New Video: Minimum Wage Brings Minimum Jobs

I don't agree with you, John.

As a former TV reporter, I can tell you that as little as they know about the effects of minimum wage, they know even LESS about investing, 401-Ks, dollar-cost averaging, "price gouging" or the fallacy of zero-sum economies.

I would put their failure to grasp the implications of minimum wage about on par with their lack of understanding about supply and demand. It's in the top 10, but not at the top.

;)

Again, John... there you go disseminating information contrary to what's approved for State Run Media. We've ALL been told minimum wage boost is essential to, uh, (all I can think of is votes for the people giving away the money--but I KNOW they've said something else). You will lose your credentials to operate in the State Run Media, John. Watch out!

I don't suppose increases in minimum wages cost jobs at the bottom and encourage automation. Look at filling stations--they used to have guys in matching uniforms (aka the Texaco commercials of the 50s and 60s) dance out to music to service your car. Now, you're lucky if the person behind the bullet-proof glass even speaks at you.

Again, John... there you go disseminating information contrary to what's approved for State Run Media. We've ALL been told minimum wage boost is essential to, uh, (all I can think of is votes for the people giving away the money--but I KNOW they've said something else). You will lose your credentials to operate in the State Run Media, John. Watch out!

I don't suppose increases in minimum wages cost jobs at the bottom and encourage automation. Look at filling stations--they used to have guys in matching uniforms (aka the Texaco commercials of the 50s and 60s) dance out to music to service your car. Now, you're lucky if the person behind the bullet-proof glass even speaks at you.

But doesn't a minimum wage hike also stimulate the economy?
Those people have more money to spend, which is good for business.

It helps the economy a lot more than those Bush tax cuts to the rich. (Though Stossel and his buddies at the country club don't want you to know that)

GaryG - If you're serious, no.

You're looking at it too narrowly. As John mentioned in the vid, it looks good for the winners - the one's lucky enough to get the wage. But, it's not as easy to see the losers. If you sum up the positive visible activity of the winners with negative invisible losses of the losers, it's not hard to imagine a situation that hurts the economy rather than stimulates it. An image of an iceberg comes to mind, with the visible part representing the activity of the winners.

@AJB - the answer is No, it does not help stimulate the economy.

And while you think you're being funny with that comment about the Bush tax cuts, then why is the Obama Administration taking credit for extending them?

When those defending Stimulus/TARP face criticism that most of that money has not yet done anything, they counter that much of the stimulus was done through tax cuts.

So which of you is right?

Minimum wage is just one of those issues that goes against intuition, much like sweatshops and free trade. This is probably why politicians ignore outcomes and simply pander to pre-conceived notions instead.

After all, in this world of sound bytes and bumper sticker manifestos, how can a politician adequately explain that arbitrarily raising the wage of those in need ends up hurting a lot of those same people in need? It just boggles the mind.

Excellent video.

...and all those jobs being outsourced are just a figment of the imagination of those who are losing them...

Yeah. Right.

John Stossel's view on the minimum wage is as narrow as the media he attacks. He makes assumptions that the minimum wage is the reason for certain results, when in fact, he shows no proof that the increase in a minimum wage did in fact cause this.

Stossel also conventiently ignores the fact that in order for the economy to continue to expand and grow, it needs people with disposable income to purchase the products being produced. The minimum wage gives more money to people who in turn reinvest it in the economy by purchasing products. Without minimum wage laws, low paid workers would be unable to purchase anything other than the bare essentials, which would prevent companies from making a profit, or expanding.

Colin,
First of all, in the world of economics, the theory that minimum wages kill jobs is about as solid as the theory of evolution is to scientists. It may as well be fact. I'm not kidding; it only makes perfect sense.

Also, see above responses to GaryG. Just because we raise wages (and therefore wealth) for those lucky enough to end up with the jobs at the new miniumum wage - doesn't mean that overall wealth (which is what we're talking about with a growing economy: production) increases.

To sum up the fallacy at hand, Colin's claim that "The minimum wage gives more money to people who in turn reinvest it in the economy by purchasing products" is false, because it is based on the subclaim "minimum wage gives more money to people."

That's where there's a problem. Miniumum wage gives more money to SOME people, but because jobs are lost as a result of a simple price floor mechanism for labor, the economy actually loses productivity.

Pete, your making the assumption that just because companies can lower wages for their workers means they'll hire more people. if anything, companies do their best to keep those costs to a minimum, therefore eliminating or drastically cutting the minimum wage doesn't necessarily create new jobs, it just lowers the wages for those at work. If companies could pay their workers 4 dollars and hour instead of 8, why would they hire twice as many workers? The few extra jobs created by slashing the minimum wage would be offset by the lack of disposable income amongst those hired.

Moreover, as there would be a lack of money necessary for the workers to stay above the poverty line, they would be forced to seek out new jobs, creating a massive demand for jobs, allowing companies to lower wages, as they have the advantage over workers.

If the continued expansion of machinery and robotics that limit the need for human workers, and the outsourcing of jobs to third world countries proves anything, it's that companies want to spend the absolute minimum on workers, thus maximizing their profits. Companies would be ecstatic about a drastic cut to the minimum wage because they'd be allowed to lower their costs, and thus drive up their profits. There would be no incentive to hire more people when they workers they already have are doing the job.

Colin, it seems to me you either don't know anything about markets, and labor markets in particular, or you're a troll.

The price for labor is determined (ceteris paribus) by its marginal productivity. The very profit seeking motivation of producers (you seem to despise) forces them to hire more workers, until the price for labor or labor costs match the marginal productivity. Along the way of this process more wealth is created, making us all better off.

It seems to me, that in your twisted view it is better that some people get higher wages, while others are kept away from competing in the labor market and thus unemployed. Again and again trade is NOT a zero sum game.

@jan -

If you're going to count the number of "outsourced" jobs, you need to also count the number that were "insourced."

Thank you, Henning.

And no, Colin, producers DO NOT simply want to spend the least amount of money on employees. If that were true, they wouldn't hire anyone.

The bottom line for a business is to get the best net profit per worker, so yes, they want to pay workers less. But they are going to do their own calculations on how to make this happen. If wage were cut from 8 dollars to 4, would they double their employee count? I don't know, because it depends on the particular firm we're talking about. Some won't increase jobs much, others will triple jobs.

Minimum wages are just one part of an endless web of rules dictating how we live. The power to dictate wages is the same as the power to require all sorts of conditions.

Added together, the parts in this system make it too costly to hire in many cases, protecting us initially right out of our first jobs, and now our higher jobs.

Those who cling to this system are basically convinced that freedom is slavery.

They think on the left: If we could choose any working conditions we felt were necessary for us, we'd be slaves to the corporations.

(They think on the right: If we could choose anything we wanted to do with our bodies, we'd be drug slaves or prostitution slaves or whatever slaves.)

But in the end, give power to the few to decide for us, and they'll decide us right into the ground. Can you feel the pain yet??

Freedom is slavery is the basic notion.

As with almost everything else, this can be moderated by having no Federal involvement. Let the states decide, so there is at least SOME element of choice.

'But doesn't a minimum wage hike also stimulate the economy?
Those people have more money to spend, which is good for business."

It is a temporary boon to the economy until the businesses have to increase the price of their product because their labor costs increased so eventually the minimum wage earner does not benefit. He/she may even lose their jobs because there is a price at which people quit buying the product forcing the owner cut back on costs. As minimum wage earners are generally the last hired, they are the first let go too.