Galbraith proposes 12 dollar minimum wage

[davidstvz]

Re: Galbraith proposes 12 dollar minimum wage

davidstvz,

Sorry, but a "permanent" wage increase IS a one-time transfer. It's effect would only be temporary until everything stabilized around it, then another wage "stimulus" would be needed again. It may take a little time, which may lead you to believe that it is continuing to act like a stimulus, but eventually everything would equalize at the $12/hour level and you'd be saying "if we can only implement a $15/hour minimum wage blah blah blah". Next thing you know, we're at $15/hr and China is still at $15 a DAY. Even more jobs lost.

Secondly, you wonder how laborers can survive on ONLY $7.50 or $8.50 or $10/hour in the US, but there are hundreds of millions of Asians, Africans, Mexicans, and others that would feel like they were part of the 1% if they could earn $7.50/hour. I'd contend that your perspective is skewed. We could argue all day whether or not $7.50/hour is a "living wage", but the answer isn't for us to say. The market has spoken and the market tells me that there is plenty of demand for my jobs at $10/hour in the US in this economic environment. Unfortunately, I'm forced to ship those to Mexico at half that rate. Funny thing...they are extremely happy to have them. Doesn't that just blow your "living wage" argument all to hell.

If someone is starving they will work for $0.50 an hour and use their days wages to buy some Ramen noodles. They'll eat them raw and then go to sleep on a park bench. They'll be extremely happy to have those wages instead of starving.

Also, cost of living is different in different places you know. Especially cost of assets like real-estate and cost of rents.

[leegs]

Re: Galbraith proposes 12 dollar minimum wage

Flintlock that's a very perceptive post.

[mesyn191]

Re: Galbraith proposes 12 dollar minimum wage

1. When you purchase clothing, appliances, electronics, food, anything... do you first make sure that it is Made in the USA?

I try to but that is pretty much a joke these days. There are lots of things with the "Made in the USA" sticker that are really only assembled in the US or only use a few US made parts. Its almost impossible to really know what is truly made in the US anymore. And no I don't mind paying more for US made goods, even if the quality is the same as the cheap Chinese stuff.

2. Do you own and operate a manufacturing business in the United States?

Nope. I'm also not a macro economist and I wouldn't be surprised if most people here aren't either, but that doesn't mean people can't talk about the subject. True?

[Raz]

Re: Galbraith proposes 12 dollar minimum wage

"Forced" to outsource. Unbelievable. Also Mexico is a pretty shitty place or haven't you heard about what is going on down there with the drug wars and even shittier-than-the-US economy they have? You're just taking advantage of desperate people to better your bottom line, which doesn't blow any argument all to hell, it just makes you come off looking pretty bad.

And you come off looking like a near total ignoramus.

You apparently know NOTHING about operating a small business. It's a ruthless world, my idealistic friend. Costs, the competition and the bottom line don't give two pinches of monkey-dung for your "altruism", and it does your employees no good whatsoever if the business folds up and dies. (But I'm sure you'd spend five to ten years saving money, then signing away everything you own for a seventy-five hour per week job just to make $25.00 per hour.)

[cjppjc]

Re: Galbraith proposes 12 dollar minimum wage

This is a good thread. Lots to be learned from reading it, for me anyway. Hope it doesn't get too nasty.

These less "fortunate" are not typically less lucky, they are often less capable. It doesn't matter how often you redistribute wealth in this case, the capable will most always get it right back from the less capable.

This sentence made me think of the idea of everything being a commodity. Wealth included. I think knowledge should be viewed this way as well. Is that maybe the reason weath and knowledge is distributed the way it is?

[mesyn191]

Re: Galbraith proposes 12 dollar minimum wage

And you come off looking like a near total ignoramus.

Nothing that you've said does anything to describe why suddenly small businesses couldn't keep running if everyone's wages went up and they started spending more at those same businesses. In particular I think its the "spending more" part that you're either not giving full consideration or ignoring.

Also $25/hr is pretty good when you consider the avg. wage is around $14/hr right now. That works out to around $24-26k a year before taxes of any sort, you know how hard it is to live on that much cash right?

