The Saddest Thing About the Minimum Wage Controversy

The highly controversial concept that the government should raise the minimum wage by law is currently a major topic on Wall Street and Main Street; some workers are striking as we speak. Here are two simple sides of the debate: a higher required minimum wage will mercilessly slash corporate profits; conversely, some workers across America are not receiving a "living wage."

As investors and basic participants in the economy, we should ponder this issue far beyond traditional economic doctrine. The dismal science's academic arguments often don't yield real-world results as they "logically" should.

The sad truth is that if big companies had designed decent strategies toward employees in the first place, no one would think the government really needed to step in to such a degree.

If shareholders hadn't concentrated so heavily on short-term profitability, managements wouldn't feel forced and even be incentivized to skimp on what should be viewed as a basic corporate expense.

Big boxes, small wages
Wal-Mart (NYSE: WMT  ) has been the whipping boy for its employee treatment for ages. This is probably because the retailer is so high-profile -- the company's market cap is $258 billion and in the last 12 months the discount giant raked in $475 billion in sales. Wal-Mart reveals its own impressive reach on its website: Every week, 254 million people enter a Wal-Mart. It currently has 11,000 stores in 27 countries, and regardless of how much it pays, it hands out paychecks to 2.2 million people across the globe.

It probably has a target on its back precisely because of its massive and visible footprint. It has so much power and influence -- Wal-Mart does something, everybody listens.

The truth is that Wal-Mart isn't the only offender.

Along those lines, McDonald's (NYSE: MCD  ) is being served a serious dish of bad PR this year. Employees are picketing. People are more commonly pondering fast-food workers' similarly abysmal pay and shoddy benefits, which rarely hit the headlines to the same degree.

Employees of companies like Mickey D's are beginning their plans for demonstrations in 100 cities. A common demand is doubling their wages from the minimum-wage floor. Like Wal-Mart, McDonald's garners more headlines -- again, it can now boast billions served.

For that reason, the spotlight is on the Golden Arches more than other fast-food offenders like Wendy's, which also happens to be in the hot seat.

The unhealthy "Suck-It-Up Syndrome" 
Our economy is still being dragged down by a high level of unemployment. Many people have switched to part-time work out of necessity. The reasons that we should try to look at the big picture are more urgent than ever. Most people know that consumer spending makes up the lion's share of our economy, but few think of what the number of struggling Americans really means.

Let's ponder one segment that often includes approximately minimum-wage workers: young people. The next generation is the life's blood of future economic prosperity. The baby boomer generation isn't getting younger and increasingly has other expenses, including health care (and in some cases, their poor children).

Although many people talk about a dynamic economy, which of course, would include younger, imaginative innovators and contributors, the "Suck it up and climb that ladder!" argument actually falls incredibly short of any big-picture thinking about our economy and how companies and investors can prosper in it.

The wage web
Here are a few examples of how living wages help us all, including companies and shareholders, in the big picture. However, such scenarios require increasing numbers of consumers to have the resources to feed into the complex web of economic interrelationships.

For example:

If an individual can afford a car, he or she can:

  • Purchase a car from a major car company.
  • Assuming that he or she can afford gasoline (a large expense these days for a basic need for many people), greater mobility can expand opportunities so that they can easily travel for training, education, and then better employment.
  • Buy more groceries (last I heard, grocery store sales do really help grocery stores), which can be more easily lugged home than on foot or through public transportation.

If an individual can afford their own housing, he or she can:

  • Buy essentials such as furniture, kitchen necessities, cleaning supplies, then bigger-ticket items such as televisions. I'd venture that few young consumers run to their parents' houses to borrow a spatula, half-cup or so of dish soap, or a chair or couch.
  • Set up utilities like electricity and water from, you got it, utility companies.
  • Have a few parties and just generally enjoy life a little more with less stress -- and happier, less desperate people will make happier employees and generally more motivated individuals.

The slight sucking sound of welfare
The heated arguments many Americans direct toward public assistance and minimum wage laws aren't foolproof. Granted, they're not parts of a pure market-driven economy, but a shoddy economy that pretends to be "market-driven" by pushing short-term profits and long-term obtuseness actually expands the need for all kinds of interventions.

Here's a weird twist: Sometimes companies like Wal-Mart derive benefits from welfare and public assistance, since they're not shelling out more for employees. Given low wages, it relies or at least encourages government assistance itself; its employees can't do much at all with their wages. Plus in the long run, demoralized employees and increasing public distaste hurt such companies, they don't help them.

A common historical example of how to conduct positive capitalism is part of Ford's venerated past. Henry Ford had a lightbulb moment: If he paid his employees better, they could afford cars -- his company's own product.

This simple view shouldn't be rocket science. Too many corporate managers have been cheating everyone by ignoring workers' basic financial needs. Investing in employees should be considered just as important as, say, "investing in" a CEO with huge pay who often isn't even nearly linked to long-term performance.

Getting back on the right track
Near-sighted managements and shareholders and Wall Street analysts who obsess on quarter-by-quarter profits help propagate the old fist-shaking adage, "There should be a law!" It's so sad, and so true.

Yes, providing truly large boosts in wages will hurt profitability for many businesses. Here's what's at fault: They aren't already prepared for higher floors for their lowest-paid workers. Should we invest in such companies? Their profits were pinched by poor long-term planning on managements' part, and even managers and chief executives who inherited such shaky foundations from predecessors should have started making repairs.

Last but not least, we investors shouldn't encourage the corporate mind-set that has given capitalism such a bad rap. Capitalism is not a bad thing -- but it requires positive economic actors. Shareholders can lead the way to a better future, if we think more deeply about how we can all contribute and get there.

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  • Report this Comment On December 05, 2013, at 7:25 PM, Brandon2037 wrote:

    I got my first job in 1995 at the age of 16. Minimum wage was $4.25/hr. back then. If it had grown at 3% per year since then it would be $7.24 per hour today. It is $7.25 so that is about exactly 3% since 1995. According to a calculator on the US department of labor if minimum wage had kept up with inflation since 1995 it would only be $6.51 hour today. According to another site there have only been 5 years since 1995 when inflation topped 3% so I am sick of hearing about how low minimum wage is. It has always been low as far as I can tell. Did I complain about it or go on strike? No, I worked hard and moved up and eventually to another job.

  • Report this Comment On December 06, 2013, at 2:25 AM, Gotlift wrote:

    Whenever government imposes a higher cost of staying in business, in this case through a proposed mandatory $15 per hour wage, employers are forced to raise prices or take other mitigating steps. Likely mitigating steps include:

    Laying off employees or reducing employee hours;

    Reducing employee benefits;

    Cancelling expansion plans;

    Relocating the business;

    Going out of business.

    All these actions, in some form, ultimately harm the worker the very high minimum wage law is supposed to help.

  • Report this Comment On December 06, 2013, at 7:28 AM, Mathman6577 wrote:

    While big companies like Wal-Mart and MCD probably would not go out of business or lay off lots of employees because of a min. wage increase but the companies would probably see a slow down in growth (WMT and MCD are both treading water right now anyway) and it would likely also affect customer service -- longer waits at the drive though or counter probably. Smaller companies would be affected more.

  • Report this Comment On December 06, 2013, at 10:19 AM, pondee619 wrote:

    "Our economy is still being dragged down by a high level of unemployment."

    BUT according to : http://www.fool.com/investing/general/2013/12/05/20-years-ag... "Everything is amazing...", " The combined rate of unemployment and inflation, which was such an important metric for Clinton, is doing just fine nowadays." Therefore:

    Everything is amazing, unemployment and inflation are at, or near, historically low levels AND our economy is being dragged down by a high level of unemployment.

    Are fools looking at the same country?

  • Report this Comment On December 06, 2013, at 11:25 AM, VikingBear wrote:

    My first "Real Job" was in 1964, and the minimum wage was $1.25 an hour. Part-time. No benefits.

    Gold was $35.00 per troy ounce and not legal.

    A working used car could be found for $500.00.

    An apartment for a young married couple could be found for $150.00 per month.

    A high-school diploma was enough to get by on.

    My father bought a 3br 3ba house for $34,000... and worried about keeping up the payments.

    Regular gasoline ran around $0.25 per gallon.

    Gold is now 1,235.70 per troy ounce--thirty-five times as much.

    Minimum wage is now $7.25 per hour--five point eight times as much.

    If Minimum wage had gone up in parallel with gold, it would be $34.75 per hour.

    If gold had gone up in parallel with the minimum wage, it would be only $203 per troy ounce.

    Your Government at work...

  • Report this Comment On December 06, 2013, at 11:31 AM, KBOKSOFT wrote:

    I bet if this article were published in Greece, a lot of people would be nodding their heads vigorously.

    ...except the 27% who are unemployed and would love to be able to take a job at half minimum wage.

    France has a "living wage" of over $20k US per year, weekly hours worked cap, guaranteed benefits, guaranteed paid time off, full pension, termination restrictions...

    ...and a 26% unemployment rate for people under age 25. Employers can't afford to hire young people.

  • Report this Comment On December 06, 2013, at 11:32 AM, Schneidku40 wrote:

    It's a morally good argument, but unfortunately an economically horrible one. I'll take the Walmart example. They have 2.2m employees. I'm not sure how many of those are in the US earning around minimum wage, but I'm guessing a lot. For this exercise I'll say 1.5m of them. 1.5m x $7.50 is $11.25 million in pay per hour, say x 30 hours per week, 52 weeks a year. That's $17 billion in wages per year to these minimum wage workers.

    Now, an increase of minimum wage to $15 per hour would double that cost, to $34 billion per year. Here's the problem: in their 2013 fiscal year, Walmart made $17 billion in net income. If you double the minimum wage, the resulting $17b increase exactly erases all of Walmart's profit.

    This doesn't even take into account the increase of COGS due to higher manufacturing costs due to the same $15 minimum wage at the manufacturing plants. With that one fell swoop, Walmart is losing billions every year and people WILL lose their jobs.

    This doesn't even touch the inflation that will occur and dilute that $15 an hour back down to near-poverty levels. The reason it worked with Ford is because that was only ONE company that did it. If every company does it, eventually some companies will have to take out extra loans to pay the extra wages. There's no way for every company to increase wages strictly out of net income. Increased loans/debt = increased money supply = inflation. I see absolutely no way around that equation. If somebody can tell me otherwise, I'd like to hear it.

  • Report this Comment On December 06, 2013, at 11:42 AM, Brandon2037 wrote:

    @VikingBear- I don't see what gold has to do with any of this. You are not paid in gold and you don't buy with gold. There is not enough gold to go around to use as currency. If we still had a gold backed currency due to our trade deficit I would think most of our gold would have been shipped overseas by now. As for your other points, you said an apartment used to be $150, if you multiply that by the 5.8 that you say minimum wage has went up it comes to $870 which in my area will still get a 2 bedroom apartment. As for the house 5.8 times $34,000 is $197,200 which is somewhat in line with the median cost of a home in the US plus rates are so low they are more affordable. As for gas 5.8 times 25 cents is only $1.45 and gas in my area is a little over twice that. However today's cars probably get roughly twice or better the MPG of cars back then. You said you could get a car that runs back then for $500. So 5.8 times that is $2900 and if all you expect is for it to run, that should be plenty. So the only place we appear to be off much is gold and that is good if you invested in gold. And if you did not I don't see that it impacts you.

  • Report this Comment On December 06, 2013, at 11:56 AM, SaintJoseph wrote:

    Hi Folks,

    It's a free country!

    Quit if you don't appreciate you minimum wage job.

    Better still, go back to school, college, university to

    improve your skills towards higher paying jobs.

    By the way,

    we, taxpayers, are NOT your parent.

    THERE IS NO FREE LUNCH!!!

    QED.

  • Report this Comment On December 06, 2013, at 12:35 PM, TMFJCar wrote:

    Alyce,

    Thank you for the insightful article. What I think many commenters fail to realize is the mere fact we are all subsidizing corporate profits. When a business fails to pay a living wage -- forcing their workers to file for public assistance -- but reports a profit, we all are subsidizing the corporation. Even if the price rises on a Big Mac because SG&A goes up due to higher employee costs, that's ok with me because I CHOSE to patron that establishment. Right now, I am paying for McDonald's meals I'll never eat because tax dollars are paying for employees health care, welfare, TANF, etc. (money being fungible and all). It seems like this should be a basic idea from both sides of the aisle – that a business should be self-sufficient and the price of their goods should be able to support workers. We decided a long time ago (for better or worse) that costs of healthcare and wages should be borne by employers and this “de facto” subsidization ends in too many low-wage jobs that continues to feeds upon itself. Thanks for lending your (excellent) voice to this critical issue.

    Jamal Carnette--TMFJCar

  • Report this Comment On December 06, 2013, at 12:38 PM, damilkman wrote:

    What the author does not understand is that a minimum wage was never intended to be a living wage. A minimum wage is something you pay someone to do a marginal service. If you raise the minimum wage such that the cost is greater then the value the job goes away.

    I will give two examples. I was paid 3.35 in my first job to count bottles and cans for return in a grocery store. I live in a state with a bottle deposit. This was a cost center for the store. When the minimum wage went up the grocery store just changed the service to self serve.

    Later I had a job at a computer lab where I checked out the computer stations for 5.50. This job was also a cost center for the university. This job was also replaced by an automated system.

    In both cases I moved on to more advanced jobs that required a higher skill set before the old job disappeared. Minimum wage jobs are there for someone to gain experience and learn skills so they can move up. Why not fix the real problem that these people have no skills other than menial labor?

    For the vast majority of us low wages fires our ambition to learn skills so we can make more. Why bother if I can make 20 dollars an hour sweeping a floor?

