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Snow-i
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Feb 19, 2014, 02:00 PM
 
Congressional Budget Office: Wage hike would lift pay but cost jobs | Fox News

Just what the hell are they smoking up there in the Oval Office? Have they lost their sanity or are they praying that the American public has?


Between this and the ACA, how in the hell do they expect any kind of economic recovery?
     
turtle777
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Feb 19, 2014, 02:21 PM
 
Originally Posted by Snow-i View Post
Between this and the ACA, how in the hell do they expect any kind of economic recovery?
Simple. Fudge the statisctics, move the goal posts.

This is how the recovery worked for the past 5 years.

-t
     
OAW
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Feb 19, 2014, 07:08 PM
 
First of all I'm not sure how the thread title relates to the OP.

But in any event, as some around here have said ... "Live by the CBO ... die by the CBO." So with that in mind I will simply point out that taking a single data point and running with it is hardly illuminating. An overall cost vs. benefit analysis would be more appropriate.

The following are six key points from the latest CBO report. For more information, last week the Council of Economic Advisers (CEA) released a summary of the economic case for raising the minimum wage.

1. CBO finds that raising the minimum wage to $10.10 per hour would directly benefit 16.5 million workers. According to today’s CBO report, 16.5 million people making less than $10.10 per hour would get a raise if the minimum wage is increased. This figure does not include CBO’s estimate of as many as 8.0 million workers who currently earn just above $10.10 an hour but could also potentially see a raise due to the “ripple effect” of a shifting wage structure.

2. CBO finds that raising the minimum wage would increase income for millions of middle-class families, on net, even after accounting for its estimates of job losses. Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages, with more than 90 percent of that increase going to families earning less than three times the Federal poverty line (i.e., $75,000 for a family of four in 2016). On net CBO estimates that national income would rise.

This finding is consistent with the fact that 62 percent of expert economists polled by the University of Chicago Booth School of Business agreed that the benefits of raising the minimum wage outweigh any potential costs, as compared to only 16 percent who disagreed.

3. CBO finds that this wage increase would help the economy today. Specifically CBO finds that the extra purchasing power for workers will expand aggregate demand and strengthen the economy today. As CBO wrote, “Raising the minimum wage increases that demand, in CBO’s assessment, because the families that experience increases in income tend to raise their consumption more than the families that experience decreases in income tend to reduce their consumption. In the short term, that increase in demand raises the nation’s output and income slightly.”

This finding is consistent with other research. For example, a study released by economists at the Federal Reserve Bank of Chicago found that raising the minimum wage to $9 per hour would raise growth by 0.3 percentage point in the short run.

4. CBO found that only 12 percent of low-wage workers will be teenagers. Contrary to critics’ claims that teens are the primary beneficiaries of increases in the minimum wage, CBO, found only 12 percent of the workers likely to benefit from a minimum wage increase are teenagers.

5. CBO also found that raising the minimum wage would lift 900,000 people out of poverty. Opponents claim raising the minimum wage won’t reduce poverty, but that is not the case, as many American who work full time are unable to make ends meet. This finding echoes the broad consensus of academic studies on the topic, which is nearly unanimous in finding that increases in the minimum wage reduce poverty.
Congressional Budget Office Report Finds Minimum Wage Lifts Wages for 16.5 Million Workers | The White House

All of that is based on the CBO report itself you can see here. So let's say for the sake of argument that the cost of this is an estimated loss of 500K jobs at the very bottom of the wage scale. Given the benefits listed is there anyone who would make a mathematically (not ideologically) based argument that the pros still don't outweigh the cons?

OAW
     
Snow-i  (op)
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Feb 19, 2014, 07:36 PM
 
Originally Posted by OAW View Post
First of all I'm not sure how the thread title relates to the OP.

But in any event, as some around here have said ... "Live by the CBO ... die by the CBO." So with that in mind I will simply point out that taking a single data point and running with it is hardly illuminating. An overall cost vs. benefit analysis would be more appropriate.
That's exactly what I've done OAW. 500,000 jobs lost is an unacceptable price to pay. What would you say to those half million? Better luck next time?

How bout us in the middle class, who're going to have to eat most of the cost for this wage hike?

Or do you feel that the path to a strong economy include merely an option to work?
     
OAW
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Feb 19, 2014, 07:45 PM
 
Originally Posted by Snow-i View Post
That's exactly what I've done OAW. 500,000 jobs lost is an unacceptable price to pay. What would you say to those half million? Better luck next time?

How bout us in the middle class, who're going to have to eat most of the cost for this wage hike?

Or do you feel that the path to a strong economy include merely an option to work?
Did you actually read #2 above?

"Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages".

That's $19 with a B in extra grip dude.

OAW
     
Snow-i  (op)
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Feb 20, 2014, 04:07 PM
 
Originally Posted by OAW View Post
Did you actually read #2 above?

"Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages".

That's $19 with a B in extra grip dude.

OAW
Where do you think that money comes from OAW? Businesses need to stay in business and pay these employees, and the price for said good/service then goes up, compounded with the fact that there is less productivity per dollar invested and an overall decrease in wealth in the economy at large.

Have you ever taken a basic economics class?

Do you understand the concept of wealth vs currency?

Any way you look at it, less jobs = less wealth. Period. There's no way to get around that. It means a lower standard of living for all of us, as the net economic output in America is reduced. That's why jobs are a big deal.

Why don't we just give everyone in America million dollars an hour! Problem Solved!


What you're telling us is that Americans will now have to collectively pay $19 billion dollars more for the same goods/services, while reducing the number of Americans who are employed at all.
And that this will somehow through the magic of whatever Obama pulls out of his ass will positively affect our economy and improve our standard of living.
     
OAW
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Feb 20, 2014, 07:52 PM
 
Originally Posted by Snow-i View Post
Where do you think that money comes from OAW? Businesses need to stay in business and pay these employees, and the price for said good/service then goes up, compounded with the fact that there is less productivity per dollar invested and an overall decrease in wealth in the economy at large.

Have you ever taken a basic economics class?

Do you understand the concept of wealth vs currency?

Any way you look at it, less jobs = less wealth. Period. There's no way to get around that. It means a lower standard of living for all of us, as the net economic output in America is reduced. That's why jobs are a big deal.

Why don't we just give everyone in America million dollars an hour! Problem Solved!


What you're telling us is that Americans will now have to collectively pay $19 billion dollars more for the same goods/services, while reducing the number of Americans who are employed at all.
And that this will somehow through the magic of whatever Obama pulls out of his ass will positively affect our economy and improve our standard of living.
:::: sigh :::::

I would encourage you to actually read the CBO report instead of parroting ideological talking points. Here, I'll make it easy for you ...

The Increase in Demand for Goods and Services

Raising the minimum wage would have four direct effects on the aggregate demand for goods and services. First, consumption would be reduced among people who became jobless because of the minimum-wage increase. In estimating that effect, CBO accounted for lower savings and some borrowing by people who would thereby avoid a sharp reduction in their standard of living. Second, additional spending by affected workers with earnings increases would boost demand. Third, demand would be reduced because business owners and shareholders would absorb part of the cost of the mini- mum-wage increase in the form of reduced profits and therefore would reduce their spending. Fourth, demand would also be reduced because affected employers would pass part of their increased costs on to consumers in the form of higher prices for goods and services; those higher prices would reduce the average consumer’s purchasing power, resulting in less spending by consumers after adjusting for inflation. (For examples of the research that CBO reviewed on these topics, see Appendix B.)

On balance, according to CBO’s analysis, raising the minimum wage would increase demand for goods and services because, taken together, the second, third, and fourth direct effects would shift income from business owners and consumers (as a whole) to low-wage workers. Low-wage workers generally spend a larger share of each dollar they receive than the average business owner or consumer does; thus, when a dollar from business owners or consumers is shifted to low-wage workers, overall spending increases. The increase in demand from that shifting of income would be larger than the decrease in demand from the reduced consumption of people who became jobless, CBO estimates.
The CBO is saying that aggregate demand for goods and services will INCREASE thereby strengthening the economy. Right there in black and white! Why? Because 16.5 million workers would collectively have an additional $19 billion in their pockets. Again this is a NET figure which already takes into account the cost to businesses. Since you wish to make comments about a "basic economics class" ... which for the record I not only took but also received an A ... perhaps you should brush up on the economic concept called the Multiplier Effect. You may find it helpful when it comes to understanding the CBO analysis.

OAW
     
subego
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Feb 22, 2014, 07:52 PM
 
I like the title of this thread.

That is all. Carry on.
     
ebuddy
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Feb 24, 2014, 08:44 AM
 
The CBO report is entertaining if nothing else. In Appendices A and B of the report, you'll find a few aspects of the report that are dubious.

