Minimum Wage

A constant battle in the war for votes, the Federal Minimum Wage has been brought up time and time again.

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled to a minimum wage. Premium pay at a rate of not less than one and one-half times the regular rate of pay is required after 40 hours of work in a work week.

Current rate: $5.15 an hour

Current Politics[]

http://www.aflcio.org/issues/jobseconomy/overtimepay/ "In 2004, Bush enacted the biggest rollback of overtime pay rights since passage of the Fair Labor Standards Act (FLSA) in 1938, with regulatory changes that robbed some 6 million workers of the right to overtime pay. Congress repeatedly tried to block Bush’s overtime take-way with six bipartisan votes and millions of workers wrote their lawmakers in opposition to Bush’s overtime take-away—but the Bush administration implemented it anyway.

During a 2004 congressional hearing on the overtime rule changes, Ross Eisenbrey, vice president of the nonprofit Economic Policy Institute, concluded, “All in all, the rule means longer hours and less pay for millions of workers.”

This year, Bush will push for new legislation to allow employers to substitute compensatory time off for time-and-a-half overtime pay. The White House also is likely to push a so-called “flex-time” bill to replace the 40-hour workweek with an 80-hour, two-week pay period.

Both proposals would force employees to work longer hours for less pay, unions and other workers’ advocates say."

Republicans in the House of Reprensentatives voted for an increase in the Minimum wage to $7.25/hr over 3 years.H.R. 5970 Estate Tax and Extension of Tax Relief Act of 2006 Democrats in the Senate blocked passage of the bill, the bill failing to pass, 56-42.

Pro Minimum Wage Increase[]

While minimum wage may be enough to satisfy the needs of a student working part time, or a college student home for the summer, it is not enough to support an adult with a family.
There are some working families living in poverty
Many minimum wage earners are senior citizens forced back into the work force because cost of living increases have outstripped their Social Security and/or pension benefits. These are people with a "skill" but who are considered a liability by employers of skilled people. They have to resort to unskilled jobs in order to afford basic necessities. Since the minimum wage's real value is as low as it has been since the fifties, it doesn't buy much for anyone. It's ironic that some seniors are making as much in real dollars as they did in the fifties.
Raising the minimum wgae improves the economy by placing more spending dollars with those who would use it buy products that drive the economy.
Employers will generally pay unskilled workers the lowest amount they can, often at a level that doesn't make it worth to work for a first-world nation citizen. Illegal-immigration supporters will claim that U.S. citizens will not work unskilled jobs, and that is because they cannot support themselves and/or their families while working one or more of these jobs. Illegal immigrants support their families, in many cases, while the families are still in their home country where a dollar goes much farther. The combination of low-minimum wage and lax law enforcement, causes a labor supply/demand condition that encourages illegal-immigration from countries with a lower standard of living.

Anti Minimum Wage Increase[]

Minimum wage inhibits the employer and employee's freedom to make a contract suiting them.
If businesses (especially small businesses) had to suddenly pay their employees significantly more, they might have to either lay off employees or go out of business. Thus, raising the minimum wage has the potential to increase unemployment, which may be a worse outcome for many employees than low pay.
In order to increase wages, businesses in some sectors could simply pass the cost on to the customers. This may negate some of the alleged benefits of the increased wage level, and would also be detrimental to consumers of markets affected by the increased wage levels.
Increasing the minimum wage may have a negative impact on the natural economic forces which encourage workers to acquire skillsets that result in higher wage levels.
Increasing the minimum wage allows the state government to set wages by allowing politicians to both ask employers for campaign contributions in return for holding down increases in the minimum wage and to require unions and lower wage employees to vote the proper way in return for raising the minimum wage. This will lead to both dependance and corruption.
Increasing the minimum wage only benefits those workers who are already above that level of productivity because the minimum wage is a "wage floor," or, in more simple terms, is a hurdle over which potential employees must jump (in terms of hourly productivity) in order to be legally eligible to be employed at the wage level for which their level of personal productivity qualifies them. Minimum wage laws make it illegal to employ the least productive workers, since any employer who employed them would have to lose money to do so. This in turn lessens opportunities for unskilled laborers to secure on-the-job training, etc. Meanwhile, those already employed benefit because entry into their market niche is made more difficult, resulting in less competition, and marginally higher wages for those who can keep their jobs.

Minimum Wage Reform[]

The economic calculation that minimum wage will result in job reduction is flawed. It assumes that people are (1) rational, (2) primarily interested in money, and thus (3) competitive with companies about wages. If any of these are false, and they all are to a great extent, then the effect of minimum wage may be different than conceived. People never completely rational and informed, and they are often rationally more interested in other goals that money. Making companies compete for their service is not high on their priorities, so long as they can get a job. The effect is that companies are able to pay wages below their demand but at or above employee supply, taking the extra welfare that would normally go to the employee.