  • Report this Comment On December 06, 2013, at 12:59 PM, SkepikI wrote:

    <It's a morally good argument, but unfortunately an economically horrible one. >

    < What I think many commenters fail to realize is the mere fact we are all subsidizing corporate profits.>

    It is neither morally upright NOR rationally kind to engage in this sort of particularly cruel deception. Alyce and TMF JCar, it is especially irresponsible of you to lend your support to those who wish to oppress those on the minimum wage with skills and knowledge that keep them there. Putting these undereducated, under-motivated individuals in the position of "don't worry we will take care of you by raising your wages even if you have insufficient value, so you can stay where you are at, oppressed and depressed" is one of the worst things I have seen in MF articles.

    The cruelest hoax for these individuals is that they DON'T need to improve, don't need to raise their level of education, don't need to improve their skills or motivation, they just need to agitate, or worse yet, listen to their "betters" who will take care of them.

    We live in a place where opportunities and education abound IF you don't listen to the not-so-kind sympathetic enablers who want to keep you in your station.....

    IF you or someone you know is "stuck" in a minimum wage situation- REVOLT. And do it in a way that works. Find a better job with your enthusiasm and great attitude. Get educated so you will create value for your next employer at a level above the minimum. GET OUT! RUN! And find something better to run to. Got a worthless degree? Well, you got one once, go get another that is worth something. Not doing well as an employee? Start your own enterprise.

    No cruel hoaxes from me...you can do it. many have. Minimum wage boosts are crack for those addicted to permanent minimum wage life.

  • Report this Comment On December 06, 2013, at 1:44 PM, damilkman wrote:

    I absolutely disagree with TMFJCar. This is akin to me being at fault for Pedro the terrorist killing ten hostages because I would not kill one myself. Walmart and McDonalds do not force employees to go on government assistance. The individuals choose to go on government assistance and through their actions and situation have to, not anything Walmart did.

    If we as a society feel that an individuals situation requires our charity is it not the role of government to assist them? According to TMFJCar the responsibility of charity are Walmart and McDonalds. The entire point of government is to do actions that no other entity can. There may be disagreement on aid levels but this implies that any government aid to anyone who is gainfully employed is an outrage because we who do not receive any benefit do not get anything out of it.

    I will say that I will gladly see my taxes go to assist others in need. Charity by corporations is their choice. Adam Smith's hand has shown over and over what happens when a government foolishly attempts to manipulate the market. Just as Jesus warned to give unto Caeser what is Caeser's we should never demand that private industry do something it is less equiped to do then government.

    In the specific case of Walmart and McDonalds they would be forced to raise their prices. In the specific case of McDonalds they make their money selling very cheap food to poor people. Razor thin margins would have to be made up by higher costs. Even modest increases will drive these consumers away. When the average meal is 5 dollars 50 cents is a ten percent increase. But alas it will not matter as a mandated increase will just accelerate the implementation of automated fast foot establishments.

  • Report this Comment On December 06, 2013, at 1:49 PM, redrhino23 wrote:

    Some workers at McDonald's, Walmart and the like are young adults, teens, and or folks with a language barriers. My guess is that few of these would strike. I bet most of the people complaining are the ones that dropped out of school or stayed put after a high school diploma. This is a free country, if you don't like your job, get another one. Why do folks like me, who studied all the way to an MBA and sacrified, feel sorry for the lazy ones. Many people started out in minimum wage, and as you can read here, they persevered and moved on. Instead of complaining, maybe you should've worked harder in school...

  • Report this Comment On December 06, 2013, at 2:39 PM, cluckgochicken wrote:

    Looking at some of these comments makes me think that many of these fools must think that slavery is not such a bad thing if somebody makes a lot of money and the slaves have a chance, even a small one to escape.

  • Report this Comment On December 06, 2013, at 2:58 PM, SkepikI wrote:

    ^ There is nothing so enslaving or repressive as the soft chains of "you can't do any better, accept your lot". It was true in Europe for the serfs of the middle ages and the peasantry of the 1800's and for the "Proletariat" in Russia for the past 6 or 8 centuries. There has ever been only one escape, by the true revolutionaries of the world, those who believe and are "dedicated to the PROPOSITION that all men are created equal" (Abraham Lincoln) and who will act on it.

    One man has made a slave of another for tens of thousands of years, if you look to someone else to resist, you are cooperating with the slavemasters. If you tell those who ought to resist "don't we will make it better for you" with the cruel hoax of collaborators, you are the accessories after the fact.

  • Report this Comment On December 06, 2013, at 3:47 PM, Schneidku40 wrote:

    Skepiki,

    I should have made more clear that my "morally good" point wasn't about raising the minimum wage itself, it was for the idea of no poverty and everybody having a living wage. Otherwise I agree with what you and others said about a lot of people needing to have more motivation for education and better decisions in life, especially early on (teens-early 20s).

    But part of that is just the difference in all of us. I believe there is a motivation spectrum. Some people have it, some don't so much. In the end, isn't that a large part of this argument? What we're talking about is taking from the motivated and giving to the unmotivated. Why is that the personal quality we choose to feel sorry for and subsidize?

    My wife has the opposite view of me, saying people in poor areas have terrible schools so their education is poor. I can't disagree with the statistics on that. But with all the governmental assistance to the underpriveledged for college, why aren't more going that route? If every underpriveledged child mustered the strength to leave their poverty, attend college, get a good job, move their family to a less poor neighborhood, and set the course of their family on a higher level, that would do more for getting rid of poverty than raising the minimum wage.

    Many of our ancestors came to this country with nothing and they worked and prospered to set their family lineage on an upright path. Why can't more people do the same in this country today, but without the need to move to an unknown country to do it?

  • Report this Comment On December 06, 2013, at 4:01 PM, damilkman wrote:

    I am going to boil this down to one sentence. Charity is not an entitlement. I agree with some of the posters above that when charity is expected it acts as its own kind of slavery as the individual becomes enslaved to the handout be it from the government or private enterprise but enforced by the government.

    We could always build Huxley's Brave New World. Design people to be content and stupid. Give them meaningless entertainment and the perfect drug. Is ignorance bliss? Is existing good enough?

  • Report this Comment On December 06, 2013, at 5:03 PM, mdk0611 wrote:

    1. $7.25 goes a lot farther in many parts of the country than in DC, NY, LA and a few other high cost of living locales. Maybe there SHOULD be differentiation between states.

    2. Know what will happen in fast food restaurants if the minimum wage goes to $15. per hour? A soda dispenser and ice machine gets put in the dining area. You buy a cup with your meal and drink all the soda you want. The crew behind the counter gets reduced by 1 per shift. You can argue that an increase from $7.25 to $8.00 will not have a major impact on employment. However I don't think it's hyperbole, particularly when small businesses are included, to say an increase to $15. will cost at least a million jobs.

  • Report this Comment On December 06, 2013, at 7:37 PM, cmalek wrote:

    The saddest thing about the minimum wage controversy is that the people who are pushing for a higher minimum wage are thinking statically. They assume that when the wages increase everything else will remain as it was before, supposedly making the employees better off.

    First of all, the doubling of the salary may put the employees in a higher tax bracket. Then their employer will have to raise his prices which means the people buying the product will have to pay and then they will demand a raise from their employer. Then he will be forced to raise his prices and so and so in a cascade effect. Eventually everybody will have raised their prices, which will raise the cost of living, which means the workers that just got their wages doubled will now be paying double, putting them back in the position of not making a living wage. Rinse and repeat ad nauseam.

    The solution, as many have stated, is for the workers to improve their skills so employers will be willing to pay higher wages for higher value employees.

    BTW - If raising the minimum wage to $15/hr would be good, wouldn't raising it to $100/hr be much better? Yes, I'm being facetious here.

  • Report this Comment On December 06, 2013, at 7:39 PM, KBOKSOFT wrote:

    I've read the article several times now, and I'm still having a lot of "huh?" moments.

    * "The dismal science's academic arguments often don't yield real-world results as they "logically" should."

    Huh? What is the "dismal science"? Economics? Are you suggesting we should consider the economic impact of a Living Wage without using Economics? Because it's "dismal"? Do you have a more "uplifting" branch of science we could use?

    Huh? Did academic arguments ever yield real-world results? Doesn't "academic" mean "not of practical relevance"? Why would that "logically" yield real-world results?

    * "The sad truth is that if big companies had designed decent strategies toward employees in the first place, no one would think the government really needed to step in to such a degree."

    Huh? What's a "big company"? Just Wal-Mart and McDonald's? or all big companies? Do you mean big BAD companies? Because they're BAD? Are small companies exempt somehow?

    Huh? What's a "decent strategy toward employees"? Just more pay? That doesn't seem like much of a strategy, nor does it seem inherently decent.

    Huh? You say "no one would think..." Trust me, I would think. Many of us would think. Don't tell us we won't think.

    Huh? When you say "the government wouldn't have to step in to such a degree..", do you mean making Living Wage law would keep the government from having to step in? Because making a Living Wage law seems a lot like the government "stepping in".

    Huh? Shouldn't "The sad truth is..." be followed with something like a fact -- otherwise it's not 'truth', just 'sad'.

    * "Henry Ford had a lightbulb moment: If he paid his employees better, they could afford cars -- his company's own product."

    Huh? From corporate.ford.com: "While Henry's primary objective was to reduce worker attrition [...] newspapers [...] reported the story as an extraordinary gesture of goodwill." -- and apparently TMF still reports it that way.

    Huh? Would Boeing benefit from paying its employees enough to buy a 747?

    Huh? Can't McDonald's employees afford to buy food at McDonald's? Can't Wal-Mart employees afford to shop at Wal-Mart? Isn't the Henry Ford example just proving that employees are fairly compensated by current standards?

    * "...the "Suck it up and climb that ladder!" argument actually falls incredibly short of any big-picture thinking about our economy and how companies and investors can prosper in it."

    Huh? Isn't "climb that ladder" (i.e. "get ahead") an accurate description of the social basis of Capitalism and how people prosper in it? That "argument" literally is the "big-picture" understanding of our economy.

    * "..a shoddy economy that pretends to be "market-driven" by pushing short-term profits and long-term obtuseness actually expands the need for all kinds of interventions." and "in the long run, demoralized employees and increasing public distaste hurt such companies..."

    Huh? Economies don't pretend to be market-driven; they are, by definition, market driven. This is like complaining that sports teams pretend to be "win-oriented" by trying to outscore their opponents.

    Huh? McDonald's started in 1948 and Wal-Mart in 1962. Those are pretty long runs for a strategy of "long-term obtuseness" using "demoralized employees". Neither company has needed intervention (whatever that means) or suffered considerable harm from "public distaste".

    * "Sometimes companies like Wal-Mart derive benefits from welfare and public assistance, since they're not shelling out more for employees."

    Huh? Does this mean Wal-Mart also derives benefit from public education because it doesn't have to pay to educate its employees' children? Does it derive benefit from the US military because it doesn't have to pay for its own militia? Why should Wal-Mart feel guilty because its employees receive government benefits that tax dollars paid for?

    * "The highly controversial concept that the government should raise the minimum wage by law is currently a major topic on Wall Street and Main Street; some workers are striking as we speak."

    Huh? Some workers are striking in France, too. Someone should tell those French workers that France already has a Living Wage minimum (and many other employee protections). Raising the minimum wage will not keep workers from striking; they'll just find something else to complain about.

    * "Capitalism is not a bad thing -- but it requires positive economic actors."

    Huh? What's a "positive economic actor"? Is an article not mentioning a single "big company" with "decent strategies toward employees" positive?

    Double-Huh? Did a regular TMF contributor just write that "Capitalism is not a bad thing"? This is like a Playboy magazine contributor declaring that women aren't ugly.

  • Report this Comment On December 06, 2013, at 8:04 PM, ditchsurfer wrote:

    When you are offered a job, you are told, what it pays. Dont take the job, then bitch about the pay. Get a education and improve your profile. If enough people stopped working for what they feel is unlivable, then employers would be forced to raise their pay. Dont like it, start your own business. Better yet, make the minimum wage 40$ per hour, if this is such a good idea

  • Report this Comment On December 06, 2013, at 8:09 PM, JadedFoolalex wrote:

    For the first time ever, I'm in agreement with skepikl!! The comments by the Foolish folk here is reminiscent of George Orwell's "Animal Farm". Let's overthrow the hand that feeds us because we are oppressed!! And the daily operation of the farm degenerates into disaster as we are led by committee!!!

    Don't like your job, make yourself more employable and get a better job! But the one thing that has not been mentioned is the Obamacide perpetrated on the American people. High taxes on business, high taxes on necessities, High taxes just for living in America. If taxes weren't so high, I would think more businesses would be able to hire more people back to work?? "Long-term obtuseness" seems to come from the top these days.....

  • Report this Comment On December 06, 2013, at 8:35 PM, Mathman6577 wrote:

    8 of the top 10 highest paying college majors are engineering related. Study your math people.

    http://www.usatoday.com/story/money/2013/09/10/georgetown-st...

  • Report this Comment On December 06, 2013, at 8:40 PM, 4445dand wrote:

    Working with and shopping in Walmart you may notice a high percentage of the employees are not employable at other jobs, certainely you would not hire them .

    Walmarrt provides jobs for many otherwise un-employabe people. THANK YOU WALMART.

  • Report this Comment On December 06, 2013, at 9:35 PM, RobertBaillieul wrote:

    "Here are two simple sides of the debate: a higher required minimum wage will mercilessly slash corporate profits; conversely, some workers across America are not receiving a "living wage."

    That would be a straw-man argument.

  • Report this Comment On December 06, 2013, at 10:27 PM, SkepikI wrote:

    The best thing I can do for you Alyce and all of you readers is to tell you Bill Porter died at 81 on Tuesday. You can read about him here:

    http://www.oregonlive.com/portland/index.ssf/2013/12/bill_po...

    Bill lived with Cerebral Palsy his entire life, refused to accept Medicaid, Public assistance and the minimum wage- he never used it as an excuse.

    What's your excuse?

  • Report this Comment On December 06, 2013, at 10:29 PM, gskinner75006 wrote:

    Fast food seems to being kicked around a bit so I thought I would throw this out there:

    "More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local men and women."

