South Dakota Democrats campaigning for the initiative to raise South Dakota's minimum wage can turn to economists for support. Economists pretty strongly favor raising the minimum wage. They generally take the position laid out by Brad DeLong that wealth has "declining marginal utility." In other words, an extra dollar for a rich gal has less effect than an extra dollar for a poor gal.
The $8.50 initiative in South Dakota is way too low in Robert Reich's book. He says even the $10.10 an hour that the President and some Senate Democrats advocate lowballs the value workers add to the economy:
Had the minimum wage of 1968 simply stayed even with inflation, it would be more than $10 an hour today. But the typical worker is also about twice as productive as then. Some of those productivity gains should go to workers at the bottom [Robert Reich, "Why the Minimum Wage Should Really Be $15 an Hour," blog, 2014.04.08].
Reich says that at $8.50 or $10.10 an hour, we are still subsidizing businesses by supplementing minimum-wage workers with Medicaid, food stamps, and other public support. You might think that will raise your price for a Big Mac, but hey: if you're buying the product, shouldn't you pay the full price instead of shifting the cost to taxpayers who may not be shopping at McDonalds?
Reich doesn't think we'll see those price hikes, though:
A $15/hour minimum is unlikely to result in higher prices because most businesses directly affected by it are in intense competition for consumers, and will take the raise out of profits rather than raise their prices. But because the higher minimum will also attract more workers into the job market, employers will have more choice of whom to hire, and thereby have more reliable employees — resulting in lower turnover costs and higher productivity [Reich, 2014.04.08].
He says rebuts the "pay hikes kill jobs!" argument with this redistributive stimulus argument: a higher minimum wage would draw down some of the concentration of wealth at the top, put more of that money into the hands of working families who will spend more of that money, stimulate the economy, and create more jobs. In Reich's analysis, these stimulative effects, along with the cost savings on turnover and the simple moral argument that we should pay folks a living wage for their increased productivity, would support a $15 minimum wage.
$15 an hour! That makes me feel a bit sheepish shouting hard for South Dakota's $8.50 proposal. But shout I shall. Workers deserve better... and they'll do more for the economy with their raise than our rich concentrators of wealth will.
$10.10 is the bare minimum. $15.00 should be the target as a fair living wage to bring people out of the poverty they have suffered with for decades. Time to get real with a living wage.
Hell make it $25 right away; then no person can afford Big Macs, we all lose weight, health care costs go down, pocket books are fat, life is good, the Feds take a ton more Income Tax , bills get paid, US Debt goes away, Putin blinks and Mao Tse Tung rises in disgust when USA is chanted all over the world...................
Sorry Charlie, but $10.10 right away would be the right way to do it. It would not make everyone able to afford Big Macs, but it would take most of them off food stamps and that would be a good thing to improve their diets. The Feds will never make a ton more from Income tax as there are way too many cheaters. The bills will continue to be paid by more or less honest taxpayers. We never want the debt to go away as that would be the end of the bond market. Although, I think that honesty has gone bye bye from Wall Street and the Mercantile. Putin has no reason to blink and neither do we. Ukraine is a failed state so why on earth would we want any part of that? Mao is very dead and does not give a care if the USA is chanted or hummed as long as South Dakota pays them back their corruption loan money from Rounds and Daugaard's little ponzi scheme. By the way, where on earth was NOem during the EB-5 millions of float dollars?
I know you're being sarcastic Charlie, but no one, not even Reich, is calling for a $25/hr wage. And a modest raise in the minimum wage will reduce the subsidy to businesses that pay the minimum wage. Higher wages mean fewer working poor people qualifying for taxpayer funded programs like SNAP, WIC, heating assistance and any other programs that conservatives rail against.
It's hard to pull yourself by your bootstraps if you can't afford boots.
Nick the argument always will revolve around personal responsibility and yes I was sarcastic. I believe though that the nature of most people once they stand on their own two feet with or without boots on causes pride to become evident in their own work. President Clinton urged by a Republican controlled Congress signed the Act below which in my mind shifted; for a time, the welfare creep society is under today.
