ipollux

I've noticed the minimum wage has been going up steadily in various parts of the U.S. over the last couple of years. Today there was a story about it on the front page of the 'paper, and it sparked a debate in the newsroom.

My argument was that raising the minimum wage doesn't help those at the bottom, but actually hurts them. When employers are forced to pay their employees more money, many will have to lay off some of their workers in order to pay those they keep the new higher wage.

This also, of course, leads to price inflation. Don't be fooled, when wages go up, the price of living goes up, hence minimum wage being higher in the parts of the country that require more money to live.

I honestly don't see the benefits of continuing to raise the minimum wage, but I'm open to arguments for it; I just haven't heard a good one yet.

Baraka_Guru

Inflation?

You can't freeze minimum wage indefinitely, and you can't tell me the minimum wage is the biggest factor on inflation. Or can you?

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girldetective

im sorry, but Prove it.

It seems to me that the minimum wage is increased after the price of living goes up and people are struggling, not before. And even then, its like pulling teeth.

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Willravel

You might get a chance to test your theory. Schwarzan.... Shwarts.... The 'Governator' is about to sign an executive order which lowers the wages of over 200,000 California government employees from $8 an hour to $6.55 an hour. We're planning on protesting over the weekend, but there's little hope as Schwarzenegger has ignored our previous protests (even the big ones). He's trying to fix the $15b budget deficit.

After a few months of this, it's possible that we could see an effect on some of California's economy. I suspect that it could be a rise in homelessness and possibly strikes.

I don't mean to threadjack, but as someone who lives here I'm sure you understand that $6.55 just isn't going to cut it. I doubt I could survive in San Jose for less than $25k a year.

shesus

I agree with GD, I thought that minimum wage went up as the cost of living did, if even then. Some salaried jobs offer a cost of living raise yearly. Is this hurting the economy also?

I don't see a problem raising minimum wage to keep up with the constant increase in cost of living. Things recently have gotten worse so there needs to be an increase more than ever.

Wil, I can't believe that Cali is lowering minimum wage. That is one of the most expensive states to live in. Even as teachers, we couldn't afford to live in San Francisco the way we are used to in Chicago.

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ipollux

I agree that lowering it is the worst thing that could be done--ever. Once it's been a certain amount for a period of time, everyone has adapted to it. Horrible idea by the governator ... I didn't vote for him, btw.

Willravel

There are myriad reasons for the inflation present in the US economy. The biggest? I dunno, but I wouldn't be surprised if it was the massive amount of cash the Fed prints and the fact that it's not backed.

robot_parade

The economics of minimum wage are pretty darn complicated. More than I understand, anyway.

The good ole' wikipedia has an introduction: Minimum wage - Wikipedia, the free encyclopedia

The argument in favor of minimum wage that works best for me is the fact that it provides a good minimum floor for wages. Otherwise, low-skilled people have precious little bargaining power in employment situations. It's depressingly easy for employers to exploit employees otherwise. Minimum wage is at least 'some' money, even if it isn't enough to live on in many parts of the country.

girldetective

This is one of THE reasons for unions.



Zapatista!

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Willravel

You like unions!

That's it. I'm gonna say it. GirlDetective for president.

girldetective

Whisper afl-cio in my ear and I purr. meow.

(Im not too worried my words will be used out of context in the next election - after all, whats the likelihood of a girl getting elected?)


I dont think Ive ever heard of minimum wage going down. Thats really catastrophic and sets a terrible precedent.

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Baraka_Guru

It's all a balancing act. You want to increase the minimum wage when you wish to boost your demand for products and services. This is best done particularly at a time when the economy is in a downcycle after a previous period of higher inflation...which can lead to recession. If the average prices for goods have increased over a period of time (inflation), boosting minimum wage will make the goods more affordable to many people, but it will also increase unemployment (as mentioned). This encourages a downward trend in a hot economy (to avoid overheating). The net effect is that you're trying to keep inflation in check by switching strategies between upcycles and downcycles. You don't want to let the economy get overheated or let it linger in the doldrums. Minimum wage is one of several tools for moderating the economy. Another is interest rates.

Governments never try to eliminate unemployment altogether. They consciously use that as an essential consideration.

(Forgive me if this doesn't make sense; I'm tired....)

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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

jorgelito

Alot of it has to do with our deficit and the weak dollar.

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pan6467

Look, the truth is that shareholders need to put pressure on the executives to cut their multimillion dollar salaries, expense accounts and other perk and PAY the workers more for those companies still having US workers.

In cutting these people's pay and perks and make them actually accountable and base their salaries on performance, you might see increases in business. Then you pay the worker more and the worker has more incentive to work harder and be company loyal. The worker works harder, has more disposable income and isn't worried so much about living paycheck to paycheck, they have less stress, can buy more and the economy moves forward at a galloping pace.

The added benefit is tax revenue increases without raising taxes.

Look at it like this....... the CEO of company X makes 10 million a year. Company X employs 1,000 workers. Now, that CEO pays let's say 2.5 mill in taxes because he has a good accountant. Now with the rest he's taking tips, buying his wife jewelry, a yacht, some foreign cars, invest in "safe global companies" and so on, nothing that really helps the local economy.

