Sunday, February 11, 2007

Got to Help the Poor

And by doing so hurt the poor. Good work minimum wage.
Why is there such thing as a minimum wage? Should it not be up to the business to determine the balance of a wage that will keep employees happy and keep prices low for customers?

22 comments:

Anonymous said...

That's still a minimum wage, it's just a minimum wage of zero. It's not like people get a choice of whether they want to work or not; they work or they don't eat. So they'd have to work for $1 an hour if that's what everyone was paying. And yes Wal-Mart pays more than minimum wage- so maybe they'd have to pay $1.25 to get enough workers.

Diatribe said...

So you believe businesses would screw over their employees to make more money?

Anonymous said...

If they actually made money by doing so? Sure- isn't the entire point of the free market that you assume companies will act to maximize profit, and then you use regulation and public opinion to fix things so that profitable actions are also beneficial to the public? Yes I'd expect them to do that if it was profitable.

Diatribe said...

You know business owners have family members right? They are not these single guys or women who live in a bubble. There would be consequences for not paying employees enough money.

Anonymous said...

Yeah, I guess I should have defined my terms a little better. I don't consider getting your windows smashed with a brick or getting spit on in the supermarket to be profitable; I should have included that in my definiteion.

However, I don't think the CEO and board of directors of Target go to the local supermarket. Indeed, I bet that a majority of the upper management of most multinational corporations that hire people in the US never meet the people they eploy socially (if they even live in the US at all).

Anonymous said...

It seems to me that the compaines least likely to pay just the minium wage are the facelss multinational corporations.

Anonymous said...

Sure- like I said, they're likely to pay 10% more than the minimum wage, WHATEVER THAT WAGE IS, because they can afford it in orer to get better workers. But as I said, $1.10 vs $1.00 is still a problem for workers.

Diatribe said...

Example - A CEO has a brother who has a son that is 16 and wants to work at Target part time.
THere are all kinds of connections like this that would be even more reason to pay employees a fair wage. It is just bad business to not keep the employees at some level of happyness. The fact is you dont trust/believe in people. You think big goverment is the always the answer. Goverment always knows better than individuals. People if left along will make stupid decisions that hurt others. I have no idea how civilization worked before the era of big government.

Anonymous said...

Before the era of big government, the economy was made up of people, and I DO believe in people. If the local blacksmith is being too much of a jackass with his prices, his wife gets snubbed at market and the local tavern won't serve him, and things get sorted out.

But corporations are NOT people, and the decision are made by boards of directors rather than individuals, and I don't believe that they will go out of their way to be moral when it hurts their competitiveness in the market- if they did, after all, they would go bankrupt, according to the underlying concept of free market competition.

Now, if you want to argue that our society or employee morale will punish companies which pay too low a wage, therefore making such a practice unprofitable, then I'd be interested to hear your arguments. But if you're saying that corporations will act in unprofitable and uncompatetive ways just to be moral, yet will still succeed in the marketplace and not be replaced by less moral and more competitive companies, then I think you're in denial about what the free market really means.

Anonymous said...

Do you honestly believe that companies set the wage they pay for the empolyees in a free market?

Anonymous said...

They don't right now; I thought that was what diatribe was advocating for.

Anonymous said...

In a market without minimum wage the value of labor is determined by the market not the corporation.

Only in cases where monopolies exist can corporation pay less then the market value of labor. In that case, i would say the market is not free.

Anonymous said...

I agree; I'm just not sure that the value of labor in this country, given automatiziation and outsourcing and such a huge worforce, is at least equal to a living wage. Remember: competition and a free market work very well at driving prices DOWN while increasing qulaity. In a competitive labor market, driving prices down means lowering wages.

Anonymous said...

Companies that sell to the poor, which are likely to the employ the poor, would go out of business if they do not pay the poor enough. For the obvious reason that the poor would be unable to pay for those products.

Anonymous said...

So your argument is basically, if every company in the country paid their employees twice as much, they'd all make twice as much profit? Weird then that I don't see them doing that.

Certainly the economy woul tank if everyone didn't pay their employees enough to buy the products they make, but why do you think that neccessarily means companies would pay people more? Afdter all, the first company to boost their wages paid doesn't get any more money; the grocery store where their employees shop gets more money, the company that pays them more gets screwed and goes out of business.

Anonymous said...

False. The company that begins to pay their employees more gets better quality applicants and therefore better employees. This will lead to a better product which some consumers would be willing to pay for.

Anonymous said...

That's a nice theory, but I don't think I care how competent the stock boy in the back of Target is. I might care if he was efficient enough that Target lowered their prices, but if they have to pay him more, then they won't do that either.

But either way, this seems to be a silly statement: you're saying that a free market will work to INCREASE overall prices?

Anonymous said...

False on both accounts:

Stock boys that care about your problem are more likely to go to that shelf in the stockroom that they think they saw your item even when the database indicates the store is out of that product. Also they are less likely to get distracted talking to other coworkers while searching for your item. In this way, if you’re interested in feeling like the staff made a thorough effort in trying to find your product and did so in a timely fashion you might be willing to pay $.50 more for that product.

