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I got them brand new blue state blues...

I guess it was inevitable, but with the Democrats sweeping the elections here in New Hampshire last November (the only reason we still have two Republican Senators is that neither was up for re-election this time), all sorts of Democratic ideas -- even the dumb ones -- would start flying through the Democratic House and Democratic Senate to land on the Democratic governor's desk, where he would sign them (probably in blue ink) into law.

This week, one of the dumber ones was passed. New Hampshire is raising its minimum wage, going from $5.15 to $6.50 on September 1, then $7.25 a year later.

In all the arguments about the minimum wage, I've always brought up one question that no one has been able to answer: how many people actually earn the minimum wage for an entire year?

I've been lucky; I've never held a minimum-wage job. But I've started out close to it on a couple occasions. And every single one of them had a "probationary" period, usually 90 days, at which time I was evaluated -- and given a raise. That seems pretty much standard. The attitude seems to be that if you're worth keeping around, you're worth giving a raise to -- and if not, then see ya.

And let's take a look at minimum-wage jobs. This took some effort, because pretty much every place around pays above that rate. The last time I drove past a McDonald's with a NOW HIRING sign, they said they were starting burger flippers at $8.50. And Wal-Mart -- you know, big evil Wal-Mart -- also starts its people above minimum wage.

So without a concrete example at hand, let's speculate. Minimum-wage jobs are jobs that require little to no specialized skills, involve very little responsibility, and reflect no position of trust on behalf of the employer. They are the jobs that pretty much no one wants. So who would accept such a job?

Two groups come to mind: those with no established job history, or those with a very bad established job history.

In both cases, those jobs can be seen as stepping-stones for them. The ones with no job history -- the young workers -- can start out on building a job history, showing that they will accept work as they find it, show up on time, do their job, and prove they can make it as a worthwhile employee. After sticking it out for a while, if their employer doesn't give them a raise and/or promotion, they can then list that job on applications for other work. And it's a long-standing truism that employers are far more likely to hire someone who already has a job than someone who's unemployed.

On the other hand, those who have a lousy job record can start rebuilding it. Had six jobs in the last two years? That looks lousy on a resume or application. Find a job you can handle, and hold on to, and start building up skills. Most employers prefer a one-page resume, so you can use that job to push the bad stuff off the bottom of the page.

I'll use myself as an example. I've been with the same employer for over nine years. I've held a wide variety of positions with the company, in several locations. I have to cut stuff from this one career to reduce it to a single page. My four previous jobs ended when I was laid off, terminated, resigned, and the company went out of business -- but they don't show up on my resume, and as they were all 10 years or more ago, nobody cares. (Ironically, I once rode three employers in a row into bankruptcy/dissolution. For a brief while, I felt like a "Typhoid Mary.")

Let's run some numbers. New Hampshire is, over the course of the next 16 months, raising the minimum wage roughly 40%. That means that in order to maintain its payroll, a company that employs seven minimum-wage workers will have to cut two of them. Alternately, it can keep all seven, and find another way to cover that 40% hike in payroll.

The standard argument for raising the minimum wage -- "no one can live on that!" -- is, largely, bunk, because the number of people who actually do live on it for an entire year must be pretty minuscule if no one can actually cite them.

So, why the big push? I've heard a few theories. Of course, the "feel-good" argument is a classic. If something seems unfair, do something -- anything -- that makes you feel like you've done something to make it better. It doesn't have to actually achieve anything, and can even make things worse, but as long as you have responded in a way you think is good, then all the better. (See "scratching a rash" and "drinking your problems away" for other examples.)

That's not enough of an explanation. I've heard another theory -- that several unions have contracts where their base rate is calculated as a multiple of the minimum wage. If that minimum wage goes up, so does their pay -- and in a proportional, not linear fashion. Suppose you're a union carpenter whose hourly rate is set at 3 times the minimum wage. (Right now, that would be $15.45 -- a not-unreasonable rate for a tradesman, especially a fairly new one.) While the mop jockey at the porn shop is getting a $2.10/hour raise, you're going up $6.30/hour. That's a nice hunk of change. And even better, you can push for it while saying it's for the "poor, underpaid" workers.