[Milton Kuo]

Re: Galbraith proposes 12 dollar minimum wage

Nothing that you've said does anything to describe why suddenly small businesses couldn't keep running if everyone's wages went up and they started spending more at those same businesses. In particular I think its the "spending more" part that you're either not giving full consideration or ignoring.

You're assuming that no business will offshore its labor force. All it takes is one reasonably competent business that offshores its labor to ruin every other business that tries to hire locally and provide a decent wage. Customers in the U.S., by and large, buy whatever is the cheapest without giving very much thought to local economies or even quality of the good for that matter. American consumers want to consume gluttonously and cheaply.

So: A small business that obeys a higher minimum wage for local workers must also raise its prices. A competing small business that offshores will have a lower cost of production and can run the first company out of business through a price war. The second business can sell the product at a price that nets itself a profit while if the first business were to sell at the same price, it realizes a loss.

[mesyn191]

Re: Galbraith proposes 12 dollar minimum wage

You're assuming that no business will offshore its labor force.

They're already offshoring the labor force anyways, small or "less competent" businesses are going to get ruined no matter what even if wages aren't raised in the long run. That is why I think that out sourcing should either be made illegal or subject to heavy taxes to discourage it.

[Milton Kuo]

Re: Galbraith proposes 12 dollar minimum wage

They're already offshoring the labor force anyways, small or "less competent" businesses are going to get ruined no matter what even if wages aren't raised in the long run. That is why I think that out sourcing should either be made illegal or subject to heavy taxes to discourage it.

Offshoring is one facet of being able to raise wages in this country. Without eliminating the ability to play the wage arbitrage game, the business that pays $12/hour is going to go out of business to the competing business that pays offshore labor $1/hour. But you were specifically stating that wages could be raised right now without considering that it is the expressway to bankruptcy for some companies without legislation that protects against wage arbitrage.

As for small businesses being ruined no matter what. That is not a certainty. "Help" from the Federal Reserve is ongoing with its dollar depreciation programs. If the small businesses can hang on (a big if admittedly), there will come a day when it will be cheaper to hire American labor than foreign labor.

[oddlots]

Re: Galbraith proposes 12 dollar minimum wage

Not that it changes the big picture but, FWIW, I never shop at wallmart, will pay more for locally produced goods and prefer to buy products from high-wage countries as much as possible. There are tons of great American manufacturers that are still around in, for instance, textiles and bookmaking for example: Filson / Alden / Gitman Bros.... If we don't support the real skills behind these companies' goods then we'll have to offshore because of that regardless of price.

Costs more but the quality makes up for it: well made goods last forever.

Won't make a huge impact but I swear I'm not alone in this preference.

[mesyn191]

Re: Galbraith proposes 12 dollar minimum wage

But you were specifically stating that wages could be raised right now without considering that it is the expressway to bankruptcy for some companies without legislation that protects against wage arbitrage.

I think raising wages would be a big net benefit for the economy as a whole but yes it'd be even better if offshoring/outsourcing/wage arbitrage/whatever you want to call it were addressed at the same time.

As for small businesses being ruined no matter what. That is not a certainty. "Help" from the Federal Reserve is ongoing with its dollar depreciation programs. If the small businesses can hang on (a big if admittedly), there will come a day when it will be cheaper to hire American labor than foreign labor.

Out sourcing and the Fed's actions are driving wages down while the cost of everything goes up and the government, under any politician or party, continues to push for policies of austerity and cutting social programs and infrastructure renewal. There is no big if there. Small businesses, the middle class, and the poor are screwed unless these things are reversed.

[oddlots]

Re: Galbraith proposes 12 dollar minimum wage

Not sure that this is entirely on topic but it occurs to me that looking at the wage question in isolation actually creates a simpler but also more ultimately confounding problem than is really necessary.

My first comment was that the economy is facing a dearth of aggregate demand and that at least a higher wage would seem to start to address this. RJWR points out that margins cannot bear such an added burden. Well by the very same logic wouldn't the extension of the payroll tax holiday make sense. If it's basically a problem of inadequate flows both would seem justified no? (This is something Mosler has called for.)

