28-05-2005 00:50									#1
	So I was walking to work the other day when a man approached me... Put an end to popups!

... asking if I would sign a petition to raise the minimum wage for the state of New Mexico to $7.50 from $5.15 (federal min. wage). Unfortunatly/fortunatly Im not a registered voter in this state yet so I couldnt sign.

As I kept walking I wondered what would be the impact upon the state economy if the minimum wage was raised so high? Alaska's minimum wage is $7.15 and cost of living is a hell of a lot higher.

What do you guys think?

	28-05-2005 00:53									#2
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quote: Originally posted by Space05us ... asking if I would sign a petition to raise the minimum wage for the state of New Mexico to $7.50 from $5.15 (federal min. wage). Unfortunatly/fortunatly Im not a registered voter in this state yet so I couldnt sign. As I kept walking I wondered what would be the impact upon the state economy if the minimum wage was raised so high? Alaska's minimum wage is $7.15 and cost of living is a hell of a lot higher. What do you guys think?

we are raising the minimum wage in our state. In fact, it started as a petition, then we had a vote in 2004. But we have to do another vote in 2006 for it to take effect. But politicians are trying to raise it before then. so I can't say what the effects are, but we'll see.

everyone always says it leads to unemployment, but it looks to me like good economic times follow rises in minimum wage.

	28-05-2005 00:53									#3
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In my opinion it can only be a good thing. It does undercut net profits for business, but will redistribute more wealth among the lower classes.


Reactionaries will tell you that the sky is falling and that businesses won't hire as many workers as they did before. They will tell you that business won't have as much money to reinvest into themselves to create more jobs. But I don't think that's the case, especially among the big corporations, where the extra cash just goes into stockholders bank accounts and upper level executives salaries and stock options anyway.

Where it would hurt the most is small business, and this is often cited in sound byte news reports. But those businesses will adjust.

	28-05-2005 00:55									#4
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What about cost of living? Would the raise in minimum wage be followed by a raise in rent, utilities, food?

	28-05-2005 01:10									#5
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It depends on how much the costs (or perceived costs) of the item in question are impacted by low wage in-state labor and what the market will bear.

A lot of fast food and retail places pay above minimum anyway, at least in California, where state minimum is $6.75 and the going rate for entry level fast-food/Starbucks type work is around $8.00

The overall impact is pretty minimal over time.

	28-05-2005 01:22									#7
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The minimum wage's impact is based mostly on how high it is versus the market wage.

$7.15 may not be above the lowest market wage for unskilled labor, and, if so, you have to ask yourself why a minimum wage is needed at all.

If the minimum wage is well above the lowest market wage for unskilled labor then you get unemployment for some unskilled labor, as employers make do without extra hands. In turn, the unemployment distorts the market wages downward for those unskilled workers who have jobs.

	28-05-2005 02:07									#8
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Oregon's is above 7.15, and it is a lot cheaper to live there than Maryland, or Minnesota

Jon Miller

	28-05-2005 02:32									#9
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The minimal wage here is 143 USD. Per month .

	28-05-2005 02:49									#10
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End result is higher inflation.

Who wants that?

	28-05-2005 02:53									#11
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It would be a good move for vendors of crap like McDonalds. It would mean that poor people, who live off their ****, would have more money to spend on it.

	28-05-2005 08:50									#12
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quote: Originally posted by Donegeal End result is higher inflation.

Not necessarily, because it simply is a redistribution of a company's earnings.

	28-05-2005 09:02									#13
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Which no company likes, hence there are fewer jobs offered for that rate of pay.

	28-05-2005 09:22									#14
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quote: Originally posted by Urban Ranger Not necessarily, because it simply is a redistribution of a company's earnings.

You need to get your economics straight, UR. The result is mainly a redistribution from consumers (some of whom are low wage workers) to low wage workers. But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal. A far better policy would be to have negative income tax for low wage workers, which increases employment, with little or no effect on prices.