    From what I can tell about Subway, they are all owned and operated by independent local men and women.

    As I understand a franchise, McDonald's and Subway do not pay for the employees needed to operate these stores. Those who put up the investment and trying to make a living operating a restaurant are paying the employees. They are the ones you have a beef with.

    But I would recommend you leave these jobs to high school/college kids or someone wanting a few extra part time bucks. These jobs are not intended for raising a family and putting the kids through college and planning a retirement. In case you were wondering, a $15 per hour salary won't accomplish that either.

    Walmart on the other hand, is a different story. They should say to hell with the stock price and use the dividend to help pay a living wage. Traders may not like that much but who cares. I'm sure Mr. Walton would not be happy with what has become of his company.

  • Report this Comment On December 06, 2013, at 10:37 PM, mountain8 wrote:

    Here's a novel idea. Don't raise wages, lower prices and leave wages at current rates.

    With the president and congress producing mandate after mandate, why not mandate a lowering of all prices on all things at the same time?

    All companies would get 20% more income because all their supplies, groceries, aluminum, gold, hair spray etc would cost them 20% less. Bottom line would not be effected because everything on the balance sheet would be 20% less. And a dollar would buy 20% more.

    Don't think that could be done in our lifetime? I seem to recall our Mandated health care system was pushed through in a couple months.

    Mandated seat belts and air bags add about $5000 dollars to the price of a new car.

    Mandated insurance is shown to cause much more cost for 80% of the country.

    Mandated car insurance (which I kinda approve of...I just want the choice.) Adds a gob.

    Everytime the govt mandates anything, the cost of living goes up, usually more than most of us can afford.

    I've been through maybe 5- 6 cost of living raises to minimum wage. It always works the same: Min Wage goes up. (in this case 50%, hmmm I only get 1.5% for my disability . Then all other workers want more. Nobody wants to earn wages that are less than what's being paid to the poor. So all wages will go up 50%. And of course businesses will then up the cost of their product or service. And we will be paying 50% more for our mcburger.

    It's a circle. Has happened everytime we have raised min wage. EVERYTIME! It will happen again, then mcDs burger value meal will pop to $10+.

    Those who do not learn from the past are doomed to repeat it.

  • Report this Comment On December 06, 2013, at 11:42 PM, HJ66 wrote:

    Hold on a minute people! If the minimum wage is raised, Walmart (and others) will NOT close up shop, or lay off people, or even reduce their profits. Someone did some math above that shows a doubling of minimum wage increase wiping out Walmart's profits. Well, they wouldn't be very good business operators if they let that happen, would they?

    Walmart would simply raise their prices BY THE MINIMUM AMOUNT POSSIBLE to still maintain their profits. OK, that's an oversimplification, it is more accurate to say that Walmart would continue to maximize their profits under the new business environment. The result of this would be the minimum prices that they could maintain, because that is their business strategy. How much would the prices go up? Let's try a little exercise. I'll use Schneidku40's numbers from above just to show its not quite as bad as all that. All numbers in millions.

    Current Sales: 466,114

    Current Margin: 24.4%

    Current hourly wages(sic): 17,000

    Lets assume all other expenses stay the same (I know...that wouldn't happen, I'll deal with that below) If we increase wages to 34,000, we need to increase sales by a like amount, or about 4% (that's right folks your 99cent loaf of bread would now cost you $1.03). Even if we assume they want to maintain their current profit margin rather than their absolute profit, the increase is still less than 5%.

    Now, as for cascading increases of cost because suppliers will need to increase, the fact is that nearly all of the things sold retail are commodity items and minimum wage jobs are not a huge proportion of the product cost, so the effect on it would be much less than you think (just like it probably was a lot less than you though in my example above)

    There likely are some industries that would be affected by a sudden increase in the minimum wage. I'd be concerned about agriculture, for example, especially since Farmers have difficulty passing along cost increases to their buyers (which is a terrible thing in the long run, by the way). It would be advisable to phase in any increase in sensitive industries, and probably everywhere because my gut feel (i.e. I haven't crunched any numbers on this one) is that mom and pops would have a more difficult time adjusting to a quick increase than Walmart. But my gut is also telling me (IBID) that maybe mom and pop would be better in the long run with a higher minimum wage and higher shelf prices.

    By the way, now would be a great time to start the process since we are currently dealing with more danger of deflation than high inflation, so injecting a little inflation might be a good thing macro-economically.

  • Report this Comment On December 07, 2013, at 12:09 AM, percoh wrote:

    Most of these comments are pretty horrifying. I don't like to think that my fellow Fools believe that it is ok for their hard-working neighbors to work full time and bring home $15k at most each year.

    Surely, on this site of all places we know that 15k can't pay for food, shelter and basic necessities.

    Do we really think that a Fortune 500 CEO can earn $25 million a year and say he can't afford to pay his full time employees enough to avoid living on food stamps?

    I have to believe we are better than this.

    I'd really encourage those with extremely negative views about raising the minimum wage, to spend a few hours with people who work hard for a living but bring home less than 20k. Spend just a little time understanding life in their shoes. I'm not talking about the 16 year old who lives with his affluent parents and is just getting a little spending money. I'm talking about adults who are working their tails off and can't get ahead.

    I work for a nonprofit in MD trying to help workers acquire skills to advance. I'm fortunate to earn a decent living while I do this but would be happy to arrange a first hand experience for those who don't have this opportunity.

    I can understand the argument that $15 an hour is too much and, to be fair, it is being considered at much lower levels in most places. But if you must take this view, please don't denigrate those who our left working at this level.

  • Report this Comment On December 07, 2013, at 2:29 AM, observerbob2013 wrote:

    During the depression Henry Ford made the decision that it was in his interests to retain as many of his employees as possible and pay as much as possible.

    Henry was no socialist, he was simply intelligent enough to understand that if you cut salaries to the present levels you eventually commit suicide by destroying your market.

    A market economy which produces huge salaries for a few often inept managers and peanuts for everyone else will eventually reap what it has sown.

    David's article on the value of happy employees this week said it all..

  • Report this Comment On December 07, 2013, at 5:41 AM, hdon94 wrote:

    Is it only me or do more and more people feel they are entitiled?

    I have had many minimum wage jobs, I have worked jobs taking out trash and unplugging crap filled toilets. Did I cry about it? Did I demand to be paid more? NO I kept searching for a better job and when I found one I would move up! I kept repeating this while educating myself and learning a skill to make myself more valuble.

    I saw the interview of the young kid on CNBC who though he deserved a raise. HE HAD ONLY BEEN ON THE JOB FOR SIX MONTHS! He asked for one and was told to be patient that he would be getting a raise in due time. He was really unhappy! Dude be happy you even have a job!!! Do something to help yourself! Take some responsibility for your life!

  • Report this Comment On December 07, 2013, at 7:58 AM, Mathman6577 wrote:

    @percoh: I don't think most of the commentators here have anything against low-wage workers. I am sure that most of them work very hard. The issue I think is that the commentators do not want a government agency or union to come in and demand that a company pay their employees a certain wage.

    Low-wage jobs are for people just starting out to gain some work experience and extra cash (it was not intended for main source of income jobs).

    I am in the camp of @hdon94 above. People have to work their way up the ladder -- they are not going to start out at CEO right after graduation from college or high school.

  • Report this Comment On December 07, 2013, at 11:06 AM, wasatchskier wrote:

    "The worst offenders"?! How offensive. There is no guilty party here. No laws have been broken. No moral offense. No intent to harm. This lady is way over the top. Socialism has no place here. We are Capitalists.

  • Report this Comment On December 07, 2013, at 11:34 AM, ershler wrote:

    Many have commented on monetary inflation but no one has commented on academic inflation. If everyone is trying to better themselves by getting an education the values of the degrees they are earning decrease. Now the person is stuck with a low paying job and repaying student loans. Petroleum engineering is a good example. The main reason their pay is so high is because it is a small field with only a few school producing small graduating classes. If they were producing as many petroleum engineers as mechanical engineers the pay would be similar.

    Academic inflation is already happening; jobs that use to require technical training require a degree and jobs that use to require a degree require more advanced degrees. I've been a engineer for seven years in two fields and I've never needed to solve a differential equation but I never would have gotten the jobs if I didn't have a degree.

    Also, there is a non-trivial percentage of the population who will never be able to work their way up the ladder because they don't have the mental ability. Automation is only going to increase this percentage in the future.

  • Report this Comment On December 07, 2013, at 11:48 AM, Jat wrote:

    I was surprised that Ms. Lomax missed the major arguments against minimum wages, which ar not that they would slash corporate profits.

    Rather, to my mind, the main arguments against MinWages are:

    1) They price low-skill workers out of the market. If you set the minimum wage to any given figure of $X per hours, workers who are not that productive cannot get the first job. Without that first job, they have no way to step on to the metaphorical ladder of opportunity. If they could get that first job, on the other hand they could potentially learn skills, better work habits, be able to afford new formal training--so many people started at low-wage jobs and eventually became solid middle class, or even wealthy! How can we close that avenue of advance off to them?

    2) It is wrong for the government--a third party--to step in and tell other people, private parties, what sort of deal to make between themselves, so long as the product or service being bought and sold is legal. It is wrong morally; it is also wrong politically. That is, it can easily be used (and minimum wage historically has been used) to prevent politically weak groups from competing for jobs with politically powerful groups. For example, minimum wage laws were originally enacted explicitly in order to prevent black workers, who would accept lower wages, from competing with white workers, who demanded higher ones. They succeeded; black unemployment, lower than white unemployment prior to the establishment of MinWage, has been higher ever since. Minimum wage laws officially meant to "protect women from exploitation" have also forced women out of jobs that they wanted and needed. Guess who benefited?

  • Report this Comment On December 07, 2013, at 11:57 AM, Mathman6577 wrote:

    @ershler: The reason that most technical and engineering jobs require a degree in engineering (or lots of experience) is that in the process of getting the degree the graduate is taught how to solve problems in a logical and concise matter --- not necessarily using all of the tools taught in college --- which will duplicate activities in the "real world" needed to create products.

    That being said most tools taught in engineering school have direct applicability to the real world. An electrical engineering position sure enough requires the use of Ohms Law which was taught to me in the first 5 minutes of my sophomore level DC circuits course. [I have been an engineer for 32 years and use that and many more tools that I learned in college.]

    And learning never stops. Engineers need to keep up on the latest advances in the field. Joining industry groups like IEEE is important.

    Note that 8 out of the top 10 starting salaries (petroleum engineering happens to be #1) for jobs requiring a degree are engineering related (and another is closely related to engineering):

    http://www.usatoday.com/story/money/2013/09/10/georgetown-st...

  • Report this Comment On December 07, 2013, at 12:16 PM, SkepikI wrote:

    @percoh:

    <Most of these comments are pretty horrifying. I don't like to think that my fellow Fools believe that it is ok for their hard-working neighbors to work full time and bring home $15k at most each year.>

    No, if you read carefully most of the commentary (ALL?) is that its NOT OK, and the road out is not the minimum wage. Evidently, you think so too as evidenced by your other commentary:

    <I work for a nonprofit in MD trying to help workers acquire skills to advance.>

    And I cant resist pointing out that even though I dont know for sure where your non profit gets its funds, I do know for sure it does not pay any taxes to fund all of the assets, programs, support, graft, waste, theft etc. And the nasty high rolling corps do so you might just cut them a little slack....

    I suggest you read Bill Porters story if you have not already. You might find it helpful in your work. It might even affect your attitude.

  • Report this Comment On December 07, 2013, at 1:02 PM, Mathman6577 wrote:

    @skeplkl: Good commentary. Great story about Bill Porters. Should be required reading for the left-wing. My thought is that the way out is education. Stop getting degrees in philosophy (and criticizing others) and go into engineering and math and be productive in the world.

  • Report this Comment On December 07, 2013, at 1:58 PM, stockdissector wrote:

    Good article.

  • Report this Comment On December 07, 2013, at 2:35 PM, SkepikI wrote:

    @Mathman6577- Thanks, I agree with you, and my thought was that Bill Porter's story might not only lift the reader's spirits, but suggest to them that isolating people from the dignity of work for value is really the horrible and patronizing and oppressing approach.

    We have had endless minimum wage increases in the past four? decades. It never fixes the problem. If I suggested we really needed to be giving the minimum wage workers "magic beans" to supplement their income and make them wealthy, I would be considered cruel and horrible. And yet those who wish to raise the minimum wage which accomplishes nothing better are compassionate. And completely missed are the unintended consequences of these sorts of window dressing- like removing the connection between work and value. Like disrespecting the ability of those individuals to to better.....When you steal achievement and improvement from individuals you steal their spirit too.....

  • Report this Comment On December 07, 2013, at 5:56 PM, LeeG3 wrote:

    When Pres. Johnson passed the Great Society legislation, its purpose was to wipe out poverty in my lifetime. I was in my teens then and now am retired. I recently read an article that stated that a larger percentage of people are below the "Poverty Line" than when that legislation was passed! So what happened?

    My belief is that government is good for those things that individuals can't do alone. Things like maintaining a standing army, negotiating with other countries, etc. Trying to change the basic nature of mankind doesn't work. There will always be people who try to improve and there will be those that want others to do all of the work but not them.

    I started out working at 16 for the minimum wage of $1.25 as a general helper. But even back then, I learned more skills so that I was making $2.50 by the time that I graduated from high school. The reason for the increase was that I provided more value to the company. That is the lesson that is not taught - you will be paid more if you provide a greater benefit than someone else. Raising the minimum wage does not provide an increased value to a company; it only provides an incentive for the company to look for ways to reduce its headcount (Automation being the most obvious!)

  • Report this Comment On December 07, 2013, at 9:10 PM, percoh wrote:

    @skepiki

    I don''t think you understood my post. I think there is a reasonable argument to be made that raising the min wage to $15/hr is too much. We can go back and forth on the economics -- and that's all fine and interesting.

