[Bruce_the_vii]

I think they could increase minimum wage in growth cities, where there are jobs being created. That is have a minimum wage for Canada's main cities. The increase from $8 to $10 is $4,000 a year. That makes a difference at the bottom. These $8 wages for adults are a problem and not popular.

[andyt]

As the study I quoted pointed out, if there's a level playing field where all employers have to pay the same wage, they will raise prices in concert. So we all pay a bit more for the services the minimum wage workers provide. (Since they'll pretty well all be in the service industry). To Timmies has to raise ther prices a bit, as does McDonalds. But not 25% since food costs, rent and profit are unaffected by the wage increase. I'm willing to pay a bit more for Timmies, especially since I very rarely go there anyway. Alberta had a higher minimum wage than we did, until this hike goes thru - did they collapse?

You said:

$1:

And as prices increase to match this wage increase (aka inflation), how much of gain do minimum wage earners get to keep? Some, but probably not much. And who do you think feels an increase of 25 cents more for a pack of toilet paper - someone earning $10.25/hour or someone earning $40/hour?

Just what do you think the effect on inflation will be for the lowest paid workers to get a 25% wage increase? One of the arguments used against increasing the wage is that so few people earn it in the first place. Well then, any increase shouldn't have much of an effect on overall inflation, should it? What will happen is that some service industries will have to raise their prices a bit - how much does that affect over all inflation? The workers who's wages went up will be able to better afford rent, food, transportation, none of these will be impacted by raising the minimum wage.

What I see is that is re-distributes income to people who need it most. Khar says there are better ways to do so. I have my doubts about his suggestions, but would be willing to give them a try instead of a minimum wage.

Also note that the increase is restricted to $9 for people who serve alcohol, because they already make way more in tips. I would have extended that limit to all people who earn tips. Basically include tips in the wage - if you make more than $10.25 in wages and tips, then great, if not, your employer has to pay you sufficiently to bring you to that $10.25 figure.

[andyt]

Khar Khar:

The way an EITC (more commonly called a refundable tax credit) works is that, at first, it reduces the amounts of tax owed and then, at the point where none is owed, goes further and provides a net "payment" to the person involved dependent on various factors (children, and so forth).


In this way it's very much like the Fome Zero program I mentioned as a living wage example. You might remember this thread because it's where you encouraged me to argue my more moderate points strongly. The Fome Zero was a poverty-eradication strategy introduced in Brazil with a small cost to the country which dramatically reduced extreme poverty (something we don't have in Canada) but did not actually reduce economic incentives because even minimum wage was better than what they got. They still HAD to work. This just improved their lot and had a surprisingly minor impact on inflation. Would something like that work in Canada? I'm no expert.

Nope, missed your Fome Zero post, likely because it was part of a huge post. But you use the term minimum wage - so it sounds like Brazil still had a minimum wage, just one paid by the state rather than the employer. To me that just sounds like an employer subsidy. They can pay their people absolutely shit wages and the state will make up the difference. I'm not sure that's really a better system.

[bootlegga]

andyt andyt:

As the study I quoted pointed out, if there's a level playing field where all employers have to pay the same wage, they will raise prices in concert. So we all pay a bit more for the services the minimum wage workers provide. (Since they'll pretty well all be in the service industry). To Timmies has to raise ther prices a bit, as does McDonalds. But not 25% since food costs, rent and profit are unaffected by the wage increase. I'm willing to pay a bit more for Timmies, especially since I very rarely go there anyway. Alberta had a higher minimum wage than we did, until this hike goes thru - did they collapse?

You said:

$1:

And as prices increase to match this wage increase (aka inflation), how much of gain do minimum wage earners get to keep? Some, but probably not much. And who do you think feels an increase of 25 cents more for a pack of toilet paper - someone earning $10.25/hour or someone earning $40/hour?

Just what do you think the effect on inflation will be for the lowest paid workers to get a 25% wage increase? One of the arguments used against increasing the wage is that so few people earn it in the first place. Well then, any increase shouldn't have much of an effect on overall inflation, should it? What will happen is that some service industries will have to raise their prices a bit - how much does that affect over all inflation? The workers who's wages went up will be able to better afford rent, food, transportation, none of these will be impacted by raising the minimum wage.

What I see is that is re-distributes income to people who need it most. Khar says there are better ways to do so. I have my doubts about his suggestions, but would be willing to give them a try instead of a minimum wage.

Also note that the increase is restricted to $9 for people who serve alcohol, because they already make way more in tips. I would have extended that limit to all people who earn tips. Basically include tips in the wage - if you make more than $10.25 in wages and tips, then great, if not, your employer has to pay you sufficiently to bring you to that $10.25 figure.

