Are high minimum wages ethical?

Daryl wrote:I understand your argument, but we look at it differently. You'd call it socialism, but we have a welfare net that guarantees basic survival for all citizens. If an employer offers less (or even the same) for full time adult work it is not mutually beneficial, but demeaning to the worker.

I'm probably (as usual) wrong, but I get the impression from some of the US posters here that the employer is seen as superior and more deserving than the worker, and thus entitled to set the rules. We see them as equals who should end up in a true mutually beneficial relationship.

I don't see an employer as superior to a worker.

Win-Win means both sides win.

Read the study I posted about those 500 people in Seattle. Their answers were enlightening to me.

T2M

PeterZ wrote:Definitely a misperception. Employers are valuable in that they have ideas they need help executing. Because they need help, they offer opportunities for people with skills they wish to sell. The employer takes the risk of losing capital in his endeavor, either his/her savings or what he borrows. The employee simply risks the continuity of a future wage. Its not that we believe employers are inherently better, its that we recognize the additional risk they take.

So, when those with a skill agree to the offered wage of an employer, both parties have a sustainable relationship. Forcing limits on what both parties can agree to limits the number of mutually beneficial solutions. This tend to decrease the total number of jobs that can be created and so limits the number of people with various level of skills that can earn a wage.

I am not sure of anyone else, but I get tired of the primary focus on employees. They are important, sure. But employers, mainly small businesses are equally important. Regulations that weigh down their ability to employ people harms more often than it helps in recent years. Any set of rules need to protect both parties and not advantage one party to the exclusion of the other.

Daryl wrote:I understand your argument, but we look at it differently. You'd call it socialism, but we have a welfare net that guarantees basic survival for all citizens. If an employer offers less (or even the same) for full time adult work it is not mutually beneficial, but demeaning to the worker.

I'm probably (as usual) wrong, but I get the impression from some of the US posters here that the employer is seen as superior and more deserving than the worker, and thus entitled to set the rules. We see them as equals who should end up in a true mutually beneficial relationship.

That is true for employer owned companies aka most small/med businesses. However for the Big multinationals GE, Pfizer etc. ownership is split among 100,000s of stockholders each with a tiny stake in the company generally owned through an S&P500 Index Fund. The decisions made at those companies are driven not by an owner who invested his own capital, sweat, blood and tears but by a CEO, a herd of VPs, board of directors etc, who risked little. If the company succeeds they make millions. If the company tanks they leave with a golden parachute while the hard working employees hit the unemployment line.

True, Biochem. Yet many more people are employed by small business owners than large corporations. The minimum wage impacts this group much more severely than large corporate employers.

Biochem,

I posited a solution to multinationals' bangaloring US jobs on Baen's bar. What do you think of offering potential tax credits to manufacturers equal to the amount spent on production personnel working in the US? The amount of that potential earned is set by the percentage of that company's (and subsidiaries) employees that reside in the US.

So a multinational that employs 100,000 employees worldwide, 10,000 of whom work in the US and spends $10,000,000 in US based manufacturing personnel expense, gets a $1,000,000 credit. A company employing 100% of its employees in the US and spends the same $10,000,000 in production personnel, would get a $10,000,000 tax credit. Personnel expense is deducted from revenue to determine taxable income.

The idea is to make manufacturing in the US more viable. By providing tax credits for employing people, we offset social support for the unemployed. If this sort of thing makes lower skilled labor more viable for US manufacturing, we maintain manufacturing capacity and increase employment.

Brilliant idea.
We actually do the opposite with pay roll tax, that requires employers over a certain size paying so much an employee. Crazy.

PeterZ wrote:True, Biochem. Yet many more people are employed by small business owners than large corporations. The minimum wage impacts this group much more severely than large corporate employers.

Yes. They also employ a larger proportion of beginning workers.

I'm officially retired (at some years after 65 - problem finding someone who could do the work), but am still called back at times when they get stuck with something. The last time was this month. While I was working, the owner-boss was talking to someone on a nearby phone. He was discussing how it was hard to find people who would make it their business to consistently do the work they were hired to do. Often he needed to fill in for someone who didn't. Yes, a small business. He started as a laborer there, decades back. He has a number of skilled workers, who get much higher pay, but can also be relied on to do more than the unskilled labor. Whenever possible, he promotes from within - someone who has both learned how to do the more difficult work, and is also experienced in the company is worth more.


When just out of my school, things were slow and, partly because of lack of experience, it wasn't possible to find work fitting my training. Going back to the ranch was possible, but didn't fit my interests. Still single, it was possible to live on very low income. Later, given work experience and better economic conditions, that changed.

