“I support government policy that helps poor and middle class workers find jobs and increase their wages, as long as those policies actually work.”
Actually most of the literature I've read says that they do. Granted, I've focused more on living wage ordinances rather than minimum wage laws but most studies I've found say that wages typically do increase and that decreases in employment are minimal. The main problem with any wage floor is that they aren't indexed to anything, which means their real purchasing power decreases every year due to inflation. That's one of the main reasons they stop being binding wage floors but no matter what they prevent a 'race to the bottom' and they prevent desperate people from being taken advantage of.

I'm fine if you don't agree with the theory. And I myself have pointed out there there are some problems with it due to the complexity of the real world (some of which jcavhs pointed out) . However, it's frustrating to me that your counter-arguments seem to indicate that you aren't really understanding the argument I am making. I apologize if my argument has not been focused from the beginning to avoid the confusion. Let me be clear now: I support government policy that helps poor and middle class workers find jobs and, as long as those policies actually work.

Excellent observation, Jcavhs- this was in the back of my mind– but I couldn't express it as well.

A free market also typically doesn't take into account social benefits. Not having people on welfare because they earn enough to survive, decreasing income inequality, etc all have positive outcomes for society and the economy overall but aren't factored into decisions at an individual firm level. That is when it is the role of government to step in.

I just see it as another way to exploit the low wage workforce -many of whom already have to work 2-3 jobs to get by. Meanwhile, CEO's and senior management get treated like little gods- regardless of performance. I think a hybrid of capitalism with a touch of socialism works best.
I do think US companies have sagged in their willingness to be forward thinking and innovative. Even with the most pro industry administration since Hoover– many are still tanking. Worker safety, benefits and the environment are suffering while pay packages for CEO's seem ever more inflated and unrelated to performance.

Do we want to go back to the Dickensian society of the mid 19th century?

And minimum wage workers put the money back into the economy instead of relying solely on government entitlements.

ChrisWWW, so since we've done pretty well since 1930 (I'm glad we agree on that), we should not change any labor policies that have been in place since then, since clearly each and every one must have contributed to that success.

My point was not that the minimum wage necessarily contributed to our success, but that it certainly was not a crippling burden. Given what seem to be clear cut benefits to having a minimum wage, I think those that wish to abolish the minimum wage have to do a better job proving it would be worth it.

As I've already explained, no one who is currently employed is paid more than they are worth, otherwise they wouldn't be employed. So, repealing the minimum wage would not cause wages to be reduced. As I said earlier, it would cause new jobs to be created, replacing jobs that are currently performed by machines or are not done because they are not currently profitable.

There are plenty of people that are employed that make more than they are worth in pure economic terms, and vice versa. Nepotism is a fact of life, and in a depressed labor market (like ours), there are plenty of people who are underemployed.

The machine vs. man point raises some interesting questions. Personally, I think if a machine can do the job of a man just as well for approximately or less than the cost, then it's waste of the man's time to do that work. The man may have made money, but we're all at a loss because his time could have been used more productively elsewhere. Perhaps not creating widgets but generating art or ideas that uplift us all.

By your own admission we have done quite well. Do you think we would have been so successful economically if we had been a socialist nation from the beginning?

Again, my point is not that we should have avoided capitalism, it's just that if capitalism is no longer capable of generating proper living conditions for a majority of people, then we've outgrown it.

We suffer the excesses of capitalism, like greed, because of the greater good it generates for society. Perhaps we are reaching a point where the negatives outweigh the benefits.

However, one last thing: there is a flaw in my argument I was waiting for someone to bring up. If the difference between what an employee with work for and what value he adds to the company is large, there is a problem. For example, if I'm willing to work for $10 an hour, but I add $100 of value to the company I work for, then clearly the labor market favors the employer and I am being taken advantage of. So in that case it might be beneficial to make the company pay me more. However, I don't see how you can make an argument that our current market is like that, because that would mean companies are making huge profit margins (which, on the whole, profit margins aren't that big even for the oil companies and the car companies are operating with a negative profit margin at the moment), and it would also mean the market would be lop-sided and would eventually even out as people keep hiring cheap employees (why not if you can make $90 an hour profit off of them?), thereby increasing their demand which in turn increases their wage.

But I don't see how the market can't determine fair wages on its own, without regulation. There is an economic incentive not to pay workers less than a fair wage. Otherwise they could find work elsewhere, assuming it's not a monopolistic labor market which someone suggested it was, but didn't offer any support for that. People change jobs all of the time, and that usually don't require relocation particularly for unskilled jobs. Underpaying workers is a great way to have a lot of sub-par workers and turn-over, which is not good for the company's bottom line.