Historically, Alberta's minimum wage increases weren't as quick (or large) as this one in BC is, so the effects were less severe than these might be (I wasn't able to find a 25% jump in one year anyways). Given Alberta's boom/bust economy, lots of people who traditionally would work in unskilled jobs at Timmies or McDonald's wind up in the oil patch making $50,000+ a year. Minimum wage may be about $9 in Alberta, but in many parts of northern Alberta, wages for jobs at Timmies, the local grocery store are much higher because of the prevalance of high paying energy sector jobs. The last time I was in Slave Lake (2006), they were offering $18/hour to stock the bulk bins at the local grocery store and $16/hour to flip burgers. And that's in Slave Lake (pop. 5000) - Fort Mac is even worse.

And while you think that raising minimum wage means that people working minimum wage will have more to spend, inflation will make sure they stay almost exactly the same. Why? Because when minimum wage earners get paid more, that affects prices everywhere, not just at Timmies. It also affects prices at the gas station, the grocery store, the movie theatre, you name it. That's where I was going with my inflation bit that you quoted. As I said, those earning minimum wage will feel inflation much more than someone in the middle class like myself - to someone earning $10.25/hour, an increase (even a slight one) in the price of toilet paper or coffee or booze or a movie ticket is much harder to deal with than someone earning $50,000 a year.

As I said, if I honestly thought that a minimum wage law made things better for people earning minimum wage, I'd support it. However, studies (and history) show that not to be the truth. And because I earn a middle class salary and NEVER buy anything at Timmies, and hardly ever go to fast food restaurants (besides the fact that I live in Alberta and not BC where this is taking place), things like this hardly effect me at all.

Finally, you forgot to debunk this;

$1:

We find the traditional result that neoclassical theory would predict: minimum wage increases create employment losses that are concentrated among less valued workers. Minimum wage increases have an insignificant effect on the employment of prime age workers (aged 25 to 61), but they have large and significant negative employment effects on teenagers, young high school dropouts, and young blacks. Hence, the very people minimum wage policies claim to help are most likely to be adversely affected.

[andyt]

bootlegga bootlegga:

And while you think that raising minimum wage means that people working minimum wage will have more to spend, inflation will make sure they stay almost exactly the same. Why? Because when minimum wage earners get paid more, that affects prices everywhere, not just at Timmies. It also affects prices at the gas station, the grocery store, the movie theatre, you name it. That's where I was going with my inflation bit that you quoted. As I said, those earning minimum wage will feel inflation much more than someone in the middle class like myself - to someone earning $10.25/hour, an increase (even a slight one) in the price of toilet paper or coffee or booze or a movie ticket is much harder to deal with than someone earning $50,000 a year.

As I said, if I honestly thought that a minimum wage law made things better for people earning minimum wage, I'd support it. However, studies (and history) show that not to be the truth. And because I earn a middle class salary and NEVER buy anything at Timmies, and hardly ever go to fast food restaurants (besides the fact that I live in Alberta and not BC where this is taking place), things like this hardly effect me at all.


Finally, you forgot to debunk this;

$1:

We find the traditional result that neoclassical theory would predict: minimum wage increases create employment losses that are concentrated among less valued workers. Minimum wage increases have an insignificant effect on the employment of prime age workers (aged 25 to 61), but they have large and significant negative employment effects on teenagers, young high school dropouts, and young blacks. Hence, the very people minimum wage policies claim to help are most likely to be adversely affected.

Give your head a shake. You're saying that the minority of people who get a 25% wage increase out of this will result in a 25% increase in inflation. That's just nuts. Wages overall are only one component of prices, and most of the wages that are covered by those prices are already well above the minimum. Manufacturing for instance. What will mostly incease, a little bit, are services provided by people who's wages are now below the new minimum wage. And those won't increase 25% either, since wages are only one component of those prices, and many people won't be getting a 25% increase but less, since they already earn somewhat more than the minimum wage.

As for the second part, take a look at the link I provided on page one

$1:

In an interview with The Real News, Arindrajit Dube, labor economist and Assistant Professor of Economics at University of Massachusetts, said that increasing the minimum wage in some areas has not reduced jobs as expected by the conventional theory...According to his findings, both the short and long term effects of the increased wage on unemployment were negligible...Dube said the conventional wisdom surrounding minimum wage comes from research done before the early ‘90s. ... Dube told TRNN that around the early to mid ‘90s some economists realized these studies were badly flawed...

[bootlegga]

andyt andyt:

bootlegga bootlegga:

And while you think that raising minimum wage means that people working minimum wage will have more to spend, inflation will make sure they stay almost exactly the same. Why? Because when minimum wage earners get paid more, that affects prices everywhere, not just at Timmies. It also affects prices at the gas station, the grocery store, the movie theatre, you name it. That's where I was going with my inflation bit that you quoted. As I said, those earning minimum wage will feel inflation much more than someone in the middle class like myself - to someone earning $10.25/hour, an increase (even a slight one) in the price of toilet paper or coffee or booze or a movie ticket is much harder to deal with than someone earning $50,000 a year.

