Wealth Distribution in the USA

Well, despite all my protests you seem absolutely certain of the point I was making. Since you seem to know more about it than I do, why don't you tell me how I should answer? Oh, gee, your company is successfully raising prices, I guess that settles it! You're again asking me to defend a position I did not take. This makes no sense. Let's change the number a bit to make the actual problem a bit more obvious. Let's say government raises the minimum wage to 20,000/year. The disappearing jobs won't be coopers and thatchers. Inflation aside (I almost said, "Independent of inflation," I won't make that mistake again), an economy can afford less of what is more expensive. A company's responsibility is to its stockholders, not to the citizenry.A government's responsibility is to its citizenry, not to company stockholders.Unless government requires a company to pay higher wages, a company has an obligation to its stockholders to maximize profits by, among other things, minimizing costs, including salaries.Now maybe your argument is that companies *should* pay higher salaries to their least paid workers if they can afford it, and I think that's an excellent sentiment, but it's not reality. I don't think it was part of my argument that minimum wage is the sole cause of the current unemployment situation. What *was* part of my argument was that increases in minimum wage would have the greatest impact on the least skilled workers, the very young. Where are the greatest concentrations of unemployment in the current European economic slowdown? The very young. We could pass legislation making available "starter jobs" at lower-than-prevailing-wage salaries to jump start both their careers and the economies of many nations, but that would be exploitative. You misunderstand. I wasn't making an argument against regulation. Or for it.In this country, liberals see government as the solution while conservatives see it as the problem. They're both right.In other words, I was pointing out a conundrum, not taking a stance.--Percy

They both see government as the solution. Conservatives have used government to shape the economy just as much as any liberal (in the American vernacular). Conservatives also think that government is the solution for shaping social morality, as well as passing legislation that is meant to weaken labor unions.One of the biggest cons is that conservatives want a smaller government. They don't. When they are in power they increase the size of government as much as any other political party. Under the most recent Bush president we saw the formation of a powerful new policing agency in Homeland Security, and huge expansions in the TSA. Conservatives want to expand government into your doctor's office and into your bedroom.The only difference between conservatives and liberals is what they want to accomplish. Both think that government is the best method for accomplishing those goals.

I agree, but there's no pure market force economy on the planet, all economies are regulated one way another.But I'm with you much of the way, market forces obviously set wages, it's just that market forces aren't as pure as we often make them out to be; all societies intervene somewhere, either with trade barriers, corruption, regulation or with welfare systems and unionisation but often with all and more.The question is how do advanced societies create fair societies whilst still remaining internationally competitive?

Was it my repeatedly asking you what point it was you were making that clued you in on how certain I was about it? Is it your contention that my company is anomalous in some fashion? Are the companies in your locality still charging the same amount as they did in 1950? I'm sorry I thought when you were saying that

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Companies still won't pay more than a job is worth to them... Jobs worth less than that will come under pressure to change or will disappear. Raising the minimum wage can have the completely expected effect of reducing employment...

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you were suggesting that there was a link between raising the minimum wage and unemployment rates. What were you saying then? What jobs would disappear, then? Actually companies do have responsibilities to the citizenry, but that aside not all companies have stockholders, either. Companies also have responsibilities to their workers (they must provide as safe and comfortable as possible working environment, adequate health and safety training, and sufficient remuneration for a full time worker to survive). Actually a government has responsibilities to both these groups. Indeed. That's not really part of my argument. My argument is that because companies have pressures to drive wages down, and they have more power in wage negotiation than the workers, the government should enact legislation to prevent exploitation of the lowest paid worker's labour. But that correlation doesn't imply any causation. Any number of things could be causing problems in the young people finding work. A large number of competing equally skilled job seekers (a baby boom of some kind), or it could be that health has improved dramatically and older workers are staying in senior positions longer, meaning middle aged workers are having promotions delayed, meaning younger people aren't climbing the ladder anywhere. Or something else.If you could show me some link between employment rates and introductions or increases in minimum wages that would be something we could actually discuss. I've never seen such data, perhaps you have. If you have seen data that just focuses on young people, that'd be interesting too.Have you seen any actual studies that link minimum wage rises with youth unemployment? There are workfare schemes, Unpaid Work For The Unemployed.

Where did I say such a thing?In my post the "abuse" was not in the numbers in the top portion but in the statement in the bottom portion.But, I think you knew that.

Wiki has a page on minimum wage studies and economic thinking on the issue past and present. Those interested enough can peruse the various studies, revisions, meta-analyses etc. for themselves. But the two extracts below I think sum up the shifting thinking on this issue. So I don't thionk it is nearly so clear cut as you seem to be implying.