It also plays into the "evil big business" meme. Big companies make big profits; they ought to share them more with their workers, the people who help them earn that money. But that is too simplistic.

Businesses stay businesses by controlling costs. If we -- as a society -- force them to pay their workers more, they'll make up that expense in other areas. They will either hire fewer workers, cut other expenses, or increase their revenues.

"Hire fewer workers." Translation: those making minimum wage will have even fewer places they can work.

"Cut other expenses." Translation: cut back on the money they pay other companies, slashing into their revenues and forcing them to make cutbacks.

"Increase their revenues." Translation: higher prices for their stuff. And since the stereotypical companies that pay minimum wage tend to cater to the lower economic strata, that means that the poor will be hit with a double whammy: fewer jobs and higher prices.

I'm no economist, but I just don't see how hiking the minimum wage actually does a damned thing for those who are being used to champion it. And I have never -- ever -- been a champion of the emotional over reality.


Comments (33)

Jay Tea:What's rea... (Below threshold)
Bob:

Jay Tea:

What's really unfair is that the 40% raise only applies to those making minimum wage. Why doesn't the NH legislature give everyone a big pay raise? Instead, they believe they know what's best for those at the low-end of the pay scale but want to leave everyone else to cope with ungenerous market forces. Those that support minimum wage legislation are really anti-free market. They really think that they know better than the market what one group should be paid and, if they had the chance, they'd be setting all prices, for labor, capital and goods. Either you believe in letting the market control wages and other prices or you think the government should contol these things (and probably every other aspect of our lives). We know where the NH legislature (and the U.S. Congress) stands on this issue. Now it's just a matter of time before they take control of other prices.

How many people living in N... (Below threshold)
BillyBob:

How many people living in NH are actually supporting a family on the minimum wage? Not many I'd bet.

My 17 year old daughter got her first job at an ice cream store making $6.75 an hour (higher than NH's newest minimum wage) because the market demands it.

All this will do will hurt the low skill, no-skill workers. Supporting a family on minimum wage. What utter bullshit.

yep Jay you are not an econ... (Below threshold)
nogo postal:

yep Jay you are not an economist..but can can pretend to be one here...

I don't know how many are min. wage for a year...however,; perhaps those of us who have been laid off and are in "transition" can use all the change we can get..

I am assuming you have never asked a boss for a raise..after all you were already being paid enough..

All this is...a reasonable increase in wage...

of course circumstances in your life have/would never put you in a position of taking whatever job you could find on a temporary basis..
only losers get laid off....

Yep let the market decide..... (Below threshold)
nogo postal:

Yep let the market decide...
..ah anyone buying gas today? oh yeah..problems with the refinery..at least be consistent..ya all love "let the market decide?" Never bitch about the price of gas.
http://www.gloucestertimes.com/punews/local_story_124235019.html

np - the govt controls the ... (Below threshold)
GeminiChuck:

np - the govt controls the number of refineries (ie, no new ones can be built); the govt decides how much oil can be drilled in the US; the govt controls what blends of gas can be produced and when. Exactly how is that a free market? gc

Last year, when Ohio had th... (Below threshold)
Les Nessman:

Last year, when Ohio had the min wage increase on the ballot, I heard a small business owner call in to a local talk show. He said nobody who showed up on time for work would still be making min wage after only six months. He said he had a crisp one hundred dollar bill for anyone who called in to the show who could provide the paystubs proving otherwise. No one took him up on the challenge, and this was in the economically depressed Youngstown area.

Don't forget, GC, that with... (Below threshold)
JLawson:

Don't forget, GC, that with all the talk about lack of US refineries and the need for more drilling in the US to compensate for ME irregularities and folks like Chavez - it gets forgotten quickly when it's no longer front page news.

So when legislation to approve ANWR drilling, or drilling off the coast of Florida actually makes it's way through the process, or someone proposes actually building a new refinery, the NIMBY crowd immediately start screaming. And since our legislators are primarily REACTIVE instead of PROACTIVE, they'll drop the idea quickly to avoid offending the vocal minority.

