Are minimum wage laws working?
 

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.

I cannot imagine this not going to PARF, Eric. Best of luck on keeping it out.

I'll participate until it does, but I'm sure you're right

Maybe there will be some good points before the monkeys fling poo

The Monkeys Have No [Brains/Balls/Tails] in Zamboanga

Are you making the point that government intervention in our free enterprise system is rather pointless? Because I agree with the gist of your message. Most of what you would think of as being typical minimum wage jobs (McDonalds, QT cash register attendant, etc) have hiring signs out advertising $9/hr+ starting wage. This may not be the case everywhere, but in our area the starting wage for menial work appears to be about 25% above minimum wage with many jobs available. Lots of these jobs available, wage higher than the minimum, looks like supply and demand at work.

yep. minimum wage laws are working. they drive up the cost for everything and simply raise the bar of 'poverty line'. they also allow politicians to demonstrate their (empty) love for the lower classes and buy votes.

then, there are still ways around them: getting the business classified as a 'farm', etc.

flame away.

In the present economy, there are a bunch of folks locally that approach me all the time and ask to work off the books for cash. Their going rate is $10.00 an hour.

And these are older men with skills with farm equipment. They are also willing to do any form of manual labor.

I do the right thing, which in this case I will leave unwritten.

As to the efficacy of a minimum wage, the volumes of opinions on the subject are exhaustive, exhausting.

The real nexus of why we have a minimum wage is political. Wiki actually does a fairly balanced review:

Minimum wage - Wikipedia, the free encyclopedia

If the minimum wage must also be a "Living wage" then kids will get no work experience.

and a 'living wage' is exactly where they keep trying to raise it. how many times has this not worked, to date? this is an example our politicians at work. what is that definition of insanity again?

1st you'll need to decide what objectives the law is designed to accomplish - not clear to me from your OP

2nd - do you mean state or federal?

3rd - what test is to be used to determine if the obj. is accomplished

4th - what are the side effects if the obj. is accomplished

your OP seems capable of being read as a claim that the Minn. min. should be raised...

From your post "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.




35% of these jobs are in retail, are not 40/hr week jobs. I'm sure there are good reasons for doing it - insurance, benefits, etc. These jobs typically have high turnaround. Retailers such as Target and Wall-mart have full time employee training programs that may train up to 250 hires a month. The problem as I see it is the amount of hours offered cannot offset taxes, ss deductions plus transportation expenses. It is almost a zero sum - which adds to the high turnover. The retailers know this and it must work to their advantage.

I was in a Cracker Barrel restaurant a few years ago in Alabama and talked to a elderly woman who waited on me. Her wage was $2.50/hr plus tips. Now Cracker Barrels typically cater to the traveler and vacationer. Depending on the economy and time of year - this could be feast or famine. They aren't 40 hr/ wk jobs either.


You could focus on high volume stores or trendy bars and I'm sure many make allot of money - on the average maybe not.

I don't think these are living wages. But we also need cheap labor. This affords our lifestyle.

Some of these low paying jobs beg for labor. In the affluent North Shore of Chicago, kids get better allowances than working part time. I live in a upper income area in the city and when I stop in at the Whole Foods store, I know those who work there couldn't afford to shop there.

The raising of the minimum wage makes it hard to afford good people for us bottom feeders. When the min. wage was lower there was more money for good employees (hourly wages and bonuses). With a small restaurant in a rural town, I just can't raise prices that fast to make up the for the added expense.

I really believe that the min. wage is increased not for the poor employee, but to add to FICA.
Also there are a lot of expenses that are tied directly to payroll, w/c insurance and unemployment insurance.

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?

If <90 days (e.g., summer employment), employers only have to pay kids under 20 years old $4.25/hr, instead of the federal minimum wage of $7.25/hr. That seems to make an attempt at making youth employment a possibility.

Didn't you answer your own question?

I sure am glad they don't have a max. wage. When I was flipping burgers in high school, I was making double the min. wage because that's what the market in my town commanded at that time. Min. wage meant nothing because there was negative unemployment.

By "kids" I mean even those 20-something kids sitting in their (parents) room staring at their faded HOPE poster. ...you know, the ones still on their parents insurance. --those kids.

