could leverage their training to engineer automation rather than just put things together by hand. Work smarter not harder, as the saying goes. A well engineered machine (“well” being key here) can simply create a better and more consistent product than fallible humans – thus the meme of reliable Japanese cars versus junk American ones. And the arguably “soulless” products sold accordingly.

    Fast forward a few decades and virtually every Japanese car you can buy in America is built here because of cheap land and energy prices and abundant labor, not so much because of cheap labor as most have been led to believe. The American car companies have followed suit (though through an extremely painful process due to promises they made based on the assumption that lots of labor would always be needed for their ever expanding product demand). The moral of the story is, the world is becoming mechanized and it’s not a bad thing; but it is a reality we need to deal with. Else our whole economy suffers the fate of GM. Meanwhile an entire new industry has been born of personalizing your soulless automobile. Labor costs are only a part of the story.

    The only reason McDonald’s hasn’t automated their burger flipping and put a touch screen at the counter rather than a person behind a register is because it’s still cheaper to pay a paltry minimum wage. The preparation may be an art, but you get your inexpensive sushi on a conveyor in Japan! There is no art to ordering “number two” off a menu or cooking a very precisely measured fast-food beef patty.

    As grand as it all sounds, we don’t want to become Japan, economically speaking anyway. The longer we keep minimum wage low, the more “Japan took over the car industry” type stories we’ll hear because the processing power to do these tasks is dirt cheap today, unlike it was when only a huge manufacturing industry like the automotive industry could afford to automate to such an extent. The appliance industry is moving back to America and is going to create a few jobs – take it for what it’s worth. The only questions are if the automation be grown here or imported, and when. While Japan and Germany have shown a lot of resistance to further automation, China and Korea are not afraid to utilize it.

    So what’s a country to do? Unlike healthcare, where the U.S. could have just copied one of the many imperfect but vastly better working systems, I don’t know that there’s a country that has dealt with the coming crisis well enough to be worthy of bench-marking. Japan, Korea and the EU fail to have compelling models. I think it’s a given that the minimum wage needs to be increased, but then do we displace workers with machines? I don’t buy that McDonald’s will just close up shop because of a wage increase. I also don’t think they’ll pay $30/hr. Somewhere between 8 and 30 they’ll automate, Even without this revolution being fully developed, France has cut working hours, but still suffers from high unemployment. Norway pays citizens to be artists and musicians to create artificial labor shortages elsewhere in the economy – perhaps that will work, but only time will tell. I think it could create serious social tensions in time. Neither has completely worked, but at least they’re trying. America will be left in the dustbin of history if we keep thinking the best way forward is to pay humans humiliating wages to do machines’ work. CEO’s will only chose automation over lowest legal wages when it makes economic sense. The sooner we start to deal with that reality, the better.

    I’ve heard a lot about Amazon not making a lot of money compared to their capital outlay for highly automated warehouses. What happens to Amazon if Walmart suddenly has to start paying a living wage rather than letting taxpayers subsidize their workers through government assistance? Does Amazon start taking over, or does Walmart become a brick-and-mortar version of Amazon – highly automated? The technology already exists there, but Amazon’s a fluke since the financial motivation doesn’t really exist.

    Raising the minimum wage without addressing this is bad, but leaving the minimum wage where it is now is even worse for the future prospects of America as a whole.

    I don’t know all the answers, but I’ll end with an anecdote. In the sixties, when those minimum wages were highest, my mom was plugging ends of cords into holes on a big board to connect phone calls. Those days were over not much after that. Good riddance – who really wants their life’s work to be about connecting phone calls or flipping burgers? Haven’t we advanced enough in the last 50 years so that fry cooks and register clerks are all but unneeded?

    I’ll see you at the self-checkout soon.