Location: Halstead, Kansas, United States

This is my seventh year at Halstead which is also where I live with my wife and my soon to be two year old daughter.

Monday, March 07, 2005

Efforts to raise minimum wage fail

I am happy to see this for a number of reasons:

The Senate on Monday defeated two proposals to raise the minimum wage, in a test of muscle over what's expected to be a yearlong struggle to increase an income floor that's gone unchanged for nine years.

A Democratic proposal to raise the rate by $5.15 to $7.25 over three years failed 49-46 in the Senate Monday. A Republican proposal to increase it to $6.25 in two years fared even worse, losing 61-38.

The proposals came as amendments to legislation that would make it harder for individuals to file bankruptcy, a priority bill with financial institutions and credit card companies. In neither case did sponsors of the measures expect to win, because leaders of both parties had set a 60-vote super majority threshold for passage. That unusual arrangement allowed both sides to get senators' votes on the record but protected the underlying bankruptcy bill against delaying ploys.

The debate pitted a proposal by Sen. Edward Kennedy (news, bio, voting record), D-Mass., to raise the minimum wage by $2.10 against an amendment by Sen. Rick Santorum (news, bio, voting record), R-Pa., that would raise it by $1.10. Santorum's proposal also would have exempted businesses with revenues of less than $1 million. The current exemption level is $500,000.

Santorum also would have permitted workers and their employers to negotiate compensatory time over a two-week, 80-hour period rather than the current 40-hour workweek. Critics said that would deny hourly workers overtime pay.

"Americans are working harder than any other industrial nation in the world," Kennedy said. "They are producing more but making less."

Why I am I glad about this:
1. Many economists point out that in the long run minimum wage laws create more unemployment and poverty.

2. Minimum wage laws increase the price of goods which often times hurts the ones that these laws are trying to help.

3. I think national minimum wage laws are unneeded. I have no problem with local laws but its is silly to make the national law that is below the levels in most of the nation.

4. Finally Sen. Kennedy's line: "Americans are working harder than any other industrial nation in the world. They are producing more but making less." is in my opinion the mistake many people fall into when listening to politicians. The quote has no real economic implication but it says that corporations are greedy and trying to take advantage of the worker. I would like to ask Sen. Kennedy if he would like rather see Americans producing less but making more and dealing with the inflation that it would bring.

FOR DISCUSSION: What are your opinions of minimum wage laws?


Anonymous Anonymous said...

This is Becky!
I think I remember having some sort of discussion like this when I was in high school. Anyway!
I have always wanted minimum wage to raised. I agree with Senator Kennedy in that Americans work harder for what they earn. When I read that, I didn't think about the companies swindling them but the fact that so many people are working 2-3 jobs at minimum wage and hardly have anything to show for it.
I'm really not an economics person, so I would like some things explained. How would raising the minimum wage create more unemployment and poverty? What are other ways to create less poverty in America? When you talk about national laws being unneeded, do you mean that the states should have their own minimum wages instead of having one fixed wage for the nation?
Some of these questions I can try and answer on my own, but I'm still skeptical. I'm thinking you'll say that if we raise minimum wage, companies will run short of money to pay their employees and will shut down, or that increased wages will up the prices on goods and that people still won't want to buy. Or something like that, I don't know. I just have trouble figuring out ways to fix this dilemma. I think this would be a logical solution if it didn't have some flaws--raising minimum wage would be paying people more for the work that they do! I mean, this is opposed to giving them a once-a-year tax return that quickly goes out the window.
So, I guess I just need some more things explained and maybe have some more elaboration on some alternative solutions.
Here's one my cousin suggested: a maximum wage!
PS! I haven't had time to look up stuff on the Kyoto Protocol. I'm behind on my Newsweeks--maybe it'll say something there. Maybe you could write a blogg about it, and then I could comment more on that there!

10:48 AM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

1:32 PM  
Anonymous Anonymous said...

I think that raising the minimum wage is only a short-term fix. In the long run it would create more unemployment and poverty instead of helping it. To create less poverty in America I think a better approach would be working harder to increase education, and create more incentives through supply side economics. If minimum wages are necessary I think it would be best if they were left up to local or state governments. I say this because different areas have different needs. Living expenses in Kansas are much different than those of California, so I think it makes more sense then having on fixed wage for the nation. I disagree with point that said companies would shut down because if the minimum wage were raised companies would just cut back on the amount of employees therefore creating even more unemployment. An increase in minimum wage would also increase the price on goods, making that pay increase useless because the extra money would be spent on higher product prices. Also if we were to increase the minimum wage there would an inflationary effect. If the minimum wage was increased to $6.25 and you were making $6.25 before the increase wouldn’t that mean you should get a raise? If the minimum wage were increased it would basically end up in the price of goods going up and everyone getting a raise causing major inflation weakening the dollar, and would bring us back to the same place we were before. This question can be used as an argument for any amount of money that was being made before increase in the minimum wage. I also think it is important to look at how many people are actually working at a job that pays minimum wage. This figure is around 3%, but 50% of those people are under the age of 25 making the percent of people that have “real” minimum wage jobs closer to 1.5%. When you compare this number to the 5.4% of people that are unemployed it looks like much less of a problem, and makes you wonder why people would want to increase minimum wage when it would ultimately increase unemployment. Becky I was wondering if you could clarify your point on tax returns because I do not think I understood what you were trying to say. It is to my knowledge that tax returns really do not have anything to do with minimum wage. I basically make minimum wage and I owed the government on my taxes. My last point is in response to the comment on the maximum wage. I think that it would be a big mistake to do this. First of all where would the maximum wage be set, and if we had a maximum wage there would be no incentive to do better.