Also, in this State, no such provisions are there. As far I know. And min wage is very close to $10/hr.

Internships? ...State says that interns must not add to productive work. --teaching only. (at the employers expense of course)

states can set the bar higher. You WA voters are damn generous.

It's ironic that every single congressman's and senator's office in DC and probably most of their district offices have unpaid interns working them. I did it and it was close to 40 hrs. per week of answering phones, sorting mail and some writing. That was the official job description of a staff assistant and they made around $20k plus benefits at the time. It could be almost as hard to get an internship as a paid position there, especially if it was in a big name office.

We use the $4.25. We use it to motivate them, as they learn we move them up in stages. I think it gives them some motivation and bragging rights when they get to $7.25 in 45 days.

My daughter has always worked in the summer, even in HS. The past three summers she has been a waitresses at a crab house in Maryland during the evening while she interned during the day.

She is smart, funny and quick...the minimum wage means zippy to her. She makes serious coin.

The only job I ever had that paid min. wage was my very first one at a local restaurant, which was the only place in town that hired 15 yr. olds. I forget what the legal exemption was, but I was able to get working papers at that time. The previous summer I made the same money, but it was under the table for a contractor who was doing an all-summer project on a neighbor's house. After that first resjob, I never made less than double min. wage at a summer job.

I never really understood internships. Work for free. :confused:

C'mon. You know how it works in DC. You get a little bit of Cap. Hill experience and a lot of networking. I still keep in touch with a few of the folks I knew then and it did help me land my first real salaried job.

But isn't that the same? ...I mean if the politicians are adding no productive work.... ;)

Sure I know, but it's a crazy process, even worse than medical internships/residencies.

The day workers at HD here start at $15/hour.

No, welfare is not working.

They are working if your goal is to reduce overall employment.

Please expand, a more thorough expansion on your position may help

Suppose all the $7.25/hour jobs out there suddenly paid $3.62/hour. What would happen? Would employers suddenly employ 2X as many people? If one guy was effectively busing 30 tables, why would you hire a second? Even if they wanted to, would 2X as many qualified people suddenly decide to work for 1/2X the pay? The small employers I know (friend's restaurant, etc) complain that they can't find reliable, capable people at $10 and $15.

How or why could that happen? If min. wage laws were abolished (will never happen), there might be some temporary adjustment. But when people quit and businesses feel the sting, wages would go right back up. The reason I made $7 per hour at Wendy's in 1988 was because they forgot to staff up at the beginning of August when all the kids' families went on vacation, pulling the kids out of work and then sending them back to school after Labor Day. They had a sudden exodus and had to fix it immediately by offering double the min. wage. That, of course, pulled workers away from other min. wage jobs to Wendy's (which I'm told was the busiest one in the country then) and forced the other places to also raise their wages to keep workers. Seemed to work pretty well.

So does the minimum wage have essentially no effect then?

It's kind of hard to measure, since we don't have any alternative or way to know what wages would be without a min. wage. I'm guessing they'd end up about the same after some fluctuation. I'm sure it has a short-term very bad effect when it gets hiked up, but things settle back down after a while. Either way, I have a problem with gov't. price controls and that's what the min. wage is. If they can tell you how much labor has to cost, they can do the same with other commodities.

I would then think it only affects the cost of living.

If these jobs would pay $7.25 with or without a minimum wage law, why does the minimum wage affect the cost of living?

The minimum wage here has been raised to $10.25/hr. ($9 when serving alcohol).

Not good. It used to be $ 6 for the first 500 hours and $8 thereafter. Now I have to pay a 16 yr old yard worker $10.25......Not going to happen. I can get a more experienced worker for the same or maybe a bit more. Going to be though for the young workers.

if it low enough then no effect - it only gets raised (outside or OR, WA) episodically so in most years it will be much lower than the market rate

BTW - in Oregon servers get the full min. wage (indexed for inflation & ~~ $9 now) + their tips, unlike most places

I think most states that allow paying tip employees below min. wage still require "subpay" if their tips don't bring the total up to what the min. wage is.

I think it's kind of a weird federalism issue that federal law says the higher wage always prevails where state and federal min. wages differ.

home depot,lowes,walmart,office depot not much better and no benifets hard to buy things with no money. most middel class jobs do not pay much people are just the working poor.