Target has been able to take market share from Walmart using this model of customer service. Here comes the point where free markets create value. In places were Walmart is the only retail outlet those consumers interested in better service are unable to express that value differentiation. They must shop at Walmart. Introduction of competing retail outlet stores enables consumers to place more value on a Target store providing incentive for that corporate model to pay their employees more as a way of converting of this value into profit. One might argue that the overall level of value has not changed, but what can be said is value can be differentiated allowing different consumers wants. This has the side effect of providing a way for some employees to be paid more by providing value others are unable to or unwilling to provide.

Minimum eliminates this employees ability to differentiate themselves.

Anonymous said...

Minimums obviously don't remove that ability for employees to differentiate themselves, since as you've said, all the big chains pay more than minimum wage.

I still feel like, though I certainly agree with you that some companies will be willing to pay more for good employees, you haven't demonstrated why they would neccessarily have to pay a living wage.

Anonymous said...

I'm combining quotes from two different posts here.

"The company that begins to pay their employees more gets better quality applicants and therefore better employees."

This argument works in the corporate world, not in the world of minimum wage workers. At Walmart, it maybe means that you have more high school kids and high school dropouts applying, but I doubt $.50 or even $1.50 more per hour is going to be bringing in any higher quality applicant.

"In places were Walmart is the only retail outlet those consumers interested in better service are unable to express that value differentiation. They must shop at Walmart."

They could have expressed it by shopping at the mom and pop store that went out of business once WalMart moved in.

"Stock boys that care about your problem are more likely to go to that shelf in the stockroom that they think they saw your item even when the database indicates the store is out of that product. Also they are less likely to get distracted talking to other coworkers while searching for your item. In this way, if you’re interested in feeling like the staff made a thorough effort in trying to find your product and did so in a timely fashion you might be willing to pay $.50 more for that product."

Maybe if they charged $.50 more on a per case basis. We all know that would never happen. That extra $.50 is tacked on across the board whether you asked for the help or not.

Anonymous said...

"Minimums obviously don't remove that ability for employees to differentiate themselves, since as you've said, all the big chains pay more than minimum wage."

In fact what they really do is eliminate the job entirely. Since you fix the value of basic labor you force employers to find other non-human labor ways to accomplish the task that cost less. The higher you push minimum wage the more cost effective it becomes to adapt a non-labor method such as a machine. This is how minimum wage eliminates jobs.

That being said I take your point that companies are free to differentiate based off of some base line determined by the federal government.

"I still feel like, though I certainly agree with you that some companies will be willing to pay more for good employees, you haven't demonstrated why they would neccessarily have to pay a living wage."

As you said earlier:

"Remember: competition and a free market work very well at driving prices DOWN while increasing qulaity. In a competitive labor market, driving prices down means lowering wages."

A reduction in price of product also means a reduction in the living wage.

Provided there is no coercion, at the end of the day, the value of one's labor is determined by the market. The market also determines the price of those things needed to get by on a living wage. Built into the cost of essential items, paid for by a living wage, is the labor needed to produce them. Businessmen interested in manipulating labor costs by reducing wages do so with the intent of reducing the cost of their product which the market will demand is reflected in the price. Reduced cost of essential items brings down the amount needed for a living wage.

At the end of the end of the day, businessman refusing to pay the actual living wage will find it impossible to hire anyone. This is the case because the wage he pays will not be enough to prevent laborers from starving to death. The laborer must make the decision to continue doing grueling manual labor and die, or simply die. Practically speaking most everyone is going to pick die or more likely, go over to that other manufacturing plant where the living wage is paid. This will put the businessman paying below a living wage out of business since he will be unable to produce any goods.

Anonymous said...

"The higher you push minimum wage the more cost effective it becomes to adapt a non-labor method such as a machine. This is how minimum wage eliminates jobs."

I definitely agree with you on this point, this is areasonable argument against minimum wage, but I think a different argument than the one we're currently having. I would ask, though, how bad is the unemployment rate right now even under minimum wage?



"Businessmen interested in manipulating labor costs by reducing wages do so with the intent of reducing the cost of their product which the market will demand is reflected in the price. Reduced cost of essential items brings down the amount needed for a living wage."


If this were true, you could buy a pair of Nike's in Vietnam (where they are made) for 75 cents, which is what the workers who actually make the shoes can afford to pay for them. But of course you can't; Nike does the manufacturing there, but sells the shoes here, where wages are high and they therefore make more money. If overall wages dropped by 80%, let's say, why would companies start selling their products here for 1/5 the price they could get by shipping them to Japan, Gemrany, England, or anywhere else with a higher average wage?


"At the end of the end of the day, businessman refusing to pay the actual living wage will find it impossible to hire anyone. This is the case because the wage he pays will not be enough to prevent laborers from starving to death."

Not at all. Perhaps living wage is a misnomer here, since the alternative to it isn't death. The alternative is to have a standard of living drastically below that which we in America, under a minimum wage, currently enjoy. after all, there are plenty of factories in third-world countries that pay nickels and dimes an hour, and have no problem at all finding plenty of workers, because even that little bit helps when you're living in a one-room hut with no heating, little food, and plenty of parasites.

If we lived in a closed economy then what youu're saying would make sense, but as long as some othercountry pays a higher wage, companies can ship their products there while countinuing to pay lower wages to employeees wiht a lower standard of living somewhere else.