And wouldn't this actually by definition give tax relief to exactly those people who actually employ others.

So how do you fund this?

Well, to my mind you mirror this with increases to capital gains taxes, a benefit that has seemed to only accelerate the dismantling of industry and so, surely, a quite worthy target. Everyone here agrees I suspect that the finance sector has become grotesquely large. Another large chunk would also agree that this growth has largely been extractive, destructive and predatory to OECD ECONOMIES AT LARGE if not - at it's worst, most destructive and fraud-propelled moments - illegal.

To my mind we need much higher capital gains taxes.

BTW Hudson's recent overview of banking that Don posted is excellent and I think underscores the real issues here:

http://www.itulip.com/forums/showthr...en-to-Now-****

[lektrode]

Re: Galbraith proposes 12 dollar minimum wage

excellent work here, dc!

.... The US went from being a nation with a relatively low minimum wage with low unemployment to a nation with higher unemployment despite still having the low minimum wage. It's european unemployment without any of the perks....

while the EU still has 'relatively strong' manufacturing base, something that is dwindling by the day in The US - without a strong manufacturing base (now that residential construction is all but dead) the situation here will be MUCH worse than EU, simply because we dont have the political will to do anything about it??? (apparently - illustrated by the issue of socsec/medicare vs "taxcuts" for FICA = MADNESS/insanity of the 1st order)

...
Nobody cares about the income inequalities Mesyn191 is concerned about and the small businesses GNK's concerned about, for the same financialization processes that lead low-income folks into the payday loan and credit traps, leave demand gaps for small businesses which can necessitate increased borrowing. ....

and creates more problems down the road, as skilled tradespeople drop out of the working class, leaving less options for keeping existing (and big ticket items at that) equipment going, leading to the consumer dropping use of said stuff (or going even deeper in the hole to replace it, vs fix it = less to spend elsewhere)

High unemployment + Low opportunity + Small saftey net

+ high/going higher fuel prices (already, this early??) = A LONG HOT SUMMER
with whats happening in oakland hinting at whats to come....

one thing is clear tho, there's still no sign of intelligent life within the beltway and wont be until the political class gets SCARED into action = why we need TERM LIMITS NOW

[lektrode]

Re: Galbraith proposes 12 dollar minimum wage

....If we don't support the real skills behind these companies' goods then we'll have to offshore because of that regardless of price.

Costs more but the quality makes up for it: well made goods last forever.

Won't make a huge impact but I swear I'm not alone in this preference.

i'm with you on this one - but even niche industries are being pressured into outsourcing/offshoring where/whenever they can - gnk's example highlights this - its simple, the desire to support Made in The USA gets stomped by desire of survival

altho the prices of goods at wallyworld, et al are too compelling to ignore (at least by those of us in survival mode)
out here we have seen the effects of the recent big box invasion and generally its been a good thing for the consumer (and most of the smaller retailers have genl'y managed to survive/thrive in spite of it) - without them (costco, walmart, target, homedepot etc) the cost of goods would have become unaffordable years ago for LOTS of people (that otherwise arent affected by the entry into the marketplace of the bigboxes)

the real problem facing retailers, IMHO, is represented by amazon/web retailing, as they cause the most disintermediation - see recent stories about target being 'showroomed' (shoppers look/touch stuff in the bricks n mortar retailer and then buy from amazon)

[lektrode]

Re: Galbraith proposes 12 dollar minimum wage

Flintlock that's a very perceptive post.

+1

and tho i'm more than a bit hesitant to agree on the issue of trade/import restrictions/tarriffs, i think we're headed there, as The US wont be able to offshore much more industrial production without intensely negative effects (read: rioting in the streets as more of the working class becomes the welfare class)

and methinks we've milked the 'knowledge economy' for all its worth, considering that The US can employ only so many highly educated people, while sending the actual production of hardgoods overseas is a recipe for disaster longer term - we cant all be rocket scientists/engineers/physicists and there's already too many 'social workers' with masters degrees - what we really need is more INFRASTRUCTURE RECONSTRUCTION and less 'hightech' plastic and silicon playthings (i-whatevahs, xboxes, lektronic tiddlywinks)