    My objection is when posters make it personal and suggest that people that make the minimum wage somehow deserve to be poor or are lazy -- and therefore we shouldn't care to raise their wages.

    In fact, in an earlier post you refer to them as "the unmotivated."

    It presents an ugliness about how we view our neighbors that I strongly dislike.

    Moreover, as someone who has worked with low-wage workers for nearly 20 years, it does not connect to my personal experience. As I offered before, I'd be happy to arrange direct communication with adults earning the minimum wage (or near) and after speaking with them, I'm pretty certain you will not find them to be "unmotivated" at all.

    I'm not really sure what you are on about regarding nonprofits and those who work for them. I pay taxes on my wages like everyone else. My organization doesn't earn a profit -- all funds are poured into service -- so we don't pay taxes.

    Most of all, it is ironic that you seem to be taking a shot at my organization -- suggesting that perhaps we receive public funds and that somehow this is wrong. First off -- you guessed wrong. We don't receive public funds. All of our funds are raised privately. On the other hand, some of the huge corporations discussed in Ms. Lomax's article use government benefits to subsidize their poverty level wages. You seem to be more than ok with this. Very odd.

  • Report this Comment On December 08, 2013, at 6:11 AM, GrCelt wrote:

    People accept minimum wage jobs because that is all they are prepared to do. Or put another way, all they offer is minimum wage ability.

    If they grew their ability, they would grow their wage.

    My conclusion is that the effort should be put into increasing their worth, not giving them more than they are worth. Besides if you pay a hamburger flipper too much, you make it worth investing in a mechanical/computerized flipper.

    I guarantee the net effect of doubling the minimum wage will be the doubling of prices.

  • Report this Comment On December 08, 2013, at 9:22 AM, Schneidku40 wrote:

    HJ66,

    Your math on raising prices 4-5% due to the $17b in extra wages to the workers appears correct. I won't argue with that. However (and maybe it's my fault for doing it first), firstly, dismissing a substantial increase in COGS is not correct at all. For not only does minimum wage affect the minimum wage earners, it affects EVERY worker in the nation. At a $15 minimum wage, workers who had been making $12 now need at least $15. But they were making 50% more than minimum wage before, so wouldn't they still want 50% more afterwards? Now they get $22.50. Those who made $22.50 before won't want to make the same as those who made $12 before, so they want at least a 50% increase also, to ~$34. On and on. This affects every wage in America. The expenses for every company in America goes up. That means if Walmart buys a coffee maker from a wholesaler to sell on its floor, it has to pay the wholesaler more, the manufacturer more, the manufacturer of the equipment used to make the coffee maker more, the truck drivers who move the coffee maker from A to B to C, etc. This absolutely adds up to real increases. Old Dominion Freight trucking company has 50% of their costs in labor. Stanley Black & Decker's labor is 25% of revenue. Alcoa's labor is about 5% of revenue. Add in walmart's increased cost of labor. That adds up to nearly 100% price increase on that coffee maker. This still doesn't factor in the extra taxes these companies will pay on the increased revenue Still think that Walmart employee is getting a good deal?

    Furthermore, this prices American companies out of competition. China doesn't have the same minimum wage hike, so all of a sudden their products are 25-50% lower in cost than similar American products. What happens then? American consumers want cheaper goods, so they buy chinese. American manufacturers go out of business, people lose their jobs.

    Plus, now we have all these extra people with more money to spend. They'll want a better housing situation. Now all of a sudden we have 100 walmart employees in towns with a walmart that want to move up from their $500/month apartment to $800/month house. What does that do for demand and price of those houses? They go up to $900 or $1,000. Every house in America just got more expensive as it ripples up the chain. Cost of living just got more expensive for everyone.

    I'm not saying I'm totally against raising the minimum wage with the inflation rate (like Social Security should be). But not an immediate 100% increase. Not even an immediate 20% increase. It will only cause inflation.

  • Report this Comment On December 08, 2013, at 11:32 AM, RxPro wrote:

    My unbiased view:

    Good point about companies profiting off of gov subsidies and assistance. It seems that they are using taxpayers as their health coverage, etc.

    However, you also mention how focused companies are on profitability, which is why a minimum wage increase would never work, right? Because if the wage increase impacts profits at all (and payroll is a big cost at a large company) the company will simply find ways to reduce that cost to maintain profitability. Hurting the company is not they answer, as they will always pass the costs on to someone else (employees/consumers) to make up for it.

    What about a system where the employer is taxed based on if their employee is on medicaid/welfare/foodstamps (while being anonymous). This would encourage higher pay by having companies with employees on gov subs share more in the taxes that the rest of Americans pay already. Then by paying more or simply providing healthcare insurance, they can avoid those tax. Helping both sides. Of course its just a rough idea but an idea that helps both sides is whats needed or else one side will just pass the cost along.

  • Report this Comment On December 08, 2013, at 2:06 PM, SkepikI wrote:

    Quite fascinating commentary. I've seen no argument to convince me that raising the minimum wage is not just a cruel hoax. Four or six or however many decades of this charade ought to be enough to convince any thinking person that it does not work. It simply makes those of us who are doing better and feel guilty about it feel less guilty.

    This is NOT an economic argument, it is a philosophical and human argument. The economic arguments ought to push you over the edge, but the human argument is what ought to give you pause.

    If you believe in "magic beans" for five or six rounds of deception I can't respect or help you. If you believe in minimum wage increases after five or six decades of it, logic fails me.

  • Report this Comment On December 08, 2013, at 8:56 PM, Freemarketof1 wrote:

    I would like to congratulate Alyce Lomax on her article. It expands the discussion on factors contributing to a weak economy to other things than just blaming high minimum wages and a over-regulating government. Ultimately, big companies control the resources and power to effect positive economic change not just profits. Their leaders need to be leaders and take a much harder and more honest look at their roll in their own continued success and the success of the country they depend on for customers. Boom and Bust economic thinking must mature into a sustainable, more stable model that better balances all the peices that make it up. Only then will wide spread prosperity stick. I think the point of Alyce's article was that large companies should look in the mirror first before finding blame elsewhere. There is plenty of blame to go around.

  • Report this Comment On December 08, 2013, at 9:41 PM, Risky88 wrote:

    Something needs to be done.

    Fact of the matter is this

    IF the Free Market worked

    We wouldn't even be having the conversation!

  • Report this Comment On December 09, 2013, at 9:22 AM, stewieG wrote:

    The saddest part is that people think these are career jobs, not transitional or part time. Since when do people have the right to believe that these jobs were meant to sustain a family?

    Either work hard to get a promotion or find additional educational avenues to find a better job.

    Settling into a cashier position at your local fast food joint will not, nor has ever, paid the bills.

  • Report this Comment On December 09, 2013, at 9:28 AM, Mathman6577 wrote:

    Instead of raising the minimum wage we should be encouraging people to get more education -- that is the best way out of lower income positions.

  • Report this Comment On December 09, 2013, at 10:09 AM, ScottPletcher wrote:

    Alyce has put forth a bizarre but fascinating view in this article. Her views are, like government interference, well-meaning but damaging. [Btw, Alyce, do YOU pay EVERYONE that works for you -- babysitters, lawn mowers, etc. -- a "living wage"? Just wondering if you practice what you preach.]

    It's *existing govt mandates* on jobs that have forced more companies' new hires to be only part-time workers. She noted the symptom -- "people have switched to part-time work out of necessity" -- but won't acknowledge the underlying disease, which was govt interfering in the first place!

    Individuals are harmed far more by being able to get hired for only part-time work than by the current minimum wage, since full-time jobs invariably have better benefits and more consistent work hours.

  • Report this Comment On December 09, 2013, at 11:43 AM, timc1981 wrote:

    I empathise with opponents of a minimum wage increase, in that a wage hike would probably contribute to inflation and/or lowered profit margins, which would presumably have downstream effects on the economy. I also understand the position that low-skill jobs are low paying because there is a high supply of workers who have those skills.

    I think it's hard to ignore 2 things though:

    1. As others have noted, when we allow corporations to pay sub-living level wages, many of those employees receive welfare, which equates to public subsidizations of corporations to pay those wages.

    2. As wealth becomes less concentrated at the top, economies tend to thrive. Wealth distribution in America is increasingly concentrated at the top .5%-1.0% or so. This is a result of lobbying, and resulting minimum wage and tax laws.

    Like everything else, the solution is probably not as black and white as people want to paint it, and a single solution is probably not the answer. The only trouble is that all the work that needs to go into solving these problems is not actually occurring, so we find ourselves in a viscious cycle.

  • Report this Comment On December 09, 2013, at 11:54 AM, mainelegal wrote:

    Bravo.

    As usual, the "free enterprise" comments, like the disparaging of "levelers" during the time of Adams and Jefferson, try to extrapolate from a microeconomic idea - some businesses cannot probably sustain an increase in marginal cost for labor - to the macroeconomic concept of a national or global change in employment. Not valid.

    Having the larger view, these comments remind me most of the "Iron Law of Wages" that justified the British Parliament allowing millions of Irish workers and their families to starve while the exporting of massive amounts of food from the country continued without restriction. This logically derived extrapolation of a microeconomic scenario to a macroeconomic outcome killed millions and inspired a revolution.

    And was completely wrong on both moral and economic grounds.

    Good, thoughtful piece. You could have mentioned that most of the extensive research on the topic fails to support the claim that changing the minimum wage affects employment.

  • Report this Comment On December 09, 2013, at 12:16 PM, lake200 wrote:

    Not very usful, lots of soft facts and not really based on any economic facts. Looking at the Bureau of Labor Statistics site, 60% of the work force ( 73 million) are on hourly wages. Of those $3.6 million are at or below the Ferderal minimum wage. The proportion of workers on minimum wage has been declining, in 2012 it was 4.7% versus 5.2% in 2011. In 1979 the figure was 13.4%. Minimum wage is a jumping off point for many young people in their careers. An increase in minimum wage actually increases unemployment in that segment, especially among minorities. If you were a business owner, would you hire more people at $7.25 an hour or $8.50, would you even hire as many?

  • Report this Comment On December 09, 2013, at 12:21 PM, TMFLomax wrote:

    This is a robust conversation. Thanks for adding the thoughts.

    A few things I'd like to mention -- "the dismal science" is in fact a term occasionally used to describe economics. I wish I had made that up, but I didn't. Regardless of etymology, I believe that it sounds good today, because there are occasionally irrational and unworkable elements in the real world, regardless of whether you're a diehard fan of Hayek or Keynes.

    I'm appreciative that a few people did see that I never said that I think the government stepping in is a great thing. It's simply a major issue right now that we are seeing in headlines and debate. The point I did make is that people who think it should step in now have a logical point, given that the horrifically low minimum wage and current struggles in an economy with many unemployed people, including those who have given up their search which in fact is not included in the publicized rate -- basically because in a truly free marketplace economic actors like corporate managements can make the free CHOICE to do something logical, which is build a stakeholder friendly company that actually does boost the entire society's prosperity through the positive ripple effects of its business.

    We could use the simple checks and balances that should be effective in corporations (boards were charged to protect shareholders, and barely make any peeps towards any kind of criticism of management) -- things like shareholders rallying against insane CEO pay would help. Further, CEOs and managements who CHOOSE to have the ethics and sense of honor to exhibit shared sacrifice and try everything they can to cut less important expenses than employees are actually running sound businesses. Freedom gives the choice to be smart and ethical as opposed to self serving and destructive.

    Adam Smith's invisible hand of the market includes every economic actor. Meanwhile, we can glean corrupting influences. Again, large companies that are passing many expenses onto the government, making deals with local jurisdictions to get their businesses into certain areas with certain perks, and may I add the often massive amounts of corporate lobbying at shareholders' expense are not seeking a market-based level playing field based on competitive merit.

    Adam Smith's Theory of Moral Sentiments touched upon the idea that actually, we are not always "rational" in that we occasionally have empathy for others and do something in which makes what little find to be insensible on a pure self-serving level: We often do voluntarily help others in need, and in fact it often will eventually serve our own interest. Pretty futuristic stuff, I know.

    Adam Smith also was not high on groups of businessmen getting together (something we could today call corporations). One of his less well-publicized quotes has to do with too many businessmen getting together and ending up putting the screws to everyone else. This actually underlines the idea that even he thought we were all economic actors, he probably wouldn't agree with outcomes like cronyism.

    Yes, many of us including myself have had to go from low-paying jobs to working up the ladder. Perhaps we were lucky that we were actually able to find the resources to help us do that.

    This is an extremely complicated issue. Conversation about it is good. Again, as some of you did glean from my argument, the way capitalism should work in a healthy way is not occurring right now. Checks and balances *within* companies are not working, and shareholders who are not cognizant of these issues are not actually doing us any favors.

    Thanks for the conversation on this important and what I believe thought-provoking issue.

    Alyce

  • Report this Comment On December 09, 2013, at 12:24 PM, gkn08215 wrote:

    When I owned my business, I would bring in employees with no experience at minimum wage to give them a chance to learn while not costing me a fortune. The good, hard working ones I kept and gave them raises. The higher the min. wage, the less likely owners will try to experiment with unskilled labor.

    This article is another reason I'll never spend a dime the M. Fool. Too much lefty propaganda and not enough basic stock market insight. I'll read your articles but no money from this dirty capitalist.

  • Report this Comment On December 09, 2013, at 12:26 PM, TMFLomax wrote:

    Oh and one more note about my line: "the way capitalism should work in a healthy way is not occurring right now" -- it is in a few cases; there are companies out there right now that do understand this web of interrelationships and do run their businesses that way. Unfortunately, in the grand scheme of things there aren't a ton of them even though they are leading the way. Many investors haven't yet recognized that these are the best long-term companies there are. They choose to do many, many stakeholder things, and don't need someone to make a law to force them to do it.

    Alyce

  • Report this Comment On December 09, 2013, at 12:33 PM, TMFGortok wrote:

    If increasing the minimum wage has no harmful side-effects and has all positive outcomes, why are we stopping at $15.00 / hour? Why not $20? Why not $100?

