I have a friend who works a lot more than 40 hours per week at a McDonalds. And he's still barely getting by financially despite how hard he works!
Lets not forget that for every McDonalds, there are half a dozen 'Antonio's Pizza's or other small non-franchise restaraunts. They barely get by as it is. Most newly opened restaurants fail within the first three years. So when you look at McDonalds or Wal-mart and jump to the happy thought of draining their profits and doling it out to the poor workers, think of all the small businesses that will simply close down if the minimum wage was raised to a living wage. The end result would be higher unemployment and a larger poverty class.
This is so true, at my peak I had seven workers. If I paid minimum wage to them all it would have cost me in their take home alone €2800 a week - which translates in reality with employer contributions, insurance etc almost double that. That basically meant that the first 5k that came into my account every week went on staff. That's before I paid for lights, heating, mortgage on the workshop, keeping 2 vans on the road, materials, machinery maintenance, and guss who was bottom of the food chain - the proprietor - moi! The only way out was to pay the guys minimum wage, just under €10 ($14) an hour for 40 hour weeks under the table which meant I had to take cash from clients with no tax charged. This cash went straight to the staff and I was able to syphon some off. Of course this economy doesn't last and the whole thing went tits up, the staff were all let go, had no stamps for social welfare or pension contributions or even redundancy because technically they never worked for me - and mostly because of such a high minimum wage.
I hear that. A few of my friends started a small moving business after college and when I heard about everything they had to pay for and the were working 80 hour weeks and never really became profitable. Besides paying employees, Obamacare is another shot in the foot for small businesses. Obama says, 'if your employees work more than 30 hours, you have to foot the bill for their health insurance.' All of a sudden a lot of workers are working 29 hours.
And what is the basis of your 'knowledge', JJ? [edited to add, I see anecdotal evidence is your source] Because the effect of raising minimum wages has an extremely complex multi-variable outcome when you look at the actual research instead of echoing oversimplified pablum. Extensive study done in 1982 on the effects of minimum wage increases on employment. The paper is freely accessible but copy/paste protected. So for those who are overwhelmed by or uninterested in actual research, scroll down to the conclusions on pages 524-525. The simple white and black world does not exist. While some teens experience higher unemployment, older adults experience less unemployment because they are no longer competing with teenagers. Some fields lose jobs like manufacturing and agriculture but other fields of employment gain jobs. It makes sense given dollars paid to minimum wage earners recirculate in the economy with a much higher return than those same dollars would if they represented higher profits someone simply saved. While savings may be invested in the stock market that doesn't translate directly into stimulating the economy. U of Vermont Review of the Research on the Effects of Increases in the Minimum Wage found the negative effect on unemployment was very small. More studies: Minimum Wage Bill: Obama's $9 Proposal Won't Increase Unemployment It's complicated and that is why intuitive sense fails to match the research. A lot of corporations are currently sitting on large amounts of cash they cannot use until demand increases. Raising minimum wage increases demand. And speaking of that positive cash on hand, a whole lot of minimum wage employers are flush with cash and taxpayers should not be subsidizing their workforce, nor should any other charity. The point of a minimum wage is so people who work full time are not a burden on society. If you want the see the economy crash fast, let employers pay as little as they can during times of high unemployment. Demand would fall through the floor as even more assets shifted to the top. That is not an outcome good for anyone but like the tragedy of the commons, what's to stop companies from taking more and more wealth out of the commons until there is too little left to circulate. The key is a regulated balance, not some laissez faire magical market force that always results in perfect supply and demand equation. It's like all economic theories, they may look great on paper, but in reality they don't quite get that human factor variable right. Edited to add: The problem of using a narrow view based on personal anecdotal experience is such individual experiences in this case do not take into account the much broader effects. A small company may lay off two workers but within a year hire four more because the economy improves.
Watching Bill Moyers today. Apparently I missed a glaring issue with the McD budget, they left off food!
Understandable, I'm not surprised a company like McDonalds could forget about food. It's not like they serve food or anything.
What? Like here in Australia with our soaring unemployment and rampant poverty? That's just fear mongering paranoia.