And I never said there would be race to the bottom. I don't believe current wages would significantly change if the minimum wage were repealed. As I've already explained, no one who is currently employed is paid more than they are worth, otherwise they wouldn't be employed. So, repealing the minimum wage would not cause wages to be reduced. As I said earlier, it would cause new jobs to be created, replacing jobs that are currently performed by machines or are not done because they are not currently profitable.

It's very popular to bash the free market these days, but for those who don't like it, please tell me a system that has worked better in the history of humankind? By your own admission we have done quite well. Do you think we would have been so successful economically if we had been a socialist nation from the beginning? The free market does have flaws (see http://sovereignmind.wordpress.com/2008/10/11/f…). I am not one who believes in the free market as if it's a religion and opposes all regulation. However, I think there is a valid argument that this particular regulation (minimum wage) is counter-productive.

I'd rather have fewer jobs that paid decently than many that paid bargain basement wages. Worker protection laws are already weaker in this country than most of the Western world— if you remove more of the protections we will see companies importing Guatemalans to do the work for nothing, while American workers are at their mercy. Companies usually do not choose to do the right thing on their own, and many will insist that this is necessary to stay competitive. As Chris, noted however, min wage laws have worked pretty well up until now.

So, what's different about the circumstances we face today that make it necessary to abolish the minimum wage?

And if we are truly forced to commit to a race to the bottom, despite living in a world with an apparent abundance of material wealth, then don't we have to conclude that “free” market capitalism has run its course?

What jobs aren't worth the minimum wage? Currently, none, because an employer would be foolish (economically speaking at least) to employ anyone doing a job that is not worth the pay they are getting. They would be losing money. So they don't create those kinds of jobs. Instead, its more economical to find a different way to do it, perhaps by building machines or programming computers to do the job or finding a process that can be done with less workers. But if the minimum wage were repealed, we'd see many new types of jobs be created since it would then we more economical to hire low-wage workers than it would be to design and build machines or computers. I can think of countless jobs that don't exist today that would if they could be paid less than the minimum wage. For one, why do you think automatic check-out machines are being used so much these days? Those aren't free, but the stores decide its cheaper to buy and maintain them than pay another couple of cashiers. By the way, since this would increase demand for workers, companies would have to pay more to keep workers, so wages would rise for everyone.

As for your argument about crime, similar arguments about the benefits of higher wages have come up before in this thread. This is missing the point. The point those opposed to the minimum wage are making is that it does not in fact increase wages overall. Those who are not worth the minimum wage are not employed at the minimum wage, they are simply not employed. I agree that higher wages is better for a society, but the argument is that the minimum wage law does not cause that to happen. Intentions doesn't always equal results.

As for your last point, if being a good corporate citizen is defined as paying employees more than the value they add to the company, your business will go out of business which doesn't help anyone. You'd be better of converting to a non-profit charity. Also, very few business get federal bail-outs. Your right that that complicates the issue, but that is far more of an exception than the general rule. For every business that gets a federal bail-out, there are many more that go out of business the old-fashioned way.

Let me re-iterate that I have mixed feelings about the minimum wage. I am arguing against it here because the comments seemed one-sided, and several I felt missed the point of the opposing argument. The arguments I am making make the assumption of a perfectly free market. But as I stated before, the real world is complicated, so I think some of the criticisms in the other comments are valid. If the labor market truly is monopolistic (probably debatable) as one commenter said, that the minimum wage might make sense. It's a complicated issue worthy of debate, but unfortunately too often we talk past each other without taking the time to understand the opposing point of view.

In your example, if the janitor truly is causing more productivity, it would be in the interest of the company to keep him around, which means making sure he is paid at least what he is satisfied with since his value added is likely much more than he would be satisified to work for (I realize “satisfied” isn't quite the right word here. Again, what I mean is, “won't leave or do sub-par work to spite the company”). Since the janitor is adding a lot more value than he is being paid, it's probably in the interest of the company to pay him a bit more than he would be satisfied with just to be sure he's getting enough and doesn't leave, since again, calculating the satisfaction of an employee is not an exact science.

I agree that BOTH — importing workers and exporting jobs harm US workers. We should try to cushion them from the effects of globalization so we don't end up treating them like near-slaves as they do in China. This is bound to occur as legal protections are removed. If you stop giving health care benefits then we have more instances of people showing up at emergency rooms with routine problems, or people with minor problems waiting until they are major ones to seek care.