And the price keeps going up, due to the international gas futures market getting squirrely because of Iran and Chavez and little to nothing is done to stop it... but the NIMBY crowd can feel all virtuous. THEY'VE stopped the exploitation, the despoiling. The rest of us look at the cost of gas going up, and wonder when someone's going to do anything - but the time for that was years ago to get any relief in the immediate future.

But, Jay, it feeeeeeeeeeeee... (Below threshold)

But, Jay, it feeeeeeeeeeeeeeeels so good to help the poor.

These idiots pushing for a "living wage", while operating under the hash-induced illusion that it will end poverty, really piss me off. Why would we want to give our kids even less of an incentive to get an education?

"Timmy! Did you finish your homework?"

"Don't have to, Mom! I'm dropping out of school. President Clinton just signed the Living Wage Act of 2010. Starting next month, I'll be making $30 an hour at my job at Burger King!"

So. nogo postal depends upo... (Below threshold)
Mark L:

So. nogo postal depends upon minimum wage work.

Why am I not surprised.

I too have been downsized on occasion. I have even taken whatever job I could -- for short periods of time. But ever since I graduated from college I cannot think of a single job (except election worker -- and I was typically taking a vacation day to work that job) or juror where I was paid minimum wage. (Well, below minimum wage as juror, but you know what I mean.)

Even when I went through a ten-month period of layoff, it made no economic sense for me to work at minimum wage. That took too much time away from job hunting, and the occasional freelance positions I found paid more in eight hours than I could have gotten working full time at minimum wage.

Jay has it pegged. Minimum wage jobs are for those entering the workforce or those whose lack the skill or reliability to find a job above the minimum wage.

Maybe nogo postal could look into getting a permanent job as a juror. It would probably get him more than his skills are worth, and while allowing ample opportunity to pass judgment.

There should be NO minimum ... (Below threshold)
drjohn:

There should be NO minimum wage.

Simple.

of course circumstances ... (Below threshold)
drjohn:

of course circumstances in your life have/would never put you in a position of taking whatever job you could find on a temporary basis..
only losers get laid off....

Hey, dude, how about you start a business and run it as you desire and pay your workers at rates which exceed your income and show us all how it's done?

I despise whiners who do nothing but bitch about how business works without them ever having bothered to be the one creating the jobs.

Nogo, let's see you do something other than complain.

If you're not part of the solution, you're part of the precipitate.

hash-induced illusion... (Below threshold)
Mark:

hash-induced illusion
What utter bullshit.

"Nogo, let's see you do som... (Below threshold)
Michael:

"Nogo, let's see you do something other than complain."

He can't because he is a loser.

I don't see much commenting... (Below threshold)
epador:

I don't see much commenting on the multiple of minimum wage point. It seems the most intriguing. Anyone got any data on that?

Ya gotta have pretty close to no skill set to not be able to find temp work when you are laid off. Like maybe a postal worker? Oh yeah, they don't get laid off, do they?

If the market is already pa... (Below threshold)
Mac Lorry:

If the market is already paying more than the minimum wage for most unskilled enter-level jobs then raising it to some point still below the market level has negligible effect. The only thing it accomplishes is helping the feel good party feel good. Of course the union supporters of the feel good party also benefit if their pay is tied to the minimum wage.

I saw a piece this week that gave the figures of how much gas U.S. drivers are consuming each day and how much gas U.S. refineries that are currently on-line can produce and there's a shortage of something like 10%. Now it wasn't a free market that put us in this situation, but free market forces are at work. That is, the price is going up which drives demand down and being refineries have doubled their profit per barrel, there are people working hard as we speak to bring more production on-line. That doesn't mean building new refineries, just getting the ones shut down for maintenance and repair back in operation as soon as possible.

No long term solution is going to happen, however, until there's enough pain at the pump to anger more voters than the environmentalists and NIMBY crowd can muster. As usual there won't be a short term fix, but Congress has been doing nothing for 20 years! The "no short term fix" argument should no longer persuade voters to go away. Vote the bums out now so that we can start moving in the right direction.

nogo:I am assumin... (Below threshold)
_Mike_:

nogo:
I am assuming you have never asked a boss for a raise..after all you were already being paid enough..