But, you cut his wages in 1/2, give that money to the employees as raises.... they go out and buy furniture, American made cars, appliances, maybe invest in companies stocks, buy real estate, new houses get built, invest in community businesses and support the community. Infrastructure gets rebuilt, the inner cities and downtowns can begin to get cleaned up, meaning more jobs, meaning more tax revenue and business is brought into the community and so on.

The workers have more money to send their kids to college, less tax money to support the colleges, fewer loans needed. The colleges, if they receive ANY governmental funding in any way, should be legally obliged to freeze tuitions and can only raise it once every 10 years.

The community begins to thrive, more people support Company X. Sales for Company X start to increase, the CEO begins to make his incentives, the employees make their incentives. There is less turnover, which means less training and fewer man hours lost, which means better quality products because of stability.

That is how capitalism and the market NEEDS to work. That is how a country and it's citizens maintain an economic harmony.

If we cannot do that, if we choose not to DEMAND that this happen, if we continue to let the rich get richer on the backs of the working class we will continue to fall downward into oblivion. We no longer have the option of waiting for all this to work itself out.... WE MUST DEMAND THAT THIS IS DONE NOW.

We also need to make sure companies get penalized for outsourcing jobs and exploiting workers in other countries. If GE, FORD, Microsoft, Nike, etc.... choose to send jobs overseas, then they must pay those workers the same wages as they do here AND be held responsible for the lost tax revenue lost by the workers they took jobs away from.

Neither party nor MAJOR presidential candidate will ever say this or propose any idea like this. Why?????

Because both parties are wanting those CEOs money and donations and support. NEITHER PARTY, NEITHER CANDIDATE GIVES A FLYING FUCK ABOUT YOU OR YOUR PROBLEMS.... ALL THEY WANT IS THE POWER TO PUSH THEIR AGENDAS: GUN CONTROL, PRO-LIFE/ABORTION, ANYTHING AND EVERYTHING THAT TAKES MORE RIGHTS AWAY FROM YOU AND GIVES THEM MORE FUCKING POWER.

How many on this board truly think cigarettes, trans fat, Howard Stern, Janet Jackson's tit, abortion, gun control, speed limits, and so on need to be given to FEDERAL POWERS?????? Hopefully, not many of you.

I would much rather live in a world where I am paid a respectable wage and have some disposable income, where the economic classes are closer and in a world where I CAN MAKE THE CHOICE OF LISTENING TO WHOM I WANT, WATCHING WHAT I WANT, OWNING OR NOT OWNING A GUN, LETTING WOMEN DECIDE THAT CHOICE {PROVIDED THE FATHER DOESN'T WANT THE CHILD}, HAVING THE LOCAL CITY, COUNTY, STATE SET THE SPEED LIMITS, HAVING BUSINESSES DECIDE BY THE MARKETPLACE WHETHER THEY WANT TO HAVE SMOKERS THERE, AND SO ON...... THEN TO WATCH MY COUNTRYMEN LIVE IN POVERTY, FORECLOSURES, AND DICTATED TO.

GIVE ME FUCKING LIBERTY, EQUALITY AND FREEDOM AND WE ALL WILL HAVE A BETTER, HAPPIER, MORE PROSPEROUS, BRIGHTLY FUTURED COUNTRY IN WHICH TO LIVE..... TAKE MY LIBERTIES, MY EQUALITIES AND MY CHOICES AWAY AND WE ALL WILL DIE IN BONDAGE AND INDEBTEDNESS TO GREEDY, POWER HUNGRY BASTARDS THAT NEVER GAVE A SHIT ABOUT ANY OF US BUT FILLED US WITH GRIEF, DEPRESSION, HATRED AND ANGER.

IT IS YOUR CHOICE..... IT IS YOUR NEIGHBORS CHOICE..... SPEAK OUT NOW, DEMAND CHANGE NOW OR DIE LIKE COWARDS IN DEPRESSION, ANGER, HATE AND HAVE THE FUTURE GENERATIONS LIVING IN WORSE SHAPE THAN WE EVER IMAGINED AND CURSING US FOR NOT DOING ANYTHING WHEN WE STILL HAD THE CHANCE TO SAVE THEM.

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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

loquitur

The rationale for minimum wage/maximum hours, as I see it, is to prevent sweatshops, basically. We as a society made a decision that there are certain minimum working conditions that we insist on if someone is going to work for pay. There's a tradeoff for that, which is that if someone has no skills or skills that are worth less than minimum wage, s/he is unemployable - the employer is prohibited from hiring that person at the wage that s/he is actually worth, so s/he won't get hired. Thankfully we have not recently been in an economic situation where the legal minimum wage has much effect, because lately the legal minimum wage has been for the most part below market-based minimum (with some exceptions for extremely low-skilled jobs that are filled mainly by part-timers and students). I'm OK with minimum wage laws precisely because they usually set the minimum wage below almost all of the market - it prohibits sweatshop-like conditions while still not interfering with market mechanisms. And I'm OK with raising it so long as it's below that level.

