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September 1, 2014

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Letter to the editor:

Higher minimum wage costs jobs

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In her column last week on the minimum wage, “Working poor shouldn’t be forced to live on “$15,000 per year,” Rep. Lynn Woolsey, D-Calif., fails to include the earned income credit, the additional child credit and public assistance when she talks about getting by on a minimum wage, all of which can double someone’s income.

Very few workers who start at minimum wage remain on it.

To increase the minimum wage will serve to eliminate many starting jobs because of added business costs and the increased use of automation.

The last thing we need now is fewer jobs.

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  1. I agree with the letter writer. And so does every study regardless of author and persuasion ever done on the subject for all time. The higher you raise the minimum wage the fewer workers the business and/or company can employ. Less jobs. Not more. What do we need now? Jobs, jobs, jobs. Let's worry about the higher wages after we have more jobs.

    CarmineD

  2. When a middle or high demand for products and services is static, businessman and woman hire workers. Hiring is not done just because there is an increase in business over a weekend, or even a month. Business planning is much more advance when it comes to hiring.

    My point, in order to achieve high wages, demand for product and services must go up and down the supply chain. From raw materials to a finish product. As a rule, products drive service.

    You cannot have service without a product. In following products, service is what drives higher wages. At some point service must interact with products.

    You can create a product without a demand. However, you cannot create a service without a product, or raise wages without a service.

  3. Economic growth=increased production=increased profit or availability of money for operating expenses, if a business so desires.

    One minimum wage employee must produce more for the employer to hire another minimum wage employee, who will also produce more.

    40 years of stagnant wage growth, while productivity levels and profits soared. But, oh no, we can't afford higher wages.

    The business multiplies it's profits, since the first minimum wage employee produced more to pay for the second minimum wage employee.

    Additionally, the business now has two minimum wage employees to deduct from business taxes.

    The two employees haven't benefited at all. Both are still working at minimum wage with increased productivity.

    However, businesses benefit from the consumerism of the two minimum wage employees, to a limited degree since they have such limited incomes.

    I have heard this lame excuse that raising the minimum wages causes loss of jobs for decades before some of you were born. Didn't happen in any way that effected the economy significantly, even in the cyclic recession that occur.

    I agree with Future on this: "With full employment competition for workers will raise wages." That is the way it use to work. However, somewhere along the way, we haven't had full employment to the degree that we had surplus jobs to create a competition for workers.

    Outsourcing jobs seemed to change things. More workers than jobs in U.S. The balance changed, and with that change, the stagnant wages with increased productivity. Profits rose.

    This results in fewer consumers due to lack of full employment.

    Everything effects everything else.

  4. "40 years of stagnant wage growth, while productivity levels and profits soared. But, oh no, we can't afford higher wages."

    You don't know your minimum wage history. There have been at least a half dozen increases in the minimum wage. What's the results?

    CarmineD

  5. "In other words, the simplest and most basic economics says this about commodities like labor (and wheat, for example): Artificially raising the price of the commodity tends to cause the supply of it to increase and the demand for it to lessen. The result is a surplus of the commodity. When there is a wheat surplus, the government buys it. Since the government doesn't hire surplus labor, the labor surplus takes the form of unemployment, which tends to be higher with minimum wage laws than without them."

    CarmineD

  6. Horse manure! Before the recession hit we were at a full employment level of output. That means that everybody that wanted to work was working. The minimum wage has gone up steadily through the years and so has employment.

    China has a minimum wage that is determined by province. They have close to 700 million people working. In Europe wages are determined by unions. Workers get together with employers and come up with wages that work. Many European countries have extremely high wages and close to full employment. The never-ending recession has thrown everything into a tailspin but for the most part some type of wage mechanism exists everywhere.

  7. <<...fails to include the earned income credit, the additional child credit and public assistance when she talks about getting by on a minimum wage, all of which can double someone's income>>

    Making $15,000 a year does not mean one is eligible for gov't help. Maybe food stamps if children are involved and maybe a rent subsidy for housing, but NONE of this would double someone's income. I worked with a guy when I worked at the grocery store and we made minimum wage and so did his wife (who also worked for the same store, different location). Our hours varied - from 15 hrs a week to 40 hrs a week. Because we were considered "part time" - not eligible for health insurance. This couple had 6 kids all living at home (combined family). They got $200 a month in food stamps. They paid full market value for rent because they rented a house (ie $900). Plus when you add in utilities, school clothes, school expenses, doctor visits, etc. - they barely made ends meet. THe food stamps were the ONLY thing they were eligible for. Even if they got a tax refund of $8000 because of the EIC - with 6 kids that money doesn't go far.

