Are minimum wage laws working?

[island911]

Originally Posted by kaisen

It was your logic.

And I agree.

I think minimum wage is a false floor when people who choose to accept minimum wage just supplement it with government assistance.

My logic is that welfare is independent/separate of minimum wage. I see now that I am seen splitting a hair to some on this, but it is a significant concept to me. That is, whether the low wage worker is getting welfare, living with mom and dad, or has a trust fund, lives like a student.... There are all sorts of scenarios --separate from welfare-- where people are fine making less than minimum wage. ...Like say, the official Sun Tropics bikini-lotion-application-specialist-boy.

[Rick Lee]

By my rough math and Google search, the max EITC for 2011 for family of four is $5112. In looking at the IRS tables, to have that kind of tax liability, your taxable income would have to be $38k. Back out the two personal exemptions of $3700 per adult and child tax credits of $1000 per child and you can gross that income up another $9400. So that means $47,400 in gross income for two earners with two kids before they pay dime one of fed. income taxes. Anything less than that and you're getting more EITC back than you paid in taxes, i.e. welfare. $47,400 divided by two earners is $23,700. Assuming 40 hrs. per week, 2000 hrs. per year, that means you have to earn more than $11.85 per hour before you pay dime one of net fed. income taxes. That's more than any state or fed. min. wage.

I'm pretty sure that kind of income level qualifies for plenty of non-taxable assistance from various fed/state/local agencies too.

[kaisen]

Originally Posted by Rick Lee

By my rough math and Google search, the max EITC for 2011 for family of four is $5112. In looking at the IRS tables, to have that kind of tax liability, your taxable income would have to be $38k. Back out the two personal exemptions of $3700 per adult and child tax credits of $1000 per child and you can gross that income up another $9400. So that means $47,400 in gross income for two earners with two kids before they pay dime one of fed. income taxes. Anything less than that and you're getting more EITC back than you paid in taxes, i.e. welfare. $47,400 divided by two earners is $23,700. Assuming 40 hrs. per week, 2000 hrs. per year, that means you have to earn more than $11.85 per hour before you pay dime one of net fed. income taxes. That's more than any state or fed. min. wage.

I'm pretty sure that kind of income level qualifies for plenty of non-taxable assistance from various fed/state/local agencies too.

Then Matt's idea of promoting spending via tax cuts is irrelevant to anyone earning minimum wage or anywhere close to it -- they don't pay tax anyway. Am I interpreting this right?

So even at $11/hr minimum wage we wouldn't be collecting more taxes, just cutting business profits so we'd collect LESS taxes at the same tax rates?

[slakjaw]

Sounds logical to me.

When I was in my early 20's I worked at an auto repair shop. The manager paid me minimum wage on paper only. I was getting anoter 10 bucks an hour under the table. I am guessing a lot of that goes on now adays.

Originally Posted by kaisen

Another Pelican got me thinking...

Are minimum wage laws still relevant? Are they working?

**PLEASE let's keep this out of PARF**
While the topic may have political components, it's fair to discuss the foundations and principles without talking about political parties. More importantly, let's do it without the name calling and bullying, okay?

Here's my take:

Without talking about why they exist and what happened long ago, I think they aren't relevant now.

I can only use examples here in my resident state of Minnesota based on studies released two weeks ago:
Local Area Unemployment Statistics (LAUS)

We have a labor force of a little over 3 million people
Of those, 93K were making $7.25 or less (US Federal Minimum Wage)
That's a little less than 3.1% of the working population

Of those making minimum wage or less, a little over 32K were age 15 to 19, representing 34% of all minimum wage earners. Another 24K were aged 15 to 24. That's 56K of 93K total, leaving 37K over the age of 24 (1.2% of the entire labor force).

35% of the workforce making minimum wage or less are in the food service/preparation industry where 53% of them made tips, commissions, or other OTC.

Part-time workers made up 72% of all workers making minimum wage or less.

I'm not sure how it ties together, but there are few people over 24 years old that are actually making $7.25/hr in their full time job. If the statistics carry, they may represent 47% of 28% of 1.2%..... about 4900 people out of 3 million workers.