The other rationales I have seen for raising it don't have any rationale that couldn't be applied to a number double or triple what the current minimum is. So why not double or triple it? The answer has to be that once you double or triple it, there are tradeoffs that will hurt the macro employment level - but then it you have to acknowledge that there are tradeoffs at EVERY level. They just happen to be more favorable overall with the minimum wage at low levels.

Timing-wise, I think GD and Shesus are correct that increases in the minimum tend to follow increases in cost of living. That's how our political system works - it isn't proactive, it's reactive.

In terms of pan's post - pan, there isn't enough money in CEO salaries as an aggregate group to make a noticeable difference in workers' lives. If a company has 50,000 employees and the CEO makes $20million, you could take his whole salary away and divide it up -- and each employee will get $400. (Most CEOs of public companies make a lot less than that.) But then you still need a CEO. Good ones don't grow on trees, and you'd still need to find and pay the new CEO. So what do you suggest - outlawing CEOs? Good ones create lots and lots of wealth and lots and lots of jobs. We can argue about how much they should be paid, but it would need to be a lot of money any way you slice it - if your'e responsible for billions of dollars in assets and tens of thousands of jobs, you should be paid a lot of money. I know I couldn't possibly do that job, and I bet you couldn't either. Even some of the people who DO that job aren't very good at it (which is why CEOs get fired). The really good ones are unbelievably talented people.

Baraka_Guru

Good post, loquitur. It makes a lot of sense out of the issues.

And on the issue of CEOs, you'd be hard pressed to get investment dollars if you don't have good management. It all comes down to the management of corporations regardless of other factors in many cases. And without investment dollars, everyone in the company suffers.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

roachboy

i haven't time to do justice to this, but i'll just note that what separates the logic of the first part of pan's post from loquitor's really is a politics of wealth creation. in the land of neoliberalism, it is a commonplace to claim that capital creates value. in the land of social-democracy (loosely speaking) it is the expenditure of labor power that creates value (working people, reduced to the bearers of labor power via capitalist wage relations)---this split is amongst the oldest ideological conflicts within and about capitalism.

at the descriptive level, there's an obvious symbiosis at work.
at the political level, that i have a marxist side indicates where i think the emphasis should fall.


gd: afl cio?
sector monopoly trade unions?
the worst possible model for thinking about organization of working folk.
but as we now know, it's organization and is better than contemporary powerlessness.

but still....

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girldetective

Loquiter said : I think this is true re salaries. Its really the bonuses, in this economy, that steam me. Occasionally I hear of a bonus that amounts to the budget a city has for a new bridge that would benefit thousands. I know a family who made so much money this way that they now live under lock and key, with black-out shades on their front windows. As far as I know they havent given any back in any way. I really feel sick to my stomach when I think about it - no kidding. I dont associate with them anymore, Im not unfriendly I just have drifted away. Its the entitlement that bothers me.

rb : I know its pedestrian, but I wanted to get my point across. Put your paddle away...or was that a whisper?!

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Cynthetiq

As an indirect investor via 401k and IRAs, I want the CEO to create wealth for the corporation. In order to attract a CEO who can do such things, one must compensate in order to attract the talent.

As a direct shareholder of stock, I demand that the Board of Directors be competent in selecting and approving CEOs and their compensation package. There are some like Steve Jobs who get little to no salary, just stockholder options and the benefits of those options.

Average citizens cannot demand it of private or public corporations, but shareholders and investors can. They have and continue to do so. Pan, if you don't know or understand this, you are out of touch with how the system works.

With regards to upping the minimum wage, there are some in the lower tiers of the workforce that are psychologically tied to the minimum wage. They see that as the base line from which they are trying to move away from. So if you up minimum wage to $12 an hour all those people who were getting paid $12 now feel like they are worth more than "minimum wage."

I always hated managing people during minimum wage increases becasue it always lead to losing 1 or 2 people who felt they were entitled to a raise because minimum wage was increasd, so they should be increased as well.

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pan6467

Guess you didn't read my post did you.... or just read what you wanted to.
Anyone who has any investment in 401ks, IRAs, or just the market is a stock holder of the companies in those funds.

See there was a time in this country when the CEO lived and died by what his company was able to produce. If Goodyear had a strong year the Seiberling family made money, if Hoover had a bad year the Hoover family didn't make as much that year, and so on.

But today..... we pay these guys millions, they come in run a company into the gutter and get bonuses.

There are a few good ones maybe like Jobs, Ford's CEO who took a cut in pay, and a couple others but anymore.... it's not about the company it's about how much they can make and what's in their severance package.

You want to pay someone 500 times the company's average worker, then he better fucking produce 500 times what they do.

Another argument above was Well, the average CEO makes more than that with perks and such, it's not just salary.... believe I even said that.

Secondly, there aren't many companies that have 50,000 employees in the US.

If you take my example CEO of Company X making 10 mill a year, that includes perks and cut it in 1/2 then give the 1000 workers an equal share, you increased their pay 5000 dollars a year. May not seem like much more but an extra 100 dollars a pay, I'm sure can really help a lot more of those workers than that money helped that CEO.

And if you take other executives pay and do the same, those workers will see even more.

If you read what I wrote, you'd also see that in paying the workers more, making the CEOs, boards and upper management more responsible for company growth, you'd see that I said as sales increased so naturally would their salaries.