	28-05-2005 09:57									#15
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quote: Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal.

So has Card and Krueger's study on this been discredited or fallen out of favor with economists?

	28-05-2005 10:11									#16
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quote: Originally posted by Shi Huangdi So has Card and Krueger's study on this been discredited or fallen out of favor with economists?

The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

	28-05-2005 10:39									#17
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quote: Originally posted by Adam Smith The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

Yep, I saw the second study and it totally ripped the Card and Krueger study apart. The way Card and Krueger measured things was ridiculous!

	28-05-2005 12:46									#18
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quote: Originally posted by Adam Smith You need to get your economics straight, UR. The result is mainly a redistribution from consumers (some of whom are low wage workers) to low wage workers. But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal. A far better policy would be to have negative income tax for low wage workers, which increases employment, with little or no effect on prices.

that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

And don't tell me companies aren't running bare minimum. My last company we were over worked, and my current company we are over worked. These companies simply refuse to hire more workers. They are trying to squeeze every ounce of productivity out of as few workers as possible.

I'm not a robot, eventually I get tired of it. That's why I change jobs every 4 years or so.

	28-05-2005 12:51									#19
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quote: Originally posted by Adam Smith But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much.

It's not that simple. Giving low wage workers a raise generally results in higher productivity.

quote: Originally posted by Adam Smith Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal.

An increase in wages for a segment of the society does not automatically result in higher prices.

	28-05-2005 16:33									#20
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quote: Originally posted by Adam Smith The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

Three percent or three percentage points?

	28-05-2005 19:25									#21
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quote: Originally posted by Urban Ranger An increase in wages for a segment of the society does not automatically result in higher prices.

For certain commodities, yes it does.

	28-05-2005 19:27									#22
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When the price of basic commodities is controlled, it stays the same.

	28-05-2005 19:29									#23
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Most countries don't have price controls.

	28-05-2005 19:49									#24
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quote: Originally posted by Dissident that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

Firms generally operate with the minimum number of employees for a given level of output. Thats part of "the all else equal ". When prices increase, the quantity demanded declines, hence the decline in employment.

quote: Originally posted by Urban Ranger It's not that simple. Giving low wage workers a raise generally results in higher productivity.

If increasing wages increases productivity and hence profits, then wouldn't these greedy, profit grubbing firms do it on their own?

quote: Originally posted by Urban Ranger An increase in wages for a segment of the society does not automatically result in higher prices.

Then where doe s the money come from to pay the wages?

quote: Originally posted by Oncle Boris Three percent or three percentage points?

The standard economic measure is called an elasticity (percentage change in x with respect to a percentage change in y), so there is a three percent decline, not percentage point decline.

	28-05-2005 21:01									#25
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Just to be painfully clear, that's a 3% decrease in overall employment, not just a 3% decrease in employment of those at the low end of the scale?

If so, then that's a pretty huge change. I didn't know the impact was that big. Previously, I didn't think a minimum wage was that big of deal, but now I'm compelled to be against it.

	28-05-2005 21:11									#26
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You were against it before.

	28-05-2005 21:12									#27
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Mildly, at least at what I perceived to be a relatively low minimum wage in the US.

Last edited by DanS on 28-05-2005 at 21:17

	28-05-2005 21:14									#28
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quote: Originally posted by Dissident that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

Or less than minimum, which is what we had to do in the last few years. Quality of service had been a problem for awhile.

What would've helped would have been the decrease in taxes at the lower end of the pay scale, as suggested, or not scaling back public services for low-income families, which took money out of their pockets that could have been used on luxuries such as dining out.

	28-05-2005 21:52									#29
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In Kansas it's $2,65/hour,... omg. I hope life is a bit cheap there.

	28-05-2005 21:54									#30
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quote: Originally posted by Solver The minimal wage here is 143 USD. Per month .

lol.. these people live on the streets then no..? How on earth could anyone pay rent with such a miserably small amount of money!