As I said, if I honestly thought that a minimum wage law made things better for people earning minimum wage, I'd support it. However, studies (and history) show that not to be the truth. And because I earn a middle class salary and NEVER buy anything at Timmies, and hardly ever go to fast food restaurants (besides the fact that I live in Alberta and not BC where this is taking place), things like this hardly effect me at all.

Finally, you forgot to debunk this;

$1:

We find the traditional result that neoclassical theory would predict: minimum wage increases create employment losses that are concentrated among less valued workers. Minimum wage increases have an insignificant effect on the employment of prime age workers (aged 25 to 61), but they have large and significant negative employment effects on teenagers, young high school dropouts, and young blacks. Hence, the very people minimum wage policies claim to help are most likely to be adversely affected.

Give your head a shake. You're saying that the minority of people who get a 25% wage increase out of this will result in a 25% increase in inflation. That's just nuts. Wages overall are only one component of prices, and most of the wages that are covered by those prices are already well above the minimum. Manufacturing for instance. What will mostly incease, a little bit, are services provided by people who's wages are now below the new minimum wage. And those won't increase 25% either, since wages are only one component of those prices, and many people won't be getting a 25% increase but less, since they already earn somewhat more than the minimum wage.

Perhaps you need some reading glasses.

The only thing I said would increase by 25% was labour costs.

I never once said that a 25% increase in labour costs would cause everything to go up by 25%. I said it would cause inflation...big difference.

Once again, to someone making minimum wage, even a small increase (say 25 CENTS - which is what I said on Page 2) is more costly to someone earning $10.25/hour than it is to someone earnign $50,000/year (around $25/hour).

But as usual with you, it's dodge and deflect because you have no real answer for much of my post.

Whatever...

[bootlegga]

andyt andyt:

As for the second part, take a look at the link I provided on page one

$1:

In an interview with The Real News, Arindrajit Dube, labor economist and Assistant Professor of Economics at University of Massachusetts, said that increasing the minimum wage in some areas has not reduced jobs as expected by the conventional theory...According to his findings, both the short and long term effects of the increased wage on unemployment were negligible...Dube said the conventional wisdom surrounding minimum wage comes from research done before the early ‘90s. ... Dube told TRNN that around the early to mid ‘90s some economists realized these studies were badly flawed...

Had you followed your own advice and bothered to follow my link, you would have noted this study was done in 1997 (and updated in 2000) - after the period your paper noted studies were flawed.

[BeaverFever]

You know, its so funny. All these people who claim that they are HELPING minimim wage workers by freezing their wages at near-starvation levels:

"but it will motivate them to get better jobs!"
- as if working 18hrs a day to keep from getting evicted isn't incentive enough! I wonder if these same people would support higher taxes or regulated fees that left them with spending money? Oh no? But you'll be motivated to work harder and earn more to keep your house! We know whats best for you.

"but they won't be able to cope with inflation!"
- Just like how slaves used to get free food and shelter but then had to pay for it when slavery was outlawed. And prices went up for everyone! Im sure history has taught us that everyone was much better off under slavery. If only those slaves had been capable of understanding how good they had it. Same proposition as above: how about the government takes more of your income in taxes, so you spend less and don't inflate prices? Oh no? why not? We're helping you, dont you see? You don't even know what's in your best interest!



Even if we did accept the premise that higher minimum wages directly relate to higher prices (which is not a universal truth) then I would argue that prices were artificially low, the same way that prices in an economy based on slave labour are articially low. When the lowest-paying full-time wages are inadequate to meet an acceptable basic MINIMUM standard of living, labour costs are artificially low and therefore prices based on those wages are artificially low as well.

[Bruce_the_vii]

Here's couple of points on minimum wage.

As bootlegga states the de facto minimum wage is higher in many places than the miserable legislated minimum wage.

Mostly people in Canada on minimum wage live with someone doing better so increasing minimum wage is a blunt instrument for reducing poverty.

The cities of Canada get immigrants which tends to produce "short term unemployment". This reduces the de facto minimum wage. It's a problem.

Bootlegga's quote that increasing minimum wage reduces jobs opportunities for those that need it the most is economists' talk from the office. The turn over in jobs is as much as 29% annually and even higher at the bottom. If you need a job you will persist and eventually find one. This one to one correspondence to those most in need is talk.

Economists will also tell you minimum wage increases does not cost jobs. But how would they know. If the minimum wage was put up in an economic expansion just the rate of change in growth differs. It's more economist talk.

The inflation from increasing minimum wage in minimal. In Calgary a $2 increase at the bottom is 1/4 of 1% of the gross product. (The increase would apply to 7% of the labour force, the average wage is $23 an hour, and wages are only 50% of the economy. Hence, minimal.)