From Wikipedia:
"The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) is a United States federal law considered to be a fundamental shift in both the method and goal of federal cash assistance to the poor. The bill added a workforce development component to welfare legislation, encouraging employment among the poor. The bill was a cornerstone of the Republican Contract with America and was introduced by Rep. E. Clay Shaw, Jr. (R-FL-22). Bill Clinton signed PRWORA into law on August 22, 1996, fulfilling his 1992 campaign promise to "end welfare as we have come to know it".[1]
PRWORA instituted Temporary Assistance for Needy Families (TANF), which became effective July 1, 1997. TANF replaced Aid to Families with Dependent Children (AFDC) program, which had been in effect since 1935 and supplanted the Job Opportunities and Basic Skills Training program (JOBS) of 1988. The law was heralded as a "reassertion of America's work ethic" by the U.S. Chamber of Commerce, largely in response to the bill's workfare component. TANF was reauthorized in the Deficit Reduction Act of 2005."
People that are against a minimum wage increase really need to put things in perspective. Consider what the average CEO pay per hour is, most of them make several thousands of dollars per hour. http://finance.yahoo.com/news/mcdonalds-starbucks-ceos-more-9-110100507.html
The Mcdonalds CEO makes over $9,000/hr and the average worker there makes under $8/hr. I guess in South Dakota that is considered fair.
"The US, Finland, Norway, and Sweden all have roughly the same percentage of children born into single-parent families — and most of these children would be poor, without government intervention. Child poverty is a problem government can help solve, if voters want it to. In Scandinavia, voters do want the problem solved, and they're willing to pay the taxes necessary to get there. In the United States, not so much."
http://www.vox.com/2014/4/14/5613658/chart-welfare-can-save-kids-from-poverty
If I can't end the FED and make the minimum wage zero... How about tying the minimum wage to the Federal Reserve's inflationary practices? Say they debase the currency by half a percent then the minimum goes up that much? This way the poor aren't continually fleeced during this minimum wage/inflation dance.
Charlie, I'll restate my point that a higher minimum wage will reduce the need for all the various welfare programs. I'd rather have people who qualify for those programs earn more money from their employers than have the taxpayers subsidize the low wages those employers pay by helping make ends meet with all the various welfare programs.
Nick makes as great point. Keeping the minimum wage low is basically a subsidy to the Walmarts and McDonalds of the country. Another form of corporate welfare. A person who works hard 40 hours a week should be able to feed his/her family.
I have a Republican manufacturer friend who is very clear about this. He says "If I offer a person a wage that doesn't really allow that person to live their life without a tremendous struggle, it's not really a job. I can either afford to hire people and pay them right, or I can't. My business isn't important enough that I should have to make poor people support me."
(See why he's my friend?)
Bill, that's just what a MN DFL legislator said at the minimum wage debate the MN legislature had, "If you can't afford to pay a person a living wage, then you shouldn't be in business."
First and foremost, I would argue that one has to convince many employers that Marginal Utility actually exists. Even though the concept stretches back roughly 140 years, it seems as though many employers will do whatever they can to not help their employees create an independent lifestyle. As opposed to agricultural or land pursuits, one can not insure their "Job" against losses. Youeither have one or you don't. But such is the world we live in, in which most businesses live by the old Milton Friedman dictum "the social responsibility of business is to increase its profits." Which would make sense if a business were one person, not hundreds or thousands of people not seeing huge profits benefiting them in any way. Businesses themselves have no responsibilities; the people who run them however, are a whole different story.
Every time I hear the minimum wage vs welfare debate it occurs to me that there maybe remedies other than raising the minimum wage that could compel employers to pay a living wage.
If employers refuse to pay a living wage and their employees are dependent on the government for their survival, the government should bill employers for the housing, food , energy assistance, and medical paid to under employed people.
It seems that the government has an obligation to collect from employers when they have to subsidize their labor costs
Roger, that is one of the best ideas I've heard in a long time.