Buried in Appendix A of the Report:
How CBO Estimated the Responsiveness of Employment to Increases in Minimum Wages
CBO reviewed a large body of research to estimate how adopting either of the two options for increasing the minimum wage would affect employment. Such research typically calculates an employment elasticity—that is, the percentage change in employment induced by a percentage change in the minimum wage. Researchers have generally focused on the employment of workers with low average wages, such as teenagers, high school dropouts, and workers in low-wage industries. Initially focusing on estimates of the employment elasticity for teenagers (in part because they were the most commonly studied group), CBO arrived at a teen-employment elasticity for each of the options, after accounting for the fact that the $10.10 option differed significantly from the scenarios explored by prior research. CBO then synthesized the teen elasticities with broader research to construct elasticities for adults.
So... they're using teen elasticity as the foundation for the numbers and then entirely contriving the effect on the adult labor market. Worse, the "broader research" they cite in the report includes studies that show anywhere above 1 million jobs lost, but rather than weigh the merits of any of the studies, simply took an average of jobs lost from all of them to come up with the 500,000 jobs lost figure.

We have to know who, at present is earning the Federal minimum wage to know who the beneficiaries really are.

Bureau of Labor Statistics Report for 2012:
  • Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over. (See table 1 and table 7.)
  • Disproportionately young: 50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
  • The industry with the highest proportion of workers with hourly wages at or below the federal minimum wage was leisure and hospitality (about 19 percent). About half of all workers paid at or below the federal minimum wage were employed in this industry, the vast majority in restaurants and other food services. For many of these workers, tips and commissions supplement the hourly wages received. (See table 5.)
  • last year 1.566 million hourly workers earned the federal minimum of $7.25 an hour; nearly two million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.55 million hourly workers at or below the federal minimum.
  • Largely part-time workers (64% of the total).

A 2010 study found that state poverty rates were unaffected by minimum-wage increases. It also found that if the minimum wage were raised to $9.50 an hour from $7.25, only 11 percent of the beneficiaries would be people who live in poor households. Forty-two percent would be people living in households making more than three times the poverty line (which means they’re well above the country’s median household income).

Obama says; “Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.”

BS buzzwords and FUD Mr. President. Raising the Federal Minimum Wage is not targeted in any way, to those in poverty. The one's earning the current minimum wage are teens, living in households well outside the poverty level, in industries with tips and other forms of compensation, and work part-time.

I've got news for ya -- $15/hr isn't a "living wage" working part-time. There's your problem though with the overwhelming majority of new jobs being part-time, perhaps we should look at the current Fed distortion of the market place for a solution over merely adding more of it.

So... once again, we're attempting to justify a purely political maneuver perpetrated by a Party trying desperately to distance themselves from any discussion on their singular accomplishment in 5 years. That's all folks, nothing else to see here.
ebuddy
     
Snow-i  (op)
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Feb 24, 2014, 01:21 PM
 
Originally Posted by ebuddy View Post
The CBO report is entertaining if nothing else. In Appendices A and B of the report, you'll find a few aspects of the report that are dubious.

Buried in Appendix A of the Report:


So... they're using teen elasticity as the foundation for the numbers and then entirely contriving the effect on the adult labor market. Worse, the "broader research" they cite in the report includes studies that show anywhere above 1 million jobs lost, but rather than weigh the merits of any of the studies, simply took an average of jobs lost from all of them to come up with the 500,000 jobs lost figure.

We have to know who, at present is earning the Federal minimum wage to know who the beneficiaries really are.

Bureau of Labor Statistics Report for 2012:
  • Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over. (See table 1 and table 7.)
  • Disproportionately young: 50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
  • The industry with the highest proportion of workers with hourly wages at or below the federal minimum wage was leisure and hospitality (about 19 percent). About half of all workers paid at or below the federal minimum wage were employed in this industry, the vast majority in restaurants and other food services. For many of these workers, tips and commissions supplement the hourly wages received. (See table 5.)
  • last year 1.566 million hourly workers earned the federal minimum of $7.25 an hour; nearly two million more earned less than that because they fell under one of several exemptions (tipped employees, full-time students, certain disabled workers and others), for a total of 3.55 million hourly workers at or below the federal minimum.
  • Largely part-time workers (64% of the total).

A 2010 study found that state poverty rates were unaffected by minimum-wage increases. It also found that if the minimum wage were raised to $9.50 an hour from $7.25, only 11 percent of the beneficiaries would be people who live in poor households. Forty-two percent would be people living in households making more than three times the poverty line (which means they’re well above the country’s median household income).

Obama says; “Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.”

BS buzzwords and FUD Mr. President. Raising the Federal Minimum Wage is not targeted in any way, to those in poverty. The one's earning the current minimum wage are teens, living in households well outside the poverty level, in industries with tips and other forms of compensation, and work part-time.

I've got news for ya -- $15/hr isn't a "living wage" working part-time. There's your problem though with the overwhelming majority of new jobs being part-time, perhaps we should look at the current Fed distortion of the market place for a solution over merely adding more of it.

So... once again, we're attempting to justify a purely political maneuver perpetrated by a Party trying desperately to distance themselves from any discussion on their singular accomplishment in 5 years. That's all folks, nothing else to see here.
Considering that young healthy adults is the demographic Obama is trying to exploit to fund the ACA, its no wonder that he's trying to put more money in their pockets so that he can take it and use it for his own ends. The aim was never to help out anybody but the Democrats running for office in 2016 by continuing to fudge the numbers in favor of the ACA. It's full effects, even to this point, are likely to reverberate throughout our economy for a decade or longer. It's not a question of if, but when, it gets repealed - but the economic damage is piling up fast.

Mr. Obama, Fix the mess you've made before championing a new cause because at this point, you look like amateur hour.
     
OAW
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Feb 24, 2014, 01:40 PM
 
Originally Posted by ebuddy View Post
Bureau of Labor Statistics Report for 2012:
  • Disproportionately young: 50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
I find it odd that you are trying to construct a narrative that the data you cited simply doesn't support. It says right there that teens are 24% of minimum wage workers. Yet you turn around and claim that ....

Originally Posted by ebuddy
The one's earning the current minimum wage are teens, living in households well outside the poverty level, in industries with tips and other forms of compensation, and work part-time.
.... as if they are the majority. When these figures clearly state that 76% of minimum wage workers are NOT teenagers. And 50% of minimum wage workers are over 25.

OAW
     
Snow-i  (op)
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Feb 24, 2014, 01:42 PM
 
Originally Posted by OAW View Post

.... as if they are the majority. When these figures clearly state that 76% of minimum wage workers are NOT teenagers. And 50% of minimum wage workers are over 25.

OAW
How is this at odds with his point at all?
     
OAW
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Feb 24, 2014, 01:45 PM
 
Originally Posted by Snow-i View Post
How is this at odds with his point at all?
As I just stated, his statement makes it seem as if teens are the majority of minimum wage earners. I quoted it so read it for yourself. But that is simply not supported by the statistics he cited.

OAW
     
Snow-i  (op)
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Feb 24, 2014, 01:51 PM
 
Originally Posted by OAW View Post
As I just stated, his statement makes it seems as if teens are the majority of minimum wage earners. I quoted it so read it for yourself. But that is simply not supported by the statistics he cited.

OAW
His statement says that a disproportionate amount of benefit goes to a group of people who're at odds with the stated objective of this initiative. You'll have to explain to me how 9.5 billion extra grip to 25 and unders is going to help impoverished families, especially since you seem oblivious to where that extra 9.5 billion is going to come from.
     
OAW
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Feb 24, 2014, 02:08 PM
 
Originally Posted by Snow-i View Post
His statement says that a disproportionate amount of benefit goes to a group of people who're at odds with the stated objective of this initiative. You'll have to explain to me how 9.5 billion extra grip to 25 and unders is going to help impoverished families, especially since you seem oblivious to where that extra 9.5 billion is going to come from.
That's a very loose interpretation of what he wrote. But in any event, the "benefits" aren't limited to those who would see a wage increase as a result of this legislation. There is the Multiplier Effect which I mentioned earlier. And that is why the CBO analysis concluded the following:

Originally Posted by CBO Report
Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages.
When people have more money to spend as a direct result of this legislation they consume more goods and services. Increased aggregate demand for goods and services then becomes additional income to other people as an indirect result of this legislation.

OAW
     
Snow-i  (op)
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Feb 24, 2014, 02:17 PM
 
Originally Posted by OAW View Post
When people have more money to spend as a direct result of this legislation they consume more goods and services. Increased aggregate demand for goods and services then becomes additional income to other people as an indirect result of this legislation.

OAW
They consume goods and services at an increased cost proportionate to that 19 billion dollar offset meaning the numbers you provide don't mean shit, since we're tinkering with the very fabric of supply and demand.

Where do you think that money/wealth comes from OAW?

You completely dodged my point about half of this benefit going to 25 and unders, who're a part of the demographic you just cited. In other words, quit trying to spin the numbers man and answer the damn question.

Where do you think that 19 extra billion dollars in 2014 money's worth of wealth comes from? You just told me where it might go.
     
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Feb 24, 2014, 02:55 PM
 
Originally Posted by Snow-i View Post
Where do you think that money/wealth comes from OAW?
There is no single source for where it comes from. Some of it comes from increased costs absorbed by businesses. Some of it comes from increased costs passed onto consumers in the form of higher prices. Some of it comes from additional income resulting from increased aggregate demand for goods and services. As a dollar circulates in the economy what is a "cost" to one becomes "income" to another and vice versa. And with the Multiplier Effect the overall economic impact is greater than the initial direct cost.