I'm sorry, as a stockholder I want to see a CEO maintain a strong company that workers are treated fairly, the company maintains a strong community bond, the company maintains a strong positive image on it's products and if it shows a loss the CEO and upper management show losses in their bank accounts.

If a CEO can't accept that challenge then, perhaps you have the wrong man/woman in the job.

How much money is enough? When does one realize they have too much? When you see your country failing and people losing homes, jobs, pride and their dreams.... how much buys you a true good night's sleep?

In the end, it's never been the rich that have started revolutions, spoken out or fought for equality..... it has been the poor who have been taken advantage of, who have gotten to a point where they see nothing to lose and everything to gain in changing the system, either peacefully or in most cases very violently.

We will soon come to that point. And again I ask, what are you doing now to try to make changes so it won't happen.

People right now are looking for a savior president to pull us out of all this shit. When he can't or won't and more people lose their houses, jobs, dreams and pride..... we will see the people rise up in masses demanding change and that hope and pride and their dreams given back.

YOU as a stock holder have the chance now to speak out and demand CEO, Board, Upper Management accountability to the stockholders and the workers NOW. You as a citizen, as a member of society and as gatekeepers to the future generations of this country have an obligation to speak out NOW.

Here's some links to read.....

CEOs Are Overpaid
Bill Moyers Journal . Watch & Listen | PBS
2008 Executive PayWatch

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

robot_parade

Sure, but unions generally cover higher-earning 'blue collor' style workers, who are in it for a career, not just a job. Think of minimum wage as a giant union covering *everyone* in the US. We've collectively decided that the least amount that's acceptable to pay (most) workers is this minimum wage, and our representatives have implemented that policy.

pan6467

That's true, but what good is raising minimum wage when the CEO's and upper management just decide to outsource more jobs, layoff more people, and raise prices... then give themselves more perks and raises?

Unions helped stop that. Unions made sure that the workers got their share.

However, unions got to powerful and to corrupt and needed limiting... but when we did that the CEO's and upper management then became too powerful, greedy and corrupt.

Now, we need to find a balance between the 2 or we will become a third world nation and if we become a third world nation, so goes all of the world and we enter a whole new feudal society/dark ages.

If we, here in America get our shit together and correct this NOW, we can set examples for the rest of the world. If we don't we show the rest of the world Capitalism fails and in the end this great society our forefathers built so proudly and with so much hope, will have died because we did nothing and our future generations will be left to wonder why.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Cynthetiq

I did read what you wrote. And as a shareholder MY demands are different than yours. You would rather have compensation parity, I'd rather have profits. I want responsible profits on a regular basis, meaning a sustainable growth. I'm not interested in windfall profits because they are anomolies.

It already works that way. Many of the executives and executive commitees are tied to extensive bonus programs that are tied into bottom line figures. No increase in profits, no bonus. There are even programs for the lowest workers called profit sharing.

There are even employee share discount programs where employees can purchase stock at discounted prices. There are gifts of stock, performance options and other very real compensation programs at many companies. Not all participate in them, but that's no different than the old days of "full medical and full dental with optical."
-----Added 25/7/2008 at 02 : 30 : 49-----
I'd also like to point out that a board of directors is not one individual. They make decisions based on voting.

I'm on the Board of Directors for the company that owns the buildings we live in. We have a $2M deficit. We have to raise funds in order to meet that shortfall, but instead of passing an increase maintenance to the shareholders to meet that, we only passed an increase of 10% which is about $1M shy of what is required.

What does this have to do with anything?

Well it takes a majority of votes by the Board of Directors to pass any resolutions. So if they don't get the votes, it doesn't matter what the shareholders demand.

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pan6467

What kind of profits are the CEO's bringing???? GM's, Chase's, Ford's, CitGroup, National City, Yahoo, etc.?

What profits are they bringing?

I guess you missed my point that IF you pay the workers more, allow them more disposable income, they buy more, they work harder so that your products are better.... and in turn YOU make more, the shareholders make more and ALL profit.

Where exactly has the Dow been going? But those CEO's and upper management guys are making you dividends and your stocks are skyrocketing because the profits are pouring in ..... . Yeah. Ok then.

Let the average guy lose his house, watch his dreams go to Hell, but you make your fucking profit and pay that CEO to ship more jobs out.

Good luck with that.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Cynthetiq

CEOS and upper management are contracted employees. There are terms that are agreed to when they come on board. Even if you decide to remove the CEO, there's a penalty to be paid for it to buy out the contract. Want to attract another CEO that can produce for the company. His first thing to do is to make sure that he's covered if he gets ousted as part of his contract.

If they get paid more. IF IF IF IF. More doom and gloom. But the reality isn't that. Yet, there are companies that are profitable that are listed on the NYSE, AMEX, NASDAQ. They may not be record breaking profits but they are profits nonetheless. Just like when the companies that you have mentioned are profitable there are others that are not. That's why investors are not supposed to only invest in one sector, but to stay diverse so that they can ride out the rough patches.

FWIW, I want the average guy to lose his house if the average guy bought it with an interest only or ARM loan. Screw him for signing a marker that he couldn't cover. Just like I wanted gas to go up to get those casual SUV drivers. You play you pay. It's that simple.