Okay Jenny, my husband and I are farmers. That is how we make our living. Fifteen years ago we decided to buy our small town movie theatre. At that time our youngest four kids were still in school. The price was manageable, because we all worked together the loan was paid off in five years. Minimum wage was about 5.25. The cost to get in to the movies was $3, $4,and $5. We paid our kids but not ourselves, we worked every night and did the bulk of the cleaning. After about ten years we raised prices a dollar for each category, our kids grew up and we added more staff, we always had other people working for us, but not as many. The last 5 years all our expenses have gone up significantly. Heat, lights, a single replacement bulb on a projector costs about 500 dollars. Movies cost about 50 dollars to ship. Popcorn prices, sugar prices and transportation prices have gone through the roof. We wanted to keep our theatre affordable for families. For some, this is their only entertainment. There are some groups who bring kids in who would never otherwise see a show. A studio takes about 70%of our ticket sales on our best week, taxes take .06 out of every dollar. Do the math, that doesn't leave a lot. The concession stand is better revenue, but we want to keep things affordable. An 8 oz kiddie soda is still .50 here, a small popcorn is 1.50, and we use only organic popcorn. Add to the expenses that not a week goes by where we are not asked to donate to something, which we are happy to do, we are all neighbors here, we help each other. We have done major work on the building. A new roof, New dual fuel heating system, replaced the curtains on the sides, repainted, cleaned screens,worked on the marquee which is still not done. We now employ close to a dozen people. We are in our 60s now and we only work 4 nights a week, not counting loading the movies, ordering and book work, a conservative estimate for that is 10 hours a week. We pay minimum wage7.25 /hr to start and they can move up to $8, we also pay some bonuses upon occasion and if they want more hours we have some projects that can be worked on at their convenience. We still pay ourselves nothing. The last six months have been a nightmare as far as getting 35mm prints. We had to make a decision, go digital or close. We discussed it very seriously and came to the conclusion that we still enjoyed the movies, the patrons and the employees. We made the leap at the cost of about 120,000 for the system, along with that we needed to replace the sound systems and will have to have better temperature control for the delicate machinery. We also needed to rip all the old equipment out, that is probably at least another 10,000. We raised our prices another dollar at the box office, but still offer our concessions for the same amount. Paying even 10.10an hour would mean we would have to cut staff and work more, or close. For you to say that we shouldn't be in business because we could not afford to pay a higher wage makes me feel pretty sad. Most small places on Main Street have it harder than we do, because they must pay themselves to get by.
yer a goddess, joelie, hope is always the last to die: flee while you still can.
Kurtz easy for you to snob hard working commoners while you grease the Federal Machine for bennies.
Why are still combatting a system of work for food while you glutton?
Better yet why are you still living in America?
I appreciate and respect your commitment to keep a small town movie theater open, Joelie. I would consider your situation an exception, especially here in the US, where it is considered a business only when it makes a profit. You and your husband are obviously not in it to make money, and that is admirable. Also, I'm sure your employees are content to even find a job in a small town.
MN tied the new minimum wage to inflation. It will be $9.50 by 2017. It can also be decreased in special instances, such as the Great Recession.
It's so important for employers to understand that higher wages are good for the economy. I wonder if there have been any studies done on the effect of the minimum wage in very small economies? I'm thinking about Joelie Hicks description of her business.
I grew up on a farm near Miller. Miller has shrunk to about 1000 population since the 1970s. If all the businesses in Miller were paying their employees $10.00/hour, would there be enough additional people going to the movies to keep the balance sheet in balance? Would there be enough additional people eating at the cafes to afford higher wages? How about the grocery stores, hardware store, etc?
Is there enough scale for small towns to cope with an increased minimum wage?
23:20, Charlie? Scotch and blood moon mix well on you.
You don't take a good poking very well Mr. Kurtz. Not to get personal but you attack with old double speak standards assuming the carrying of water for the herd.
Harvard graduates are told "Don't go out there and find a job, go out there and make your own!"
Get your own dole from rancher relief, Charlie?
http://www.bhpioneer.com/news/article_2e6a78b4-c413-11e3-835e-0019bb2963f4.html
If the minimum wage went up for everyone, that should mean that there may be a little more money to be spent for things like a hometown movie and you could raise the price of your goods and services to offset your expenses. Having that venue in your city does the city well and I hope that you can continue to operate.