    Minimum wage is not a living wage. If the minimum wage was higher, then there would be no need to seek gov't assistance. Only those who never had to live on minimum wage in these hard times do not undertand what it's like and they are the ones who complain like the letter writer has done.

    That EIC - doesn't Romney want to get rid of that?

  8. Go back to reading your Ayn Rand nonesense !

  9. Min wage is about 32k a year if both husband and wife work. If a couple decided they can raise 6 kids on that it is their choice but realistically they can not and the burden will be put on someone else to pay for their kids. A couple making 250k a year may only have 2 children so they can pay for the guy who has 6.
    Raising min wage also increases costs for those who earn min wage as they tend to shop in stores that are in that employee wage level. The only solution is for the worker to better him/her self and climb the wage ladder thru education and or productivity.

  10. petef: How many of us does it take to cover for an Octomom? How many does it take to cover for your couple both at min wage w/6 kids? I'd guess at least 10-20. And therein lies the problem. Too many are opting for children they will not / can not pay for and so they opt into the myriad of social welfare programs including the programs funded directly via the tax code. Add in tuition assistance, student grants, K12, anything and everything where what you pay is based on a sliding scale. Why we even subsidize their health care premiums.

  11. Here's another angle for careful consideration: If taxes were much less (NO social welfare, aide...) a family could live on minimum wage--costs would be dramatically less because prices would not include all the taxes.

  12. Good luck with your angle. The income tax system has been around for less than 100 years. Prior to that the poverty rate was close to 100%. People were lucky to make it to 60 and if you got sick it was goodbye my Coney Island baby. There are plenty of countries in the world today that have few taxes and almost no government structure. The people are killing each other to survive and people are lucky to make it to 30.

  13. Carmine asks, "What's the results?".

    The past history of minimum wage increases did not result in massive unemployment. Prices have increased, mostly adding profits, using labor costs as an excuse.

    If you are referring to the current problem, it is caused by business not hiring out of fear of the instability of the still global economic crisis.

    They are not helping the recovery.

    Business people promote the thought that they build it because they take the risks, however...

    They are taking no risks now in hiring, producing, and enabling more money to circulate in the economy through consumerism,

    Or, in reducing the need to provide assistance,

    Or, increasing the tax base.

    All they are doing is trying to maintain their lifestyles, while waiting a miracle to help them get back to making bigger profits, at no risk.

    Generalization, yes! I know there are some sincere business people out there who are actually hiring as they can, cutting other expenses, business and personal, to do their part to help our country.

    Sorry, I live in the real world, with real world experience, not facades of a magical justifications projected by bean counters.

  14. "China has a minimum wage that is determined by province"

    Slave labor without the guilt. Rise of the middle class and their expansion have led to prosperity and more pro-western business practices, including better wages.

    CarmineD

  15. "The past history of minimum wage increases did not result in massive unemployment. Prices have increased, mostly adding profits, using labor costs as an excuse."

    Explain please the reason unemployment is higher much more so, for youth, college students, blacks and latinos than others?

    CarmineD

  16. Zippy: I didn't say no government. It's not black and white, much grey ground in the middle. A question of magnitude down from Nanny State to totally self-reliant society with churches / non-profit assistance for needy. I implied fewer social welfare programs. I'm OK with TEMPORARY assistance. favor free contraception for anyone willing to keep an appointment at Planned Parenthood, school nurse, or elsewhere. (Funded by 501(c)(3) entities but with legislation allowing.) Custodial Parents that need assistance must have a feasible plan to become independent before receiving anything beyond emergency food stamps. Currently, Nevada does essential nothing for adults without dependent children so we don't need to eliminate programs there. We might even devise something to put single adults into the work force provided they have a track record of performance--good work history, good academics....

  17. Carmine DiFazio stated "so does every study regardless of author and persuasion ever done on the subject for all time."
    PROVE IT.

    Cite the research. I dare you to provide legitimate sources (Cato Institute & ALEC papers aren't legitimate.)

