Thousands of workers in five states and the District of Columbia are getting a raise today, but not because of the generosity of their employers or because they have suddenly become more productive. That relic from FDR’s New Deal, the minimum wage, increases today in the District of Columbia and the states of Illinois, New York, Oregon, Vermont, and Washington.
Twelve states (Alaska, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Rhode Island, Oregon, Vermont, & Washington) and the District of Columbia already had minimum wages higher than the federal minimum wage. The increase in the minimum wage in New York makes it the thirteenth state to have a minimum wage that exceeds the federal minimum of $5.15 an hour.
In addition to states, many cities have passed “living wage” laws, which set higher minimums for workers employed by city contractors.
Voters in my state of Florida recently overwhelmingly approved a constitutional amendment to increase Florida’s minimum wage to $6.15 per hour. However, rather than beginning on January 1, 2005, the amendment stipulates that the change in the minimum wage is to take place six months after the amendment’s enactment, which was on November 2, 2004. Florida also joins Oregon and Washington as the only states to index their minimum wage to inflation.
Supporters of the minimum wage act like people would still be working for the original 25 cent an hour minimum without government intervention. They fail to realize that minimum wage laws infringe upon what should be the right of an employer and an employee to make whatever wage agreement they choose. Minimum wage laws also foster the notion that everyone should be paid the same if they do the same job for the same amount of time.
The details on minimum wage laws in the states are available on the U.S. Department of Labor website. However, it has not been updated yet to reflect the new changes in the minimum wage laws in the abovementioned states. Information on the changes that take effect on January 1, 2005 is available here.
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I don’t know what else I can say that I haven’t already said.
You are assuming that when workers are paid more, they must have less workers and therefore less goods produced.
Again, no. What I am saying is that when an individual or business has to pay more for the same quantity of goods and labor, they necessarily have less money to spend elsewhere. The fact that you are spending more for the same amount (be it goods or labor) is the cause of the productivity loss, and shows that this is not just a redistribution of money from one sector to another.
Again, only a productivity gain can make up for the productivity loss. If the workers increase their productivity, or if the business itself could increase productivity, then the productivity loss could be “made up”. But productivity increases don’t happen automatically or on demand.
Consider it from this angle: prices change all the time to reflect various changes in supply and demand. These are economic factors indicating productivity changes, consumers’ changing needs and desires, and the development and phasing out of various goods and services. Prices reflect the relative value and availability of goods and services and their component resources. When the government legislates a price control, such as a minimum wage increase, this is not an economic factor, but a political factor. Supply and demand has not changed, but the price structure no longer reflects that.
The value of the minimum wage worker’s skills (his productivity) to the business has not changed, but government has said that they must pay more, anyway. That’s the productivity loss. Just as the individual must decide how to deal with a price increase, a business also must decide how to deal with this price increase, and the business’ options aren’t really all that greater than the individual’s options: cut back somewhere or become more productive.
Second is that a production shortage would immediately lead to a price rise, and that it would affect all industries.
I didn’t say that it would immediately lead to price increases, but I do say that it eventually would. The immediate impact would probably be price decreases, actually, as businesses find that they’ve produced more than people can afford to buy. But then businesses would cut back production to avoid future surpluses. Which industries would be affected sooner depends upon the decisions made to cut back expenses, and thus is not really predictable, but it’s difficult to imagine that there would be any industry that would not eventually be impacted by the rippling economic currents.
…and not all industries use min. wage labor, so they would have no change in productivity.
Even businesses without minimum wage workers could be impacted, depending upon the decisions made by businesses with the minimum wage workers in cutting expenses. Still, the fewer workers who are impacted by the increase, the less harm would be done to the economy. Raising the minimum wage from $5.15/hour to $5.50/hour wouldn’t be as harmful as raising it to $7.00/hour. But some degree of harm would still occur, unless productivity gains could be made somewhere to make up the difference.
—You are assuming that when workers are paid more, they must have less workers and therefore less goods produced.
==Again, no. What I am saying is that when an individual or business has to pay more for the same quantity of goods and labor, they necessarily have less money to spend elsewhere. The fact that you are spending more for the same amount (be it goods or labor) is the cause of the productivity loss, and shows that this is not just a redistribution of money from one sector to another.
==Again, only a productivity gain can make up for the productivity loss. If the workers increase their productivity, or if the business itself could increase productivity, then the productivity loss could be “made up”. But productivity increases don’t happen automatically or on demand.
I think you are confusing concepts here. The fact that a business pays more for an aspect of its business does not make it a productivity loss. Increasing productivity through a new device that produces twice as much an hour or with only 3 workers instead of 10, these are productivity increases. Increases in pay affect a companies bottom line, profits, etc. but do not effect their productivity unless they are forced to specifically cut back on production. Which few would do if the demand is there. If you make lug nuts, you cut anything but production if there are orders for lug nuts, else your customers will go elsewhere.
Brooks
Their actual production is not initially affected, but because of the price increase in labor, they have to cut back on expenses somewhere, which means they spend less on other things, that is, things that *they* buy from other companies, and therefore, other companies are now overproducing and have to cut back on their production. (or, as I said, if they raise their prices to make up the difference, then their customers are the ones who have to spend less on what they buy from companies, and the companies they buy from are overproducing and have to cut back).
Using profits to pay for the increase simply transfers the issue of where less money is spent, and thus which companies are subsequently affected, but there still remains the same basic problem: the same amount of money can now buy fewer goods and services as before. Unless a sufficient productivity increase occurs somewhere, production has to be cut back to match the new, lesser spending power that now exists.
Note also that a company initially affected by the wage increase may eventually have to cut its production anyway if other companies or customers end up buying less from the initially-affected company because of spending cuts throughout the economy.
I’m lost with all this stuff. I’ve been a stay home mom for several years and unfortunately depended on the income of my husband. I’ve been blessed to have had jobs that paid me way over the minimum wage amount with wonderous benifits. It’s been a while and I’m now going back out into the working field even if I have to start at the bottom of the ladder and work my way back up. All I want to know is how low the ladder is as far as pay??
As of 3/2/05 what are employers paying for minimum wage in the state of Florida? When is it supposed to go up and how much? An answer to this A.S.A.P would be greatly appreciated. I wouldn’t want to get hired at an offered amount of $6.00 an hour and find out I gave the employer a discounted rate.
Some one please help???
Minimum wage in FL is $5.15 and hour. It will go up to $6.15 an hour on May 2.
Actually, it is possible to work for nothing—it’s called volunteering. Many non-profit organizations rely on this free labor. But why should it be illegal to work for one dollar an hour, but legal to work for nothing?
Mark, the answer is pretty simple if you think about it. If you’re volunteering, then you obviously aren’t working to make a living. The underlying premise is that employers owe living wages to their employees, regardless of the nature or type of employment. Thus, the rhetoric is changing from “minimum wage” to “living wage”.
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