I would say to Mr. Reich (is it just a coincidence that his name is the same as the organization Hitler led I the 30's through the end of WWII), "Go ahead and start as many businesses as you want paying your workers as much as you want. Pay them what it is you think they need, not what their job actually is worth. If your theory is correct, your businesses ought to thrive and you should become one of those vilified billionaires who are greedy and simple loath those very workers who got them there. Of course, in your case, your financial success wouldn't be because of your willingness to take a risk or your business acumen, it will be because you dared to pay your workers much more than anyone else and you therefore, would glean the very best employees available. It would all be because of your workers. But you would still be one of the greedy billionaires. You would have done it, not because your product was something that everybody needed or wanted more than they should, and couldn't resist buying more of it than they really needed, but because you had the foresight to pay your employees more than the rules of business dictated you should. How many of such businesses have you started Mr. Reich? When do you plan to start your next one? If it's such a sure way to your financial success, why did you waste your time in the Clinton cabinet? Lots of questions, can you provide us some answers?
Joelie, would more people come see movies and buy popcorn at your cinema if everyone else on minimum wage got a raise?
I wonder: I'm reading an article about Connecticut's new paid sick leave law. Business leaders warned it would increase costs and lead to layoffs. It has not. The law exempts small businesses (fewer than 50 employees). What would happen if we created a tiered minimum wage, say, $8.50 for small outfits, $10.10 for big?
Capitalism: a love story whipped into the backs of slaves on land stolen from indigenous. Mr. Amundson: kiss the sky.
Charlie, I'm trying to figure out where your personal responsibility idea fits here. We're talking about people who show up and work, who surrender their liberty to a boss to do what they are told. How much more responsibility does a worker need to demonstrate? Reich says worker productivity is up; are we holding employers responsible for paying workers more for that increased output?
Nick's subsidy point really addresses responsibility: if McDonalds, Walmart, and other minimum-wage payers are getting full day's work out of their employees, why are they sticking government (i.e., us) with the tab for their food and medical bills? That's like you and Holly hiring someone to paint your house and then sending me a third of the bill.
Randy, I could point out that your name also means sexually aroused, but that would be impolite and irrelevant to the discussion at hand.
On point, your response seems a complete distraction from the discussion of what base amount every citizen deserves for giving up his or her liberty, submitting to a boss's orders, and adding value to someone else's project with his or her labor. Reich's discussion of the minimum wage has nothing to do with discussing how much more employers can offer to recruit talent and boost productivity.
Clinton added 22 million jobs to the economy,far more than Saint Raygun and any other wingnut pol. He also managed more jobs and a good economy with the largest tax increase ever,voted for without a single wingnut vote. Then along came Jones and his start wars/slash taxes disaster and no jobs economy and look where it got us.
CAH a couple years ago the Walmart in Pierre put a call out to Walmart employees in South Dakota that they needed extra help and would pay time and a half for coming to Pierre, staying in a hotel room Walmart paid for and working for a few months. I had a friend who did that and she told us that the government pays more then Walmart did which was causing the worker shortage. Maybe we have it wrong on both ends is where I'm coming from but the marketplace will always correct itself if left alone. As the time and a half pay spelled out for those who took advantage of it.
Charlie, we offered you a job in Pierre with hotel reimbursement, and you just quit! Who wants to be stuck in a motel room in Pierre slaving away at a thankless job? :-)
Charlie, are you saying government should again subsidize Walmart by cutting its own workers' wages and benefits, driving them away to crappier jobs, and losing its own talented workers?
I don't find being paid time and a half to go work at the Pierre Wal Mart and staying in a motel very appealing. If they just paid workers a living wage to begin with, Wal Mart wouldn't have needed to do that.
Sigh.....only in America would someone bring up Hitler when having a minimum wage debate. Godwin's Law at work again.
http://en.wikipedia.org/wiki/Godwin's_law
CAH I quit nothing and am serving out my third term continuing on as an E-Board member whose mission right now is to find a permanent LRC Chief Operating Officer. All legislative seats are held until someone else is sworn into the position so I guess I'll be a District 23 Rep. until around January 13th, 2015.
The moral of the story concerns government forcing higher hourly wages by keeping workers out of the workplace with wonderful free bennies. Could this actually be a back door attempt at getting those nasty corporations to dole out more moola to the middle class? (snark)
$22 an hour wages in Williston at McDonalds was market driven by a lack of workers. I wonder what their Big Macs cost in Williston.....