What this means is that modest minimum wages would not distort employment, because employers are already paying below what they would be willing to pay otherwise. It would take a substantial rise in the minimum before a company would find it profitable to lose even one worker.

On the other hand, minimum wage does have a serious problem. A significant number of minimum wage reciepients are teenagers, even from middle and upper class [1]. The teenage population naturally has higher unemployment rates than the adult population. Rather than do away with the minimum wage, however, it would make more sense to scale the minimum based on age, from a significantly lower minimum (or no minimum) for 16+ year old workers to a living wage for those in their twenties and above. -Jjensenii 18:41, 25 July 2006 (UTC)

Amendment: Also, it makes more sense for the minimum wage to be tailored to each particular area. What is sufficient in Alabama may be too low in New York City, and giving New York City wages outside NYC will cause inflation. Splitting the difference will only get you the worst of both, so tailoring the MW by local area seems like the best option. -Jjensenii 22:45, 25 July 2006 (UTC)

State Minimum Wage[]

About half the states have their own minimum wage laws. Where Federal and state law have different minimum wage rates, the higher standard applies.

Alaska[]

$7.75 an hour since January 1, 2010

California[]

$8.00/hr

Kansas[]

$2.65/hr Premium pay after designated hours: 46 hrs/week

Pennsylvania[]

For businesses with 11 or more employees:

By Jan. 1, 2007 the minimum wage must be raised to $6.25 an hour
By July 1, 2007 the minimum wage must be raised to $7.15 an hour

For businesses with 10 or less employees:

By Jan. 1, 2007 the minimum wage must be raised to $5.65 an hour
By July 1, 2007 the minimum wage must be raised to $6.65 an hour
By July 1, 2008 the minimum wage must be raised to $7.15 an hour

City Minimum Wage[]

Chicago[]

Chicago city council passed 35-14 a living wage bill. Mayor Daley is set to veto it, but with 35 votes, the council can override the veto.

It will start July 1, 2007 at $9.25 an hour and $1.50 in benefits, then end July 1, 2010, with $10 an hour and $3 in benefits. After that, the "living wage" would be raised annually to match the rate of inflation.

Is Minimum Wage a Livable Wage?[]

The Minimum Wage is just that, a minimum that an employer must pay that prevents them from taking advantage of their employees. It is not a "livable wage," but a wage for those getting their first job. A high school student flipping burgers doesn't require a livable wage, but only a fair wage.

Unfortunately, in the U.S., it isn't just teenagers flipping burgers. If the only jobs in some communities are service industry and the jobs won't pay much more than minimum wage, what incentive is there for a family in poverty but to put their hand out for welfare or to resort to crime? If it isn't a livable wage, it should be.

increase minimum wage doesn't solve anything, employers will just raise the price. 70.48.250.45 21:04, 13 July 2006 (UTC)

I don't remember McDonalds and/or WalMart raising prices when the minimum wage increased last time. Do you have stats on that claim? They already don't give much benefits, so it's not like they are going to cut them.

You are right, it's not a livable wage, and not all burger flippers are teenagers, but if you are a burger flipper and you haven't progressed beyond that and you have a family to feed, then you are a failure, why should we reward mediocrity and failure. To raise the minimum wage higher than the market will bear is to cause businesses to do one of two things, lower costs or raise prices. The way they lower costs is to fire people, use cheaper supplies, etc. or they raise prices for everyone, both of these results hurts the very people you are trying to help. --Yoda133113 16:48, 11 January 2007 (UTC)

I have never seen statistics that show a loss of jobs when the minimum wage is increased. If people who spend 100% of their paycheck taking care of themselves and their families have more money to spend in the economy, that economy gets more dynamic because demand increases. If WalMart wants more people to spend money in their stores, they should make sure that people can afford to shop in their stores. And that means their employees, their suppliers and the surrounding communities and economies.

Let's see what happens. It passed the House. Chadlupkes 17:00, 11 January 2007 (UTC)

Well, according to this graph on Wikipedia, yes unemployment does go up, at least for workers with less than a high school diploma, the workers most likely to be effected. This is from the article on minimum wage. And, yes there has to be enough money in the market place for people to afford your product, however if you have to raise prices to raise the amount of money, then you have just made a situation where people need even more money to afford things. The labor market is similar to any other market, and as such, if you try to raise a minimum wage above the equilibrium wage, then there are going to be negative repercussions. If raising the minimum wage is the solution to poverty, why don't we raise it really high like to $15-20 an hour, or heck lets go all the way to $100 an hour, that should solve all these problems, but we all know that this is ludicrous. In addition to that, why do we need a Federal minimum wage, after all a livable wage should be different in different states, and because of that, there are different minimum wages in different states (29 states have a higher minimum wage than the current Federal one), leave this to the states if you must have a minimum wage at all. --Yoda133113 22:12, 11 January 2007 (UTC)

Good points, and thanks for pointing to that graph. The statistics are pretty scattered. From that graph, it seems like education is a key issue. So let's do what it takes to get people a high school education.

