Consequences of repealing minimum wage rates.

The only reason I believe a minimum of any kind is needed is to prevent predatory employers from exploiting individuals. We need some kind of minimum, the same way we need caps on things like interest allowed. Otherwise banks and financial institutes would be charging whatever they want, and consumers would suffer.

Personally, I think this is best handled at the city-county level. The economy in say Fresno or Auburn California is nowhere near that of say San Francisco or Los Angeles. So each should be free to set the limits as high or low as they want.

 

Frank650, are you contending that an individual among the working poor can negotiate with employers of labor from an economically equal position?

Employers can outsource or substitute or modify the goods or services they deliver or modify their price structure to pay for the specific task or deliver their product without employing the specific task or defer the task being done until it can be completed at lesser cost.

Labor can only hire out to the highest bidder and if the federal minimum wage is eliminated, there certainly would be a “race to the bottom”. Labor cannot store their product on a shelf until the price is right.

The race to the bottom has been the experience of the working poor wherever there’s no scarcity of labor and no legally enforced minimum rate.

Respectfully, Supposn

 

Mushroom, the federal minimum wage, (FMW) rate is a minimum rate. The U.S. Constitution gave the federal government supreme jurisdiction over interstate and global commerce to avoid states from undermining each others’ economies.

States have exercised their right to increase the minimum within their jurisdiction but they are not permitted to undermine other states’ economies by in any manner enabling the FMW laws to be ignored.

Respectfully, Supposn

 

Mushroom, states have exercised their right to increase the minimum within their jurisdiction but they are not permitted to undermine other states’ economies by in any manner enabling the FMW laws to be ignored.

Within labor markets lacking an enforced legally mandated minimum wage rate, an indefinite market determined minimum rate will emerge that’s of less than the historic federal minimum wage, (FMW) rates’ purchasing powers; (an indefinite minimum rate is “a race to the bottom”).

The FMW’s or an indefinite market determined minimum rate’s affects the purchasing powers of all jobs’ in the same manner. The minimum rate’s effects upon all jobs are proportionally and inversely related to the differences between the minimums and the job’s purchasing powers.

The minimum rate has the greatest effect upon the jobs of the working poor. The minimum rate’s effect may exist but it’s inperceivable for jobs’ wages exceeding the median wage. But an indefinite market determined minimum rate’s purchasing power will be drastically less than the historic FMWs’ rates. An indefinite minimum rate’s purchasing power’s “a race to the bottom”.

Respectfully, Supposn

 

Frtank650, Within labor markets lacking an enforced legally mandated minimum wage rate, an indefinite market determined minimum rate will emerge that’s of less than the historic federal minimum wage, (FMW) rates’ purchasing powers; (an indefinite minimum rate is “a race to the bottom”).

The FMW’s or an indefinite market determined minimum rate’s affects the purchasing powers of all jobs’ in the same manner. The minimum rate’s effects upon all jobs are proportionally and inversely related to the differences between the minimum’s and the job’s purchasing powers.

The minimum rate has the greatest effect upon the jobs of the working poor. The minimum rate’s effect exists but it’s inperceivable for jobs’ wages exceeding the median wage. An indefinite market determined minimum rate will be drastically less than the historic FMWs’ rates. An indefinite minimum rate’s purchasing power’s “a race to the bottom”.

Many people want to work but they’re rejected due to their lack of qualifications. Too many of them lack the qualifications to earn the FMW rate. The extremely lesser purchasing power of the indefinite minimum rate will affect all jobs’ rates. Many additional jobs of extremely poor purchasing power will be created. More people will be enabled to be employed but the additional people entering the job market will exceed the number of additional jobs.

Our rate of unemployment will increase. Even if we deduct those unemployed that would not have qualified to earn the FMW rate, our numbers of unemployed people would not be decreased.

The working poor’s’ proportion of our aggregate employees will increase. Under the FMW’s rate, few employees without dependents qualified for public assistance. Due to the transformation, all of the working poor will be in dire need of public assistance. USA’s rate of poverty and its drag upon our economy will increase.

Respectfully, Supposn

 

If they are working at Minimum Wage for more then 3 months, there is probably a damned good reason why they are poor.

 

Mushroom, I assume you to be reasonably knowledgeable and aware that the term “working poor” includes a population segment of those that earn proportionally more than $7.25/hour.

You weren’t aware that my posts refer to the “working poor” rather than limiting the discussion to only those that earn no more than $7.25/hour and the federal minimum wage rate indirectly but certainly affects ALL labor compensation in the USA?

The federal minimum wage rate affected ALL USA job rates. The proportional effect upon a job’s rate was inversely is inversely related to the proportional difference between the minimum rate and the job’s rate.

Your post is not germane to the economic consequences of repealing the federal minimum wage laws..

Respectfully, Supposn

 

And is this "wage" a national or a local issue?

I know of a great many places in the US where $7.25 is a very good wage. Like in more rural areas, where rent may be only $250-300 a month.

The biggest problem of poverty from what I have seen always tends to be the same things. Lack of education, lack of skills, drug or mental issues, inability to keep jobs for various reasons, and trying to live in an area where not even minimum wage is a sustainable income.

And increasing the national minimum wage will not address any of these issues at all.

 

Perhaps not, but it will improve the lives of people making the minimum wage.

 

You're saying if the minimum wage dropped to $1 per hour, all wages paid in the US would fall by a factor of 7?

 

Not Amused, no, I’m saying modification of the effective minimum wage will generally initiate the same absolute modifications of all other wages within the labor market.

If there were no effectively enforced definite minimum wage rate, there’s a theoretical indefinite minimum rate that would be each labor market’s effective minimum wage rate. That’s the rate that is applicable to that labor market’s least challenging task.

[For good reasons the federal minimum wage (FMW) rate is always modified gradually, never suddenly].

An increase of the effective minimum wage does not legally but does generally increase all other of the labor market’s wages by no less than an equal absolute amount. Such wage increases are then inversely and proportionally related to the increase of the minimum wage.

If for example the $7.25 federal minimum wage, (FMW) were increased by $1, all other wages would be generally also be increased by at least $1. Most jobs would be increased by more than $1 because employers are reluctant to be perceived as stingy by all others.

I’m unaware of any government ever reducing the legal minimum wage. No political party would be so foolish as to do it. They’d better accomplish their goal of increasing poverty by permitting inflation to undermine the legal minimum wage’s purchasing power. That’s proportionally more (than would be a legal minimum’s reduction) of all wages.

Respectfully, Supposn

 

Except that government social welfare programs tend to push the labour market's effective minimum wage rate below the theoretical indefinite minimum rate, which distorts the bottom of the wage curve downward.

Where did you learn that mumbo jumbo?
Minimum wage increases do not reflect across the economy in equable absolute amounts, they reflect as a declining differential, highest near the newly increased minimum wage and petering out to zero at about 200% of the new minimum wage. In other words, if the minimum wage was increased to $8.25, those making $9 would see an increase of close to 1$ while those making over $20 would likely see no increase at all, at least that's what the studies of actual real world minimum wage increases have found.

 

I don't understand why my tax dollars should pay for a companies inability to provide a minimum standard of living. Surviving on minimum wage is not even possible. These people have to rely on government and welfare to make up the difference in order to survive.

 

Unrealist42, our numbers differ somewhat but the conceptual basis of your statement and mine are the same; you’ve changed the wording. We are not as far apart as your post implies.

I’m 77 years old; my personal observations are that well prior to the announced effective date of a federal minimum wage, (FMW) rate, increase, (almost all USA enterprises with say 10 or more employees) begin increasing their rates.

(Those enterprises want to make the case that they are not acting in response to the FMW law and wish to avoid acquiring a reputation of being stingy). Most of those enterprises’ minimum rates are at least slightly more than the FMW’s rate for precisely that same reason).

We agree that those enterprises initiate THEIR OWN rate increases of a similar absolute amount across those enterprises’ lower wage schedules and the purpose of that is to retain pay rate differences between various job descriptions.

We’re both of our opinions, the absolute increase of the FMW rate greatly affects lower income earners and the proportional increase is inversely related to the differences between the FMW's and the jobs’ wage's rates.

Our opinions of the absolute increase between the FMW rate and the enterprises’ own minimum rates differ slightly; also you contend that those increases will “peter out for wage rates exceeding approximately twice the FMW rate and I contend they’ll start “petering out” as the wage rate’s approach USA’s median wage rate.

The conceptual basis of our opinions do not differ all that much.

Respectfully, Supposn

 

Originally Posted by Supposn1:
Not Amused, no, I’m saying modification of the effective minimum wage will generally initiate the same absolute modifications of all other wages within the labor market.

If there were no effectively enforced definite minimum wage rate, there’s a theoretical indefinite minimum rate that would be each labor market’s effective minimum wage rate. That’s the rate that is applicable to that labor market’s least challenging task.

I contend when there’s no scarcity of lesser skilled labor, the “race to the bottom” induces the theoretical indefinite minimum rate’s purchasing power to be drastically less than that of the historic FMW rates.

Please provide further explanation of your paragraph. I’m not sure of what you’re stating.

Respectfully, Supposn