Originally Posted by Snow-i View Post
You completely dodged my point about half of this benefit going to 25 and unders, who're a part of the demographic you just cited. In other words, quit trying to spin the numbers man and answer the damn question.
I'm not dodging anything. The problem here is that you seem to keep insisting that the only "benefits" are for people who will see a wage increase as a direct result of the legislation. And yes, half of them are under 25. But so what? The overall benefits of the increased economic activity that will result from this legislation are spread much farther and wider. As shown here ...



So what this is saying is that 16.5 million workers will see an hourly wage increase as a direct result of this legislation. And again ... half of those workers are under 25. But families with incomes between 1 to 3 times the federal poverty level will see an additional 12 billion in income. And families with incomes between 3 to 6 times the federal poverty level will see an additional 2 billion in income. For 2016 the CBO is projecting that the federal poverty level (FPL) will be $24,100 for a family of four. So 3 times the FPL is $72,300 per year. 6 times the FPL is $144,600 per year. Now ask yourself this question ...

Do you really think the vast majority of the people in those two income groups which will receive the lion's share of the benefits are the 8.25 million under 25 minimum wage workers?

OAW
     
Snow-i  (op)
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Feb 24, 2014, 04:06 PM
 
Originally Posted by OAW View Post
There is no single source for where it comes from. Some of it comes from increased costs absorbed by businesses. Some of it comes from increased costs passed onto consumers in the form of higher prices. Some of it comes from additional income resulting from increased aggregate demand for goods and services. As a dollar circulates in the economy what is a "cost" to one becomes "income" to another and vice versa. And with the Multiplier Effect the overall economic impact is greater than the initial direct cost.
Sure, if you ignore the fact that we're losing up to a million jobs and many, many more full time positions being eliminated.

Is it your position that this wealth will just spring up out of nothing? Or do you suppose this will be financed by the 1%ers? You do understand that "increased aggregate demand" is synonymous with "increased aggregate prices for goods and services" right? That and "increased" costs are one in the same. What do you say to people like me, who is barely scraping by at around $17 an hour and will have to eat the costs born by this political diversion?

Are you factoring in the loss of production to your "overall economic impact"? I'm not sure how you can take a pie, make it smaller and still claim a net increase in that pie. It doesn't stand up to reason and your track record with stating basic facts about the costs of Obama's initiatives is not a strength of yours.

What do we do with the 500,000 to a million people that won't have jobs anymore? Are we leaving them out in the cold?

What about the rest of us who're barely scraping by and now have to contend not only with the ACA's mandated ridiculous price increases but now increased prices for everyday goods and services? You think that'll be a net positive on the economy?

I'm not dodging anything. The problem here is that you seem to keep insisting that the only "benefits" are for people who will see a wage increase as a direct result of the legislation. And yes, half of them are under 25. But so what? The overall benefits of the increased economic activity that will result from this legislation are spread much farther and wider. As shown here ...
See here you are again changing your tune when presented with the fine print of your own cause:

Originally Posted by OAW
"Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages".
Did you misstate the above quote earlier because you clearly say "middle class families" with no mention of the actual demographic that half this redistribution of wealth will go to.



So what this is saying is that 16.5 million workers will see an hourly wage increase as a direct result of this legislation. And again ... half of those workers are under 25. But families with incomes between 1 to 3 times the federal poverty level will see an additional 12 billion in income. And families with incomes between 3 to 6 times the federal poverty level will see an additional 2 billion in income. For 2016 the CBO is projecting that the federal poverty level (FPL) will be $24,100 for a family of four. So 3 times the FPL is $72,300 per year. 6 times the FPL is $144,600 per year. Now ask yourself this question ...

Do you really think the vast majority of the people in those two income groups which will receive the lion's share of the benefits are the 8.25 million under 25 minimum wage workers?

OAW
No, I honestly think that you have this idea in your head that increasing demand for the same goods and services will somehow stimulate net economic growth. It doesn't matter what magical effect you claim Obama has over the numbers, Econ 101 dictates that when you constrict the labor supply, the prices for goods and services goes up. I'm asking you how you think that effect will be overcome in the face of massive layoffs. You've shown me the benefit for those targeted by this increase, yet fail to grasp the basic economic concept that all this "benefit" has to come from somewhere, and coupled with said job losses will be a net decrease in the wealth output of our economy. You cannot escape basic math, OAW. It doesn't matter what numbers you embolden and italicize.

There is only one way to truly grow the economy - by adding productive jobs to economy and increasing the wealth output of the total economy. Everything else is simply squeezing the balloon to get the air to go where we want it. You're suggesting we do exactly the opposite of that and sacrifice a segment of our workforce to put more money in the pockets of unskilled labor. The multiplier effect only works in a vacuum when you remove the variables that reflect the decrease in wealth output born by artificially constricting labor supply.

In other words, no amount of stat cherry picking or cool buzzwords will allow you to escape a basic economic reality.

I'm all for increasing the minimum wage, OAW. AFTER the economy recovers and we've gotten our spending problem under control. The man in office now is doing everything in his power to keep that from happening and trap an entitlement base to keep his party in power. He's preying upon the idiots that vote themselves money and even more so the idiots that buy into his PR machine and have lost all skepticism of a centralized economic authority.
( Last edited by Snow-i; Feb 24, 2014 at 04:20 PM. )
     
OAW
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Feb 24, 2014, 05:35 PM
 
Originally Posted by Snow-i View Post
What do we do with the 500,000 to a million people that won't have jobs anymore? Are we leaving them out in the cold?
What do we do with the 900,000 people who will still be in poverty without this increase?

Originally Posted by Snow-i View Post
No, I honestly think that you have this idea in your head that increasing demand for the same goods and services will somehow stimulate net economic growth.
It's not in my head. That's straight out of the CBO analysis.

Originally Posted by Snow-i View Post
It doesn't matter what magical effect you claim Obama has over the numbers, Econ 101 dictates that when you constrict the labor supply, the prices for goods and services goes up. I'm asking you how you think that effect will be overcome in the face of massive layoffs. You've shown me the benefit for those targeted by this increase, yet fail to grasp the basic economic concept that all this "benefit" has to come from somewhere, and coupled with said job losses will be a net decrease in the wealth output of our economy. You cannot escape basic math, OAW. It doesn't matter what numbers you embolden and italicize.
The only thing I can say to you at this point is that the CBO analysis says the exact opposite of what you keep telling yourself. The economic benefits I cited above are NET figures. IOW the projected job losses and its negative impact on income are INCLUDED in those numbers. Now if you choose to disbelieve what the CBO analysis says then that's your prerogative. But let's be clear ... that essentially means that you think you know better than the CBO and it's team of Ph.D. economists. And therefore your argument is with them and not me.



In the meantime, this graph here shows how the current federal minimum wage in 2013 has the same real purchasing power as the federal minimum wage in 1950. That is simply INSANE! And yes raising it will have its costs. No one is arguing that it won't. But when the alternative is to do nothing and allow the real purchasing power of the minimum wage to steadily decrease over time due to inflation ... I contend that the benefits far outweigh the costs. It just seems to me that as a society we need to decide whether or not a person working full-time should be in poverty. Period. If not, then we need to determine what the minimum standard of living for a full-time worker should be as a percentage above the FPL. Turn that into a minimum wage. Periodically adjust it automatically based upon inflation. And then just call it a day. That way a decade or so from now we won't have to waste time rehashing this same debate.

OAW
     
Snow-i  (op)
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Feb 24, 2014, 09:23 PM
 
Originally Posted by OAW View Post
What do we do with the 900,000 people who will still be in poverty without this increase?
FIX THE ****ING ECONOMY



The only thing I can say to you at this point is that the CBO analysis says the exact opposite of what you keep telling yourself.
No, man. You have trouble putting the numbers you're reading into context.

The economic benefits I cited above are NET figures. IOW the projected job losses and its negative impact on income are INCLUDED in those numbers.
So where is the estimate on the average increase in prices for goods and services as a result of the job losses? Conspicuously absent from your analysis.

. Now if you choose to disbelieve what the CBO analysis says then that's your prerogative. But let's be clear ... that essentially means that you think you know better than the CBO and it's team of Ph.D. economists. And therefore your argument is with them and not me.
No, I'm not arguing with the analysis. I'm arguing with your complete lack of ability to take the CBO findings and ask the important questions as to the net effects of this legislation that are out of scope to the CBO's purpose outside of the stats you're so proudly parroting. Let me ask you this, OAW. If this is such a good thing, why don't we increase the minimum wage to $25/hour?



In the meantime, this graph here shows how the current federal minimum wage in 2013 has the same real purchasing power as the federal minimum wage in 1950. That is simply INSANE! And yes raising it will have its costs. No one is arguing that it won't.
You are arguing exactly that.
But when the alternative is to do nothing and allow the real purchasing power of the minimum wage to steadily decrease over time due to inflation.
By eroding the purchasing power of the rest of the United States?
.. I contend that the benefits far outweigh the costs.
So it may be. Given the track record of this administration, don't hold your breath.
It just seems to me that as a society we need to decide whether or not a person working full-time should be in poverty.
. I think we must first decide if citizens working full time is a good thing. Your boys in blue seem to be confused on that issue depending on which way the political winds are shifting.

