Democrats Again Trample Poor for Political Gain
Politics
| June 20, 2006
| Tim
I see the Democrats are again trying to take poor people, who are already living on the edge, barely getting by, and take away what little they have for naked political gain:
Dems want to force a vote on hiking the $5.15-an-hour federal minimum wage, which is meeting resistance from the GOP leadership. This may be an election year splinter issue for Republicans--some may revolt and move to get the issue to the House floor.
Why do Democrats hate the poor so much? Poor people are just trying to get by, trying to rise out of poverty, and here come the Democrats, scheming to take away their jobs and training and leave them unemployed, unemployable, and dependent upon government aid. It's unconscionable!
(It's particularly ironic that this bill should be touted by Jessie Jackson, since an increase in minimum wage is shown to shift jobs away from young black men and toward upper-class white teenagers! But hey, at least he's benefitting...)
Think, my friends: If minimum wage laws worked, why couldn't we just raise the minimum wage to $100,000 and make ourselves all rich? Right: We'd see inflation and massive unemployment. Economists have known for decades that minimum wage laws produce unemployment -- and hurt the poor most! And worse, for many people, these jobs are the few first stepping-stones which might help them rise up the employment ladder, the first chance to prove they can be trusted, and learn what it means to work, and get a taste for something more. But Democrats keep trying to yank away that ladder, leaving them stranded below with no way out except to depend upon the handouts Democrats promise them!
Certainly, most voters don't understand this (thanks to the media, which keeps them generally ignorant) -- but I can't for a moment believe that people who have spent their lives in politics and studying the economy -- namely the Democratic supporters of this bill, guys like Ted Kennedy -- would be similarly uninformed.
And either way, it's damning: Either they know full well that they're going to hurt the poor, or they care so little about the economic impacts of their action they've never bothered to do even minimal research to find out if their actions will help or hurt the most vulnerable among us.
The link I've supplied, for example, points to a mountain of studies and evidence: "Minimum wage reduces employment", "minimum wage reduces employment most among black teenage males", "minimum wage helped South American whites at the expense of blacks", "minimum wage hurts the unskilled", "mimimum wage helps upper income families", "minimum wage encourages employers to hire illegal aliens."
While Democratic voters may simply be uninformed, I've come to the inescapable conclusion that Democratic leaders SIMPLY DON'T CARE about hurting the poor -- or worse, I fear, may even be trying to hurt and impoverish poor people because the vulnerable fall for their lies and vote for them. They *pretend* to care for the poor, while pushing them into crime and misery, in exchange for power and wealth, padding their expense accounts, basking in the praise of like-minded peers, and buying mansions on Martha's Vineyard with the proceeds they've earned from impoverishing the weak and vulnerable.
They are, frankly, everything they accuse their opponents of being.
Howard Dean: Our moral values, in contradiction to the Republicans', is we don't think kids ought to go to bed hungry at night.
No Howard, your party clearly doesn't.
Think, my friends: If minimum wage laws worked, why couldn't we just raise the minimum wage to $100,000 and make ourselves all rich? Right:
Theres a distinct difference between a $6 minimum wage and a $50 minimum wage.
I'll give a model which is admittedly oversimplified.
Economic efficiency determines what a supportable minimum wage is. If someone produces $10 worth of value an hour and demand for labor is fairly inelastic (which it is in the absence of offshoring and illegal immigration) then a person could be paid $6 or $7 or $8 and still keep their job.
Minimum wages, within reasonable limits, encourage businesses towards greater efficiency, and replace unskilled jobs with skilled jobs as your studies clearly show. In the short term, this is bad for unskilled workers who lose their jobs. In the long run, with proper education and training, it can push for an economy which relies on more highly paid skilled labor and efficient technology as opposed to cheaper, labor intensive industries.
But I agree, that this isn't what Howard Dean is claiming to sell at all.
Theres a distinct difference between a $6 minimum wage and a $50 minimum wage.
Yes, there is. Look at the wages being paid by most low-end jobs: they're already higher than the "minimum" wage. This tells us that the current minimum wage isn't doing much harm. So even though I'm opposed to the minimum wage, I don't have anything much against a $5-or-so setting, since it has almost no impact.