    Every increase in wages that does not have a corresponding increase in capital to provide those wages causes unemployment. I can hire 50 people for $7.25 that provide $7.25 in productivity; but unless I have more capital, I have to fire 14 of those people if the minimum wage rises to $10.00 per hour (all else staying the same).

    I could raise prices to account for that change; but as we learned in Econ, if you raise prices, demand will fall.

    Bottom line, If you force me to hire people I can't afford, I will go bankrupt. You will lose not only the people who are making minimum wage, but also everyone that I once employed. Is that really the outcome we want?

  • Report this Comment On December 09, 2013, at 12:50 PM, SkepikI wrote:

    <Oh and one more note about my line: "the way capitalism should work in a healthy way is not occurring right now" -- it is in a few cases>

    I wish I could say I thoroughly disagree... but that would be a flat out lie. I do have some disagreement and could give you more than A FEW CASES to as examples, big and small. Considering your "position" at MF I won't do your job for you but suggest you are not looking hard enough.

    People voting with their dollars for the operations that get superior service, products and innovation because they manage and maybe pay their employees better may work. Forced minimum wage increases do not. Darwinian maybe, but there it is....

  • Report this Comment On December 09, 2013, at 1:03 PM, mmt369 wrote:

    If you look at a 6000 year span of history, you see a repetitive cycle played out in many nations. Those with power contrive to get more power, which in the last thousand or two years has been in the form of money. The "Free Market" mantra is a good way of helping them to do so. Eventually, those with ever decreasing power get together and a revolution happens. It's utterly predictable, except for the date of the revolution.

    Sometimes the revolution just changes the names of those with power, sometimes it results -- for a while -- in a more democratic structure. Usually, bad people manage to take power in the chaos, but not always. In the USA and many other countries at the moment, an increasing amount of the power is in the hands of those who control the businesses that your Supreme Court has determined to be people. It's a dangerous situation, and thoughtful people should consider it carefully.

    It is possible that the cycle will not repeat itself, and maybe enough of the lucky few will act to further their own self-interest in the way one or two billionaires have been doing, but at least in the case of the USA I am not encouraged by the general tenor of the comments in this thread. They seem to display an ostrich-head-in-the-sand approach to life. In the UK a few years ago, the attitude was called "I'm all right, Jack".

  • Report this Comment On December 09, 2013, at 1:21 PM, foolishlymeek wrote:

    Thank you, KBOKSOFT. I read this article and wondered if my reading skills had deteriorated in the last hours. Maybe it's just a poorly written article!

    I've always wondered what happens to the rest of hourly workers if the minimum wage doubles. Many semi-skilled workers - those with technical degrees or associate degrees - make about $15 an hour. Will they now all get $30 an hour? Will people considering getting additional education just forget it since they will make the same amount of money with or without the education. Will everything just double - wages and costs?

    In addition, the last three times I've gone to McDonald's, they have gotten my order wrong. (And I only go to McDonald's about three times a year!) I'm definitely not happy about it, but realize that the workers are "unskilled." If they are being paid $15 an hour and I'm paying $5 for a $1 burger, they'd better get their act together!

  • Report this Comment On December 09, 2013, at 1:25 PM, dws199 wrote:

    I notice most people say work hard and/or go back to school and it pays. You will climb the ladder. As I understand it, there are, or should be, fewer positions at the higher levels- you manage a bunch of people under you. Carried out to an extreme, can this work? If all minimum wage workers move up the ladder, who does the menial work? OK, machines is more and more the answer. Still, there is a limit to how many people can advance, the competition will get fiercer and fiercer. (my wife and I both worked our asses off getting advanced degrees. The hard work paid off for her, but not for me. I hope this is less me crying and more a cautionary tale) So, to some extent, the "work hard, it pays off" maxim is more tenable when most others don't work hard. I'm pointing out a conundrum here, not rationalizing that we need lazy people.

    Also, can our system support a mass influx of people going back to school? (Assuming everybody can afford to/get enough student loans?).

    It may well be that raising the minimum wage is not a good solution. But people who don't make enough will be a cost that society has to bear. I don't have answers, but I think the "work harder" argument may work to only a certain extent.

  • Report this Comment On December 09, 2013, at 1:27 PM, cjb44 wrote:

    The minimum wage is not a livable wage...it's a starter wage. It's aimed for kids and people starting out. Remember when everyone who worked at McDonalds was a teenager?

    The minimum wage is for kids looking to set aside something for college, maybe gas money for the weekends. Those jobs aren't for people supporting families.

    Does the kid who rips your ticket at the movie theater really deserve more? And be careful because soon those job can be eliminated. How many jobs were eliminated with self check-out at the supermarket? How soon until fastfood places have self serve ordering kiosks set up?

  • Report this Comment On December 09, 2013, at 1:28 PM, tombarrett150 wrote:

    I am an investor and look forward to profitable companies. I don't think it's fair for me or anyone else to earn money on the backs of the poor. I don't think someone who works 40 hours a week shouldn't be able to live without food stamps and government assistance. The idea that a working person should just better him/herself to earn more money is not possible for the majority of people in that situation. Good paying jobs have been sent overseas. The jobs that are available are service jobs. When the minimum wage was $1.25, the people earning it were teenagers. Now the average age of a food service worker is 29. Increasing the minimum wage will make those jobs livable. That's all people are asking for. It's not a handout. It's just fair.

  • Report this Comment On December 09, 2013, at 2:13 PM, ems79 wrote:

    There are millions of people out there working minimum wage jobs.

    The assumption that everyone should work harder/smarter and get a better job seems fine until you realize that there already aren't enough jobs out there.

    I understand if we have scarcity... but we are in a period where the richest of the rich continue to get vastly richer. Large companies post huge profits and executive salaries (like Yum! Brands) ... and the typical worker for their company/franchisees are receiving assistance from government--meaning the rest of the tax payers.

    This big picture problem is what needs to be solved.

    Blanket Increase in minimum wage probably not solve it. I also doubt that government regulation will solve it--at least in a way that does not create more problem.

    Also--one last point--to anyone comparing minimum wage to inflation... inflation numbers, especially recently, are BS. Absolute BS. Cost of fuel is up 300% or more in the last 15 years... cost of public transportation has sky rocketed in my city... cost for houses has doubled... rents have doubled... goal is up multiples over its value. Whatever funny math is being used to compete inflation is detached from reality at this point.

  • Report this Comment On December 09, 2013, at 2:15 PM, valuesAddValue wrote:

    Bottom line here is that income inequality DOES stagnate the economy. There would be a lot more wheels in motion (jobs) if today's population could earn a living wage and there was less of is sitting idle in stockpiles.

  • Report this Comment On December 09, 2013, at 2:21 PM, oldfool1959 wrote:

    Let's look at this problem from another perspective. Say we raise minimum wage to $10/hour. All those with a salary between the old minimum wage ($7.25/hour) and the new minimum wage ($10/hour) will also expect a salary increase. So figure those added costs into your impact on businesses and the economy.

  • Report this Comment On December 09, 2013, at 2:23 PM, HoosierRube wrote:

    Saddest thing about this article, someone is paying them to write it.

    Going off of this article, we should just give everyone a million dollars and be done with it.

    Looking at this article. this is just as viable.

    By the 'facts' 'reported' here, this is just as good of a solution as raising the minimum wage.

    The point these guys are missing is that something is only worth what someone else is willing to pay for it. How can the authors not know this.

    If we go down the road with these social idiots we too will have riots in the streets and two classes. The D.C. rule makers and then us poor people.

    This is uneducated, feel good, everybody gets a trophy drivel to the extreme.

  • Report this Comment On December 09, 2013, at 2:23 PM, TMFHousel wrote:

    <<If increasing the minimum wage has no harmful side-effects and has all positive outcomes, why are we stopping at $15.00 / hour? Why not $20? Why not $100?>>

    You drank a glass of water this morning, and it helped you stay hydrated. If water were so good, why didn't you drink a swimming pool instead?

    EVERYONE STOP DRINKING WATER. I PROVED IT'S BAD FOR YOU!!!!!!

  • Report this Comment On December 09, 2013, at 2:30 PM, SkepikI wrote:

    ^ Hasn't fixed anything in the past several decades Housel.. and of course to quote one of my fave writers: "Emotion eats facts for breakfast" ; -)

  • Report this Comment On December 09, 2013, at 2:33 PM, HoosierRube wrote:

    I love the anti-capitalist posts. Not a single one of them can tell you what capitalism is. They think its an economic system. Well, it isn't.

    Capitalism is a right. It is the right for any two humans to come to a mutually beneficial agreement.

    That's it. And you people want to take away that right. Because??? If you're not an elected official you're too dumb to decide for yourself? Politician are somehow smarter than we are? More compassionate than the simple citizen?

    Go back to the parable of Adam and Eve. There are NO saints that walk among us. So why would you let someone else decide whats best for you?

    Heres how your fast food idea will work. For every penny in costs that the product costs, you will lose x number of customers. That's a fact. And with those customers goes the jobs.

    Unless you point a gun at someones head and force them to eat at McDonalds. And you liberals probably think that's ok also..

  • Report this Comment On December 09, 2013, at 2:34 PM, TMFHousel wrote:

    ^ I'm not saying raising the minimum wage has no harmful side effects. The actual studies, rather than the theories, are split pretty evenly down the middle on its effects. You can find just as many studies showing it has no impact as you can studies showing it has a positive impact and studies showing it has a negative impact. The meta-studies (studies of studies) conclude something close to "we don't know."

    But the slippery-slope thinking of "If X is good, why not X to infinity?" logic is weak. Some things have non-linear benefits. Like drinking water.

  • Report this Comment On December 09, 2013, at 2:36 PM, mdk0611 wrote:

    I'd say more than doubling the minimum wage to $15 is closer to a swimming pool than to a glass of water. As I said above a couple of days ago, going from $7.25 to $8.00 can be debated. Going to $15., IMHO, will lead to significant job losses.

  • Report this Comment On December 09, 2013, at 2:38 PM, mdk0611 wrote:

    What did the actual studies show when the minimum wage was more than doubled?

  • Report this Comment On December 09, 2013, at 2:43 PM, TMFHousel wrote:

    <<I'd say more than doubling the minimum wage to $15 is closer to a swimming pool than to a glass of water>>

    Adjusted for inflation, the minimum wage was nearly $11 an hour in the 1960s. A $15 minimum would be less than 0.8% annual growth since, during a period when real GDP per capita grew by nearly 2.5% a year.

    Put another way, If the minimum wage kept up with real GDP per capital growth since 1969, it would be nearly $30 an hour today.

    I'm not advocating that; again, the actual studies on this issue are incredibly inconclusive. But most of the arguments against raising the minimum wage are filled with logical holes.

    To me, the best argument for raising the minimum wage is that current low-wage workers are subsidized by government policies like Medicaid and Food stamps. Fast food workers agree to work for $7.25 an hour because more than half of them are on food stamps. Raise wages and some of those subsidies could very well be lowered.

  • Report this Comment On December 09, 2013, at 2:46 PM, TMFHousel wrote:

    ^ That's capita, not capital.

    (BTW, I don't think I've ever been able to type "capita" without typing "capital" first.)

  • Report this Comment On December 09, 2013, at 2:50 PM, Mathman6577 wrote:

    As a country we have to look at the unintended consequences of doing something. While increasing the min. wage may help a certain group of people (i.e. lower-income people) it might hurt another group of people (business owners, investors, etc.). Perhaps a better thing to do is to help everyone. Why not focus efforts to help lower-income people get a higher level of education ..whether it be high school or college or specialized training (as long as the help isn't a direct transfer of wealth from one group to another) ? In the past the country has tried to help people obtain mortgages, etc. I am sure the people getting educated will benefit as well as businesses (which have complained mightily lately that job applicants are not qualified).

  • Report this Comment On December 09, 2013, at 2:51 PM, valuesAddValue wrote:

    <<The point these guys are missing is that something is only worth what someone else is willing to pay for it. >>

    The way incomes are going - pretty soon no one will be willing to pay for anything (again).

  • Report this Comment On December 09, 2013, at 2:54 PM, valuesAddValue wrote:

    ^ Also, think about the opportunity cost today's low wages are creating to society as a whole - in particular for businesses with lost revenues due to there being a smaller overall market - in every market.

  • Report this Comment On December 09, 2013, at 2:57 PM, Landsman55 wrote:

    I live is the Vienna/Mclean VA area. The Chipotle in Vienna is a measurably better experience (enthusiasm, friendliness, presentation, helpfulness) than the one in Mclean. Now the wages in both must be roughly the same and I have no answer for the difference. But you walk into any McDonalds in the region and the place seems depressing because I think all the staff are depressed.

    I am 58 and when I was a kid, it seemed that mostly school kids manned the McDonalds or other people looking to pick up extra money but not a living wage. Still, I often wonder as a shareholder of MCD whether the stores wouldn't be better if the staff at them had a better attitude and whether a better attitude wouldn't come fron better wages. I also wonder the demand for MCD products are fairly inelastic to raising prices to offset the wage increases.

  • Report this Comment On December 09, 2013, at 2:58 PM, valuesAddValue wrote:

    ^ also, think of the opportunity cost low wages are creating for society as a whole in lost revenue (both private and public) - due to the size of (every) market being so much smaller than it should be with today's increased wealth generation potential.

  • Report this Comment On December 09, 2013, at 3:09 PM, SkepikI wrote:

    <I'm not advocating that; again, the actual studies on this issue are incredibly inconclusive>

    As usual Morgan, you are right on target...AND that is the best argument with no logic holes at all for ceasing to tinker with something that works not at all. OR perhaps for brief periods only to attract tinkering again in 2,5,10 years with exactly the same inconclusive result. A cruel deception to the people you aim to help.

    Maybe you can add "minimum wage bubble" to your list.....