    From an SBI report, "Opponents of raising the minimum wage say that raising wages will "kill jobs." However, statistics show that raising the minimum fair wage standard has no significant impact on short term employment rates, and in fact, concluded that wage increases result in more jobs over the long term(28*).

    *Schmitt, John and David Rosnick. March 2011. "The Wage and Employment Impact of Minimum ]Wage Laws
    in Three Cities." Center for Economic and Policy Research http://www.cepr.net/documents/publicatio...

  18. Bob, it would take a Beautiful Mind to do the math. Increases in (minimum) wages without PRODUCTIVITY increases is inherently inflationary and costs all of us by decreasing our standard of living and accelerating the cost spiral. The cost of multi-generational welfare can be driven down by cutting "benefits." Perhaps what we're really saying is that some individuals chose not to carry their own weight and we cover for them. We need to NOT cover for them. If they are unwilling to work enough to subsist or better, they do not belong here. In the past, many were allowed to leave. Charities and churches provided for some but ONLY IF they worked to resolve their issues. Without letting individuals decide for themselves how they're going to live, we degenerate, generation after generation, until our society / nation implodes and is no more.

  19. "Cite the research. I dare you to provide legitimate sources (Cato Institute & ALEC papers aren't legitimate.)"

    Of course not. Just the studies you approve are valid.

    Answer my question: Why is the unemployment rate among youth, college students and graduates, and blacks and latinos higher, and considerably so, than others.

    CarmineD

  20. Cato is the Koch Brothers funded think tank.

    From the NY Times, June 25, 2012, 6:40 pm:

    "Cato Institute and Koch Brothers Reach Agreement"

    "As part of the agreement, the Koch brothers will drop two lawsuits they had brought to gain greater control over the institute's board. In exchange, the Cato Institute said that its longtime chief executive, Ed Crane, who had been at odds with Charles G. Koch, would retire."

    Now CATO speaks for and is funded by Koch. This is not a legitimate source of information and neither is ALEC.

  21. If a work plan requires three employees, only three will be hired. Reducing their pay does not result in four or five being hired.

    If a field of cotton requires 50 laborers for harvest, only 50 will be hired. If the laws of the land allow the laborers to be owned, then they will be slaves. If the slaves have children, then they become the property of the landowner.

    The goal of capitalism is to create wealth, not employment. Hedge fund managers do not create jobs for employees - they play casino games with the financial system and drain the profits of another person's labor into their own pockets. Then they buy elections with the profits.

    Those that take another person's wealth away through the manipulations are called executives by the privilieged. Those that borrow money from the Government to get an education are called "moochers" by the elite.

    This is capitalism 101.

  22. Headlines today: Wall St. profits soar, but jobs, N.Y. taxes drop.

    ALBANY, New York (AP) -- Although profits continue to grow on Wall Street, jobs are declining along with tax revenue that's vital to the state and New York City, according to an annual earnings and employment report released Tuesday by New York state Comptroller Thomas DiNapoli.

    http://www.usatoday.com/story/money/busi...

    Profits don't create jobs if employment is not needed to increase profits. Capitalism 102.

  23. One answer you missed. Minimum wage laws.

    CarmineD

  24. Arguably the minimum wage worker is the only employees doing real work.

  25. hookershaky: Not even close. If you've ever seen ANY worker exceeding expected performance, you've seen someone promoted, rapidly, time after time. When there is a RIF, the best performers are retained. I've seen RIF's to facilitate management getting rid of poor performers--without having to write up poor evaluations, disciplinary actions, union grievance interference.... Shortly after a RIF, and sometimes during, management is accepting applications for very "similar" positions.

  26. Carmine,

    "Explain please the reason unemployment is higher much more so, for youth, college students, blacks and latinos than others?"

    Because the young people lack experience and employers don't want to invest in training when youth are still in a mental mode of mobility.

    Blacks and latinos may lack the education necessary, and also require the investment in training.

    Both groups require and employer to invest in them, and fear the presumed lack of commitment to the employer.

    Older worker's often have prior education and experience, and require less investment. They also tend to have families and the need to support more than the worker alone.

    Employers set priorities and their level of risk based on their assumptions.

    The number of positions that exist are too few for the number of applicants, so priorities are a result of risk, cost, plus experience and reliability of an applicant. Drop outs need not apply.

    A young person may have a degree, but what they majored in may also tell if they are qualified for the work they apply for. If not, the degree means little.