Likewise, modest raises in the minimum wage increase unemployment only modestly, so, though I'm disgusted that Kennedy and Jackson would hurt the poor at all for political gain, I'm somewhat comforted that the damage wouldn't be nearly as bad as for a "living wage."
So the biggest difference between a $5/hr minimum wage and a $100,000/year minimum wage is only the amount of harm done. There's no magic discontinuity (cut-off-point) at which the minimum wage flips from being "harmful" to "helpful". It simply doesn't hurt as much when the wage is small.
Minimum wages, within reasonable limits, encourage businesses towards greater efficiency, and replace unskilled jobs with skilled jobs as your studies clearly show...
No, studies show minimum wage laws cause unemployment in the long run (even more so), not just in the short run, as you would have it.
Take the studies on South Africa, which demonstrated that rich whites benefited from a high minimum wage at the expense of poor blacks. These laws were instituted in the 1950s but were still hurting poor blacks decades later, increasingly so. The passage of time only allowed the effect to accumulate, continually raising unmployment among the poor, until you had whole generations trapped in poverty and crime, parents unable to even give their children an idea of what it might have been like to have a job.
In the long run, with proper education and training, it can push for an economy which relies on more highly paid skilled labor and efficient technology as opposed to cheaper, labor intensive industries.
No, you're wrong: it works the opposite way around. People who find themselves chronically unemployed don't then suddenly one day magically "leap" into highly-skilled professions. Instead, they, like the rest of us (barring having some well-connected friends) have to climb that lowly ladder. By raising the lowest rung, you make it harder for people to climb up from their current situation. The higher you raise it, the fewer people will be able to grasp it and climb out.
Just one example, from the previous citation:
Worse, the lowest wage earners, stereotypically young unskilled African Americans in high crime areas, are priced out of the job market because any employer that hires them takes a 'loss' every hour they are on the job because the employer is forced to pay them more then he/she believes their labor is really worth. Eliminating these 'entry level' type jobs also eliminates opportunity for future advancement and skill learning.
You cite "education" as being helpful for moving ahead. True, but in real life, most education that leads to promotion is simply experience.
And even when we're talking about getting more formal education, most people who get a degree have to pay for it somehow. That means either "working your way through school" or having a relative or friend help you. But when many poor are unemployed, and everyone you know is poor, that's also less likely to be available.
And even if you imagine government is the magic solution to this -- it will somehow train people who are chronically unemployed to be computer programmers and X-ray technicians -- the money for that must come from a robust economy -- which you won't have when you have 10% or 20% unemployment.
Finally, though I can only cite my own experiences, it's been my impression that people who have worked also apply themselves more avidly to their studies. If that's true, it makes your scenario all the more unrealistic.
Ryan, if your argument was correct, it still would make sense to raise the minimum wage to $100,000 or more. Sure, in the short run there'd be some unemployment, but in the long run, it would disappear again and we'd all be doctors, tort lawyers, actors, VPs and CEOs.
Besides, everyone knows the real answer is for us to all quit our jobs and sign up for Quixtar. Or something Xango-related. ;-)
Granted, I'm not an economist, and it may show. However;
Look at the wages being paid by most low-end jobs: they're already higher than the "minimum" wage. This tells us that the current minimum wage isn't doing much harm. So even though I'm opposed to the minimum wage, I don't have anything much against a $5-or-so setting, since it has almost no impact.
We're almost in agreement here. However the data you've presented indicates that people aside from just those earning exactly the minimum wage are affected by the minimum wage. The skilled worker who can fix labor-saving technology is in direct competition with the two or three workers who would have done the job by hand before. Just as the industrial revolution reduced wages in the short term but allowed for increased affluence in the long term, economies which favor labor-saving devices will permit the average wage to rise without causing inflation. As I understand it, the efficiency of an economy needs to increase for wages to rise without inflation.
Take the studies on South Africa, which demonstrated that rich whites benefited from a high minimum wage at the expense of poor blacks. These laws were instituted in the 1950s but were still hurting poor blacks decades later, increasingly so.
There's a step here being edited out to make this argument. How do minimum wages benefit 'the rich', 'the upper class' etc? I don't ask this rhetorically. Under your worldview, minimum wage laws shouldn't benefit anyone, right? Or have I misread you? Shouldn't rich whites benefit from cheaper labor and be against a minimum wage? It means cheaper help to work the fields, more employment, etc. So why are minimum wage laws found to benefit those with more wealth, education, etc. even in the US?