Interesting revisionism. Yeah, right, I'm denying inflation. My original points were that wages are set by market forces (which I guess I'm parenthetically forced to add, at risk of lengthy pursuit about points I haven't made, that I include the entire market environment with its regulations, tariffs, unions, etc.), and that a job's value or worth is equal to its wage. It definitely is not equal to its contribution to the company's value, to the extent it can ever be calculated, which it rarely can.I later elaborated that government regulations about wages do not change the reality of a job's value, and that minimum wage laws can price jobs out of the market. You argue that it ain't necessarily so and rebut my points by introducing a lower level of detail of secondary issues, but the law of supply and demand is not a secondary issue. The higher something is priced, the less of it is purchased. The higher you set a wage for a job, the fewer people will be hired at that wage.--Percy

Except that it's exactly as clear cut as I stated (not implied). Your 2013 study used a specific figure of $9/hour. If you ask the same question for $10/hour, $12/hour, $15/hour and so forth, the number economists who would agree that it would make it harder for low-skilled workers would increase. There's no economists out there (I hope) who don't understand that jobs can be priced out of the market - the question is at what price level does that start to happen.I'm not stating anything controversial. I'm making a simple supply/demand argument. The higher the price, the lower the sales. The higher the wage, the lower the number jobs.In 1968 the minimum wage in the US was $1.50/hour. Adjusted for inflation the minimum wage today should be $9.00/hour, not $7.25/hour. Using different baseline years we'd get different figures, but it does seem like the minimum wage should be increased, though not while the recovery is in its nascent stages.--Percy

The economic benefit to a company of employing someone must be deemed by that company to be higher than the cost of employing them. Otherwise why bother employing them - Right?Things like the minimum wage are designed to makes wages at the bottom end better reflect the economic benefit that those doing such jobs bring to a company rather than relying simply on how little people at the bottom are prepared to sell their labour for if left to pure market forces. Do you disagree that this is the aim? Do you think that aim wrong-headed? So you read the linked to page and you don't think that there is anything at all contentious about your position that an increase in minimum wage necessarily results in increased unemployment of low skilled workers?

You notice here that you're using the phrase "a job's value" in the normal sense? I presume this is an oversight. According to the concept of "value" you have used in previous posts, for example in post #172, where you write: "a job's value or worth is equal to its wage", a government regulation raising the minimum wage does indeed increase the value of minimum-wage jobs.Edited by Dr Adequate, : No reason given.

Straggler is quite right. Both sides see government as the solution to the problems that they actually want to solve. For example, conservatives thought imaginary WMDs were a problem, and wanted the government to solve that. Liberals saw millions of Americans having no healthcare as a problem, and wanted the government to solve that.

Or you can think of an insurance company as a casino. It's a net loss for almost everybody. I'm not overly concerned about the wealthy protecting their wealth. I'm mostly interested in getting a minimum amount of wealth down to the lower echelons. Whether they work for it or "earn" it in some other way or even "deserve" it or not isn't even an issue with me.I'm only interested in people not being poor. Just not being poor ought to be seen as a benefit to society.

You're actually asking a very complex question that in most circumstances can't be answered for companies of any size or complexity. Companies generally hire at prevailing wages (what a job is worth) into all the job positions that they need filled in order to provide their product or service, and calculating the contribution to the value of the final product or service for each job is not generally thought necessary or useful or, more importantly, even possible. Interesting. The companies themselves can't break down the economic benefit to them on a per-job basis, but someone somewhere knows what it is, and it's the same for all low-level jobs, whether burger-flipper, stock-boy or lawn cutter. I responded to what you quoted, which you claimed reflected a great divergence of opinion concerning my position, which it didn't. And what I actually said was that at some level it will affect job availability for the lowest skilled workers, that the law of supply and demand applies. Continual reframing of the question doesn't change the answer.--Percy

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Why would we consider things independently of labour unions?

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I'm asking you why would we consider wages independent unions

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I am asking what useful knowledge we acquire about the value of labour if we discount such things as the actions of labour unions? Why would we value the worth of a job independent of many of the factors that go into determining it?

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It doesn't look like revisionism to me, it certainly appears I kept asking you why we should consider wages without consideration to one party in the negotiation of those wages. So are you agreeing with me that as costs of doing business rise, so to do the prices the business charges?

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Oh, gee, your company is successfully raising prices, I guess that settles it!

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This seems to sarcastically be saying that my company is unique in its capacity to increase prices as exposure to expenses rises. If you were trying to say something else, perhaps you could try being straightforward with it. In that case in answer to your question:

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Why shouldn't wages be set by the market?

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is... they are. Well nobody is suggesting that that is how wages are calculated. Marx and those that followed his footsteps would argue that a person should receive the value he adds to the product, and that in capitalism that value is 'stolen' by the capitalist. I've never suggested that the minimum wage changes how much a job is worth to the company, it should be noted. I've just said it legislates a minimum price for human labour.Maybe it does 'price jobs out of the market', but all you've done is say it. This would make sense if minimum wages were being ever increased faster than inflation. But that's not what is happening at all as far as I can see.What I see is that minimum wage gets set, and it stays there for a good number of years, then it will periodically be bumped up to bring it in line.This means that minimum wage labour steadily goes down in real price. So businesses can employ more minimum wage staff as time goes on. Then it gets bumped up and some businesses may find themselves overextended.It seems the solution isn't to stop increasing the minimum wage, but to have more frequent and thus less sharp increments. Since these businesses are probably putting up their prices in line with inflation at least, they should not find paying wages in line with inflation strenuous.Granted, if there was no minimum wage, we'd probably find higher employment. But then, if slavery was mandatory for 90% of the population we'd have good employment too... Let's say you set the minimum wage to be $1,000,000/hour.Would this be a problem?Well suddenly every working person becomes a millionaire. But then again, businesses won't be charging $10 for a cup of coffee anymore, they'd be charging $1million for it instead...so being a millionaire isn't all that great.It'd be a problem for other reasons, obviously. I don't however see, how it necessarily leads to less employment - it just leads to a hyperinflationary sort of position that essentially wipes out everyone's savings.

Yes, and I said precisely that way back in Message 124: Please do try to follow along.--Percy