  • Report this Comment On December 09, 2013, at 3:14 PM, TMFHousel wrote:

    << A cruel deception to the people you aim to help.>>

    I only advocate humility when it comes to economic policy-making, because that's what the evidence overwhelmingly suggests. I'll leave it to the policymakers to take the risks seeing what works and what doesn't.

  • Report this Comment On December 09, 2013, at 3:15 PM, DaveMc0 wrote:

    I agree that $7.25 is not a living wage, as has always been the case for the minimum wage. In 1978 the minimum wage was $2.65. This is exactly the same as today's minimum, with 3% annual growth. There is nothing going on in our present economy that demands a change from this curve.

    The key to minimum wage jobs is that they are generally unskilled jobs. Thus, the minimum wage job market is open to teens, who generally have few expenses, most of which are optional, like buying music. They just don't need a living wage. I know my teen kids don't.

    How do I compassionately say that adults who must support themselves and their families should get all the education they can? And teens should learn while in their minimum wage jobs that the way to put such jobs and wages behind them is better education?

  • Report this Comment On December 09, 2013, at 3:15 PM, mhayon wrote:

    I'll let an economist debate the merits of raising the minimum wage, and to what degree.

    But as a businessperson, I think it's pretty reasonable to say that such an increase (100% in one fell swoop) could be more than many businesses can handle, definitely in the short term. And an increase in wages very well maybe it is better for them in the long run (ala some of the ethos of Costco), but in the long run, [they] are all dead.

  • Report this Comment On December 09, 2013, at 3:32 PM, KombatKarl wrote:

    From an everyday-person's POV, until those imbiciles at McDonald's can get my order correct more than 50% of the time, I'm going to keep saying they are OVERPAID. Double their pay? Give me a break. They don't deserve what the get now. Walmart might be a different story.

  • Report this Comment On December 09, 2013, at 3:35 PM, hbofbyu wrote:

    Many here are over-thinking basic economics.

    1. We have high unemployment and low wages because we have too many people chasing too few jobs.

    Why are there too many people?

    Globalization. Immigration. NAFTA. Outsourcing. Whatever you want to call it. When you release the water behind the dam, the level goes down for those in the reservoir (U.S) and up for those downstream (third world). Some of the wealth that America has enjoyed has been transferred and shared with other countries. In many aspects, it is a zero sum game.

    You are now competing with people who are happy to work for $5 a day.

    The crappy service I received at McDonalds the other day convinces me that hamburger delivery will so easily be automated within the next ten years that a living wage for a non-skilled McDonalds employee will be irrelevant.

    Get skills, move to India, or go on Welfare.

    To refute Morgan's point on minimum wage; in the 1960's companies did not have much of an option to outsource jobs. I would be happy to raise the minimum wage if we were still in the 1960's type economy.

  • Report this Comment On December 09, 2013, at 3:39 PM, hbofbyu wrote:

    As an example of the transfer of wealth: How much capital does Apple keep over-seas? $102 billion

  • Report this Comment On December 09, 2013, at 3:40 PM, TMFHousel wrote:

    <<To refute Morgan's point on minimum wage; in the 1960's companies did not have much of an option to outsource jobs>>

    I don't know many fast food restaurants that outsource jobs.

  • Report this Comment On December 09, 2013, at 3:50 PM, mhayon wrote:

    I think his argument is that even though the fast food restaurants themselves don't outsource those jobs, other those employees are getting squeezed because they don't have that many other options these days. That is, with less factories and other places of employment for these people, the workplaces that are left are getting tighter. And when MCD and WMT are the only games in town for these people, economics of the workforce change.

  • Report this Comment On December 09, 2013, at 3:50 PM, TMFHousel wrote:

    In fact, restaurant employment has boomed over the last two decades.

    http://research.stlouisfed.org/fred2/series/CES7072200001

  • Report this Comment On December 09, 2013, at 3:52 PM, TMFHousel wrote:

    <<And when MCD and WMT are the only games in town for these people, economics of the workforce change>>

    I agree with that, and also think it refutes the idea that these should be temporary jobs for teenagers.

  • Report this Comment On December 09, 2013, at 4:01 PM, lakespapa1 wrote:

    As a tax payer, I sort of resent businesses (and investors) leaning on government to keep employees alive. And I find it amusing when fiscal conservatives decry both higher wages and higher taxes -- and THEN complain that sales of consumer goods is sluggish because starving people can't buy stuff.

    A healthy payroll shouldn't drive a company's stock price down -- and it wouldn't, if investors were willing to look beyond a quarterly report.

  • Report this Comment On December 09, 2013, at 4:03 PM, hbofbyu wrote:

    ^ I knew you would say that right after I hit the enter key. Arrg.

    In a global economy how do you enforce a minimum wage requirement on other countries?

    And Amazon will replace Walmart and we will print our own hamburgers in the company cafeteria. These jobs are dying anyway.

  • Report this Comment On December 09, 2013, at 4:03 PM, TMFHousel wrote:

    <<A healthy payroll shouldn't drive a company's stock price down >>

    Something else interesting here (copying from an old article I wrote):

    Costco pays its employees on average 72% more than rival Sam's Club, according to the Harvard Business Review. How can it possibly do that? Because higher wages means much lower employee turnover: 17% per year vs. 44% for Sam's Club. The cost of hiring and training a new employee is so great that Costco earns nearly double the profit per hourly employee as Sam's Club, even with much higher wages.

  • Report this Comment On December 09, 2013, at 4:07 PM, HoosierRube wrote:

    If/When they raise those pay rates, the 'everybody deserves everything' crowd should pick up the slack for every consumer that finds a McBurger is not WORTH what they are asking.

    If you've paid attention, you've watched the union officials line their own pockets for decades when they move into an industry and price the goods or services out of the market.

    The textile industry, the steel industry, the auto industry. Every time..

    So all of you non-critical liberals need to step up and support these industries with every dollar you have.

    But you wont. You just talk a good game.

  • Report this Comment On December 09, 2013, at 4:14 PM, HoosierRube wrote:

    The anti-capitalist that says we should ignore economics not only does not understand what capitalism is, they don't know what economics is either.

    A. Capitalism is a RIGHT no an economic model.

    Its the right of all men to make their own deals

    with other men without the interference of men

    with no skin in the deal. And you want me to

    give up that right? You are a fool indeed.

    B. Economics is the ONLY true social science. It

    accurately predicts human responses to

    financial situations/scenarios.

    So, you folks want me to give up my God given rights to some self-appointed men as gods and ignore the social science of economics when it brilliantly tells you the results of your folly.

    Not going to happen.

  • Report this Comment On December 09, 2013, at 4:21 PM, hbofbyu wrote:

    @HoosierRube

    Government subsidies and incentives will guide and ameliorate human nature. So they say...

  • Report this Comment On December 09, 2013, at 4:22 PM, TMFJCar wrote:

    @skepikl

    <<It is neither morally upright NOR rationally kind to engage in this sort of particularly cruel deception. Alyce and TMF JCar, it is especially irresponsible of you to lend your support to those who wish to oppress those on the minimum wage with skills and knowledge that keep them there. Putting these undereducated, under-motivated individuals in the position of "don't worry we will take care of you by raising your wages even if you have insufficient value, so you can stay where you are at, oppressed and depressed" is one of the worst things I have seen in MF articles.>>

    Well, sorry to write one of the worst things you've ever seen on a MF article although I'd say you are engaging in a little bit of hyperbole.

    I think it's also slightly deceitful when I hear "these are low skill/intelligence opportunities that only high school kids have" when the average fast food worker is 29 and nearly half a million fast food workers have a college degree. However, in my comment I said nothing about oppression and frankly I don't know where you came to that conclusion. Also, I fail to see the connection between paying fast food workers more and "oppressing them." If you think that way, perhaps you should offer to cut your salary at your job so your employer won't burden you with a living wage. That makes no sense.

    However, I still think we are missing my point. For many years we have assumed that living wages and health care costs were borne by the employer. So when we buy a widget, those costs were included. If they are not and those workers are filing for government assistance then we are all subsidizing the company. It is weird to me how much we yell about the workers and call them moochers but say nothing about the businesses that also benefit from government largesse. That befuddles me.

  • Report this Comment On December 09, 2013, at 4:28 PM, SkepikI wrote:

    <The cost of hiring and training a new employee is so great that Costco earns nearly double the profit per hourly employee as Sam's Club, even with much higher wages.>

    NOW you are on the right scent Housel. Though I think you might find after a more thorough analysis that is not the only factor driving better performance per employee at Costco. But to your point, value is created no matter how much above minimum wage an enterprise pays its employees.... AS Long as it has its eye on value creation and structures its business and operations to accommodate it.

    Cant possibly accommodate it? Either fresh out of innovation or doomed to be a bottom feeder by the dismal science ... perhaps another business line beckons....

  • Report this Comment On December 09, 2013, at 4:41 PM, devoish wrote:

    judging from the commentary...

    There are presently 2,356,530 architects and engineers and all 1,600,000, college grads in 2014 should have gotten engineering and mathematics degrees.

    A minimum wage increase will entice burgers to jump on the grill, flip and climb into a bun all by themselves.

    Minimum wage employees should to India or otherwise get lost.

    Only imbeciles are employed for us at McDonalds and so we do not have to respect your work or pay you a living wage for the dividends you create.

    Parents of teenagers should continue to subsidize the low pay of minimum wage employment and the profits of their employers.

    The productivity of minimum wage employees has outpaced their pay.

    Best wishes,

    Steven

  • Report this Comment On December 09, 2013, at 4:44 PM, TMFHousel wrote:

    Here's a sampling of some of the studies:

    Economists Alan Krueger of Princeton and David Card of U.C. Berkeley looked at minimum-wage hikes in California in 1988 and New Jersey in 1992, and compared them to regions that didn't raise wages. The pair found that "increases in the minimum wage lead to increases in pay, but no loss in jobs."

    Two economists from the London School of Economics looked at different data and used a different statistical technique to show that, indeed, raising the minimum wage does reduce employment, particularly among teenagers.

    Andrajit Dube, then at U.C. Berkeley, looked at yet another set of data and found "strong earnings effects and no employment effects of minimum wage increases."

    Three separate economists asked fast-food restaurants in Georgia and Alabama how they would react to minimum-wage increases implemented between 2007 and 2009. Fifty-three percent said increasing employee performance standards was very important to deal with the wage hikes. Twenty-nine percent said they'd cut weekly hours of some employees. Eight percent said they'd reduce headcounts.

    http://www.fool.com/investing/general/2013/07/24/minimum-wag...

  • Report this Comment On December 09, 2013, at 4:55 PM, damilkman wrote:

    Here are some real life examples that make the problem more obvious to the author who I do not think gets it. I live near Ann Arbor. If you ever visit Ann Arbor and like good sandwiches and have cash I recommend eating at Zingerman's. Zingermans makes very tasty food that along with their brand allows the owners to sell a lunch approaching 25 dollars. Zingermans last I visited is always crowded. Part of the Zingerman's experience is the superior service. It is known Zingerman's pay is much greater then the minimum wage.

    Take Stadium to its end on the west side of the town and you will see a strip of fast foot places. There is a McDonalds, Taco Bell, Burger king etc. Here you can purchase a meal of 5 dollars. If you do not go during the rush hour you will most likely be the first person in line. Needless to say the cash flow at McDonalds on Stadium is a trickle of any Zingermans.

    The fast food joints on Stadium get most of their employees from minority kids from the projects where some of the poor in Ann Arbor live. The flagship Zingmermans is maybe two miles away from the projects. The owners of Zingermans are HUGE VOCAL proponents of the living wage movement. Yet the minority kids can't get a job at any Zingermans even though there is one sitting right on Jackson road.

    The problem is if one establishment generates a higher wage, you get a more experienced or motivated employee. If you are an inexerienced kid from the projects competing against a Univeristy Student who happens to be in the top 1% of their class, your not going to compete. The employer is also going to expect that worker to do more. Nothing against the kid from the projects. I would think with experience they could certainly do as good a job. I am sure some people do hop to the better jobs.

    So what happens to McDonalds if you raise the minium wage to 15 dollars in Ann Arbor? Those fast food strips close down. Perhaps not all of them. But there is not enough buisness to justify their cost structure. This actually sort of happened during the internet boom of 2000. The employement situation was so bad, the local franchises could not hire enough of even entry level workers. When they could not retain enough staff for given days they just shut down. You can only sell a cheap hamburger for so much.

    What also happens is the kids from the projects don't have an entry level job. Some of them are motivated and move on to bigger and better things including possibly working at Zingermans. But it can't happen without McDonalds. So in our authors perfect world instead of starting up the ladder they never get an opportunity.

    Despite the Zingerman's owners laudable goals of a living wage, their buisness model cannot work if they are getting 7 dollars of value from a 15 dollar job. If the service is slow, shoddy, and the food taste like McDonalds the customers will stop showing. The only way a person with no skills can learn skills is baby steps. If their skills exceeds their pay they can leverage their skill set to move on. The motivated kid from the projects does move on because he/she is qualified to work at places like Zingermans.

    When I was a kid I had to do the same thing. I worked an entry level job for garbage pay because I had no skills. My job was so disgusting I had to have my uniformed run through the washer after every shift. I worked so hard I got the attention of the managers who after only eight months work gave me a promotion that doubled my pay. With my doubling of pay I was able to save for school. Is there anything wrong with that?

  • Report this Comment On December 09, 2013, at 4:59 PM, Mathman6577 wrote:

    I don't think the issue is entirely framed by the issue of a potential loss of jobs. Equally important I think is how will businesses and investors, etc. be affected by increasing the min. wage? Where will the money come from? Either prices will have to be raised --- which will affect revenues eventually --- or profit margins lowered. A lot of small businesses are now operating on razor thin margins. Either is not optimal. Why do you think businesses are fighting an increase? Because they want to see employees suffer? I don't think so. Small businesses can't print money like the Fed can.