The real minimum wage is zero - when you can't find work. The basic question here is how to arrange for new workers to get experience without killing the businesses. It looks like different cultures have various methods, as is to be expected. One problem is that some don't balance these needs: in the USA, many of the governments which tried to provide people's wants and needs from taxation are having very bad financial problems. I assume everyone knows the story about killing the golden goose?

Double entry bookkeeping, done right, shows a balance of value going one direction against value going the other way. We pays our money, and gets our goods; the seller loses inventory, but to survive must get enough to replenish it after expenses.

Should an understanding of the basic principles of double entry (as opposed to just skill in doing it) be a requirement for public office

PeterZ wrote:True, Biochem. Yet many more people are employed by small business owners than large corporations. The minimum wage impacts this group much more severely than large corporate employers.

True but only because their minimum wage "employees" are making subminimum wage in China, India, Mexico, Bangladesh etc. It's a lot easier for GE to outsource than for the local restaurant to.

PeterZ wrote:Biochem,

I posited a solution to multinationals' bangaloring US jobs on Baen's bar. What do you think of offering potential tax credits to manufacturers equal to the amount spent on production personnel working in the US? The amount of that potential earned is set by the percentage of that company's (and subsidiaries) employees that reside in the US.

So a multinational that employs 100,000 employees worldwide, 10,000 of whom work in the US and spends $10,000,000 in US based manufacturing personnel expense, gets a $1,000,000 credit. A company employing 100% of its employees in the US and spends the same $10,000,000 in production personnel, would get a $10,000,000 tax credit. Personnel expense is deducted from revenue to determine taxable income.

The idea is to make manufacturing in the US more viable. By providing tax credits for employing people, we offset social support for the unemployed. If this sort of thing makes lower skilled labor more viable for US manufacturing, we maintain manufacturing capacity and increase employment.

It is certainly worth a try. We do know the multinational companies are tax sensitive, locating themselves in Ireland etc to avoid taxes. So it is logical that they would seriously consider taking advantage of this tax break. If they don't take advantage of such a good tax deal, we may need combine it with some regulatory reform as well. Not all of the expenses in employing US workers are direct, the Obamacare mess is one example. There are others.

On the revenue side, there probably won't be much loss to the government. These guys are dodging taxes anyway, so we wouldn't actually lose revenue. This would just give them a tax dodge that actually benefits people. We probably will even come out ahead - not having to pay so much in welfare and "disability" etc. plus the money from individual income tax of the US based employees plus secondary effects. They have a job therefore they can afford to spend money in the local economies etc.

Peter's comments over in Presidential candidates made me go look.

http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/ wrote:Perhaps surprisingly, not very many people earn minimum wage, and they make up a smaller share of the workforce than they used to. According to the Bureau of Labor Statistics, last year 1.532 million hourly workers earned the federal minimum of $7.25 an hour; nearly 1.8 million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.3 million hourly workers at or below the federal minimum.

In 2013 total employees was 144 million. or about 2.5%.

Another interesting quote from the above article.

People at or below the federal minimum are:

Disproportionately young: 50.4% are ages 16 to 24; 24% are teenagers (ages 16 to 19).

Mostly (77%) white; nearly half are white women.

Largely part-time workers (64% of the total).

Actually it makes a good read with lots of caveats. Fairly short read though.

As an example went looking around the BLS website.

Picked the lowest wage for FL. Where the minimum wage is $8.05.

39-3031 Ushers, Lobby Attendants, and Ticket Takers

Leads to this table.http://www.bls.gov/oes/current/oes393031.htm

We shall see how the table shows here.

Percentile | 10% | 25% | 50% (Median) | 75% | 90%
Hourly Wage | $8.05 | $8.61 | $9.22 | $10.75 | $14.00
Annual Wage (2) | $16,730 | $17,910 | $19,180 | $22,360 | $29,110

For what it is worth,
T2M

biochem wrote:

PeterZ wrote:True, Biochem. Yet many more people are employed by small business owners than large corporations. The minimum wage impacts this group much more severely than large corporate employers.

True but only because their minimum wage "employees" are making subminimum wage in China, India, Mexico, Bangladesh etc. It's a lot easier for GE to outsource than for the local restaurant to.

There isn't much we can do about minimum wages elsewhere. What we can do is put incentives to employ people here to offset that wage advantage. That an control the border to limit the number of people taking the available jobs and using our social services.