1:33 PM  
Anonymous Anonymous said...

By raising minimum wage, companies will not run short of money- they will increase the cost of their products and transfer the cost to higher-paid workers to pay the higher salaries so the companies won’t directly be effected. In doing, the costs of goods will be raised, which would be fine for the United States’ 3% of minimum wage workers, but to those whose wages are lowered, they’ll be stuck paying higher prices for goods when they have less money.

Ways to create less poverty: There is no way to completely end it; some people are never going to work, and I’d say most people have a choice in at least one point in their lifetime: Be lazy, not finish high school, be happy with no or a low paying job. To get people to chose the pro-economy choice the key is discipline (which Americans lack on more and more every generation), and more education.

A maximum wage: bad idea, causes people to see no point in continuing because the ladder stops. This also would not work with self-employed people- how would the government successfully regulate them? Besides, what politician would ever vote for a maximum wage considering their own salaries?
Dale Page

5:33 PM  
Anonymous Anonymous said...

This is Becky!
First to *clear the air* I was really joking when I said maximum wage!! I did not expect a debate on that. Wish I could have injected my tone a little more!!
OK. *collecting thoughts*
There are a couple of things I'd like to address. One is the point made about only a small percentage of people (3%) working minimum wage jobs. I was wondering, does this count JUST the 5.15 an hour jobs? Or does it include those making $5.25, $5.50, $5.75, etc.! Because it makes it sound like only a small number of people are making that small amount of money while the rest are doing fine? I didn't really know what that figure meant.
Also, about "if minimum wage were raised, prices would raise too." Minimum wage hasn't risen for nine years, but I"m pretty sure prices in goods and things have since then. So--we'd be worried about goods increasing in price if min. wage were increased--but haven't they already?
I have some questions about the solution of discipline and education. I'm sure ideally we'd love for everyone to move on from high school, go to college, etc. The thing is, though there are people that just dont' have the desire to do anything, there are a LOT of people out there who live in situations where they can't get a good education (or one at all). Poverty, for many, isn't something they chose. Improving schools and making education more accessible is certainly something we need to work for, but for many adults out there working 2 or 3 jobs, they just don't have the chance to get that education.
So far, the solutions I've read have been about increasing education; there was also the solution including incentives. Those sound pretty good, and would work in some jobs, but I still find it hard to believe it would work in most minimum wage jobs. Blockbuster is a stupid example, but I'll use it. Sure, there were incentives like working there a certain amount of time or being promoted--but in that kind of job, there were only two promotions (that hardly increased the pay) and the raises you got for working there for a certain amount of time were very small. Incentives sounds like a good plan, but I don't think it should go alone in fighting poverty. I think one problem would be keeping track of incentives--I'd be afraid of some companies putting off or denying some people's incentives, not choosing to offer them, etc. That's one reason why I like raising minimum wage--it'd be fixed by law that makes sure people get paid that certain amount.
Anyway. I think it's good to look at economic trends when examining issues like these, but I think some things can be bad about it too. I mean, when we say things like "only 3% of people work minimum wage jobs, we wonder why minimum wage is such an issue" I think we lose the humanity of things because there ARE millions of people working low paying jobs that don't have enough money for things!
There are just so many things that I think about concerning this issue. If minimum wage hasn't been changed for nine years, when will it? I certainly can't think of it staying at 5.15 forever. It just seems to me that parts of the other solutions involving education and incentives can't go without being assured that you'll find a job with a good enough starting pay.

Now I'd like to bring up something that has been weighing on my mind for a while--maybe it'll open up some new talk if people still read this post.
Debates are really great for some people, but debates like this one, for me, are really frustrating. I can state what I think all I want, and if I'm successful, maybe I"ll even change someone's mind! But what does that DO really? Addressing issues is very important and being educated on things, but I always feel so empty. What have I actually done to accomplish anything? Jim Wallice came to speak at our school a few weeks ago, and he said something that really struck me. A lot of middle-upper class people like to talk about things like this and feel like our opinion is right, but then we just go back to our comfortable lives and not do anything. To me, there's only so much talking can do for me. I think action should be implemented more in schools, and everywhere! Global warming is a good example ^_^--we can sure talk about it a lot and know a lot about the issue, but that won't stop it from happening. Riding a bike or walking to cut down on gas is just one thing the individual can do. I want to feel the same way about all the issues we debate about--if we feel so strongly about issues, what action can WE take to make things better?

1:15 AM  

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