If you're providing work worth what you're asking either your employer will agree to your raise or you'll leave because, if you're truly worth what you're asking, there will be someone else willing to hire you for that rate. If neither is true, then you're asking more than your work is worth. That's your clue that you either need to improve your skill set or work ethic or both.

"Businesses stay businesses... (Below threshold)
Herman:

"Businesses stay businesses by controlling costs. If we -- as a society -- force them to pay their workers more, they'll make up that expense in other areas. They will either hire fewer workers, cut other expenses, or increase their revenues." -- Jay Tea

As usual, Mr. Tea (like many conservatives) fails to see all the possibilities, the most obvious one overlooked being:

The greedy capitalists can simply keep less of their profits to themselves by sharing more of their profits with their workers!!!

Mr. Tea is no economist, as he happily admits. What is troubling, though, is his willingness to apply his own admittedly limited knowledge of economics rather than consult with those with expertise. Mr. Tea and many conservatives are not scholars in economics, but these 650 in the link below are, and among these are five Nobel Laureates in Economics:

And these 650 believe that raising the minimum wage would "improve the well-being of the low-wage workers and would not have any of the adverse effects that critics [like our own Mr. Tea] have raised"

http://www.epi.org/minwage/epi_minimum_wage_2006.pdf

A significant majority of people in this country believe that there should be a minimum wage that capitalists are required to pay. And if you're going to have a minimum wage, it makes sense to ensure that it keeps pace with inflation.

Herman, are you a communist... (Below threshold)
Kat:

Herman, are you a communist? Fess up. Truther it.

It's the way you say 'capitalist', I can hear the disgust dripping from your words.

It's not that hard to get t... (Below threshold)

It's not that hard to get the data, Jay Tea, go to the Bureau of Labor Statistics at the Dept. of Labor. For 2005 (I don't know if they have 2006 up yet, I'm pulling this from a post of mine a couple of months ago when I did the research) about 3.35 million people earned minimum wage (not broken down by length of time they made only minimum wage, unfortunately). That's about 2.5% of the workforce.

Only 1.5% are 25 or older (2.01 million workers).

60% of the minimum wage earners only work part time.

What it pretty much boils down to is that about 1% of the full time workforce makes minimum wage for a portion of a year.

So Herman, since:"... (Below threshold)
Ted:

So Herman, since:

"these 650 in the link below are [scholars in economics], and among these are five Nobel Laureates in Economics"

then we non-economists should just unquestioningly bow to their expertise? Sorry, but each is entitled to their opinion.

Economics is not a "hard" science. Like psychology and sociology, it's fluid and fuzzy and relies on trends and tendencies rather than precision. Economists, even Nobel Laureates, are making 'best guesses' and sometimes get it wrong.

Indiana recently raised their minimum wage. A theater manager that I know had half of her staff quit for other jobs because although they were making more per hour of work, their hours were cut to compensate and they wound up with less actual take-home pay per week. Anecdotal evidence for sure, but true.

"The greedy capitalists can simply keep less of their profits to themselves by sharing more of their profits with their workers!!!"

I just posted on this over at my blog just last night. Here, I'll remind you that the purpose of a company is to make a profit. End of statement. If they have enough workers to do the job adaquately, then they are obviously paying enough to attract the needed manpower. Otherwise, they raise their wages to attract more or better qualified workers.

It's not about greed, it's about purpose. If I were a stockholder in the company, and my earnings were down because the board decided to arbitrarily increase wages for no good reason, I'd be unhappy, because the only reason to form and operate a company is to make a profit!

The key phrase there is "no good reason". If productivity improves because the workers get paid more, then that's good. But that's not a given, and you'll have to convince me that raises are *always* a good idea. As a worker, I'd agree. As an owner/operator of a company, I'd have to judge on a case-by-case basis. As a stockholder, I'd almost certainly disagree.