You've made the claim yourself. Why do you think it's true? My best guess, if I had to make one, is that you're saying the benefit to middle class workers are entirely from decreased competition, and efficiency gains play via investment in technology play no role. Is that an accurate summation?
No, you're wrong: it works the opposite way around. People who find themselves chronically unemployed don't then suddenly one day magically "leap" into highly-skilled professions. Instead, they, like the rest of us (barring having some well-connected friends) have to climb that lowly ladder. By raising the lowest rung, you make it harder for people to climb up from their current situation. The higher you raise it, the fewer people will be able to grasp it and climb out.
I'm not talking about magic. I'm talking about government sponsored training. Perhaps tax credits for businesses who train and employ workers who have been chronically unemployed.
A comparison of black to Asian unemployment is revealing. In the United States, Asians tend to attain higher levels of education than blacks. Thus minimum wage laws are relatively unimportant to Asian Americans. Consequently, Asians are able to attain unemployment as low as the 2-3% range. For Asians aged 16+ the unemployment rate was only 3.3% in 2005. For Asians in the 20-24 age group unemployment was 5.1%. These figures are only a fraction of the unemployment rates experienced by blacks in 2005. There is no reason why white, Hispanic, and black Americans cannot also reach the 2-3% range of unemployment.
http://www.mises.org/story/2130
Most polititians favor 'workfare' or government support for programs which allow people to be employed and increase their wages without spoiling the work ethic or creating the other problems associated with welfare. Do you think that poor blacks couldn't possibly be trained to do the jobs that whites do?
From my time in the Philippines, it seems that businesses that had access to cheap labor used that labor in a fairly inefficient manner, with chronic overstaffing and no pressure to coordinate schedules for optimal officiency. This wasn't just my opinion (which I wouldn't rely on), but also the assessment of the managers in my organization.
the money for that must come from a robust economy -- which you won't have when you have 10% or 20% unemployment.
The efficiency of the economy has increased dramatically due to increasing automation in business.
Ryan, if your argument was correct, it still would make sense to raise the minimum wage to $100,000 or more. Sure, in the short run there'd be some unemployment, but in the long run, it would disappear again and we'd all be doctors, tort lawyers, actors, VPs and CEOs.
I assume you're kidding here. It'd be a lot easier to train someone to be a $25,000/year mechanic than a $100,000/year doctor. The amount that the minimum wage can be raised without being counterproductive (via inflation) is linked to efficiency gains in the economy. I don't claim to know what a good level is, as I'm not an economist. Perhaps the current level is too high. I'm no fan of the 'living wage' argument. I'm simply arguing there are long term benefits (as well as costs) of a wage floor such as replacing untrained labor intensive industries with higher paid, more efficient ones. And that this would benefit from government sponsored training and severe limits on immigration.
Besides, everyone knows the real answer is for us to all quit our jobs and sign up for Quixtar. Or something Xango-related. ;-)
Lol. If another Quixtar salesman approaches me in a resturaunt, I'm going to smack them. In a loving, pacifistic way, of course.
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Think, my friends: If minimum wage laws worked, why couldn't we just raise the minimum wage to $100,000 and make ourselves all rich? Right:
Theres a distinct difference between a $6 minimum wage and a $50 minimum wage.
I'll give a model which is admittedly oversimplified.
Economic efficiency determines what a supportable minimum wage is. If someone produces $10 worth of value an hour and demand for labor is fairly inelastic (which it is in the absence of offshoring and illegal immigration) then a person could be paid $6 or $7 or $8 and still keep their job.
Minimum wages, within reasonable limits, encourage businesses towards greater efficiency, and replace unskilled jobs with skilled jobs as your studies clearly show. In the short term, this is bad for unskilled workers who lose their jobs. In the long run, with proper education and training, it can push for an economy which relies on more highly paid skilled labor and efficient technology as opposed to cheaper, labor intensive industries.
But I agree, that this isn't what Howard Dean is claiming to sell at all.
Posted by: Ryan on July 2, 2006 03:45 PM