  • Report this Comment On December 09, 2013, at 5:07 PM, TMFHousel wrote:

    <<Where will the money come from? Either prices will have to be raised --- which will affect revenues eventually --- or profit margins lowered>>

    Several of the studies showed a businesses first line of defense after a minimum wage hike was demanding employees become more productive. It doesn't necessarily have to come from either revenue or profits.

  • Report this Comment On December 09, 2013, at 5:13 PM, Mathman6577 wrote:

    Yeah yeah yeah .. you and your studies.

  • Report this Comment On December 09, 2013, at 5:17 PM, hbofbyu wrote:

    <<Several of the studies showed a businesses first line of defense after a minimum wage hike was demanding employees become more productive. It doesn't necessarily have to come from either revenue or profits.>>

    Exactly. Of your five employees, layoff 2 and make the other 3 more productive.

  • Report this Comment On December 09, 2013, at 5:20 PM, jjlnk wrote:

    Anybody who works 40 hours a week should earn a living wage (and have health care), I don't care if that is sweeping the floors (which is a tough job, btw). The average IQ is 100, that means that half the population has an IQ below 100. Not everybody can go to college or invent the next Ipad. The people at the bottom third of the Bell curve need to live, work, eat and raise kids as well. A whealthy society like ours should be inclusive and make sure that everybody can earn a living wage and be proud of the contribution they make to society. That can be inventing a cure for cancer or picking tomatoes. It all matters.

  • Report this Comment On December 09, 2013, at 5:21 PM, Mathman6577 wrote:

    The small business owners that I know can't afford to raise their prices (they will lose business) and can't make employees more productive/layoff. Therefore, only option available is to make less money. Money doesn't grow on trees.

  • Report this Comment On December 09, 2013, at 5:23 PM, TMFHousel wrote:

    <<Exactly. Of your five employees, layoff 2 and make the other 3 more productive.>>

    Here's the actual results:

    "Fifty-three percent said increasing employee performance standards was very important to deal with the wage hikes. Twenty-nine percent said they'd cut weekly hours of some employees. Eight percent said they'd reduce headcounts."

  • Report this Comment On December 09, 2013, at 5:34 PM, hbofbyu wrote:

    << Eight percent said they'd reduce headcounts. >>

    You always have those blasted statistics to back you up.

    That is what they say but is it what they will do?

    I see, first hand, companies squeezing more out of their employees thus allowing them to reduce expenses by laying off more workers - do more with less. It is the nature of Wall Street to perseverate on efficiency. Capital accumulation is the primary goal (short sighted), rather than value creation through innovation (long term).

  • Report this Comment On December 09, 2013, at 5:35 PM, Mathman6577 wrote:

    You know what they say about statistics. Statistics are always right.

  • Report this Comment On December 09, 2013, at 7:07 PM, damilkman wrote:

    The Heritage Foundation nailed why wages often do not decrease significantly when the minimum wage is increased. The lower level employees are replaced.

  • Report this Comment On December 09, 2013, at 7:21 PM, TMFLomax wrote:

    TMFHousel's example of Costco is one of the companies that is a sound example of positive capitalism I'd like to see become more common and more respected by investors.

    Indeed employees are paid WELL over minimum wage, have internal opportunities to move through the ranks into better positions, have great benefits. Like Morgan said, the turnover is incredibly low for a retailer, and that puts a lid on a significant expense for companies.

    Jim Sinegal was one of the CEOs who didn't cave to pressure from Wall Street (including investors, which speaks to my original point) who thought that the company should cut expenses like health benefits for workers otherwise it would be a bad or at least mediocre stock to own.

    Jim Sinegal was modestly paid, answered his own phone, visited warehouses. He wasn't exactly an ivory tower type.

    Costco enjoys great customer loyalty. Obviously, again, the workers must be pretty darn loyal too, given the low turnover rate. If the workers are treated well, customers can feel good going there and likely enjoy much better customer service than they would from disengaged employees.

    Costco has not been a stock "dud" by any stretch, its business hasn't been impeded by its positive, stakeholder-friendly policies. It's been a great investment and I don't believe that this is disconnected from its practices.

    There are other examples of companies like these, again, not as many as I would like to see, but they are out there -- but since Morgan mentioned Costco, I did want to mention that it's one of my favorite examples of what investors should want to see in the companies they invest in.

    Alyce

  • Report this Comment On December 09, 2013, at 7:49 PM, NOTvuffett wrote:

    I am so sick of this crap- if you don't like McDonald's or Walmart, don't go there. On what planet should a stock boy or a gal working the deep fryer have sufficient income to support a family?

    Food and fuel are already excluded by the govt. in their calculations on inflation. So if they cause a can of beans to cost me more, they won't even count it.

  • Report this Comment On December 09, 2013, at 9:50 PM, damilkman wrote:

    I am going to dispute TFFLomax's conclusion and propose that the example of COSTCO is a perfect counter example of why the minimum wage should not be increased. COSTCO is another example like Zingerman's where higher wages are justified. However, they are justified by the employees having a higher skill set. TMFHousel keeps stating that 53% of the buisness's cited in his studies believe increasing employee performance standards was very important with dealing with wage hikes. What is left unsaid is HOW the buisness's deal with increasing performance standards.

    James Sherk from the Heritage Foundation has testified that not only does increasing minimum wage decrease total jobs by a consistent and quantifiable level, but buisness's like COSTCO and Zingerman's account for increased wage costs by hiring high productivity employees AT THE EXPENSE of low productivty and entry level employees. The very people the author of this study proposes to help are hurt the most by being shut out of the labor market!

    I would really like to see a rebuttlal by the mimimum wage hike PRO's why James Sherk's testimony to the Health Education Labor and Pensions Committe on Jue 25th 2013 is flawed.

    He states the following. Unbiased studies show that increases in the minimum wage reduces jobs. Low skilled, low capability individuals lose their jobs at the expense of individuals at higher skill levels. The vast majority of those earning a minimum wage belong to households far above the poverty level. Very few households depend on the minimum wage for supporting the given unit. Households in poverty that depend on a minimum wage job would not see their situation improve because the reduction in government aid and tax increases is almost equal to increase in wages. Lastly, increasing the minimum wage removes the entry rung that most of us including me have climbed. I of course had it worse because when I earned minimum wage I still had to pay union dues. Go figure. I will hang up the phone and go listen :)

  • Report this Comment On December 09, 2013, at 10:07 PM, devoish wrote:

    DESVARIEUX: So, Deborah, can you just described for us the conditions for the average teller in the United States banking industry?

    AXT: Yes. I mean, what we're talking about here are jobs that the public generally perceives to be entry-level jobs on a path to a professional career. And what they really are, often, is completely dead-end jobs, where workers are trapped in forcibly part-timed work, low-wage work, with high-pressure sales goals, sometimes wage theft, even. And, you know, these are really rough jobs. Workers report often being pressured to sell deals, products, bank accounts, credit cards that are not necessarily in the best interests of the clients, and that they realize this is true but have no ability to blow the whistle on these kinds of unethical practices at the banks.

    http://therealnews.com/t2/index.php?option=com_content&t...

    Best wishes,

    Steven

  • Report this Comment On December 09, 2013, at 10:26 PM, prginww wrote:

    Alyce - What is your response to the "Everything is amazing" fool post? I challenge you to address this discrepancy.

    http://www.fool.com/investing/general/2013/11/29/everything-...

  • Report this Comment On December 09, 2013, at 10:51 PM, mhayon wrote:

    Well, from my experience, when you "demand the employees to be more productive" to respond to shrinking economics, that turns out to be short-lived. It might work for a bit, but will eventually descrase employee morale, the employee will leave (I can go to work at McDonalds and make the same $$), and the business will comes around to adjusting for the new wage by adjusting (squeezing) their prices and profit margins. That is if the economics of the business even allow for this. Sometimes the business isn't so lucky to be left with so many options.

  • Report this Comment On December 10, 2013, at 11:03 AM, HoosierRube wrote:

    The comparison with Costco isn't really fair.

    I've been in McDonalds and I've been in Costco; and I'll tell you what, the folks working at McDonalds are there because Costco wouldn't hire them.

    But everybody should get a trophy regardless of their work ethic, motivation or drive.

    I still want to see all you folks pushing for this actually then support those industries.

    Economics, and a lifetime of watching liberals tells me you will not.

  • Report this Comment On December 10, 2013, at 11:17 AM, Mathman6577 wrote:

    Good point ... HoosierRube.

    Costco shouldn't be compared against WMT or MCD. Costco should be compared against companies like Target and Whole Foods (where it would probably lag behind somewhat). WMT should be compared against dollar stores, etc. MCD should be compared against Burger King, Wendy, lawn care companies, etc.

  • Report this Comment On December 10, 2013, at 12:46 PM, mattmosa wrote:

    A nice article and needed to promote balanced thinking and judgement. I must say that I am slightly shocked about the negativity of a minimum wage hike and its effect on the economy.

    Late 1960's-1970 the Dow trades around 1000 points.

    Since then until 2012 there has been about a dozen minimum wage hikes.

    Today the Dow trades around 16000

    Minimum wage hike= value destruction? Really?

    The numbers don't support the notion.

    And I do think that the right wing smart money knows it. They may not publicly admit it,they may want to hold on to great margins for as long as they can,but they know it

  • Report this Comment On December 10, 2013, at 1:45 PM, hbofbyu wrote:

    There are half a dozen franchise restaurants near my house that hire the mentally challenged who do a great job as greeters, general cleaning, delivering food, and running errands. They often get tips because of their enthusiasm.

    At $12/hour these people would not be hired. The gradation of skills goes up from there. Why not have wages to match the skill level instead of trying to artificially manipulate a market?

  • Report this Comment On December 10, 2013, at 3:33 PM, peterpan wrote:

    all workers contribute to the value of goods and services. for their part, corporate officers receive enormous compensation. i bet all those against a raise in minimum wage could easily find a dozen rationals for this kind of compensation. funny we become brain dead when it comes to understanding the value of people we believe are beneath us.

  • Report this Comment On December 10, 2013, at 3:35 PM, TXObjectivist75 wrote:

    Don't forget, McDonald's is already field testing automated iPad ordering stations. iPads don't demand higher wages or benefits, or require payment of unemployment insurance to the state. Beware of what you wish for.

  • Report this Comment On December 10, 2013, at 3:39 PM, TXObjectivist75 wrote:

    Plus, how many grocery stores run enough staff anymore to take your groceries to your car? And 99 out of 100 of the transactions I make now at a grocery store are with self checkout (i.e. 1 person, the supervisor of the machines, doing the work of 4,5,6 or more)

  • Report this Comment On December 10, 2013, at 4:34 PM, SkepikI wrote:

    @TMFJCarr: I have very strong beliefs in evidence and facts. Given that and observing the LARGE VOLUME of commentary as well as the interesting nature of the commentary, I am forced to retract my opinion that this is one of the worst articles I have ever read at MF.

    The facts of the futility of minimum wage increases are equally clear. That many bite on the indoctrination and conventional wisdom that it helps the poor minimum wage worker at all rather than simply "keeps them in their place" is equally predictable and depressing. Housel was politely oblique when he allowed that the studies were "inconclusive" There is only one study that matters and it is long term (half a century) and covers large numbers of workers:

    "In 1949 the minimum wage was raised from 40 cents and hour to 75 cents an hour for all workers" from the Dept of Labor website. That is all anyone needs to know. Futile.

    We have been doing this periodically for multiple decades. The results have been spectacularly dismal. We now have more "workers" on larger amounts of public assistance than we did in 1950. Maybe we should call legislating the "Dismal Science". Oppressive. Cruel Hoax.

    In other news, today the CBO announced that the bottom 45% of income earners paid a negative income tax rate and the top 55% paid 106% of income taxes...huh?

    I know at some point, facts will penetrate the craniums of impervium... Yah Yeah, Housel, I know "Emotions eat Facts for Breakfast"

  • Report this Comment On December 11, 2013, at 7:51 AM, Mathman6577 wrote:

    I'm going to add my own study (that I thought was interesting) to the mix here:

    From "When Welfare Pays Better than Work" (http://www.cato.org/publications/commentary/when-welfare-pay...

    "In 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states and DC, the welfare package is more generous than a $15-an-hour job."

    So if we raise the min. wage will it get people off government support? Food for thought.

  • Report this Comment On December 11, 2013, at 1:37 PM, retbubhead wrote:

    The hot topic being food here....I am a franchisee. Raising the minimum wage is fine so long as customers appreciate that THEY are going to pay this cost. Five dollar foot longs will be six dollar foot longs. There is already very little margin in quick service restaurants. As it is my wife and I work without pay to keep the store open and employ as many people as we can afford, including our own adult children.

    As always, there is no free lunch. Not for anyone.

  • Report this Comment On December 11, 2013, at 7:35 PM, umh wrote:

    While people can get more money for not working than working the "market" will remain distorted.

    Jobs don't pay based on how hard they are so much as how hard it is to find someone to do them. I'm retired and I'm glad I never had to work making fries, but if push came to shove as they say I would have. If we artifically lift minimum wage we just distort the market more. The bad side effects of raising the minimum wage begin with reducing the benefits of acquiring skills and education. I don't want to see a nation of entitled dumb people. The long term effects of a higher minimum wage are even scarier to me, since many people need incentives to perform well.

  • Report this Comment On December 11, 2013, at 7:56 PM, 123spot wrote:

    Important. Well expressed. Thank you. Spot

  • Report this Comment On December 11, 2013, at 8:45 PM, mythshakr wrote:

    Here in the city of San Jose a minimum living wage law was passed making the minimum wage $10+/hour. How much of an impact has it had on small businesses and franchisees I frequent? None that I have seen other than the folks working in those places sure do seem to do a better job than before. That was noticeable. How much did prices increase? No more than they have been increasing over the past 5-8 years anyway. A lot of the people working in those places are not kids in their first job. Several are college graduates and older high school graduates doing the best they can in the current job market.