Falze, that's precisely my ... (Below threshold)

Falze, that's precisely my point. The exact data I'm asking for apparently just doesn't exist. Just how many people live off minimum wage for a full year without any raises?

Without that, the calculation of how much minimum wage adds up as an annual salary is pretty much useless.

J.

Minimum wage is just a demo... (Below threshold)
Scrapiron:

Minimum wage is just a democrat cover tactic. When you can't provide facts, baffle them with BS. One thing about the democrats, they are full of BS. Notice lately that every democrat on TV screams over the host because thay have no facts to answer the question. They start screaming BS to cover their stupidity and the simple minded listen.

What drjohn said.J... (Below threshold)
Jay:

What drjohn said.

Jay Tea, I know how you feel. My last two jobs were for companies that effectively went out of business afterward. The first was involuntary, if for the best, and I did what I could to help them dig their hole. The second was voluntary, and it's not that they went under, but poor management ultimately led them to be swallowed up after they'd all but closed their flagship operation and and adjacent headquarters.

The company before that is, I believe, still around, but struggled massively after the certifiable owner bought an even larger, theoretically complementary company. A company I worked for part time before and during that period went out of business, in the form of both losing many of their clients and being absorbed by a larger company.

Let's see... The company I last worked at before that may still exist, but closed the local places I worked from.

The company I worked at before that was swallowed by a far larger, national company and many people have forgotten they ever existed, despite the nominal head of that company having been so newsworthy last year.

The company I worked at before that is long gone. It was a struggle even when I was there, given more efficient competition and lower cost labor in other parts of the company. It was a matter of months from the time they finally unionized - which had never been successful in many tries because they paid well and were that good to work for - to the time they closed down.

I'm afraid the company I worked at before that is still there and bigger than ever, because it was the feds. Thus my streak of companies I worked for no longer existing only goes back 25 years.

If you count that I am basically closing down the business I have been in since before I left my last "real job" in 1999, I'm still on a roll. At least being self-employed lasted longer than anything I've ever done.

The increase in minimum wag... (Below threshold)

The increase in minimum wage isn't about the people receiving the minimum wage. It is about those people whose wages are mathematically tied to the minimum wage. Many goonion contracts call for negotiated multiples of the minimum wage (goonion dues are then a percentage of those increased wages) and most politicians are joined at the hip with goonion officers and money. If the politicians were to use that "interstate commerce clause" to make the entire US follow the "right to work" template, they would be cutting one of those "corrupting money in politics" sources, they would be taking conversations such as this "off the table."

Min. wage in CA is at 7.50 ... (Below threshold)
Allison:

Min. wage in CA is at 7.50 and is going up to $8.00 in January '08. The labor unions were big advocates of the hike, of course. The liberal legislature played the "you can't raise a family on minimum wage!" card after creating a poor business climate by supporting terrible economic policies that have driven many more prosperous industries out of the state. They will tell you they REPLACED those high tech jobs that were outsourced to more business-friendly states states... sure! With SERVICE jobs that pay MINIMUM WAGE.

I worked a minimum wage job in high school (fast food, got a $1.50 raise in my first month of employment for simply not being a loser), right after college while I was looking for a "real" job, and my boyfriend manages a retail store that starts its employees at slightly above the min. wage. We can both attest to the truth in Jay's hypothesis. The vast majority of min. wage workers are high school kids, people working second jobs at night for some pocket change, and general losers who end up getting fired after a couple months for not showing up.

Not to worry Jay, we will t... (Below threshold)
NH:

Not to worry Jay, we will throw the bums out in /08 for the havoc they are causing.

You are missing the point h... (Below threshold)
Ennis:

You are missing the point here.

A lot of unions have agreements that if the minimum wage goes up their wages also get increased by that amount. This amounts to a free raise to the members of the unions on top of any other raises they may get.

The Democrats are simply paying off their greatest supporters-the unions.

Thank you Ennis and RRRoark... (Below threshold)
epador:

Thank you Ennis and RRRoark.

Simply more Pork and Dumbocratic* Politics at work.