What job do you think is not worth minimum wage? I don't see that you are complaining about CEO's and upper management earning more than they are worth and- that has been a much bigger issue with the Wall St debacle. Where I live a min wage job just pays enough for one person eat if he/she has a free place to live.

Also- when people are paid a living wage we see a decline in crime and the need for government programs like food stamps and rent subsidies. The extra money goes out into the economy as it is unlikely any of it will be saved unless the job is held by a teenager saving for college.

I see nothing wrong with companies acting like good corporate citizens. You are correct that there is no obligation for them to do so, but those that do make our country and the world a much better place to live in. It should be encouraged. I might also add, that when these big companies are in trouble they often seek federal bailouts which come from the taxpayer. If they expect to be bailed out in bad times, shouldn't they act responsibly in good times?

How much am I worth? Without me, my lab wouldn't have brought in the approximately $2 million in grant money it did, but I was just the last piece of the puzzle. The amount of work I added that was visible on the end product was maybe 5%. Am I worth $100k for that reason, or $2 million because they would have gotten $0 without me? Or maybe just divide by the total number of people. Or do it by years of expertise….but we all have different areas of expertise so that's hard. Other people on the grant were less influential than me for the grant's content, but they have a long track record and that helped get it. Are they worth more or less since my name wasn't even on it? Etc.

At my last job, there was a janitor that everyone got along with and he really brightened the mood. After a visit from him we all worked quantitatively harder. How much “value” did he add?

Value isn't directly calculable, it's dependent on the well….values of the people assigning the value. The values our society assigns aren't the same that all ones would. I think that corporations do have a responsibility to provide for their workers and would like to see more of a social contract reform between worker and corporation. We can get in an argument about what level of “lifestyle” people should live but the fact is that there are tons of jobs where people can't afford even the basic necessities of food, shelter and health care.

In a perfectly free market, the theoretical ideal wage an employee should be paid is the lowest amount that employee is satisfied with (meaning they will not leave or do sub-par work) . If the wage is too low, they will leave for another employer. If the wage is higher than what the employee would work for, the company is wasting money. If that wage is not less than the value the employee adds to the company, or if the company can employ someone else to do the work for less, there is no point in employing him or her.

So, in your scenario, and assuming a perfectly free market, if the employee that was really worth $10 was require to make $15, that would not result in a decrease in wages on the other employees (because that would theoretically cause them to quit, assuming they were already being paid the minimum they'd be satisfied with). It would result in one of two things:

1) The employee making $10 would be fired and the company would try to find a way to get by with just the other two employees, and could even give them an extra $5 each to do some overtime if necessary.

2) If the other two employees simply aren't enough and the company has to pay the third employee $15, the total labor cost per product is now $85, which means it is no longer profitable for you to make that product so you fire all of your employees and go out of business (or move it to India).

Of course #1 is not good for the poor, and #2 is not good for anyone, so this is still an argument against the minimum wage, but not for the reason you suggest.

But we don't exist in a perfectly free market and sometimes things aren't simple, so honestly I'm not sure what the right answer is in regards to the minimum wage. I think some of the criticisms from other commenters are valid, but others I disagree with. Specifically:

kritt11: globalization is a reality we can't run from (at least using the minimum wage). What difference does it make if a company hires cheap immigrants of if that company moves to another country? Either option is equally attractive to the company, and either way, American workers suffer. Tariffs are one way to possibly insulate us from globalization to some degree, but that's a separate topic. Besides, what's wrong with people from Guatemala and El Salvador? Most of our ancestors moved here seeking opportunity they couldn't find in their own countries. You could argue for stricter immigration controls if we are concerned about being overrun (from what I understand you have to have a skill to immigrate… legally), but again, the minimum wage doesn't seem to be the right way to solve that problem.

As for those arguing for “corporate responsibility”, I would point out that corporations are not charities. I agree with corporate responsibility to the extent that workers should be treated fairly, but if you argue that a worker should be paid more than the value he or she adds to the company, that is not corporate responsibility, that is corporate charity, which companies are more than welcome to participate in but should not be forced to. The company is under no obligation to ensure that each employee is making enough to support his or her lifestyle.

As it is, those with min wage jobs have to work 2 or three of them and are still constantly struggling economically. Meanwhile we have CEO's who get huge bonuses and golden parachutes that are not tied in to performance. In theory, these people should be doing wonders for their companies in order to get that kind of compensation.

the free market is a joke