O.K., o.k., "quit" effective January 2015.
Ah, you're talking about welfare, not government wages. So are you saying we should get rid of social support for people who lose their jobs, are downsized due to market forces, are driven into bankruptcy by illness or other misfortunes, just to ensure that they all work harder to find jobs? Cutting social assistance doesn't make moving to Pierre to live in a motel any easier on families struggling to make a living. Cutting social assistance doens't make it moral for an employer to pay an employee less than it takes to feed a family. Cutting social assistance doesn't solve the problem of respecting every citizen's dignity.
Charlie, my daughter Brigette, who you know, took up Walmart on a similar offer to work at the Watertown store last summer. She is a college student and was employed at the Brookings store. She felt they nickeled and dimed her all summer. I'm a little hazy on the details and haven't called her to reconfirm but it seems that wouldn't schedule her for a full 40 hours a week, they only paid for the hotel room on days she worked so on days she wasn't on the schedule she had to pick up the cost of the room or drive back to Brookings. Rather than a 8 hour shift she would have 3 hours here and 2 hours there, basically screwing up the entire day spreading an 8 hour shift across 12 hours or more. They also said they were going to allow a daily per diem for meals but that too was a sham and she had to present receipts for actual meals in restaurants, not allowing her to buy groceries or pocket the difference between the actual cost of her meals and the advertised per diem rate.
In short the biggest corporation in America took advantage of a bunch of college kids and potential future customers rather than treat them with respect and do the things they implied they would do. Modern day slave drivers, there will always be a new crop of workers next year.
Zing on you Charlie, LOL. Williston has very high priced burgers man because everyone there make big time moolah. If you want to have that argument, stay in government and change things to allow more renewable's and less nonsense at a state level. Stop with the EB-5 like schemes and actually put forth workable ideas. Here is one suggestion, pass the Medicaid Expansion and you will see the results of how that kind of stimulus helps the bottom line of the workers and the state coffers in short order. You guys bitch and moan about the workers and citizens you fail to serve each and every day. What job did you think you were going to do when you got there? Play cribbage or solitaire on your computer?
Don't know anybody here except Nick personally and trust his opinion greatly. Walmart should be ashamed of themselves. Corporate profits win--college students lose!
CAH thanks for letting me ramble on here from the other side. Nick keep those edges flowing with nesting habitat and I will always be available for Rooster Reduction hunts! :)
Charlie, I hope to have both you and Cory out for the annual hunt this year. No date yet. After reading someplace that feral domestic cats were the #1 predator of song birds and upland game birds I noticed many have now become infected with fatal lead poisoning.
It is obvious few here have ever been private business owners with comments like Jenny's " joelies movie theatre is the exception not the rule." Naïveté at best.
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Walmart screws America at every turn. They let no profits hit the USA borders. Walmart of China their offshore company strips the profits from the product before it ever hits our shores. The pennies left is what shareholders and employees fight over.
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I can tell you small town USA has had many years of good profits but that went away in the 80's with the advent of malls and easy transportation to the city.
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All Jerry is saying is the prices will follow the pay. No more disposable income with higher wages.
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If as Reich says, owners don't raise prices to recoup the cost of raising the minimum wage, but rather just take it out of profits, "because their business is so competitive", wouldn't that just lower stock prices? Who is affected by that, Mr. Reich? Aren't middle income wage earners who are invested in 401k retirement plans at work going to be hurt? What is wrong with paying what the job is worth?
Assumptions, Randy. You assume a net loss on business that would hurt shareholders. But lower-income workers buy more stuff, thus raising profits and boosting share prices.
Besides, who deserves a greater cut of the productivity pie, passive investors or active workers?
I know I would never want to be a small business owner, Les. I don't have the corruption in me to rig my employees of a decent wage just to give myself a (wealthy) profit. I'm with the MN DFL legislator, 'don't be in business if you can't afford to pay the worker a decent wage.'
Oh, so the workers that makes your business what it is don't deserve to go home and feed their families, put gas in their car, pay the mortgage/rent? Typical SD talk from the people here, and look where you're at - high poverty rates, people working multiple jobs, moms working more hours than ever before. Oh yes, then the business owners still whine.