Period. If not, then we need to determine what the minimum standard of living for a full-time worker should be as a percentage above the FPL. Turn that into a minimum wage. Periodically adjust it automatically based upon inflation. And then just call it a day. That way a decade or so from now we won't have to waste time rehashing this same debate.
You know OAW, I agree with much of what you've said in this last post in general about the minimum wage. I would now like you to reconcile those thoughts with the state of our economy today

Why don't we offset the erosion of purchasing power (all else the same) experienced by the remaining 300 million Americans by reducing the taxes by 19 billion on middle and low income earners as well as small businesses?

If Obama can waste a billions on bankrupt solar plants and a failed ACA website, why are we the taxpayer footing the bill for this? Why do we need to lose the half-million jobs when clearly the private sector continues to struggle?
     
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Feb 24, 2014, 10:08 PM
 
Originally Posted by Snow-i View Post
By eroding the purchasing power of the rest of the United States?
There's an old saying ...

Everybody wants to go to Heaven, but nobody wants to die.

Originally Posted by Snow-i
Why don't we offset the erosion of purchasing power (all else the same) experienced by the remaining 300 million Americans by reducing the taxes by 19 billion on middle and low income earners as well as small businesses?
The offset already exists in the form of the additional 19 billion in income for families of four making up to $144K/year. And again, that figure is above and beyond the increase in hourly wages to the 16.5 million people directly affected by the legislation. I think that is more than sufficient to cover the extra buck for a pizza.

OAW
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Feb 25, 2014, 08:05 AM
 
Originally Posted by OAW View Post
Do you really think the vast majority of the people in those two income groups which will receive the lion's share of the benefits are the 8.25 million under 25 minimum wage workers?

OAW
Well... no, of course not. After all, there are only a total of 3.6 million hourly workers at or below the federal minimum wage so any math coming up with a number of beneficiaries from a minimum wage increase far exceeding that, multiplier () or not, would be woefully dubious at the outset. We've already discussed the CBO's history of accuracy, it's not like its failures aren't noteworthy here.

The income groups you cited my friend are household incomes and yes, the overwhelming majority of the total 3.6 million hourly workers at or below the Federal minimum wage are working part-time while living in homes outside the FPL and show a vast majority in restaurants and other food services, many of which are earning tips and commissions to supplement the hourly wages received. The good news is, according to BLS statistics, the free-market is working. The proportion of hourly paid workers earning the prevailing federal minimum wage or less declined from 5.2 percent in 2011 to 4.7 percent in 2012. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. It's amazing that even without a Federal mandate, far fewer are getting paid the minimum wage now and yet -- WE NEED A GOVERNMENT SOLUTION FOR THE IMPOVERISHED AND THEIR CHILDREN!

Instead of picking apart my words, why wouldn't you start by picking apart the downright dishonesty of our leadership on this issue and how this is being sold by its proponents? No matter which way you cut it, they're once again using a bunker-buster on an anthill and they're really helping very few, with studies showing virtually 0 impact on poverty. All this is, is the government mandating the private sector pay for the folly of their Keynesian stimulus scheme.
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Feb 25, 2014, 06:48 PM
 
Originally Posted by OAW View Post
There's an old saying ...

Everybody wants to go to Heaven, but nobody wants to die.
There's also a much older saying, more apt saying.

There's no such thing as a free lunch.


The offset already exists in the form of the additional 19 billion in income for families of four making up to $144K/year. And again, that figure is above and beyond the increase in hourly wages to the 16.5 million people directly affected by the legislation. I think that is more than sufficient to cover the extra buck for a pizza.

OAW
You don't get it man. You really don't understand basic econ do you? It's not like I'm making this stuff up.

We'll try a more visual approach.

You have a pie, right? This pie is the yearly American wealth output, aggregated as all the goods and services (wealth) created by working individuals via their businesses in the United States.

You remove 500,000 to a million jobs from that pie, what happens? It gets smaller. No matter which way you slice up that pie or measure its divisions, that pie has still gotten smaller. A "multiplier effect" does not automagically replace the wealth output of the jobs lost, because nobody is working those jobs anymore. You cannot make that pie bigger without actually producing something, whether it be a good or service - that's what ultimately creates "wealth" in this country. Multiplier effects do not create wealth, OAW. They never have. They never will, unless they gain sentience and start working construction jobs, the wealth output has been lost. The idea is to make that pie bigger so that there's more pie to go around. This political maneuver will have the opposite effect - jobs lost will mean a smaller output of wealth to go around. There will be less output to be shared among the private sector, and yet somehow you've convinced yourself that ultimately the economy will grow?

Do you understand that, OAW? If people are not working, no work is getting done. Multiplier effects do not replace workers, they only hide the loss of wealth in terms of relative currency. How much is a dollar worth, OAW?

If you want to tell me that we're offsetting the reduction in labor supply by using some form of wizard's math, you'll have to explain to me how those numbers are making existing workers and their outputs more efficient. You've yet to connect the dots, bro.
( Last edited by Snow-i; Feb 25, 2014 at 06:59 PM. )
     
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Feb 25, 2014, 07:07 PM
 
Originally Posted by Snow-i View Post
If you want to tell me that we're offsetting the reduction in labor supply by using some form of wizard's math, you'll have to explain to me how those numbers are making existing workers and their outputs more efficient. You've yet to connect the dots, bro.
Again. I'm not telling you anything. The CBO Report is telling you that the projected increases in aggregate demand for goods and services will offset the projected job losses and then some. As I mentioned to you earlier, it would be helpful if you actually read the CBO analysis. If the concept still eludes you afterwards then I really don't know what else to tell you.

OAW
     
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Feb 25, 2014, 07:18 PM
 
Originally Posted by OAW View Post
Again. I'm not telling you anything. The CBO Report is telling you that the projected increases in aggregate demand for goods and services will offset the projected job losses and then some. As I mentioned to you earlier, it would be helpful if you actually read the CBO analysis. If the concept still eludes you afterwards then I really don't know what else to tell you.

OAW
Demand. OAW. Do you know what that is? Do you know what effect increasing demand has? Can you tell the class in your own words?

I've read the CBO report, OAW. I don't think you have enough of an understanding of econ to fully comprehend its conclusions though. The report is written as though it assumes you have some level of understanding of basic economics. I'm not sure you do at this point considering you're ignoring several basic foundational realities of capitalism. The CBO report was not commissioned to address the questions I'm asking you now. You know, econ 101. It assumes you already know all that and is presenting the variables in a way for policy makers to decide if the job reduction and price increases is worth the welfare.

Go back, read my pie analogy again, and tell me how a smaller pie is good for America long term. If you don't want to hear it from me, go get yourself an econ book and read the first 2-3 chapters. Then we can talk about the CBO report and address each of the variables you're misinterpreting.

If you want to make an argument that these people are suffering so much at minimum wage that the smaller pie is worth the reduction in suffering by the targeted demographic - that's a different argument. But please don't spread misinformation that this will improve our economy overall in the long run - because that's simply wrong and even a high-school sophomore will be able to explain to you why.

If I'm too much of a righty for you to listen to and you don't like books, go find an economist and ask them what happens when you lose jobs and increase demand. Hell, google it.
     
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Feb 25, 2014, 07:54 PM
 
Originally Posted by Snow-i View Post
It assumes you already know all that and is presenting the variables in a way for policy makers to decide if the job reduction and price increases is worth the welfare.
And the CBO numbers essentially say that it is.

Originally Posted by Snow-i View Post
Go back, read my pie analogy again, and tell me how a smaller pie is good for America long term. If you don't want to hear it from me, go get yourself an econ book and read the first 2-3 chapters.Then we can talk about the CBO report and address each of the variables you're misinterpreting.

If you want to make an argument that these people are suffering so much at minimum wage that the smaller pie is worth the reduction in suffering by the targeted demographic - that's a different argument. But please don't spread misinformation that this will improve our economy overall in the long run - because that's simply wrong and even a high-school sophomore will be able to explain to you why.
The flawed premise that you keep stumbling upon is that your "pie analogy" presumes that the only factor in the overall size of the pie is job increases/decreases. That certainly has an impact. But you continue to fail to grasp the concept that the overall economic picture is affected by additional factors. You say you read the report so this part should be familiar n'est-ce pas?

Originally Posted by CBO Report
The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions:

- Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
The CBO analysis is telling you right there that even after factoring in the job losses, the higher costs for business owners, and the higher prices for consumers ... OVERALL REAL INCOME in the economy as a whole would still rise by $2 billion. IOW, the "pie" will GROW by $2 billion. So again ... if you still wish to insist that it will shrink because of "Econ 101" and that you know better than the team of Ph.D. economists at the CBO well then that's on you. It's virtually impossible to debate the issue when you refuse to accept that the conclusion plainly written in the report actually means what it says. For the rest of us the concept is fairly easy to grasp.

OAW
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Feb 25, 2014, 08:46 PM
 
Originally Posted by OAW View Post
And the CBO numbers essentially say that it is.
It doesn't reconcile with basic Econ, and I don't think the CBO's science is wrong - they're incomplete (they were never intended to address the issues I'm raising here).

The flawed premise that you keep stumbling upon is that your "pie analogy" presumes that the only factor in the overall size of the pie is job increases/decreases. That certainly has an impact. But you continue to fail to grasp the concept that the overall economic picture is affected by additional factors. You say you read the report so this part should be familiar n'est-ce pas?
Ok Dr OAW, what other mechanisms in the economy create wealth? Not transfer it, not buy it or sell it (international trade - buying other's made wealth does not apply here). Create it. That is the only mechanism by which wealth is created. Critical thinking bro! Try it!


The CBO analysis is telling you right there that even after factoring in the job losses, the higher costs for business owners, and the higher prices for consumers ... OVERALL REAL INCOME in the economy as a whole would still rise by $2 billion. IOW, the "pie" will GROW by $2 billion. So again ... if you still wish to insist that it will shrink because of "Econ 101" and that you know better than the team of Ph.D. economists at the CBO well then that's on you. It's virtually impossible to debate the issue when you refuse to accept that the conclusion plainly written in the report actually means what it says. For the rest of us the concept is fairly easy to grasp.

OAW

There's that mathematical wizard creating wealth out of his ass again. Read it again, then read my posts again. What question have I been asking you time and time again?

It took awhile for us to get here OAW yes, additional income will be created. But where is the f*ck all is that income going to come from OAW?! The wealth behind that income is not being created as we're going to lose about 500,00 to a million jobs, so where's that income going to come from? Who's really paying for this?


Before you get high and mighty with the credentials of the people trying f*ck you in the ass, think about it.

The time to do minimum wage increase is during a strong economy, when the markets can adjust because of the overall expansion of the wealth being created. That's not what we have now.

If you're not creating wealth, you're taking it from somewhere. Currency is a rough measurement of wealth that can be manipulated.
( Last edited by Snow-i; Feb 25, 2014 at 09:06 PM. )
     
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Feb 25, 2014, 09:34 PM
 
Originally Posted by Snow-i View Post
It took awhile for us to get here OAW yes, additional income will be created.
Now that wasn't so hard now was it?

Originally Posted by Snow-i View Post
But where is the f*ck all is that income going to come from OAW?! The wealth behind that income is not being created as we're going to lose about 500,00 to a million jobs, so where's that income going to come from? Who's really paying for this?
Rather than play this guessing game you could just cut to the chase and state what you mean. But since you insist it appears you are implying that the income will be the result of inflation. Higher prices coupled with smaller labor supply and all that jazz. So please read it again and pay close attention to the parts I'm highlighting for you ... and then re-consider your line of reasoning.

Originally Posted by CBO Report
Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions:

- Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
OAW
     
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Feb 26, 2014, 11:27 AM
 
Since you completely ignored yet another question of mine, I'll ask again:

What other mechanisms create wealth? You said there were others, what are they?


Originally Posted by OAW View Post
Now that wasn't so hard now was it?
Income OAW, Income. What is income? It doesn't grow on a ****ing tree. Income to one person is expense to another.

Where do you think it comes from? Just grows out of Obama's bush?

I'll give you an example. My income comes from my company. Our clients provide my company income as an expense.

Where do you think this income is going to come from?


Rather than play this guessing game you could just cut to the chase and state what you mean. But since you insist it appears you are implying that the income will be the result of inflation. Higher prices coupled with smaller labor supply and all that jazz. So please read it again and pay close attention to the parts I'm highlighting for you ... and then re-consider your line of reasoning.


OAW
Ok OAW. I'll cut to the chase (for the 9th time).

Where do you think this income for the targeted demographic is going to come from? I've mentioned nothing about inflation as all the numbers you're reading are weighted for inflation. Instead of trying to guess what I'm going to ask you about next, how about you just address my questions directly and we can actually move this forward?

Please; answer the freaking question. I can't make it any simpler for you. Who is paying for this? Where is this money/wealth coming from? That's what all this has been about OAW - the pie analogy, the walls of text, the basic econ lesson. You still haven't answered that question. Where the **** is this wealth that's being put into these people's hands coming from? Who are we taking it from to give it to them? Or are you suggesting that this magical wizard is just creating this money/wealth out of thin air (hint: that's impossible).


Can you answer the question OAW? I've only been asking you in 9 separate posts over the last few days. It shouldn't be a hard question to answer.
( Last edited by Snow-i; Feb 26, 2014 at 11:41 AM. )
     
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Feb 26, 2014, 12:34 PM
 
Gee, the CBO didn't do such a great job analyzing ACA, what makes you so sure this also isn't Garbage in Gospel out?
     
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Feb 26, 2014, 02:24 PM
 
Originally Posted by Snow-i View Post
Income OAW, Income. What is income? It doesn't grow on a ****ing tree. Income to one person is expense to another.

Where do you think it comes from? Just grows out of Obama's bush?

I'll give you an example. My income comes from my company. Our clients provide my company income as an expense.

Where do you think this income is going to come from?

Ok OAW. I'll cut to the chase (for the 9th time).

Where do you think this income for the targeted demographic is going to come from?

Please; answer the freaking question. I can't make it any simpler for you. Who is paying for this? Where is this money/wealth coming from? That's what all this has been about OAW - the pie analogy, the walls of text, the basic econ lesson. You still haven't answered that question. Where the **** is this wealth that's being put into these people's hands coming from? Who are we taking it from to give it to them? Or are you suggesting that this magical wizard is just creating this money/wealth out of thin air (hint: that's impossible).

Can you answer the question OAW? I've only been asking you in 9 separate posts over the last few days. It shouldn't be a hard question to answer.
I suppose I question your incessant need to question the patently obvious.



Right there it's telling you that this policy will generate $19 billion of additional income for families making less than $144K per year (i.e. 6 times the FPL) . And $17 billion of less income for families making more than $144K per year. Which nets out to $2 billion of additional income OVERALL because the lion's share was an income transfer. Where does the extra $2 billion come from? From the increase in aggregate demand for goods and services that obviously results when the demographics that are the most likely to spend have more spending power (as a result of increased wages) in what is fundamentally a consumer demand driven economy. This is a concept so basic that you'll have to forgive me if I presumed that I didn't need to spell it out for you.

OAW
     
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Feb 26, 2014, 04:26 PM
 
Originally Posted by OAW View Post
I suppose I question your incessant need to question the patently obvious.



Right there it's telling you that this policy will generate $19 billion of additional income for families making less than $144K per year (i.e. 6 times the FPL).
Im not asking you how much income will be generated OAW, I'm asking you where you think this money is going to come from.

. And $17 billion of less income for families making more than $144K per year. Which nets out to $2 billion of additional income OVERALL because the lion's share was an income transfer. Where does the extra $2 billion come from? From the increase in aggregate demand for goods and services that obviously results when the demographics that are the most likely to spend have more spending power (as a result of increased wages) in what is fundamentally a consumer demand driven economy. This is a concept so basic that you'll have to forgive me if I presumed that I didn't need to spell it out for you.

OAW
It is a basic concept OAW, one you seem oblivious to.

We're losing 500k to a millions jobs' worth of production to boost income to a certain subset of people. Basic stuff, right?

I'm all for it OAW, but not at the expense of the economy at large. This extra income is going to be generated from higher prices due to increased demand. I'm asking you to reconcile how you view this income boost for one group of people at the expense of total production as a net benefit to an already struggling economy. It's not like small business is making a killing out there, and this will just add that much more strain to an already delicate situation. Will it collapse the economy? No, but it'll certainly move it in the wrong direction and put that much more strain to the engine of this economy.

Your response to that is "READ THE CBO REPORT" which is exactly what I've done. It seems you're confusing income with a net increase to the economy. Basic econ and accounting dictate that income comes from somewhere as the only way to create wealth is via the production of goods and services. You're saying it will come from those that can afford it, I'm saying that either way we're looking at another hit to economy to fund this, because that's exactly what the CBO report is saying. The pie will get smaller and the lines dividing its' sections will be redrawn, boosting income for workers and increasing expense for businesses. We are NOT offsetting the hit that businesses will take, we're simply justifying it with a net income boost to minimum wage earners.

I'm asking why, instead of reducing the number of jobs in this country (which are already dismal), we don't relieve the strain on businesses causing the reduction in available jobs. As soon as we make it to this point, you say "ITS OFFSET BY INCOME" completely neglecting the fact that income to one person is expense from somewhere else. All the while reducing the output of production for the economy at large. Sure a decent sized group of people will have more money to spend, but that money will be spent at higher prices for the same goods/services. After you shake all this out, the only aggregate net gain/loss to the economy will be the jobs lost. Everything else is just how the money is partitioned and used. This won't create wealth, it'll simply shift some of it around at the expense of 500k to millions jobs worth of output.


So, I asked this question a few posts up. Why don't we offset the expense to business owners via tax reduction so we can have our pie and eat it too? Take the strain off of businesses so that the expense they'll eat to provide income doesn't result in a loss of productive jobs across the country. Take the extra money businesses will be on the hook for and give a reprieve from taxes in an equal amount so that we do not bleed 500,000 to a million jobs from an economy that's already losing jobs fast and is no where near a path to recovery from the 08 recession.

With this proposal ($10.10 option):
-Net income for low-wage earners targeted here will increase by 2 billion weighted. (good thing in a vacuum.)
-Demand for everyday goods and services, and therefore cost, will be driven up (bad thing).
-Total economic output within the United states will decrease (very bad thing).
-We'll add another 500,000 to a million people to those without jobs out in the cold (bad thing).

Do you disagree with any of the bulleted points above? If so, please explain how.
     
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Feb 26, 2014, 07:12 PM
 
Originally Posted by Snow-i View Post
Im not asking you how much income will be generated OAW, I'm asking you where you think this money is going to come from.
Originally Posted by Snow-i View Post
It is a basic concept OAW, one you seem oblivious to.

We're losing 500k to a millions jobs' worth of production to boost income to a certain subset of people. Basic stuff, right?

I'm all for it OAW, but not at the expense of the economy at large. This extra income is going to be generated from higher prices due to increased demand.
Well you know Snow-i I could have sworn I've said "increased aggregate demand for goods and services" a half dozen times already. I could have sworn I've also mentioned higher prices faced by consumers and higher costs faced by businesses. Yet still you insist that you are privy to some grand insight that is somehow escaping me. And in other news ... the sky is blue, water is still wet, and the sun continues to rise in the east.

Originally Posted by Snow-i View Post
I'm asking you to reconcile how you view this income boost for one group of people at the expense of total production as a net benefit to an already struggling economy. It's not like small business is making a killing out there, and this will just add that much more strain to an already delicate situation. Will it collapse the economy? No, but it'll certainly move it in the wrong direction and put that much more strain to the engine of this economy.

Your response to that is "READ THE CBO REPORT" which is exactly what I've done. It seems you're confusing income with a net increase to the economy. Basic econ and accounting dictate that income comes from somewhere as the only way to create wealth is via the production of goods and services. You're saying it will come from those that can afford it, I'm saying that either way we're looking at another hit to economy to fund this, because that's exactly what the CBO report is saying. The pie will get smaller and the lines dividing its' sections will be redrawn, boosting income for workers and increasing expense for businesses. We are NOT offsetting the hit that businesses will take, we're simply justifying it with a net income boost to minimum wage earners.
So you said you read the CBO report, but you continue to argue the EXACT OPPOSITE of what it is saying.

Originally Posted by CBO Report
The effects on total national income of an increase in the minimum wage differ in the long term and in the short term. In the long term, the key determinant of the NATION’S OUTPUT and income is the size and quality of the workforce, the stock of productive capital (such as factories and computers), and the efficiency with which workers and capital are used to produce goods and services (known as total factor productivity). Raising the minimum wage probably reduces employment, in CBO’s assessment. In the long term, that reduction in the workforce lowers the nation’s output and income a little, which means that the income losses of some people are slightly larger than the income gains of others. In the short term, by contrast, the nation’s output and income can deviate from the amounts that would typically arise from a given workforce, capital stock, and productivity in response to changes in the economywide demand for goods and services. Raising the minimum wage increases that demand, in CBO’s assessment, because the families that experience increases in income tend to raise their consumption more than the families that experience decreases in income tend to reduce their consumption. In the short term, that increase in demand raises the NATION’S OUTPUT and income slightly, which means that the income losses of some people are slightly smaller than the income gains of others.
Again, the CBO Report is stating that the increase in demand will raise the NATION'S OUTPUT as well as income. So contrary to what you are saying it is explicitly saying there WILL BE a "net increase to the economy". Granted, it also says that this will be a short-term boost ... and that in the long-term a "reduction in the workforce lowers the nation's output and income a little". But that's not what you have been saying. You have been unequivocal in your "pie shrinking" analogy which is why you are in error about the conclusions of the analysis. It is also worth noting that CBO projections measure the proposed policy change vs. existing policy. IOW, the analysis takes an approach that essentially functions like this .... "All other things being equal, if this particular policy change and this policy change alone were implemented ... this is what the CBO projects will happen." So even the projected long-term decrease in the nation's output by "a little" is only applicable in the vacuum of no future policy changes to further boost economic output. And we both know the likelihood of no future policy changes in the long-term is slim to none.

Originally Posted by Snow-i View Post
So, I asked this question a few posts up. Why don't we offset the expense to business owners via tax reduction so we can have our pie and eat it too? Take the strain off of businesses so that the expense they'll eat to provide income doesn't result in a loss of productive jobs across the country. Take the extra money businesses will be on the hook for and give a reprieve from taxes in an equal amount so that we do not bleed 500,000 to a million jobs from an economy that's already losing jobs fast and is no where near a path to recovery from the 08 recession.
1. You do realize that labor expenses are already tax deductible to businesses right?

2. And you also realize that businesses will only have to "eat" the increased labor expense if they do NOT pass them onto the consumer in the form of higher prices right?

3. And it does occur to you that businesses get to do #1 REGARDLESS of how they choose to handle #2 right?

So let's put all of this together shall we?

A. On the one hand you are arguing that "This extra income is going to be generated from higher prices".

B. But OTOH you are arguing for an additional tax cut to businesses to "offset the expense" that has ALREADY BEEN OFFSET in the form of increased tax deductions ... and given your position on A above ... FURTHER OFFSET in the form of higher prices.

This strikes me as a prime example of a position taken out of ideology instead of a clear understanding of how an income statement functions. Businesses are taxed based upon a percentage their profits. Labor expenses are already factored into a business's profits. A business decision to increase or decrease its labor force is going to be made based upon how it impacts profits (current or future) ... not taxation. Because that decision is made well before the taxation on those profits is even a consideration. Consequently, any reduction in taxation is not going to have a significant impact on any employee headcount decisions.

So instead of trying have the "tail wag the dog" by focusing on tax cuts, perhaps a better approach would be to focus on the front-end by stimulating demand? Infrastructure investment? Partial sequester rollback? Etc.?

OAW
( Last edited by OAW; Feb 26, 2014 at 07:23 PM. )
     
Snow-i  (op)
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Feb 27, 2014, 01:58 AM
 
Originally Posted by OAW View Post
Well you know Snow-i I could have sworn I've said "increased aggregate demand for goods and services" a half dozen times already. I could have sworn I've also mentioned higher prices faced by consumers and higher costs faced by businesses. Yet still you insist that you are privy to some grand insight that is somehow escaping me. And in other news ... the sky is blue, water is still wet, and the sun continues to rise in the east. :roll eyes:
You've mentioned them. You've still not explained how this is a good thing for the economy.


So you said you read the CBO report, but you continue to argue the EXACT OPPOSITE of what it is saying.
How so?


Again, the CBO Report is stating that the increase in demand will raise the NATION'S OUTPUT as well as income. So contrary to what you are saying it is explicitly saying there WILL BE a "net increase to the economy". Granted, it also says that this will be a short-term boost
Do you even read my posts? Who the **** cares about a short term boost? Do i have to go quote myself from on this very same page? If so I'm out man.
... and that in the long-term a "reduction in the workforce lowers the nation's output and income a little". But that's not what you have been saying. You have been unequivocal in your "pie shrinking" analogy which is why you are in error about the conclusions of the analysis. It is also worth noting that CBO projections measure the proposed policy change vs. existing policy. IOW, the analysis takes an approach that essentially functions like this .... "All other things being equal, if this particular policy change and this policy change alone were implemented ... this is what the CBO projects will happen." So even the projected long-term decrease in the nation's output by "a little" is only applicable in the vacuum of no future policy changes to further boost economic output. And we both know the likelihood of no future policy changes in the long-term is slim to none.
Yeah OAW, they'll take it back down in a future policy change


1. You do realize that labor expenses are already tax deductible to businesses right?
What does that have to do with anything I said?
2. And you also realize that businesses will only have to "eat" the increased labor expense if they do NOT pass them onto the consumer in the form of higher prices right?
And I contend that this is terrible for the economy, are you arguing this?

3. And it does occur to you that businesses get to do #1 REGARDLESS of how they choose to handle #2 right?
Can you go back and actually read what I'm saying? When did I say anything about making labor expense tax deductible? That's absurd, and doesn't even make sense. No wonder you have such issues understanding me. You're barely even reading my posts.

So let's put all of this together shall we?
Based on what? 1 2 and 3 have jackshit to do with what I said.
A. On the one hand you are arguing that "This extra income is going to be generated from higher prices".
Is this incorrect?
B. But OTOH you are arguing for an additional tax cut to businesses to "offset the expense" that has ALREADY BEEN OFFSET in the form of increased tax deductions ... and given your position on A above ... FURTHER OFFSET in the form of higher prices.
I'm seriously surprised at how hard you're trying here and completely failing to apply basic economic principles to the discussion at hand. Increased tax deductions? You mean there's less profit to tax right revenue being equal? That's what you're saying? That's not an offset. That's an increased expense.

Labor expense isn't a deduction, either. It's an expense. Dude, educate yourself here. I can't continue in a conversation where you don't understand the economic principles taught in grade school, much less analyze a CBO report with you.

Higher prices isn't necessarily offsetting the increased expenses either.

This strikes me as a prime example of a position taken out of ideology instead of a clear understanding of how an income statement functions.
No, it's a prime example of you completely failing to understand the basic principles of econ driving my arguments, and as a result incorrectly interpreting my arguments in relation to those principles.

Businesses are taxed based upon a percentage their profits. Labor expenses are already factored into a business's profits.
Ok, so they'll be factored in at a higher rate. Was this in contention? You're not really saying anything here.
A business decision to increase or decrease its labor force is going to be made based upon how it impacts profits (current or future) ... not taxation.
What in the hell are you talking about? Taxation is is a major consideration when managing personnel. Tax liability is a substantial portion of the cost born by both the business and the worker. You do know what payroll tax is, right? You do know that it's a percentage of gross pay, right?
Because that decision is made well before the taxation on those profits is even a consideration.
I can tell you've never been near the management for a real, for-profit business before.

Consequently, any reduction in taxation is not going to have a significant impact on any employee headcount decisions.
This might seriously the most misinformed thing I've read on these forums in a long time OAW.

So instead of trying have the "tail wag the dog" by focusing on tax cuts, perhaps a better approach would be to focus on the front-end by stimulating demand? Infrastructure investment? Partial sequester rollback? Etc.?
Yes OAW higher prices stimulate consumption and production.

Please go read an econ textbook. Econ 101 should give you everything you need to know. Let me know when you do, and then perhaps we can have a productive discussion. Until then, I've stated my arguments 7 different ways and you've still failed to even understand what I'm arguing, much less get into a discussions of the merits of the effects (which really where I thought we'd be by now). Ah well.
     
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Feb 27, 2014, 06:13 PM
 
Originally Posted by Snow-i
Please go read an econ textbook. Econ 101 should give you everything you need to know. Let me know when you do, and then perhaps we can have a productive discussion. Until then, I've stated my arguments 7 different ways and you've still failed to even understand what I'm arguing, much less get into a discussions of the merits of the effects (which really where I thought we'd be by now). Ah well.
First of all .... this "Econ 101" thing has become more than tiresome. Let me be clear. You do NOT want to compare educational backgrounds, academic performance, income levels, etc. with me. You'd do well to quit trying to turn this into a d*ck measuring contest ... because you will lose.

That being said, you are correct. You have been stating your arguments "7 different ways". Which is part and parcel of the problem. When you make a point ... I respond to that particular point with a counter-point. There's nothing complicated about that. So you are either convoluting the various points you've been trying to make OR you are shifting your argument by making a somewhat related but different point when you have no comeback for one of my counter-points. Let me provide an example of this so we can get past your rather transparent shenanigans ok? This is how this particular exchange went down ....

Originally Posted by Snow-i
Ok OAW. I'll cut to the chase (for the 9th time).

Where do you think this income for the targeted demographic is going to come from? I've mentioned nothing about inflation as all the numbers you're reading are weighted for inflation. Instead of trying to guess what I'm going to ask you about next, how about you just address my questions directly and we can actually move this forward?

Please; answer the freaking question. I can't make it any simpler for you. Who is paying for this? Where is this money/wealth coming from? That's what all this has been about OAW - the pie analogy, the walls of text, the basic econ lesson. You still haven't answered that question. Where the **** is this wealth that's being put into these people's hands coming from? Who are we taking it from to give it to them? Or are you suggesting that this magical wizard is just creating this money/wealth out of thin air (hint: that's impossible).

Can you answer the question OAW? I've only been asking you in 9 separate posts over the last few days. It shouldn't be a hard question to answer.
Originally Posted by OAW
I suppose I question your incessant need to question the patently obvious.



Right there it's telling you that this policy will generate $19 billion of additional income for families making less than $144K per year (i.e. 6 times the FPL) . And $17 billion of less income for families making more than $144K per year. Which nets out to $2 billion of additional income OVERALL because the lion's share was an income transfer. Where does the extra $2 billion come from? From the increase in aggregate demand for goods and services that obviously results when the demographics that are the most likely to spend have more spending power (as a result of increased wages) in what is fundamentally a consumer demand driven economy. This is a concept so basic that you'll have to forgive me if I presumed that I didn't need to spell it out for you.
Originally Posted by Snow-i View Post
Im not asking you how much income will be generated OAW, I'm asking you where you think this money is going to come from.
Originally Posted by Snow-i View Post
It is a basic concept OAW, one you seem oblivious to.

We're losing 500k to a millions jobs' worth of production to boost income to a certain subset of people. Basic stuff, right?

I'm all for it OAW, but not at the expense of the economy at large. This extra income is going to be generated from higher prices due to increased demand.
Originally Posted by OAW
Well you know Snow-i I could have sworn I've said "increased aggregate demand for goods and services" a half dozen times already. I could have sworn I've also mentioned higher prices faced by consumers and higher costs faced by businesses. Yet still you insist that you are privy to some grand insight that is somehow escaping me. And in other news ... the sky is blue, water is still wet, and the sun continues to rise in the east.
Originally Posted by Snow-i
You've mentioned them. You've still not explained how this is a good thing for the economy.
So throughout this thread you have repeatedly, incessantly, over and over again asked me this "Where is the income coming from?" question. As I stated earlier, you've been beating this drum like "you are privy to some grand insight that is somehow escaping me.". My answer was already there in that first quote in blue. In fact, it was there long before ... but I'm not going to quote every other time I've said the same thing even earlier in the thread because we both know that I did so. You then decided to go and reveal your "grand insight" in blue as well... and when I countered and told you in blue that I had already said that a half dozen times already ... you at least acknowledged that I had so I'll grant you that much ... but you then tried to "flip the script" to a different point altogether! And was foolish enough to think that I wouldn't notice!!

You do realize that "Where is the income coming from?" and "Is it a good thing for the economy for the income to come from there?" are two different questions right? If you really wanted to discuss the latter then why spend so much time and energy asking about the former? Especially when the answer to that question had been given repeatedly? But of course, if the intent with the former was merely to provide a pretext for making snide little "Econ 101" comments ... then how is that d*ck measuring contest working out for you thus far?

In any event, my answer to your latter question was ALREADY PROVIDED to you earlier as well. So again, do I really have to explain to you why "increased aggregate demand for goods and services" is a "good thing" for a "consumer demand driven economy"? Like ... really? If a business is presently meeting the existing demand for its goods/services ... do you really think it's going to increase its output and/or increase its employee headcount without a corresponding increase in demand?

But let's continue with yet another example of these shenanigans from a separate exchange ....

Originally Posted by Snow-i
So, I asked this question a few posts up. Why don't we offset the expense to business owners via tax reduction so we can have our pie and eat it too? Take the strain off of businesses so that the expense they'll eat to provide income doesn't result in a loss of productive jobs across the country. Take the extra money businesses will be on the hook for and give a reprieve from taxes in an equal amount so that we do not bleed 500,000 to a million jobs from an economy that's already losing jobs fast and is no where near a path to recovery from the 08 recession.
Originally Posted by OAW
1. You do realize that labor expenses are already tax deductible to businesses right?

2. And you also realize that businesses will only have to "eat" the increased labor expense if they do NOT pass them onto the consumer in the form of higher prices right?

3. And it does occur to you that businesses get to do #1 REGARDLESS of how they choose to handle #2 right?

So let's put all of this together shall we?
Originally Posted by Snow-i
Based on what? 1 2 and 3 have jackshit to do with what I said.
Really? So were all the readers of this thread suffering from some sort of collective hallucination when they read your words in blue suggesting we offset the increased labor expenses to businesses with a tax reduction for an equal amount? But when I start to respond to your suggestion and also make mention of labor expenses and tax reduction mechanisms you then turn around and claim that it has nothing to do with what you said. So again, are you just convoluting your various points OR shifting your argument by making a somewhat related but different point when you have no comeback for the counter-point?

Oh but wait it gets worse! .....

Originally Posted by Snow-i
I'm seriously surprised at how hard you're trying here and completely failing to apply basic economic principles to the discussion at hand. Increased tax deductions? You mean there's less profit to tax right revenue being equal? That's what you're saying? That's not an offset. That's an increased expense.

Labor expense isn't a deduction, either. It's an expense. Dude, educate yourself here. I can't continue in a conversation where you don't understand the economic principles taught in grade school, much less analyze a CBO report with you.
Did you really just say that labor expenses are NOT tax deductible for businesses? Right alongside yet another snide little "Econ 101" comment. Like ... seriously???? I think I'll just respond to that little gem with this ...

Originally Posted by IRS
You can generally deduct the amount you pay your employees for the services they perform. The pay may be in cash, property, or services. It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. For information about deducting employment taxes, see chapter 5.
So can we at least agree that you are at best ummmm .... "misinformed" on that particular topic? Or will you simply continue to insist that you know better despite all evidence to the contrary? Regardless, let's put all that aside for the moment and address your suggestion to "Take the extra money businesses will be on the hook for and give a reprieve from taxes in an equal amount." on its own merits shall we? Now I'm going to provide a basic example. With simple round numbers and a 10% tax rate for arithmetic ease and illustrative purposes. Ok?

Scenario A

Revenue: $1000
Operating Expenses: $800
Operating Profit: $200
Tax Liability: $200 * 10% = $20
Net Profit: $180

Now let's assume that because of an increase in the minimum wage the figures now look like this ....

Scenario B

Revenue: $1000
Operating Expenses: $850
Operating Profit: $150
Tax Liability: $150 * 10% = $15
Net Profit: $135

As we can see that extra $50 in Labor Expenses resulted in $45 less in Net Profit in Scenario B. Now the original Tax Liability in Scenario A was only $20. So in order to "give a reprieve from taxes in an equal amount" for the extra $50 in Labor Expenses we'd not only have to eliminate the original Tax Liability altogether ... but we'd also have to provide a refundable tax credit for 150% of the original $20 Tax Liability! Do you now see the utter impracticality of that suggestion? Do you now understand why I said that it was "a prime example of a position taken out of ideology instead of a clear understanding of how an income statement functions." Does it now finally "click" for you why I said that "instead of trying to have the "tail wag the dog" by focusing on tax cuts, perhaps a better approach would be to focus on the front-end by stimulating demand? Infrastructure investment? Partial sequester rollback? Etc.?"

The economy as a whole will need to absorb those increased expenses ... not the tax code. Economic growth is where the money comes from to do this. Hence, why increasing aggregate demand for goods and services in a consumer demand driven economy is crucial.

OAW
( Last edited by OAW; Feb 27, 2014 at 11:51 PM. )
     
finboy
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Feb 27, 2014, 10:15 PM
 
Originally Posted by Snow-i View Post
Where do you think that money comes from OAW?
It's simply amazing to me the ignorance of the masses on this kind of thing. I know the research cited here accounts for job losses the best it can, but the idea that all that new money is going to be shelled out by the 1% or some other class warfare target demographic is insane. The people who buy the products and use the services are going to make up the difference, not the bondholders or shareholders, or even the "overpaid" managers. So, it's the MIDDLE-CLASS that will eat it, and to some extent the lower-class who will lose training wage opportunities forever. Poof. Those are gone. So those folks with no skills will have one less way to learn them (legally).

Growing the ranks of the poor and dependent is the objective of The Left, and they just keep demonstrating it every day.
     
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Feb 27, 2014, 11:07 PM
 
Originally Posted by finboy View Post
Growing the ranks of the poor and dependent is the objective of The Left, and they just keep demonstrating it every day.
And 900,000 people lifted out of poverty is growing the ranks of the poor? I suppose you'd prefer they stayed broker than the 10 Commandments so the "middle class" can save a nickel at Wal-mart.

OAW
     
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Feb 28, 2014, 08:19 AM
 
Originally Posted by OAW View Post
And 900,000 people lifted out of poverty is growing the ranks of the poor? I suppose you'd prefer they stayed broker than the 10 Commandments so the "middle class" can save a nickel at Wal-mart.

OAW
That's just the nature of the economy. People move in and out of the income quintiles all the time, it's fluid. Folks start off at minimum wage and generally don't stay there. I didn't earn minimum wage for very long, did you? Hell, I don't think either of my daughters had ever experienced minimum wage.

Again from the BLS; The proportion of hourly paid workers earning the prevailing federal minimum wage or less declined from 5.2 percent in 2011 to 4.7 percent in 2012. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. That's the free market doing what it do. We don't need the government to do anything here.
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Feb 28, 2014, 06:56 PM
 
Originally Posted by ebuddy View Post
I didn't earn minimum wage for very long, did you?
No I didn't. But studies are increasingly showing that the demographic of the people making minimum wage today isn't the same as it was back in the day when you and I were in that boat. It's not just teens working their first gig anymore. We now have adults in that boat ... many in their 30s.

Originally Posted by ebuddy View Post
Again from the BLS; The proportion of hourly paid workers earning the prevailing federal minimum wage or less declined from 5.2 percent in 2011 to 4.7 percent in 2012. This remains well below the figure of 13.4 percent in 1979, when data were first collected on a regular basis. That's the free market doing what it do. We don't need the government to do anything here.
Yeah but that 4.7% still represents 16.5 million people my friend! Actually scratch that because it's not entirely accurate. That's not how many people are making the prevailing federal minimum wage. That's the number of people who are making less than the proposed federal minimum wage. In any event, my point is that's a lot of people!

I suppose for me what this really comes down to is fairly straightforward. So let's put left vs right, Dem vs GOP aside and focus on two key issues. And answer for me the following ....

A. Do you think that it is proper for the prevailing federal minimum wage in 2014 to have the same real purchasing power as the federal minimum wage did in 1950? If so, why? If not, why not?

B. Do you have an objection to having a periodic, automatic adjustment to the federal minimum wage ... whatever it may be ... that is tied to the rate of inflation? If so, why? If not, why not?

OAW
     
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Mar 1, 2014, 09:52 AM
 
When a large percent of the population become intellectually and educationally stagnant, so do their wages. As time move on, they become even more worthless. Union auto workers come to mind. Does media and the political BS have much to do with this desire to sit on the couch and play with the iPad instead of trying to get ahead? Why does it seem that people are more selfish and self centered and does that also contribute to this lack of desire to get ahead. We have more lazy stupid slackers than ever.
     
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Mar 1, 2014, 10:33 AM
 
Originally Posted by OAW View Post
No I didn't. But studies are increasingly showing that the demographic of the people making minimum wage today isn't the same as it was back in the day when you and I were in that boat. It's not just teens working their first gig anymore. We now have adults in that boat ... many in their 30s.
Do you have something to substantiate this claim? "Back in the days" of 1979, nearly 3 times more people were earning the prevailing minimum wage. I'd be willing to bet this also included a higher number of those in the 30+ age-range earning it then, over now.

Yeah but that 4.7% still represents 16.5 million people my friend! Actually scratch that because it's not entirely accurate.
Not entirely accurate? More like, nowhere near accurate. There are a total of 3.6 million hourly workers at or below the federal minimum wage.

That's not how many people are making the prevailing federal minimum wage. That's the number of people who are making less than the proposed federal minimum wage. In any event, my point is that's a lot of people!
Yes, and there are many more for which there would be no room in the departmental budget for an increase. This is where cold CBO numbers remain ignorant of how businesses operate.

For example, our budget this year company-wide was able to produce an average 3.0% COL increase across the board. No matter what increase you give to Johnny or to Jane, it had to come out to 3.0% overall. This means management had very little headroom for acknowledging superior performance. For every one person that received a 4% COL increase, someone else had to be getting a 2% COL increase.

If a business owner must go through his or her entire base of unskilled, entry-level personnel and issue a 39% wage increase from $7.25/hr to $10.10/hr overnight, what do you suppose the worker at $10.50/hr is going to be told about the state of the company budget in their annual performance eval and what is left for a COL increase for them this year? Do you think all this talk about "fairness" and "living wage" is going to produce enough money to accommodate a 39% increase for Johnny @ 7.25/hr AND a feasible COL increase for Jane @ $10.50/hr? Of course not, businesses interested in solvency (something the government couldn't possibly understand) can't operate this way.


I suppose for me what this really comes down to is fairly straightforward. So let's put left vs right, Dem vs GOP aside and focus on two key issues. And answer for me the following ....

A. Do you think that it is proper for the prevailing federal minimum wage in 2014 to have the same real purchasing power as the federal minimum wage did in 1950? If so, why? If not, why not?
No. Sounds to me like a more pervasive economic problem from a decreasing dollar, not solved by raising a minimum wage for the least-skilled, entry-level employment base. This is the government distorting the marketplace and attempting to ease the symptoms of their folly.

That pain in your left arm is telling you something, having the government come in and shove morphine into it isn't going to fix the problem.

B. Do you have an objection to having a periodic, automatic adjustment to the federal minimum wage ... whatever it may be ... that is tied to the rate of inflation? If so, why? If not, why not?

OAW
Yes, I object. I don't believe there has to be a Federal minimum wage and I've substantiated that by showing you what the market has done for workers without Federally mandated minimums. The government has proven time and again to be woefully out of touch with the business community and their "solutions" only exacerbate the very problems they try to solve.

Not unlike moving the victim of a neck injury. If you don't understand neck injuries, your noble effort to pluck him up and get him to the hospital may kill him.
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el chupacabra
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Mar 2, 2014, 10:12 PM
 
Where does the extra money come from? From the increase in demand for goods and services
This is like saying if I want the stuff in your house, such as your TV, piano or toaster, I should buy it from you, but if I can't afford it I should steal your money from you, then... I will offer you the money I stole back to you in exchange for your stuff.

This is as If I were your employee, and you told me I could purchase your stuff for a certain price and I responded with "increase my wage so I can give the extra income back to you in exchange for your stuff". See how this wouldn't work for you?

Raising wages wouldn't be much of problem in an economic vacuum. As one wage went up so would all those above it effectively creating a wash by inflation as the new min wage became the new "it must be raised again" wage.

In a globalized economy where departments hiring American workers under minimum wage laws are competing with foreign departments running under maximum wage laws, you just end up with outsourcing.
~$7/hr vs $4/day.

Sure you can't outsource every min wage employee such as fast food/clerks; but as wages go up working their way through the tiers eventually you hit the tier of jobs of which it's now cheaper to outsource than to give wage increases that keep up with inflation.
     
   
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