    This oversimplification that you can just go out and get an education to do anything to make more money is pretty inane. Many people simply do not have the mental facility to be doctors or lawyers or engineers. When I was in college there were many people who worked their butts off trying to succeed at technical areas but simply couldn't get it.

    The same holds true for starting your own business. I know I could not start a business doing anything. Why, I simply do not have the temperament. If a customer is full of carp I AM going to tell them so.

  • Report this Comment On December 11, 2013, at 9:00 PM, Mathman6577 wrote:

    San Jose does not represent the entire U.S.

  • Report this Comment On December 12, 2013, at 9:48 AM, damilkman wrote:

    In regards to the example of San Jose it is a perfect example of more motivated qualifed workers pushing out a less qualified workers. Thus the most disadvantaged in our society are cut off from the bottom rung. The kids from the projects don't have a chance.

  • Report this Comment On December 12, 2013, at 10:27 AM, TMFGortok wrote:

    @TMFHousel - I took it to its hyperbolic conclusion because people don't seem to see the problem if you use small numbers. I could have just as easily used percentages; but the premise still holds:

    If you force wages to increase above the value the employee brings to the company (measured in some way by that company's revenue, because that's what is used to pay workers), then something has to give: Either the employer has to hire less workers, or he has to cut costs somewhere else.

  • Report this Comment On December 12, 2013, at 10:39 AM, TMFHousel wrote:

    <<Either the employer has to hire less workers, or he has to cut costs somewhere else.>>

    Again though, there's not a lot of evidence that that's the case. Several of the studies done show businesses just force their workers to become more productive. Others showed the increase came out of profit margins. Business is competitive. Owners can't always just fire workers or raise prices at will.

    The problem with using hyperbolic examples is that things can have non-linear benefits. Come on, you're a libertarian -- Laffer Curve! Raising the minimum wage from $7 to $10 could generate a net benefit. Raising it from $7 to $1,000 wouldn't. Those aren't mutually exclusive. The argument for raising the min. wage is that we're currently on the left side of the Laffer Curve equivalent.

    I'm not advocating either way. The worst part about the minimum wage debate is that there's not a lot of conclusive data to support either side.

    To me, the best arguing for raising it is to ween the ~half of minimum wage workers who rely on food stamps to get by. That's a deep subsidy for businesses distorting the cost of labor.

  • Report this Comment On December 12, 2013, at 11:04 AM, Mathman6577 wrote:

    TMFHousel: Good point in your last paragraph.

  • Report this Comment On December 12, 2013, at 11:51 AM, SkepikI wrote:

    <To me, the best arguing for raising it is to ween the ~half of minimum wage workers who rely on food stamps to get by. That's a deep subsidy for businesses distorting the cost of labor. >

    The counterflurbium connection between wages and transfer payments like food stamps, or other such subsidies will frustrate your intention Housel. Surely you can see by now exactly what will happen. Just after raising the minimum wage, it will not be enough, so legislative robots will raise the income level at which the "working poor" get food stamps, and ( ) support -fill in the blank.

    We have half a century of data covering millions of people.

  • Report this Comment On December 12, 2013, at 2:09 PM, damilkman wrote:

    I will dispute the claim "there's not a lot of evidence that that's the case." regarding loss of jobs. We can agree to disagree. However there are plenty of studies claiming that increases in minimum wages do generate a quantified decrease in total jobs and present their evidence.

    These studies also point out what they believe are the flaws in the studies that claim there is no link to wage and jobs. I believe that their conclusions are reasonable.

  • Report this Comment On December 12, 2013, at 2:27 PM, TMFHousel wrote:

    <<However there are plenty of studies claiming that increases in minimum wages do generate a quantified decrease in total jobs and present their evidence.>>

    And there are plenty of studies showing the opposite. As noted, the meta-studies (studies of studies) are inconclusive.

  • Report this Comment On December 12, 2013, at 3:08 PM, omahasandman wrote:

    Idea...Raise the minimum wage to a "liveable wage" and offset some of the hit with lower corporate taxes so that companies don't get killed. Offset the reduction in government revenue by slashing government welfare. Politically, Democrats get a living wage they can tout, Republicans get lower taxes, and more people get off welfare and go back to work (no more free lunch). Clearly high level, but not sure why this approach doesn't benefit just about everyone in our society long term (sole exception being those collecting their free lunch). Thoughts?

  • Report this Comment On December 12, 2013, at 3:58 PM, bub wrote:

    if min wage goes to $15,now i have to pay my $15 employees $30-can you say "out of business"

  • Report this Comment On December 12, 2013, at 4:17 PM, Mathman6577 wrote:

    @omahasandman: I like your idea.

    FYI. The effect of raising the min wage in one city (SeaTac, Washington): http://online.wsj.com/news/articles/SB1000142405270230420220...

    One hotel is putting expansion plans on hold because of the increase. Can't reduce employment level or increase prices so his margins will go down unless something else is cut.

  • Report this Comment On December 12, 2013, at 8:11 PM, zjk1018 wrote:

    I live in Los Angeles, serve millionaires and billionaires every single day. They drive Bentley's, Ferrari's, and other over priced vehicles. They live in multi million dollar homes, own multiple homes, boats, cars, and are draped in jewelry. The owners of our store make more money in one week than most of our employees do all year. Yet somehow if we raise minimum wage it will destroy everything. Give me a break. Life is like monopoly and just like in monopoly when one person or one small group of people has all the money the game is over. I'm tired of looking at big companies with tens or hundreds of billions of dollars in cash on their balance sheet but we can't get unemployment down and we can't raise taxes on the top 1% even though we are talking about people who generally make more than a few million dollars every year. Money is like a tornado it syphons up, it doesn't trickle down. Companies are struggling to generate growth because the majority of our country doesn't make enough to afford their products and services. If they want growth than they are going to have to come off of these massive piles of cash they have built up and distribute it to people who can use it to buy things, things that include their products and services. We all know most people are horrible at saving money and living within their means, if you raise peoples wages they will go spend more money and our economy will start to grow.

  • Report this Comment On December 12, 2013, at 11:04 PM, NOTvuffett wrote:

    zik1018, I can't tell if you resent the rich or or have disdain for them because you are not rich, lol. Yeah, increasing taxes would level the playing-field, lol.

  • Report this Comment On December 13, 2013, at 1:48 PM, Handworn wrote:

    The best argument against the minimum wage is this: unless poor people use the extra money to accumulate assets, it will all go to raise the prices of what the poor compete for that can't be mass-produced, like housing. I have no problem with efforts to help the poor, but I have huge problems with efforts that try to do it in ways like this that, enacted without any other programs that actually try to fix the habits of the poor, only slap a band-aid on the problem. Raising the minimum wage will certainly not get the poor to live organized lives-- getting into a long-term, stable marriage, for example, or using birth control to avoid pregnancy until you can better afford it-- which affect wealth massively.

  • Report this Comment On December 13, 2013, at 2:02 PM, bigtex55 wrote:

    Saying a company should do a better job of paying a living wage is like saying the consumer should do a better job of paying the price a company demands for its goods or services. The free market should determine both.

  • Report this Comment On December 13, 2013, at 2:18 PM, paledriver wrote:

    So let's see if I understand this: If companies pay their employees more, then the company will be more profitable because the employees will buy more of the company's products. Really? Have we solved the mystery of Perpetual Motion? This is an example of what happens when an analyst begins to feel sorry for someone: his judgement goes off the rails.

  • Report this Comment On December 13, 2013, at 3:45 PM, gamblingkev wrote:

    Time to go back to analyzing stocks and stop analyzing the minimum wage. You seem to forget that minimum wage jobs are minimum wage for a reason, almost anyone can do the job. That job is not designed to be a vehicle to your retirement, it is designed to be a place to start. You are supposed to learn some skills to be able to take to your next job and so on down the line. In other words, besides making some cash, you learn some tools. Combine that with some education and you move on up. We've been doing that for the last 60 years or more

    Now all of a sudden a minimum wage job is supposed to a feed a family of 4? Really?? The fry guy at McDonalds is supposed to earn $31,200.00 per year? NOOOOOOOOOOO. He is supposed to be motivated to improve himself to get a job that pays more money. If he takes his money and blows it on cigars or booze or cars or gambling or girls or whatever he wants to spend it on every week, that is on him. If he quits high school at 16 and doesn't even get a GED, fathers 4 kids, and gets in trouble with the law, that is the decisions HE makes. It is a free society. Or at least it is supposed to be.

    I see this all the time. People working fast food or other places that pay minimum wage because it is all they can get. When you're 16, that is how it should be. When you're 35 it isn't. You are supposed to have skills that will allow you to get a better job. But if you screw around when you should be buckling down and trying to improve yourself, then you have no one to blame but yourself. "We wear the chains we forge in life" When you get in trouble, when you drop out, when you have kids as a teenager and have to raise them rather than go to college then you have made decisions that impact the rest of your life. Some people learn and grow from there. They get the hard lesson and buckle down to make sure they can get past it. But for many people it becomes the excuse. Then it's Walmart's or McDonald's fault because they don't pay enough. No it isn't, it's your fault. And it's up to you to do something about it.

  • Report this Comment On December 13, 2013, at 4:48 PM, grambo45 wrote:

    @paledriver: sure! Nancy LalaPelosi told us that unemployment benefits raise the GDP .... so, with that in mind, this makes sense.

    @bigtex55 You stated the major point in all this for me: "The free market should determine both". What right (as in, Constitutional) has the government to interfere in this matter at all??

    And, for myself, I am a little surprised to find these socialist tendencies among the TMF guys.

  • Report this Comment On December 13, 2013, at 4:55 PM, eddietheinvestor wrote:

    I am disappointed in the blatant bias of Ms. Lomax and the simplistic nature of her argument. You can tell that she is biased when she calls Wal-mart an "offender." Not particularly objective at all! Also, Lomax posits the argument as a fight between corporate profits vs. a living wage. That's part of it, but it's far more complex, such as the argument that whenever the minimum wage rises, it leads to more layoffs and higher unemployment because the companies decide that they must use less workers to do the work. That argument should be addressed.

  • Report this Comment On December 13, 2013, at 9:17 PM, kofcagent wrote:

    A few quick points.

    First point, I worked for a company which made small (ca. 1 hp 12V motors for the auto industry.) Motors were manufactured in Mexico for the US market and in Germany for the European market. In Germany, they had 4 employees per assembly line. In Mexico, they had about close to 40 employees to make the identical motor. The cost of the assembly line in Germany was several times the cost of the line in Mexico. (The shipping cost from Mexico to the US was huge, but was still less than the high cost of labor and regulations in the US. So we did not make the motors in the US even though they were used here.) Regarding the employment rate, which country is the winner?

    Second point, According to the author, Walmart is not doing as well as they should because they are looking for quarterly profits instead of investing for the "long term." Where does he think Walmart would be if they were smart enough to invest for the "long term?"

    Third point: Historically, the normal state of humankind is poverty. The US was the first major country to change that. Did we change it by implementing the minimum wage?

    To be honest, I expected better from TMF. No business sense at all.

  • Report this Comment On December 16, 2013, at 12:42 PM, oldpbass wrote:

    You can frame this argument in any and all directions, with charts, stats, etc. But it boils down to one thing: Should a minimum-wage employee, working full time, qualify for govt. assistance?

  • Report this Comment On December 16, 2013, at 10:37 PM, haulnass wrote:

    I'm making a basic statement of fact ,If employee pay went up on the same percentage as CEO pay since say 2001 the average worker would make $27.60 per hour and if you use another formula taking the CEO pay for Yums he still makes $10,000 more in 1 day then a 40 hour week minimum wage person in a complete year of 50 weeks with 2 weeks off.These boards of public companies and the CEO's have a nice handshake deal even when the company doesn't do well ,I believe there needs to be change and big companies should do it on there own!

  • Report this Comment On December 28, 2013, at 10:12 AM, Mathman6577 wrote:
  • Report this Comment On December 28, 2013, at 11:04 AM, RxPro wrote:

    I'm going to add in a friend of mine's comment he made during the Obama re-election that really struck me hard.

    He is a lot wealthier than I am (has his own private plane) and when he told me he was voting for Obama again, I asked him why in the world someone like him would vote for him and this is how he explained it.

    He said, well everything Obama has done so far just made him even wealthier. Medicaid and welfare enrollments have gone up, unemployment has gone up, so that just makes him even MORE wealthy in comparison. For example, if everyone was off of welfare and medicaid, he wouldn't be nearly as rich simply because the average wealth would be rising. Sure he would be rich still, but with Obama economics the rich people are SO rich compared to everyone else.

    So as it stands, Obama has simply screwed the middle and lower classes and the upper class (the ones he claims to be against) can now afford things no one else can, and never will be able to (if the economy continues this way).

    He said, think of it like slavery. If the people are thinking of going to college and getting better jobs then that means more competition for us, however if you increase welfare and unemployment benefits, make medicaid the best healthcare you can get (which it currently is, zero copays), then now I can sit back content at my CEO job knowing that at least half the people who would've tried to move up have now simply said "well i don't want to give up my medicaid/foodstamps/etc."

    He is right, he makes a million a year so a tax hike of 5% to him is 50k. No big deal if it keeps everyone else poorer, which in turn makes his money and investments worth even more.

    Obama is so bad at economics and its hilarious to hear this from a millionaire of how he would pay to give everyone else below him welfare if it meant he could be the only rich person. Clearly he is greedy, but his point still stands.

  • Report this Comment On December 28, 2013, at 5:41 PM, Mathman6577 wrote:

    @RxPro: The connected left-wing cronies (maybe like your friend) generally love big government programs like ACA, etc.

  • Report this Comment On December 30, 2013, at 3:56 PM, Mathman6577 wrote:

    Effect of raising min. wage in SeaTac: one business owner plans to eliminate 200 jobs. Another will cut positions/reduce benefits. How's that for increasing productivity ?

    http://www.foxnews.com/politics/2013/12/30/highest-in-nation...

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