*Dumbocratic = non partisan stupid politics

Virtually every state has a... (Below threshold)
SShiell:

Virtually every state has an department of labor type of franchise and they should have statistics for the numbers of people who make at or below minimum wage. National numbers should be available through the Deparment of Labor.

Below minimum wage? How is that possible? For Federal Law, basically those companies that make over $500,000 annually or have a business whose transactions cross state lines are required to follow federal minimum wage laws. There are exemptions and special provisions. For example someone working as restaurant wait staff is covered by the law at a minimum of $2.13 an hour plus tips.

here are 50 years of studie... (Below threshold)
tom:

here are 50 years of studies about the harm of the minimum wage:

http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm

Since you libs think that raising the minimum wage is a good idea, why don't we just raise it to a million dollars an hour, and we'll all be rich!! yeah right....

I'm going to have to call b... (Below threshold)
Tim in PA:

I'm going to have to call bullshit on Nogo, here. The only people who can't find any work other than minimum wage are generally people who are 15 years old, mentally handicapped or ill, or who have a nice collection of murders and such on their rap sheets. Any idiot can go flip burgers, work at the convenience store, or even do random crap through a temp agency. All of these things will pay well above minimum.

These are jobs that all you have to do is SHOW UP - don't call in every 3 or 4 days whining that you can't get a ride, or you can't find a babysitter, or your dog ate your uniform shirt. Some people just can't get their shit together -- we call those people losers -- but even they could make 8 or 9 bucks an hour if they'd simply show up. I deal with this crap all the time, since I'm usually handling the call-offs and keeping track of who is working during the shift.

I've worked about a dozen different crappy menial jobs through college, and the worst still paid about a buck over minimum wage. You have to look fairly hard to find anywhere that pays the minimum, because no one wants to work for it.

That's the market at work; it's raised labor prices to the point that the previous boneheaded attempts to set labor prices don't really have an effect anymore. So now, naturally, they want to screw with it some more.

As for the market and gas prices -- what Nogo, in your infinite wisdom, would you have us do? You want what, price controls? Hello? Jimmy Carter called, he wants his stupid back.

It comes down to subscribin... (Below threshold)
Dave:

It comes down to subscribing to one of two thoughts here. You either think that 1.) Government needs to control everything, wages, prices and the whole 9 yards. Government would never do anything wrong provided that it is set in a socialist mold where the government is essentially a type of orwellian entity that makes sure the dolts in this country are staying efficient and take marching orders from said hillary inspired socialism. After all, Hillary "wants to take those profits". Essentially no one can earn anything, it must be given by an all power force known as government. You either believe that or number 2.
Number 2 is that people are responsible for their actions and for their futures. People can seek employment in any field they want. Market forces will decide what jobs are needed and will be filled by qualified individuals that will be paid what the position is worth. Prices of goods will be determined by a competitive market. If company A is selling for cheaper than company B, then A will get more business until B finds an innovative way to compete with A.

In the first example numbers such as wages and prices are set by elitists sitting at the top of the hierarchy who decide what is best for everyone else. In the 2nd example fair values are placed on labor and goods. If you can't compete, you lose. That is why it is deemed "unfair" because some people don't want to compete in life and would rather have things handed to them instead of actually working for the things they would like.

Here are a few tips to you libs.
1.) find an in demand skill
2.) learn how to do that skill
3.) find a job using that skill and get good at it
4.) as you do your job you will forget what minimum wage is, as it will be far behind you.
5.) Look at yourself as an individual and reflect on what dead end job you could have been doing if you would have just been a little more defeatist and whiny about your lot in life.

I should have provided more... (Below threshold)

I should have provided more info, JT, here you go:

http://www.heritage.org/Research/Economy/wm1181.cfm

and click through for the background (note that they're using the liberal EPI for their data, so it's not anti-minimum wage skewed).

2/3 earn a raise in a year or less. so you can take the numbers I provided above as to how many earn minimum wage and divide it by three to see how many actually earn minimum wage for more than a year.

About 0.83% of all workers earned minimum wage for more than a year. About 0.33% of all full time workers earned minimum wage for a full year.

so, we're talking about 450,000 full time workers making minimum wage or less for a full year.




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