Australia is one of those golden fleeces that people like to cite when talking about minimum wage. However, the methods used by the policy-makers to come up with the unemployment figures is not completely accurate of the unemployment problem in Australia. You can read about that here: Hidden Unemployment in Australia The actual unemployment rate is well over 10% and the youth unemployment in some areas is 30%. What a high minimum wage does is make low-skilled labour more expensive relative to alternate options. It decreases the demand for low-skilled workers and increases the demand for other kinds of labour or for labour-saving technology. (Instead of hiring a dishwasher for $15/hr, just buy a dishwashing machine and have the waitresses or cooks load it.) The predictable result will be a reduced rate of job creation for low-skilled or unskilled labour, and as a result a comparably high rate of unemployment among minorities, younger people and the poor. Jus remember this. Minimum wage laws don't create jobs, they outlaw them. Whenever you raise the minimum wage, you are saying, 'Every job that pays this much is now illegal.' The only two logical outcomes is to raise an existing employees pay, or fire them. Neither one of those outcomes creates jobs.
How do 2003 unemployment statistics compare here exactly? And don't a lot of countries' unemployment rates suffer from the same methodology issues as Aussie numbers do? You'd need to show two countries' unemployment rates of the same years vs minimum wage laws of the same years and the data to be able to compare the effects of one country's minimum wage to another's. Just citing some article on hidden unemployment in 2003 Aussie numbers doesn't support your dismissal of the evidence that raising the minimum wage does not have the impact on employment you claim it does. I posted a large meta-analysis showing raising the minimum wage caused a shift in employment/unemployment but had an overall positive effect. You have not addressed that research. I suggested the anecdotal evidence from a single company didn't show the actual effect of raising the minimum wage on the whole economy. More money in the hands of low wage workers gets pumped right back into the economy, stimulating it. You have not addressed that point. You cited a straw man argument of what would happen if the minimum wage was more than doubled, something no one is suggesting occur. You simply continue to assert your claims without addressing the evidence that challenges those conclusions.
I just don't see the point anymore, honestly. Sure, I could post all my studies showing minimum wage increases true unemployment in the marginal workforce and show where your studies are flawed, but in the end you are never going to change your mind, and I am never going to change mine. It's just a tiring circle that never ends. Citing walls of internet studies doesn't lend your argument anymore credence than mine, it just makes the thread boring and the. It dies quicker, which is alright with me. How about we all just get drunk? Great idea.
Ah, I see the rightwing blogosphere has a full blown attack on citing Australian figures in support of minimum wage increases. It'll take me a while to digest it, but in the meantime, I cited plenty of legitimate research that does not cite Australia and has not been responded to.
Let's see, how about believing you are the only one having a discussion when there are other people in the room? Or believing your claims are evidence based without the evidence?
The fact is that on the ground it's not a problem and our economy is sound despite his claims that a higher wage will destroy an economy. He can cite any statistic for a previous decade he likes, but our base standard of living is still higher than that of the US and plenty of 'internet surveys and studies' that he worships support this. The quality of life on the ground is simply better, with unemployed Australians receiving free medical care and welfare benefits which roughly (depending on your scheme and entitlements) equals the US minimum wage working 70 hours a week. We do that instead of spending $8 Billion a year maintaining aircraft carriers (yes, it all goes back into the economy, but through which channels is the key). And that's all I'm saying about that.
Re: this argument -- it is unfortunate. But, it's no different than the issue of the unemployed workers. When one takes the position that the low paid workers are deserving of the low pay because they're too lazy or stupid to get more training or spend the money unwisely, but does not apply the same argument to the businesses, it is disingenuous. You could just as easily say that the marketplace determined that these businesses could not compete. They did not make enough money to survive. Part of the costs are paying workers fairly -- if the business can't sustain itself by doing that then the marketplace is not valuing the business sufficiently to enable it to survive. It's a shame, and very sad, and many people will lose out on some product or service they really want. But if the marketplace doesn't support, it can't (and many would argue, shouldn't) survive.
It's also a matter of competition. The smaller fish can never compete with the big fish especially when it comes to govt grants which are as corrupt and unfair as anything. I was a small window manufacturer/installer going nicely. Then a massive German company comes in and builds a huge factory with 500 staff. The grants they got, the tax breaks they got, the bulk buying deals they got, the discounts they could give and a whole load of other factors squeezed out us little guys. It's like when Walmart opens and every little grocer closer around is forced to close. It doesn't mean that the market doesn't support food or the service is not valued - it's corporate bullying and unfair work practices (minimum wage being 1) forced on by govts. Or IKEA opens and the small furniture shops all disappear. Peole will walk by a framer's market to save 10c on a kilo of spuds in the supermarket - sad but true.