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Baraka_Guru

Sometimes a high unemployment rate is necessary to slow inflation. CEOs take pay cuts and get fired too. It all depends on the company's performance and his or her own performance or willingness to "take it for the team." Not all CEOs are stereotypical old, white "fat cats."

Unions can only do so much during an economic downturn. Unemployment (via layoffs, etc.) can be unavoidable.

There are laws and regulatory bodies. The problem isn't only in the infringement, it's also in the detection and enforcement.

I'm going to take a pass on this hyperbolic slippery slope.

It isn't only up to America to do this. America isn't the only place to turn for leadership and for setting examples. Business is an international community. If we can't learn from each other, that will probably be one of the biggest reasons for failure. Capitalism only fails when it doesn't become regulated or reformed to help us deal with our greatest challenges. This is why I believe in mixed economies. I don't think America is doomed; the country has some of the most innovative and energetic people in the world. Perfect equality is an idealistic notion. Reasonable standards of living, however, are entirely achievable. This is what we should strive for. Eliminate poverty, not wealth.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

loquitur

pan, a company with only 1000 workers likely won't be paying its CEO $10million in comp. You need to have revenues of several billions to be in that sort of league. That's why your example doesn't make sense.

Roachboy, I think you're oversimplifying (besides calling me "neoliberal," which is kinda funny). I don't think it's capital that creates wealth. Capital can't do noodlysquat without labor because you can't eat money and someone has to run the machines. But labor can't do much on its own either. Capitalism is a cooperative venture - both segments contribute their bit and take out of it what they can in a fair exchange of value. They allocate risks and rewards among themselves according to the market.

Pan, I'm curious - what is the reason for your objection - do you think CEOs should make less simply because they make a lot and you don't think anyone should make that much money? Or do you think most CEOs don't earn their compensation? The approach you would take to the issue will vary depending on your answer. If it's the first, then basically you're advocating some variant of socialism. If it's the second, then it's an issue for the board and shareholders to address - it's their money and their fiduciary obligations that are on the line. In a free country, people are allowed to do stupid things, like pay a mediocre CEO more than s/he is worth. It might not be wise, but it's really not your problem. The fallacy in your reasoning is that you assume any reduction in the CEO's pay would go to the employees. Not so. It might go to investments, new equipment, cash for stock buybacks, shareholder dividends or other corporate purposes. You can't assume that the CEO's pay comes out of other workers' pockets - you simply don't know which pocket it comes from.

Cynthetiq

Ah yes, thanks for that.

There has been a growing trend for companies to buy up their existing stock to go private. They got tired of getting beaten up by shareholders to have record profits each and every quarter.

Our company sold off some assets. We thought they'd keep the cash liquid for operating expenses, but instead bought back stock.

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pan6467

Watch the Bill Moyers link on what the CEOs of bankrupt airlines did.

Some CEO's are strong and do what it takes to keep workers working and make sure the company grows even in the worst of times, maintaining the best environment possible.

However, the vast majority of the big companies these days don't. As for their severance packages, I'm sorry if they run the company down, they don't deserve anything when they are fired. There have been companies in the recent past that have been destroyed because of upper management's golden parachutes. The stock holders lost, the workers lost but those who were supposed to be the leaders of these companies actually gained millions.

If you can't find a CEO willing to take risks and knows he profits when the company and workers do and loses when the company does.... then you have the wrong person in that job.

Sorry, but recent past events and current events show the CEOs are so invested only in themselves that they will bankrupt a company and cost thousands their jobs if that means they can make more money than they will doing their job.

I just want accountability and a fair distribution of wages.

You want to say the CEO has more to lose if the company loses.... then fucking prove it. I have yet to see such proof.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

dc_dux

Back to the OP.

For years when minimum wages were first legislated at both the state and federal level, economists were divided on the impact.

In the last 10-15 years, more and more studies suggest that that the impact is positive.

There is little question that the overall impact of a minimum wage is positive, as the following facts make clear:

If the minimum wage were increased nationally to $7.25:

* 14.9 million workers would receive a raise,

- 80% of those affected are adults age 20 or over, and
- 7.3 million children would see their parents income rise.

* Families with affected workers rely on those workers for over half of their earnings.

* 46% of all families with affected workers rely solely on the earnings from those workers.

* The best recent research on the economic impact of the minimum wage shows positive effects without job loss.

* Even the research that suggests a negative labor market effect shows only a minimal impact that is more than offset by the higher wage levels.

* The states that have adopted higher-than-federal minimum wages have seen low-wage workers’ incomes rise with no negative side-effects.

* Over 650 economists, including five Nobel Prize winners and six past presidents of the American Economics Association, recently signed a statement stating that federal and state minimum wage increases “can significantly improve the lives of low-income workers and their families, without the adverse effects that critics have claimed”
...

The belief that raising the minimum wage causes job loss was more commonly accepted by economists decades ago, but high-quality research by leading academic economists has forced the economic community to re-evaluate these arguments. This consensus view rapidly eroded following evidence from the 1990s. Even Benjamin Bernanke, President Bush’s appointee as the Chairman of the Federal Reserve, has noted that “economists disagree about …whether increases in the minimum wage reduce employment of low-wage workers”(Bernanke 2006). In lieu of negative employment effects, economists are frequently citing higher productivity, decreased turnover, lower recruiting and training costs, decreased absenteeism, and increased worker morale as ways in which employers may be able to offset some of the costs of a wage increase .