I have heard that in order for WalMart to provide all of their employees health care, they would need to add 1.25% to the cost of their items. So something costing $20 would now cost $20.25. I can afford that, and I'm willing to pay it. I guess I'm in the minority. At least unless we could actually do a poll with that question.

Let's look at the numbers. Wal-Mart earned $11.231 Billion dollars in 2006. They have 1.8 Million employees. If Wal-Mart was employee owned, and divided their profits among those 1.8M, each person would have gotten $6,239.44. An increase in the minimum wage from $5.25 to $7.25 would mean an annual increase in pay from $10,920 to $15,080. The difference is $4,160, which is less than the profit distribution I talked about. And even if they gave all the employees a bonus of $4,160, they would still have 3.743 Billion to pass on to the shareholders.

Blah, Blah, I know. The shareholders are more important than the employees, at least in our current capitalist culture.

The Labor Market is only similar to other markets if you consider it valid to treat people in the same way that you treat cow meat or steel. Is it really a good idea to set a policy that it's best practice to minimize the amount of money that we pay people and maximize the profits we get, just because we can? I thought Thomas Jefferson changed the priorities of society from the original thoughts of John Locke, from "Life, Liberty and the pursuit of property" to "Life, Liberty and the pursuit of Happiness." In my mind, people are special, and much more important than what the electrons say in a bank's computer or the amount of area on a map that we can color any particular color. Capital is not superior to Labor. Capital is dependent on Labor to exist in the first place. And my kids are a lot more important than the size of my bank account. Maybe that's why I never have any extra money...

As far as the states having control, sure. That works for a while. But when you have a majority of people around the country wanting an increase in the minimum wage, Congress has to act or they lose their seats to people who will follow the will of that majority. How many states voted to raise their minimum wages in 2006, either by initiative or through the legislature? That's another reason People are superior to Capital. Capital can't vote. I think that's because our Constitution starts with "We the People". Chadlupkes 22:57, 11 January 2007 (UTC)

If you (the society, or the Government) want to tell me how much to pay my employees - than pay my bills as well. Illusion behind legislating minimum wages is in the assumption that when paying more their employees, capitalists would take less for themselves.

Statistics show that majority, I heard yesterday on NPR that about 70%, people paid minimum wage are high school students working part time jobs.

If there are families trying to live on the minimum wage salaries, they can do it only because of extensive government welfare programs, supplementing not sufficient income. If we would eliminate welfare, people could not survive on low paid jobs, so they would not take them. This would force employers to pay livable wages in order to get workers. The only difference between proposed here solution, and what we have now, is that less people would be employed by the government agencies, so we would need fewer taxes. --HAK 01:32, 12 January 2007 (UTC)

Well, because the government is providing extensive welfare programs, supplementing insufficient income, then the quid-pro-quo that you refer to is already happening. The government handles the tranfer of wealth through taxes in order to provide a financial and social foundation underneath us all. Right now, we have employees and employers sharing the cost of health care, social security and unemployment benefits, to name just a few. And the employers are trying to unload those costs more and more by reducing benefits. There is absolutely nothing wrong with our elected officials stepping into the debate to say that the employer must provide these benefits, or pay sufficient taxes so that the government can do what the employer does not wish to do.

That's good news about 70% of those jobs being high school students. Let's give them some additional money so they can save for college while we figure out how to make college less expensive, and then they can save up for a car or their first house.

If we eliminate all the welfare programs at the stroke of a pen, we will return to the world that existed before they were passed. Namely, our elderly will lose their homes, there will be bread lines for blocks and children will be begging for change in the street. That is the world of the 1930's that all those pesky welfare, the minimum wage, the end of child labor laws, social security, and medicare programs were designed to end.

In the United States, George Bush has been privatizing more government positions than any other administration in history. Fewer people working directly for the government does not mean that taxes go down, it means that private companies are getting government contracts to do the same job for even more tax money. Bring government employees back into those jobs with a stable and livable wage, and eliminate the necessity to pay CEO's and shareholders, and we will save lots of tax money. Chadlupkes 04:31, 12 January 2007 (UTC)

The question of whether the minimum wage constitues a livable wage can be answered only when the surrounding context is considered. Cost of living and family composition are two factors which strongly impact this calculus. The federal minimum wage may be enough to get by on in an area with low housing costs, but may not be in more competitive housing markets. This same minimum wage may be enough to live on independently, but may not be enough to feed and clothe a family of four or more, even with two wage-earners working full-time at this minimum hourly rate. Supplemental income, in the form of payments from one's Social Security benefit or from Temporary Assistance for Needy Families (TANF), also impacts this calculation.