Minimum Wage Definition:
Quite possibly the dumbest economic practice in existence
-dkward2

When minimum wage is raised:
1)Prices go up because cost of production has gone up.
2)Poorer workers get laid off because a company can't afford to pay them more than their service is worth.

In Depth
In any economy, every good or service that adds value also comes with the inherent cost of production. Every company must weigh how much value they can add (read: profit), compared to how much it costs to produce. It's a very straightforward practice, and is fairly universal.

One large factor in production cost is labor. No one wants to work 40 hours a week for nothing. Wages are decided by the market by how much someone is willing to work for, and how much value they add. A CEO adds a lot of value indirectly to a company through management skills, and therefore receives a large salary. The job is also usually demanding, making it necessary to pay well to compensate. Everyone usually accepts the logic when speaking of rich people.

Where the democrats start to fall apart is when moving to the poorer end of the economy. They act as if the same rules don't apply, but they do. Someone flipping burgers at McDonald's doesn't add very much value. Also, the job places no heavy demands on the workers, and when they go home, work is over. No pagers, beepers, etc. This is not to demean them; they work hard for their money and perform a valuable service. However, in their position, a free market dictates smaller wages.

This is where things get interesting. What happens when an institution like our government sets an arbitrary number to the minimum that someone can get paid? The economy naturally shifts to alleviate this pressure. Think of a balloon with someone squeezing at one end.

This shifting results in fewer uneducated people with jobs, but having to pay more for goods and services. If you have 10 people working that are worth $5 an hour each, when you are forced to pay them $10 an hour you fire 5.

A simple, yet pointed question further illustrates the logical flaw behind minimum wage:

Why not make minimum wage $50 an hour?

Then we could all live like fat cats right? The actual result is, of course, economic ruin, or burgers costing $45. If doesn't work on a large scale, it doesn't work on a small scale. The harmful effects of a .25 cent minimum wage raise are simply harder to see.

Personally, I feel that is disinginuous.

First of all, not all mathematical curves are exponential. some of them peak and then head back down. Quite a lot of them, actually. Thus, something *can* work on a smaller scale but not a larger one.

Aside from that, do you really suppose to make the US eonomy 'competitive' with China for workers? How well do you think those working conditions would go over in Iowa?

If the free market would keep wages high, how would this affect production costs? It wouldn't. But you dont suppose that wages will stay high. In addition, with a high unemployment, it is the employer's market. How to you expect someone to 'get ahead'? have time for school? afford a house getting $3 US an hour? You propose that prices would drop enough to compensate? How much do you suppsoe McDonalds would drop their wages, and how much do you suppose labor figures into their costs?

I used to work for McD. I know that they shoot for 10% labor caosts per hour, but they usually get closer to 20% (at least in my restaurant)

If you cut labor costs by half, then you can lower prices by 5-10%. Maybe lower when you factor in food costs. Say a generous 20%.
A worker making half what they were previously can afford about

In addition, I think you contradicted yourself. A skilled worker can compete and demand a better wage. The rules are different fo unskilled workers. Unless there are more jobs than people, the employer sets the rules. Thats always been the case. Thats the need for unions - to counteract that. There is not much need for unions these days because the government now fills the role that the Unions used to.

The minimum wage has been around for quite a while, and hasn't crashed the economy. In fact, in another post, you weer saying its doing pretty good. Your argument strikes me as stretching the facts to fit the theory.

I do feel that removing the protections from unskilled workers will create a large very low class group of people with little hope for social elevation. (Sure, pull your own self up by your bootstraps - but its far easier if you have money. Just look at the numbers)

This large group of people, even if they desrerve to be there creates problems for everyone else with increased crime, disease, etc that comes along with poverty.


I think your morals are dictating your facts on this one.