Some distinguished economists have acknowledged their change of opinion on the issue. Former Federal Reserve Vice Chairman and current Princeton economist Alan Blinder commented, “My thinking on this has changed dramatically. The evidence appears to be against the simple-minded theory that a modest increase in the minimum wage causes substantial job loss”
...

Following the 1997 federal minimum wage increase, Nobel Laureate Joseph Stiglitz of Columbia University observed, “We saw no ripple effect at all in the unemployment rate. Unemployment just continued to go down.” The minimum wage increase, he said, “was totally swamped by other factors going on in the economy” (Chipman 2006). Accordingly, the 1999 Economic Report of the President stated: “Many studies have examined this issue, and the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.”

...

In response to dire predictions made by minimum wage opponents prior to the enactment of Florida’s minimum wage, Bruce Nissen of Florida International University and Luke Shaefer of the University of Chicago followed up with a comprehensive study of Florida’s economy one year after the minimum wage increase. Their conclusion:

No empirical evidence shows that Florida’s minimum wage has caused businesses to lay off workers. Instead, state employment has shown strong growth since the new wage took effect, better than in previous years and better than the U.S. as a whole.

Similarly, an examination of the Wisconsin labor market one year following the implementation of an increase by the Center on Wisconsin Strategy at the University of Wisconsin-Madison found that the most-affected industry, eating and drinking establishments, grew three times more rapidly than the overall Wisconsin job growth rate.

Washington has the highest minimum wage in the country and was the first state to annually adjust its state minimum wage for cost-of-living increases. The Washington-based Economic Opportunity Institute has found that Washington has out-performed the rest of the country in jobs since the end of the recession in November 2001, and that industries most-heavily affected by the minimum wage have not seen adverse employment impacts.

Studies by the Oregon Center for Public Policy have found that Oregon has had faster job growth than 41 other states since its minimum wage and indexing went into effect in 2002. Furthermore, low-wage employers have been adding jobs at a faster rate than Oregon employers overall since the higher minimum wage and annual cost-of-living adjustments were implemented

A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses or in the retail industry. Examining government data, FPI found that none of the many states that have raised their minimum wages above the federal level have seen labor market or other economic problems arising from their higher rates.

Minimum wage trends: Understanding past and contemporary research

There is plenty of research for those interested....and yes, I am glad this is not a pub discussion!

__________________
"The perfect is the enemy of the good."
~ Voltaire

robot_parade

This is true, but unfortunately those in power have *always* tried to do exactly that. Whether 'in power' meant being the CEO of the company, or the union boss. Power corrupts, and all that.

Egalitarian, capitalist societies with proper regulatory structures are supposed to limit fat-catting. Unfortunately, looking at CEO profits lately, it seems to me that this model has broken down a bit lately. I'm not sure exactly what the cause is, but I wonder if institutional investment has something to do with it - when the CEO and board of directors vote themselves unreasonable pay, the shareholders are supposed to revolt and kick the bums out. But when a lot of companies are majority-owned by big banks and institutions, who are in turn run by execs who want their *own* pay raises...

Got any bright ideas?

A couple I can think of:

1) Transparency - shareholders need to be able to understand the financial structure of the companies they invest in, and know who's making money at the top.

2) Regulation - conservatives love to bash this, but I think regulation is absolutely key in all sorts of areas. I'm absolutely a capatalist, but I don't believe that the invisible hand will always produce what's best for society as a whole any more than I believe in the tooth fairy.

3) A progressive...but not too progressive...tax structure, especially one that taxes income from work at the same or a lesser rate than income from investing.

Let me break out my reasoning for the third point a little more.

First, I think it's obscene for a rich country to allow people to have inadequite basic necessities. If people can't or won't provide for their own basic food, shelter, and medical needs, then I think it's totally appropriate for the government to do so. And I did say ~*basic*~ needs. Government-provided stuff should be as basic and utilitarian as possible. If you don't like it, then work for something better. Whether you implement that as a government-mandated 'minimum income' for everyone, or as government-provided food, housing, etc, doesn't matter so much to me.

Second, our current tax system seems tilted very much towards taxing income that's the result of work far more than income that's the result of investment. Which is exactly backwards to me. Investment is absolutely necessary, of course, and we shouldn't discourage it to much. But how does it make sense that someone who worked to produce something of value gets taxed *more* than someone who invested money?

flstf

If the government is going to control wages by enforcing a minimum wage rate I wonder why they set the number below the poverty level. Why not make the minimum wage something that people can live on like $15 an hour or so and since we are in the wage control business why not set the maximum wage as well? Maybe something like the highest paid person in a company cannot make more than 100 times the lowest. Executives would be scrambling to raise the lowest wages.