That's 0.16% of the population

I arbitrarily picked 24 years and up as they're likely not college students and/or still being subsidized by family. They're more likely (in my supposition) to be head of household. Same with part-time, thinking that they may be supplementing a job that pays more.



Sooooooo.........



If 99.84% of the 'adult' full-time wage earners are making MORE than minimum wage, is this evidence that the free-market system is working to find stasis (market equilibrium) at wages more than minimum wage?

If we eliminated minimum wage, would we see wages decrease? How many people would really be effected in an "I can't pay for my food/shelter" way?



It seems to ME that minimum wage is largely irrelevant.


Who can live on minimum wage anyway? $7.25/hr x 40 hrs/week x 4.3 weeks/mo = ~$1250 per month. Taxes, SS, other deductions leave --what, $1100?? (I could look it up, just guessing)

Please discuss, I haven't locked in my position. Just looking to hear your points in a non-PARFy way. Thanks.

[Rick Lee]

Originally Posted by kaisen

Then Matt's idea of promoting spending via tax cuts is irrelevant to anyone earning minimum wage or anywhere close to it -- they don't pay tax anyway. Am I interpreting this right?

So even at $11/hr minimum wage we wouldn't be collecting more taxes, just cutting business profits so we'd collect LESS taxes at the same tax rates?

Well, if you don't pay fed. income taxes, it's hard to give any kind of tax break other than a hike in the EITC, which is a euphemism for welfare. You don't get a refund at Nordstroms for clothes you didn't buy there. Though I know that's very hard for some folks to accept.

I'm sticking with an earlier claim in this thread that min. wage hikes are a backdoor way to more FICA $$, which is probably how the feds justify letting state min. wage prevail over federal if it's already higher.

[Head416]

Originally Posted by Cannonball996

when you factor in all the government money, the minimum wage goes a lot farther then you think. I look at my own employees who I pay a little more minimum wage, and everyone of them gets food stamps (in texas its the lone star card) I know a few of them get some sort of housing allowance because they call me to verify their employment.

I think the real question should be, why does someone with a job still need government money?

I like this question. Since you're an employer, can you help me out with some hard numbers? How much do you pay a certain employee? What is their take home pay after taxes/deductions/whatever? I want to try to put an actual number to it. $350/week take home? More/less?

How much is an apartment in your area? Let's do the math and see if we think they should be able to live without government money or not. I'm not trying to bait you, I really want to run the numbers and see.

[onewhippedpuppy]

Originally Posted by kaisen

Then Matt's idea of promoting spending via tax cuts is irrelevant to anyone earning minimum wage or anywhere close to it -- they don't pay tax anyway. Am I interpreting this right?

So even at $11/hr minimum wage we wouldn't be collecting more taxes, just cutting business profits so we'd collect LESS taxes at the same tax rates?

I wasn't suggesting it to specifically benefit those who are on welfare or minimum wage. I was suggesting it to benefit everyone. I give to charity of my own free will, I don't appreciate the government doing it for me.

I'm not the accountant in my family, but I believe Rick's comment was based upon your tax credits and refund that you receive at the end of the year, and the potential to actually receive more in refund than you paid in. I don't know of any circumstance in which you don't have to pay in to state and federal taxes on each paycheck, you could just potentially get it all back (or more) at the end of each year. I can't speak to this specifically, because I'm more than happy to let my accountant wife take care of this stuff for me.

[onewhippedpuppy]

Originally Posted by Head416

I like this question. Since you're an employer, can you help me out with some hard numbers? How much do you pay a certain employee? What is their take home pay after taxes/deductions/whatever? I want to try to put an actual number to it. $350/week take home? More/less?

How much is an apartment in your area? Let's do the math and see if we think they should be able to live without government money or not. I'm not trying to bait you, I really want to run the numbers and see.

I'll play, because I have multiple college aged sister-in-laws I'm pretty familiar with apartment costs in Wichita. We'll use $9/hr, because there are a lot of menial jobs that pay this much or more. I know a teen with no experience that started out at $10.50/hr + benefits running the cash register at a QT.

$9/hr x 40 hrs x 4 weeks = $1440/mo
$450/mo for a nice apartment in a nice area
Groceries $100/mo
Gas for car $100/mo
Water $20/mo
Electricity $40/mo

Deducting those necessities leaves you with $730/mo left over. I'm obviously not deducting taxes from the check, and not including perceived "necessities" such as cell phone, cable TV, internet, new car payment, etc. Most of my wife's siblings are living this exact life while going to college. Can you raise a family on this? Hell no. But if you're trying to, shame on you for not taking responsibility and trying to make a better life. Even manual labor around here pays much better than $9/hr.

[Head416]

Originally Posted by onewhippedpuppy

$450/mo for a nice apartment in a nice area

This may be the most shocking thing I've read all year. I'm going to need some time to recover from this. Just one more reason why I need to leave CA.

[onewhippedpuppy]

Originally Posted by Head416

This may be the most shocking thing I've read all year. I'm going to need some time to recover from this. Just one more reason why I need to leave CA.

Yup. The wife's sisters have had several over the last few years, all nice clean one-bedroom places in popular and safe areas. If you don't mind something still livable but not as nice or convenient, you can find them for $300-$350. Cost of living in KS is ever so slightly different than CA, I won't bother getting into what a nice house costs......

[Zeke]

I don't see how anyone can work for minimum wage. The minimum wage is an insult to humanity in this country. It's there I suppose because some would pay even less if they could get away with it.

I think Seahawk put it in perspective. $10/hr cash is like 15 on payroll. One can at least live at a comfortable (relatively speaking), while in modest poverty, making 15. Get a couple wage earners in the household and the comfort factor will reach into having basic financial discretions. YMMV state by state.

Even a combined 30/hr cash in metropolitan CA is a stretch if you're going anywhere but broke.

[Rick Lee]

Originally Posted by Zeke

I don't see how anyone can work for minimum wage. The minimum wage is an insult to humanity in this country. It's there I suppose because some would pay even less if they could get away with it.

What would you pay your subs if there were no min. wage? Would you pay prevailing wage or more because it makes you feel better?

[kaisen]

Originally Posted by Rick Lee

What would you pay your subs if there were no min. wage? Would you pay prevailing wage or more because it makes you feel better?

Half the subs in California are working illegally anyway. No minimum wage law would apply.

[Rick Lee]

Originally Posted by kaisen

Half the subs in California are working illegally anyway. No minimum wage law would apply.

It's probably more than half. But assuming (I know, fantasy land stuff) it was all on the books and subject to reporting, FICA, etc., no one would pay more than prevailing wage. Just doesn't happen. At best, some would get bonuses for coming in ahead of schedule/under budget. No one pays more than they have to.

[RWebb]

A minimum wage can increase overall employment as the additional dollars will be spent by the employee on goods and services.

That's the macro-economic story.

Fint's comment above to the contrary is also true but only at the micro-economic level.

In contrast, a subsidy to the well-odd, e.g. lower tax rates, tends to be invested so there is a lower effect on jobs.

[kaisen]

Does trickle-up work as well as trickle-down? Or is it all VooDoo??

[island911]

Originally Posted by RWebb

A minimum wage can increase overall employment as the additional dollars will be spent by the employee on goods and services.

That's the macro-economic story....

Sure, if that min wage job is actually printing more dollars.

Do tell us more macro-economic stories. ...of a confused Parfessor.

I mean, you really don't -get- where "additional (macro econ) dollars" come from, do you.

[RWebb]

isly if you cannot act like a grown up then stay in your PARF playpen

and try an introductory econ course sometime

[island911]

So then, NO; you really don't -get- where "additional (macro econ) dollars" come from.

[dheinz]

Originally Posted by

$9/hr x 40 hrs x 4 weeks = $1440/mo
$450/mo for a nice apartment in a nice area
Groceries $100/mo
Gas for car $100/mo
Water $20/mo
Electricity $40/mo

Deducting those [U

necessities[/U] leaves you with $730/mo left over. I'm obviously not deducting taxes from the check, and not including perceived "necessities" such as cell phone, cable TV, internet, new car payment, etc. Most of my wife's siblings are living this exact life while going to college. Can you raise a family on this? Hell no. But if you're trying to, shame on you for not taking responsibility and trying to make a better life. Even manual labor around here pays much better than $9/hr.

Groceries $100/mo...= $3.33 a day