That 401K retirement is a myth now Randy. Take a look at the markets and you will see that while they are high, they are not paying because they are rigged. Now we find that even the Chicago Mercantile has been corrupted with this high speed trading. There is so much fraud and corruption that small investors have flown the coop. If you are still in the chicken house, you might want to put it in your mattress. The problem with the "market fixing itself" is that the market will not do it without a push. You can clearly see that the corporations are sending record amounts of cash off shore now to the tune of some 4.5 Trillion. That is a whole lot of zeroes that are not being used to fix itself. We need to raise the wages to $10.10 for a start and we need to do that now. The working poor are never going to get a shot at a retirement program other that the Social Security they will qualify for so lets not kid ourselves. That includes many mid income folks as well as they lost all of their so called retirement, in the last round of corruption. The workers need a living wage and that is the $400.00 bucks and change a week before taxes.
""Oh, so the workers that makes your business what it is don't deserve to go home and feed their families, put gas in their car, pay the mortgage/rent? Typical SD talk from the people here, and look where you're at - high poverty rates, people working multiple jobs, moms working more hours than ever before. Oh yes, then the business owners still whine."" Mental much Jenny? Are you quoting me above?
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My statement was that most small town biz is little different from Joelies post. My employees have always made more than I. My income was accepted for potential growth in the size of the biz hoping it would sell for more than 30cents on the dollar which it didn't. My wage as an owner is around 8.50 an hour for those 84 hour weeks, but I also have that growth that is often not there.
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What do you do Jenny that obviously makes more than many do with your ability to stay home and beat up folks on the internet all day long without concern for a paycheck.
Les- There have been several studies that have shown that prices only increase on a very small scale with minimum wage increases. We have also had several example that a minimum wage increase doesn't destroy the economy (look back at past examples). I do understand the issue of the small business person for some help. I think the Minnesota compromise is fairly sound. No perfect, but it pushes small businesses a bit without completely impacting them while the increased wages from workers with large corporations like Walmart are able to trickle into the small business person's pockets.
I have no problem with min wage increases MJL. My comment on wage to price increase was sarc for my bud Jer.
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What I really have a issue about is all the folks here talking about how easy it is to just put wages wherever someone might want them, and stay competitive. My business's have always succeeded because we took what was left after paying good wages and the bank. I have a couple of biz opportunities for anyone of the capable folks wanting to prove up.
Cory, according to my Booker, the his client in Wiiliston was able to put in digital years ago and has since replaced those with new systems. Because he has a bored bunch of fellows working up there he does a boffo business, but he can't run as many movies as he would like because he can't afford the help, things have inflated like crazy up there. But people do not live better, in the case of the residents, the opposite is true. The idea that people making more money would come to movies is interesting. If we have a movie people want to see, attendance is not a problem. Right now, my Main Street neighbors have a very difficult time competing with Watertown box stores. Because they can't afford to pay more should they close their doors along with us? Bye bye small towns.
First, MN minimum wage reaches $9.50 by 2016, not 17, as I erroneously stated earlier.
Joelie, if the minimum wage was raised in your small town, do you that more people might come to movies even if they weren't sure they would like it, just because they could afford it and it was something to do? That's what I'm asking.
By the way Randy Amundson, your dig at Paul Reich's name is off the mark. The definition of reich is a kingdom or empire.
http://money.cnn.com/2014/04/15/news/economy/oklahoma-minimum-wage-ban/index.html?hpt=hp_t4
Oklahoma bans minimum wage hikes. That settles it.
It's none of your business what I do for a living, Les.
I wonder how many business owners don't even make the current minimum wage after expenses justified only because they are pursuing their dream and working 80 hours a week.
It should be patently obvious that korporate amerika loves socialist programs like foodstamps and medicaid. They get to avoid korporate responsibilities to provide decent wages and benefits and they still get to avoid paying taxes to keep these programs afloat. What's not to like? No wonder they keep voting for conservatives. Wingnuts give them billions for free.
Cool Jenny, but it's your biz what I do and how I do it for a living? Great! Sounds like Mn needs you around to keep things in order over there, just don't over do it with that load you carry.