I also wonder why Arnold decided to balance the budget by lowering the wages of the lowest paid workers instead of lowering the wages of the highest paid?

pan6467

I love this quote. So you are willing to destroy the entire housing market, a few banks, send an entire industry down the tubes along with 1000's of jobs. Have the Federal government pay BILLIONS possibly even a TRILLION or 2 to bail out Fannie Mae and Freddie Mac, truly test the FDIC, {who by the way has 99 years to give you you insured money back}. All this, just to teach some people a lesson. How noble of you.

Then, lets punish the people who have to drive to work, let's destroy the trucking industry, let's truly push inflation, let's really rip apart the rest of the economy by pumping those gas prices higher to teach those wealthy bastards who drive Hummers a lesson. Sure, the poor slob and his family barely making it now goes bankrupt in the process, but those SUV drivers will suffer a little bit. How very humanitarian you are.

BTW, no Loquiter I am not against people making as much as they can. I am against CEOs and upper managements taking huge salaries and benefits while their workers make wages that barely allow them to live. I am against watching CEOs and Boards of Directors outsource jobs, lay off 100's, and post huge losses while they pad themselves with higher salaries and bigger benefits. I believe those people should enjoy windfalls only when the companies that employ them do and suffer losses when the companies that employ them suffer losses.

Thank you Robot Parade and FLSTF for great posts. Robot, I must say that your post is one of the best I have read in a very long, long time.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Cynthetiq

I didn't force someone to buy an SUV that costs >$100 to fill up each week. I didn't force someone to sign on an 5/1ARM loan with a P&I that was 40% of their monthly income for the first 5 years and destined to get higher when the ARM kicked in. Don't worry, the housing market will increase, you'll be able to refinance and take out cash, refinancing is easy.

Noble? Fuck that. I didn't bite off more than I can chew. I'm not the spendaholic. Why do I have to go to rehab?

I saved money while people took out home equity loans. I saved my money and didn't refinance and take cash out of my primary residence like it was an ATM. I didn't lease a car and wind up in a leasee trap having to release a new vehicle every end of contract because someone didn't save for a downpayment to buy another vehicle.

But you keep telling yourself that we still need to go out and buy or spend our way out of this mess.

http://www.nytimes.com/2008/07/20/business/20debt.html

No, see as far as I can tell there are people who saved their money and are buying bargains now. I just bought another house, my third in fact. It goes out on the rental market tomorrow. There are people buying up real estate owned (bank owned properties) at record speed. And no I didn't buy this property with an interest only mortgage, 20% down, cash from savings. Not some exotic piggy back loan, 0% down payment.

Maybe I should have just squandered my money and equity because Nanny State will take care of me and bail me out of trouble.

Another company will buy up their assets, no different than bargain houses. Companies buy up other companies all the time. Hey but you'd rather bail out people and companies who made mistakes. No consequences for them or their actions. Great!

You keep telling yourself that story, because as far as I can tell there are plenty of people out there doing just fine even some people who are making minimum wage. It's a simple process really. It's called living within your means. Your spending cannot exceed your income.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

boink

because it's easier to steal a buck from 10,1000 people (who have no power) than 100 bucks from 10 people who have power and a voice right in the rooms where these plans are made.

nobody will ever see limits on how much anyone can make in America, never happen.

is a hyperbolic slope any nicer ride than a real slippery slope ? imho, we are in reality on that slope. as far as CEO's and other PTB's are concerned, human rank and file are cattle. if we run short of American cattle there's plenty of Mexican cattle and they breed faster and work pretty hard too.

__________________
when you believe in things that you don't understand, then you suffer. Superstition ain't the way.

robot_parade

So there are a lot of complications in the whole mortgage bail-out idea. I've got a couple of thoughts on this. There are different classes of people owning mortgages involved. Easiest for me is the speculators and investors - they can go hang. :-)

Second, there are people who bought more house they can afford, even with a reasonable interest rate. They're going to lose their house. However, I think the guvment could maybe help out - like offer incentives for low-interest loans, based upon what their credit score would be without the defaulted mortgage, or something along those lines.

Third, there are the people who just got fucked. They didn't understand the terms of the loan they were taking on...their realtor/mortage company promised they'd be able to refinance before the ARM blew up, or hell, they just gambled wrong - hard to tell the difference between these options, really. I think we (the gubmint) should help these people out. Personally, I liked the idea of allowing judges (or more practically, a state-appointed arbiter) to rewrite the terms of the mortgages. With proper guideles (ie, minimum interest rate so the lender isn't screwed), an arbiter can look at the individual situation, and make a call that's fair to both parties.

Why? Why do these people deserve a bail-out? Well, some of them were simply misled. Sure, they should've known what they were getting in to. Personal responsability is great. But they trusted the mortgage company and the realtor not to sell them a loan they couldn't afford. Are they any more at fault than the person who goes in for an oil change and leaves with $300 worth of 'repairs' that he just 'had to have'? We go to professionals and would like to not be fucked in the ass. When the mortgage company says 'you can afford this', and 'sure, you can just refinance after three years before the arm adjusts, no problem', we expect that to be true. And lots of people were told exactly that.

Even more than a matter of who deserves to be bailed out, consider the impact on society as a whole? Is it better to have the banks make a little less money than they'd hoped, or have thousands of families lose their homes, the homes stand vacant, etc., etc.