[andyt]

bootlegga bootlegga:

Perhaps you need some reading glasses.

The only thing I said would increase by 25% was labour costs.

I never once said that a 25% increase in labour costs would cause everything to go up by 25%. I said it would cause inflation...big difference.

Once again, to someone making minimum wage, even a small increase (say 25 CENTS - which is what I said on Page 2) is more costly to someone earning $10.25/hour than it is to someone earnign $50,000/year (around $25/hour).

But as usual with you, it's dodge and deflect because you have no real answer for much of my post.

Whatever...

What you said was:

$1:

And while you think that raising minimum wage means that people working minimum wage will have more to spend, inflation will make sure they stay almost exactly the same. Why? Because when minimum wage earners get paid more, that affects prices everywhere, not just at Timmies.

You're claiming that giving them any increase will just get eaten up by inflation caused by that increase. I've demonstrated to you why that's bullshit. Yes, they'll have to pay bit more at Timmies too, or at the gas station if they can afford a car. But not 25%, not even close. Other things won't be affected at all. Transit for instance - nobody there makes even close to minimum. If you look at the link I posted on the first page again, they said that a minimum wage increase only pushes up wages for workers making up to 25% more than that minimum. Ie low income workers. Your pay won't go up at all, your costs will increase by only a very minor amount, and the working poor will be a little less poor in BC now.

[andyt]

bootlegga bootlegga:

Had you followed your own advice and bothered to follow my link, you would have noted this study was done in 1997 (and updated in 2000) - after the period your paper noted studies were flawed.

So your paper must be right and mine wrong? Why?

[bootlegga]

andyt andyt:

bootlegga bootlegga:

Had you followed your own advice and bothered to follow my link, you would have noted this study was done in 1997 (and updated in 2000) - after the period your paper noted studies were flawed.

So your paper must be right and mine wrong? Why?

I never said yours was wrong - just that your article's critisms of minimum wage studies may not be relevant to the results found by this study - given that it was done AFTER the period in which your author suggests ther were many flawed studies.

[andyt]

Fine, but my article talks about an exhaustive study that found evidence to the contrary of what you're saying. The earlier study it was based on were also subject to criticism of methodology, which this one addressed. Maybe we'll have to go with Bruce and just call them all economist talk, and that we don't know. I'd still rather see more money in the hands of the working poor.

[bootlegga]

andyt andyt:

bootlegga bootlegga:

Perhaps you need some reading glasses.

The only thing I said would increase by 25% was labour costs.

I never once said that a 25% increase in labour costs would cause everything to go up by 25%. I said it would cause inflation...big difference.

Once again, to someone making minimum wage, even a small increase (say 25 CENTS - which is what I said on Page 2) is more costly to someone earning $10.25/hour than it is to someone earnign $50,000/year (around $25/hour).

But as usual with you, it's dodge and deflect because you have no real answer for much of my post.

Whatever...

What you said was:

$1:

And while you think that raising minimum wage means that people working minimum wage will have more to spend, inflation will make sure they stay almost exactly the same. Why? Because when minimum wage earners get paid more, that affects prices everywhere, not just at Timmies.

You're claiming that giving them any increase will just get eaten up by inflation caused by that increase. I've demonstrated to you why that's bullshit. Yes, they'll have to pay bit more at Timmies too, or at the gas station if they can afford a car. But not 25%, not even close. Other things won't be affected at all. Transit for instance - nobody there makes even close to minimum. If you look at the link I posted on the first page again, they said that a minimum wage increase only pushes up wages for workers making up to 25% more than that minimum. Ie low income workers. Your pay won't go up at all, your costs will increase by only a very minor amount, and the working poor will be a little less poor in BC now.

I said they will stay almost exactly the same, which is absolutely true. Minimum wage laws have been around for decades, yet I have yet to see a significant increase in the standard of living of people working minimum wage.

After all, if minimum wage laws provided a decent standard of living, we wouldn't be having this conversation, now would we?

Whether or not you want to admit it, inflation affects the price of almost everything - if not this year, then next year (such as relatively fixed prices like transit for example). As such, if minimum wage goes up, costs go up in a number of sectors, and the trickle down effect happens, and soon costs go up everywhere, negating a large part of the increase in minimum wage.

You're entitled to believe whatever you want, but I have yet to see minimum wage helping anyone. As someone who worked for almost a decade on/near minimum wage, I feel that the best solution is better education, not a few extra dollars per week.

That's what got me above the poverty line, not hoping that the government would come to my rescue.

[Bruce_the_vii]

The trouble with "better education" is that it does not affect the number and conditions of the jobs at the bottom. They are different topics. These days the bottom is rather large and getting out of it a bit of a scramble. Also it's people with ability these day, particularly women who return to work after bring up kids. Canada is about "good jobs", the issue needs more public debate.