Thursday, June 22, 2006

The Importance Of The Court Jester

Posted by Codemorse

From the Daily Show:

But I want to talk to you a little bit today about an issue that is - and I'm going to be a kneejerk reactionary reflexive, uh, idiot on this one. The Senate voted not to raise the minimum wage which, for the last nine years, has been five dollars and fifteen cents an hour. So, if you're working 40 hours a week, you're making 200 large.

They did vote themselves a pay raise, but they didn't vote to raise the minimum wage. I believe they were going to raise it to 7 dollars and 25 cents. So, if you're working 40 hours a week, you're making 280 large. Or maybe 300 large.

I just want to say, good. i'm glad they didn't do it because, you know, the lower strata of American society has had a free ride for too long. And if you were to give them $7.25 an hour you know it'd just go up their nose and out their hose - you know what I'm talking about?

You don't want to give them walking around money. So kudos to Congress, for literally taking a giant shit on the poorest people in this country. Because they deserve it. Don't they deserve it?


At 8:57 AM, Blogger Jabawacefti said...

Well, with respect, raising the minimum wage doesn't help all poor people. What it does is help a majority (if that) of poor people and completely screws the rest. And here's why:

Let's say you are Company A. And you need to make widgets. You're willing to spend $1,000 a week making those widgets. You take unskilled laborers (because a minimal amount of skill is required to make widgets), and employ 5 people (at $200 a week). Let's say you raise the minimum wage. Now you can only afford to hire 3, maybe 4, (at $280/300 a week) people to make your widgets.

So, you fire 1 or 2 people. Because your business simply can't afford it. Sucks to be those people, huh? Congress just took a big shit on them. But that's ok, because the other 3 are living large on their $300 a week.

Well, not so fast, you say, Company A can just pass on the extra cost to the consumer, pay their workers $1,500 a week, keep everyone employed and everyone is happy. Well, not entirely. You see, these 5 people have to buy those goods too. So, they don't entirely get to keep all the extra money.

Additionally, Company A has to compete against Company B from India who can make the twice the amount of widgets as Company A with $100 (as compared to $1,500) a week, by paying 10 people $10 a week to make their widgets. So, Company B can sell their widgets for $1 a widget, while Company A has to sell theirs for $5 a widget. Which widget you gonna buy?

It does not take an economics major to recognize that it's only a matter of time before Company A is out of business. And the 5 workers it kept on are laid off, and making $0 a week. That's $0 large. Congress ain't feeling so magnanimous now.

I imagine it would feel good to say, let's raise the minimum wage to 7 dollars a week. More money to the poor, and they need it. The problem is, that solution is shortsighted, and ignores the current international economic model that favors foreign workers that are willing to work harder for less. And in the end, what you're doing is taking a giant shit on the poor people, while saying, "you're welcome."

At 9:10 AM, Blogger Scott Roche said...

This comment has been removed by a blog administrator.

At 9:11 AM, Blogger Scott Roche said...

Yeah minimum wage is eee-ville. ;)

Okay so seriously, what's your answer then? Because forcing people to continue to live on 5.15/hour (okay so no one has a gun to there head, but you know people can get into those jobs and never find their way out) isn't viable.

If you don't have a minimum wage then you wind up with people here being no better off than the people in India. I guess my answer would be for our country to somehow encourage/enable people to get better than minimum wage jobs. But then that would cost money and how would we pay for the war?

At 9:26 AM, Blogger codemorse said...

And this is why (amongst many, many other reasons) you kick so much donkey-tail, my friend.

Awesome deconstruction. Your logic continues to impress.

I'm not sure why helping a majority of the poor is something to avoid because we screw the rest. Especially since, to my math-allergic mind, the cost of increasing the minimum wage is entirely do-able.

It seems the problem is that businesses hypothetically won't hire/keep the same amount of employees if the wage is increased by two dollars and change. But that seems sort of odd as argument. We shouldn't raise people's wages because companies will be too cheap to pay them? Doesn't that essentially equate to "Be grateful you have a job at all, unskilled laborer?"

Isn't the underpayment of these positions already one of the major (if not THE major) underlying causes of the illegal immigration rumpus?

Should we then require less/the same amount of commitment to the American economy? Because businesses already abusing the government would abuse it more?

The above is all top-of-the-head stuff. Your argument makes sense, just not the sort of sense that I particularly like (how's that for stupid liberal reasoning). Especially when our government's just given themselves another pay bump. For what? Cronyism and general incompetence?

I found this interesting:

"The Annual salary of a minimum wage worker who works 8 hours a day, 5 days a week, on average, at the current rate of $5.15 an hour comes to $10,753.20.

At the proposed rate of $7.25 an hour--blocked by Republicans--this average salary rises to $15,138.00.

Thus, the proposed increase in minimum full-time annual salary comes to a grand total of $4,384.80 for an average 40-hour-a-week worker on minimum wage.

According to the Department of Labor, the number of American workers receiving minimum wage or below in 2005 was 1.9 million.

So, according to these statistics, the maximum total annual cost to employers of increasing the minimum wage, assuming an average 40-hour work week would be $8,331,120,000.

And meanwhile, what is the average annual cost of the estate tax repeal "compromise" proposed by Republicans? $28 billion.

At 9:26 AM, Blogger codemorse said...

Editor's note: I'm responding to Jabs above, because Scott snuck in as I was rambling.

Hi Scott!

At 9:46 AM, Blogger codemorse said...

Finally read (and commented on) that Berman article, by the way. Check out the big brain on Berman!

And I've edited your blogging ability. Didn't realize I needed to. You should now have the power to make letters small, and to destroy others with the power of your mind.

At 1:45 PM, Blogger Jabawacefti said...

We shouldn't raise people's wages because companies will be too cheap to pay them?

It's not that companies are cheap. They have to compete. If I want to stay in business in an international marketplace, I can't pay people $7.00 an hour when people in India are happy for $2.00 an hour.

Isn't the underpayment of these positions already one of the major (if not THE major) underlying causes of the illegal immigration rumpus?

Actually, it's the opposite. If you require employers to pay $7.00 an hour, they'll just find illegal immigrants, and pay them $4.00 off the books. This aggravates the illegal immigration problem.

The answer is, as Scott said, education and training so that the workers can compete in a global marketplace. We can't just have 100 million widget makers. We need engineers, etc. It can cost money, or tax incentives can be used. But raising the minimum wage is a false solution.

At 2:02 PM, Blogger Scott Roche said...

Of course another alternative is for companies who are "forced" to pay minimum wage to become *GASP!!!* innovative. No you can't sell the same widgets that they make in India for a competitive price, even at teh current rate. What you can do is make a better widget. Case in point Rather than give up the ghost in a market where foreign made pencils are CHEAP they decided to differentiate themselves. They use the same equipment that they always have for over a hundred years to make quality art pencils. They are also smaller and more mobile (with no downsizing) than their foreign competitors and can make products to customer specs. If they can do it with pencils why can't other American companies pay a good to great wage and find ways to make their companies profitable? Is it too difficult?

At 2:32 PM, Blogger Jabawacefti said...

Scott, with respect, that's just an absence of a solution.

Just try harder? Be more innovative?

Why don't we then just raise the minimum wage to $10? Or $20? Innovation should just cover the cost differential.

You don't handicap companies into innovation. Particularly right now, when American companies are facing increasingly competitive markets with an increasingly cheap labor force.

Innovation will only get you so far. And it's always tempered by that *GASP!!!* reality.

At 3:36 PM, Blogger codemorse said...

But that answer still screws a lot of people, it seems to me. Even if you educate people to help them get jobs where they're paid more, you still need gas station attendents and maintenance men. So what do we tell those people?

For me, what concerns me is just that people are able to put in a full week's work and be above the poverty level. Raising the wage that amount isn't really improving their quality of life - it's pretty much maintaining it.

At 5:10 PM, Blogger Scott Roche said...

Well jabs, you haven't offered a solution either. All I heard from you is "stay the course". Trying harder adn being innovative is what made this country something I'm proud of.

The minimum wage should be something that keeps people above the poverty line (I'm not convinced that 5/hour does that especially since those people don't have health care adn generally aren't guaranteed 40 hrs/week). I'd take whatever 5% a year over nine years added to 5.15 works out to. I'm sure that's less than $10.

And I suppose you're right, we can't handicap companies into innovation, but we can't subsidize them into innovation either. I think maybe this whole thing needs to be about the people who can't afford to eat/pay rent/raise their kids.

At 9:26 AM, Blogger Jabawacefti said...

I guess what we have here is (perhaps not surprisingly) a different point of view on what a "subsidy" is.

From what I understand from your last post, allowing companies to pay employees whatever the market demands constitutes "subsidizing" them.

I, for one, think that the absence of regulation and taxation does not constitute a "subsidy."

Nevertheless, I understand the desire to pay workers so that they can live above the poverty line, I just think it's a mistake, and in the end will hurt more people than it will help.

To overstate the case with a quote:

"The road to hell is paved with good intentions." - wrongly attributed to Samuel Johnson

At 9:32 AM, Blogger codemorse said...

Nevertheless, I understand the desire to pay workers so that they can live above the poverty line, I just think it's a mistake, and in the end will hurt more people than it will help.

But will it hurt more than consciously keeping these folks in poverty, while giving yourselves generous raises?

I say we bump minimum wage and outsource our Congress to India. It's cheaper, and it'd probably be more effective.


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