What really drives me nuts is that the same congress that argues for months whether people who took on bad loans deserve a 'bail out' jump into action in a matter of weeks to bail out a bank, because allowing it to collapse is unacceptable. Now, it's probably true that the consequences of allowing companies like Bear Sterns, Fannie Mae, and Freddie Mac are bad enough that we are better off bailing them off than not. Fine. But shouldn't the companies (and their CEOs and shareholders) face some consequences for their poor actions. And guess what, the consequences of having a few thousand people kicked out of their homes are pretty bad, too.

I don't think anyone is pumping gas prices higher. Anyone who's been paying attention the last 10 years (ie, not watching FOX news) should have known that the chances of gas prices going higher has been pretty high for a while now. Anyone driving a hummer to work everyday deserves what they get. Sorry.

Now, maybe the gubmint should do some things to smooth things out a bit. Give people time to adjust to the inevitable. But oil is going to run out. We need to deal with it. The sooner, the better.

Yeah. I don't like this either. But how to fix it? I can't see any reasonable government regulation that would keep this in check - this isn't really an area for regulation, anyway.

loquitur

Pan, how do you feel about baseball players making huge salaries? Movie stars?

You don't see that the market for different kinds of talent works more or less the same, and that really good CEOs (or those who are expected to be really good CEOs) get huge compensation? If you pay a ballplayer a big hump of money and he has a bad year, or you pay an actress a huge payday for what turns out to be a flop, what do you think should be done about it? What is done about it is that they keep the payday and then they are tainted goods for the next job they try to get - which is approximately what happens to CEOs who don't deliver. They get fired and then have some problems getting a comparable job next time around.

Why is this such a mystery? Why are people so hung up on the fact that some people make a lot of money?

Baraka_Guru

It is worth mentioning that high compensation and high severance packages for CEOs is a necessity to draw these highly talented executives into these positions of running large companies. These men and women can probably do any number of things to make the same amount of money (or more) rather than be the one responsible for the helm of a modern multinational corporation.

The likelihood of a CEO getting fired is extremely high in just about every CEO posting when compared to other careers and positions. When a company brings a new CEO in from outside, it is usually done when they are in a tight spot financially. In some cases, companies are trying to restructure to survive. This is why the position is being filled, a CEO left or was fired.

So, we must keep in mind that taking a CEO position is often a high-risk situation. The pay is high for this reason, in addition to the fact that the company wants to attract hard-to-find talent. The severance agreements are high to encourage CEO risk-taking. If the penalty for being fired was high (i.e. no severance), any CEO would be tempted to stagnate and play it conservatively so they can continue to receive a salary and possibly stock options. The problem with that, is conservative CEOs often run into trouble with the company because risk-taking involves pursuing new ventures and initiatives that are necessary for growing the business. With stagnation, the CEO will lose stock options and other bonuses from a loss of performance and company profitability, but they will still have their salary. But they will likely get fired. In this case, everyone loses.

By having high salaries, bonuses, and severance packages, a company can remain competitive in being able to attract risk-taking and talented executives into a CEO position that is, by all means, not intended to be a long-term contract in and of itself. It is all about performance.

That said, it is also important to note that the disparity between CEO compensation and employee compensation is more market-based than it is based on bad practices. Companies also realize that to remain competitive with employee talent, they need to have compensation that is competitive within their respective industries. But this is another issue.

What about minimum wage? Well, where does it exist? Mainly in the service sector, such as retail, entertainment, and food services. The raising of the minimum wage is a necessity depending on economic indicators. It is a challenge that many companies need to deal with, and to suggest an easy solution is idealistic, as this is also something that is market-based. If they hadn't raised minimum wage when I had first started to earn one back in the early '90s, minimum wage earners would still be making CDN$4.55 per hour in Ontario today.

Try living on that.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

robot_parade

What bothers me is that I'm very often seeing articles and studies that show that CEO compensation is at a much higher level than it has ever been before, and that CEO compensation is rising at a rate far higher than 'normal people'. I don't think it's a healthy system. And especially concerning is that rising corporate profits don't seem to have any effect on worker salary. Also that CEO's actual performance (in terms of corporate profits) don't seem to have any relationship to their compensation - we've all heard of the 'golden parachute', where even if a CEO is kicked out for utter incompetence he or she gets lavishly compensated.

For instance:

Executive Pay: CEO Pay Up 298%, Average Worker's? 4.3% (1995-2005)

So, if that article is correct, since 1990, corporate profits have doubled, CEO pay is up about 300%, and the average worker is making...4.3% more.

Why?

Baraka_Guru

Profits are up maybe because of CEO decisions that both save money and increase revenues.

But in regards to the average worker, a 4.3% increase is more than double the average annual rate of inflation for that same period, so workers are generally better off. I doubt you could have increased worker pay by as much as 300% and still maintain profitability. Even something like 5% or 6% would be unsustainable. Worker cost is generally a high one as an overall percentage of business costs.

I know it doesn't sound fair, but I will repeat what I said in my previous post: This is more market-based than based on "fairness," whatever that is.

EDIT: I just realized that this is a "cumulative" increase, which means inflation has eroded worker earnings by as much as 16% to 18% over the period. Okay, well, that sucks. Fine. But I still say this is market-based. I blame globalization.

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot