Gulp..!

[godotwaits]

Great speech.... gulp!... Senator Rubio!

Was that a Poland Spring bottle? And was there any product placement stuff going on there?

[Lonnie]

Oh, I so do not want to start a political rant, but did Rubio even listen to Obama's speech, or did he have his comments written sometime this afternoon?

[Supertramp78]

I'm pretty sure they get an advance copy of the speech but they write theirs way in advance anyway. I didn't listen to either. We just haven't had anything to top the entertainment value of Bachmann having her tea party response apart from the GOP response and then look at a camera that was slightly off axis from the one that was shooting the tv feed. Classic.

[godotwaits]

Lonnie... I was kinda thinkin' of the same thing. But after all, he's Johnny on the spot for the GOP. The GOP has read the tea leaves and sees a definite need for more Hispanics in their future. God bless him.

[Chesapeake]

Well it certainly was a step up from Bobby Jindal.

[Lonnie]

Perhaps he's the new bright shining star, but the boy does need to lubricate before speaking...

[Supertramp78]

Feb 12, 2013 23:57:59 GMT -5 Chesapeake said:

Well it certainly was a step up from Bobby Jindal.

Which was so strange because Jindal was supposed to be the go to guy.

[PaulKay]

Didn't watch any of it, but I did read that Obama wants to raise the minimum wage. Dumb idea. Talk about the law of unintended consequences. Just reduces the overall employment in trade for giving those who get jobs more money.

[dradtke]

They don't release the written speech until just before delivery. "Responses" are just stock boilerplate written beforehand.

[Supertramp78]

ah, so it is essentially "Whatever it was he said, we dont' like it."

[Russell Letson]

Just a thought about the minimum wage and its supposed effect on the business environment:

When I took Econ 101 back in 1962, there was this notion of elasticity, and various parts of an economic system--wages, raw materials, demand, money supply--could have various degrees of elasticity. Why must wages be seen as the factor that breaks the system? Are the other components of the economy so inelastic that an increase in wages drives enterprises out of business or forces reductions in employment?

I understand that a very small-scale operation--a non-chain retail store, say--can have such thin margins and so little in reserve that increasing pay from $7.25 to $9/hr might mean firing the stockboy/second-shift clerk. But plenty of large corporations employ plenty of minimum-wage people (think of the maids in a hotel) and post healthy profits, and any inelasticity in those organizations is likely to be in the profit expectations of managers and shareholders. (And how elastic is the demand for clean rooms and fresh towels?)

Or am I misunderstanding the dynamic of corporate capitalism?

[Deleted]

Russell, it depends. (I love sounding like a lawyer.) I've been reading about this a lot today as I loiter in the transit system on the way to Kuwait. If I find a cogent discussion from a source I'm comfortable with, I'll post it.

Most of the arguments I find that are anti-minimum wage are from sites like Justrightofattillathehun.org. Most of the arguments that are pro-minimum wage are from sites like thegopcookspoorpeopleandeatsthem.org.

The stuff in the middle is hard to find.

[kenlarsson]

[PaulKay]

Feb 13, 2013 12:28:54 GMT -5 Russell Letson said:

Just a thought about the minimum wage and its supposed effect on the business environment:

When I took Econ 101 back in 1962, there was this notion of elasticity, and various parts of an economic system--wages, raw materials, demand, money supply--could have various degrees of elasticity. Why must wages be seen as the factor that breaks the system? Are the other components of the economy so inelastic that an increase in wages drives enterprises out of business or forces reductions in employment?

I understand that a very small-scale operation--a non-chain retail store, say--can have such thin margins and so little in reserve that increasing pay from $7.25 to $9/hr might mean firing the stockboy/second-shift clerk. But plenty of large corporations employ plenty of minimum-wage people (think of the maids in a hotel) and post healthy profits, and any inelasticity in those organizations is likely to be in the profit expectations of managers and shareholders. (And how elastic is the demand for clean rooms and fresh towels?)

Or am I misunderstanding the dynamic of corporate capitalism?

I think there is more than one impact. The tendency for larger corporations who will see their labor expenses go up will very likely pass it on to consumers in higher prices; especially given that all the companies competing in the same market category will experience the same increases. So the main impact will be inflation.

But for the little company with thin margins, it may be a case where they might have hired some number of people because of expanding business, but instead now try to get by with less because they can no longer afford all they need.

We already have seen teen summer jobs getting very scarce because of the last minimum wage increases.

Both of these are cases of the law of unintended consequences. Less people will find jobs and those who get more money very well may find that the cost of "stuff" they need to buy has gone up proportionally. And if they succeed in indexing wages to inflation, it becomes a vicious cycle.

Employment Results

Using government data from January 1979 to December 2004, the effect of minimum wage increases on retail and small business employment is estimated. Specifically, a 10 percent increase in the minimum wage is associated with a 0.9 to 1.1 percent decline in retail employment and a 0.8 to 1.2 percent reduction in small business employment.

These employment effects grow even larger for the low-skilled employees most affected by minimum wage increases. A 10 percent increase in the minimum wage is associated with a 2.7 to 4.3 percent decline in teen employment in the retail sector, a 5 percent decline in average retail hours worked by all teenagers, and a 2.8 percent decline in retail hours worked by teenagers who remain employed in retail jobs.

These results increase in magnitude when focusing on the effect on small businesses. A 10 percent increase in the minimum wage is associated with a 4.6 to 9.0 percent decline in teenage employment in small businesses and a 4.8 to 8.8 percent reduction in hours worked by teens in the retail sector.

epionline.org/study_detail.cfm?sid=98

[Supertramp78]

the best argument I have regarding minimum wage came from the business classes I took at A&M over 30 years ago. We all ran the numbers and came to the same conclusion. Increase any cost of doing business (supplies, utilities, rent, taxes, labor) and a company will reduce where it can in order to maintain the existing price point against competition for as long as possible. Of the five things I listed, only one of them is really within the control of the company. Labor. Everything else is pretty much out of their control. If you increase the cost of any of those, the one thing that will get reduced first is labor. Simple math really. Either that or you increase your prices and hope you don't lose all your customers. What do you think is more likely? So historically if you increase the minimum wage, the overall number of people earning minimum wage goes down to compensate. Total labor costs remain the same, total employment coes down.

[PaulKay]

Feb 13, 2013 13:28:53 GMT -5 Supertramp78 said:

the best argument I have regarding minimum wage came from the business classes I took at A&M over 30 years ago. We all ran the numbers and came to the same conclusion. Increase any cost of doing business (supplies, utilities, rent, taxes, labor) and a company will reduce where it can in order to maintain the existing price point against competition for as long as possible. Of the five things I listed, only one of them is really within the control of the company. Labor. Everything else is pretty much out of their control. If you increase the cost of any of those, the one thing that will get reduced first is labor. Simple math really. Either that or you increase your prices and hope you don't lose all your customers. What do you think is more likely? So historically if you increase the minimum wage, the overall number of people earning minimum wage goes down to compensate. Total labor costs remain the same, total employment coes down.

This is also my opinion.

This web page sums it up best I think. It covers all the different models typically used.
www.downsizinggovernment.org/labor/negative-effects-minimum-wage-laws

They site quite a few negative effects besides just lower employment.

Aside from changes in employment, empirical studies have documented other methods by which businesses and markets adjust to minimum wage increases. The congressional Joint Economic Committee published a major review of 50 years of academic research on the minimum wage in 1995.33 The study found a wide range of direct and indirect effects of increased minimum wages that may occur. These include

Increasing the likelihood and duration of unemployment for low-wage workers, particularly during economic downturns;
Encouraging employers to cut worker training;
Increasing job turnover;
Discouraging part-time work and reducing school attendance;
Driving workers into uncovered jobs, thus reducing wages in those sectors;
Encouraging employers to cut back on fringe benefits;
Encouraging employers to install labor-saving devices;
Increasing inflationary pressure;
Increasing teenage crime rates as a result of higher unemployment; and
Encouraging employers to hire illegal aliens.34

[Supertramp78]

I'm skeptical about increasing minimum wage resulting in increases in job turnover. I also don't see it discouraging part-time work since that work would now pay more. The rest isn't too much of a stretch.

[Deleted]

Just had a quick look at Canada's minimum wage rates. They seem to have risen by 10-15% or so over the last three years. The unemployment has been steadily declining during that time. The UK's minimum wage has risen a little less over the same period and unemployment has stayed about the same. Lot's of factors involved I suppose.

[Supertramp78]

In a growing economy you can absorb it via increased sales. Plus you may have a reduction in minimum wage workers but an increase in full time workers that compensates as the job market shifts. The only jobs that are really at risk when the min wage increases are min wage jobs. Overall, not that many people earn minimum wage. In the US in 2010 there were only 1.8 million people at that wage point. More people (2.5 mil) made less than minimum wage. Combined, those 4.4 mil people were only 6% of all the hourly workers in the country. Not a lot of bang for the buck.

[theevan]

Good facts.

Thanks for that, Ken. Goats are highly amusing. I'm skeptical about the high screams but I've goats make all those other sounds.