Wealth Distribution in the USA

That's because you are still equating what I am actually saying with the straw man position of calculating salaries.......Get past that straw man and you'll see that estimating the economic benefit a business derives from different roles can be estimated by assessing the economic impact of that work not being done.

I never said employers like McDonalds would be happy with an increase in minimum wage. I said that such an increase, 20% I believe was the example I used, wouldn't necessarily result in the negative effect on employment you were asserting would necessarily be the case. The empirical evidence refutes this assertion of yours.

If you want to estimate how much a business benefits economically from a given role assess the economic impact of that work not being done. It's really not a difficult concept and businesses make such assessments all the time. There are all sorts of reasons one might want to assess the economic benefit of a given role. To write a business case for a new position. To assess who can be made redundant in times of contraction. To know the likely cost of industrial action. To determine how dependent a business is on a given role. For government minsters to question why they are subsidising the employment costs of multinationals. For shareholders to question whether the CEO salary of 10 million is economically justified. I could go on....... OK. Let's say that. You are yet again pursuing your straw man. Why are you doing that when you have repeatedly been told that NOBODY is advocating that salaries be calculated in the way you keep relentlessly pursuing. Let's instead suppose that the government comments on this strike. Let's suppose that I am the government minister doing the commentating. This is what I would say:"Given the losses this highly profitable multinational company claims it is incurring as a result of this strike we can conclude that the employees in question are of vital importance to the profitable operation of this company. The company in question is deriving considerable economic benefit from these employees and making vast profits in the process. Yet these workers doing work that is essential to the profitability of this company are not even being paid enough to feed clothe and house themselves without government support. Why are we, as a government as a society, subsidising the employment costs of highly profitable multinational corporations in this way? It is high time that such companies, who derive enormous economic benefit from their low wage workforce, were forced to pay such employees at the very least a living wage."Now I know that's not what you want to hear. You want to hear me saying something obviously stupid like "If workers X provide economic benefit Y then they should be paid amount Z"But you might note that what I am actually saying isn't that. What you might want to take note of is that what I am saying is entirely consistent with what I have been saying throughout:

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If the lowest paid workers are being paid so little that it is impossible for them to feed, clothe and house themselves, and thus continue in employment without welfare assistance, then it is absolutely reasonable and appropriate for society to ask whether those employees are providing the businesses that employ them with economic benefit that far outstrips the cost of the measly wages they pay.

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Are we going to put this "calculating salaries" thing to bed now? Then we could make the same speech on behalf of the truck drivers too. What we wouldn't do is start adding things up and calculating salaries. Coz that'd be silly wouldn't it? Then we could make the same speech on behalf of the dockers too. What we wouldn't do is start adding things up and calculating salaries. Coz that'd be silly wouldn't it? Then we could make the same speech on behalf of the assembly workers too. What we wouldn't do is start adding things up and calculating salaries. Coz that'd be silly wouldn't it? They provide economic benefit to the business of millions per day. Nobody is suggesting that truck drivers, dockers, network engineers, box packers or anybody else be paid millions per day no matter how much economic benefit they provide.What is being suggested is that those who provide companies with considerable economic benefit should at the very least be paid a wage they can live on for doing so.It really is very simple.........

At a shareholder meeting shareholders question the 10 million a year salary of the CEO. They question it on the basis that such a salary is unjustified in relation to the economic benefit being derived from his leadership.Are the shareholders in question a bunch of economically illiterate imbeciles who have no right to ask such a ridiculous question? "Economic benefit" what a ludicrous idea..........

The evidence I posted in Message 385 refutes the notion that an increase in wage of the sort being discussed will necessarily result in job cuts.What I was trying to say with my example (obviously not successfully) was this:In a situation of high profits, low wages and and high dependency on low wage workers a moderate increase in minimum wage needn't result in job losses. Because any business strategy pursued in response to a minimum wage increase that involves significant job losses may well be self defeating. Significant job losses mean reduced operations and thus reduced profits. So it is perfectly conceivable that simply taking the hit from the wage increase will have a less negative effect on profits than a strategy that involves less workers and a correspondingly decreased operation. Shareholders don't want to see profits fall. But they don't want to see companies contracting rather than growing either.Anyway whatever theoretical model one applies - The evidence I posted in Message 385 refutes the notion that an increase in wage of the sort being discussed will necessarily result in job cuts.Edited by Straggler, : No reason given.

1) The simple supply and demand model fails when applied to the low wage labour market. The evidence tells us that "the supposed cost in terms of employment from seeking to raise low-wage workers’ earnings is a myth".2) When it is suggested that those who provide considerable economic benefit for a subsistence wage are underpaid and that those who provide little discernible economic benefit for vast rewards are overpaid - This has nothing to do calculating salaries on the basis of a fictitious formula and that any talk of calculating salaries on such a basis is a complete straw man.If you can bring these facts with you to any future discussions on these or related issues then something will have been achieved here.If you can bring them to any further posts in this thread that would also be highly appreciated (although perhaps overly optimistic on my part).Edited by Straggler, : No reason given.

You're somehow still failing to see the implications of statements like this from your Message 312: And of what you just said: You are failing to incorporate simple and obvious facts into your thinking. You don't seem to understand that a company is a combination of many jobs working in concert together. Removing any job isn't a measure of the "economic benefit" of that job because all jobs are necessary to varying degrees, different jobs make different contributions, and some jobs can have an immediate impact if removed (with no truckers no products move to market), while others won't have an impact for a considerable period (with no product designers there won't be any new products, but that won't have an effect on business for a year or two), while still others will have almost no impact at all (cafeteria workers, receptionists, night watchmen, janitorial staff, etc.).So when the truck drivers go on strike, shut the company down, and cost it millions of dollars a day, that is no more a measure of their "economic benefit" to the company than if the cafeteria workers go on strike, people have to bring their lunch, and it costs the company nothing at all. In fact, the company probably saves money while the cafeteria workers are on strike.The reality is that it is not possible to calculate or estimate the economic benefit to a company of any job, and certainly not in the way you suggest. Furthermore, you can't postulate a link between wages and an unknown value, one which you can't even know is positive or negative.It is apparently necessary to again mention that pointing out to you that it is flawed thinking to believe a link should exist between a job's wages and some imaginary "economic benefit" of that job does not mean one thinks executive pay scales are reasonable or that nothing should be done about poverty wages.--Percy

Paul Krugman's conclusions aren't supported by the excerpts you posted from the paper Center For Economic And Policy Research - Why Does the Minimum Wage Have No Discernible Effect on Employment? John Schmitt Feb 2013: In fact, nothing in Schmitt's excerpts supports Krugman's statement that "the simple Econ 101 story doesn't seem to work," and I don't think he really meant to imply that supply and demand doesn't apply to minimum wage levels, because earlier in that paragraph he makes clear he's only talking about "raising the minimum wage near current levels."What I think he was really trying to say is that modest changes in minimum wage don't necessarily follow the law of the supply and demand, and given the slack in any economy this must of course be true. It's the same with many things, for example, gas prices, which as long as they range between $3 and $4 seem to affect the economy little, but raise them to $5 and it will have a significant impact (that's per gallon, folks, apologies to everyone not living in the USA for our unconscionably low gas prices).Increases in the minimum wage that are in line with inflation, which is what politicians have attempted to do over the years and which is what the studies examined, should have little impact on employment, and this is what the studies apparently show. But, counter to what Krugman claims, the law of supply and demand has not been repealed, and whenever politicians vote increases in the minimum wage that are out of line with inflation then it will negatively impact employment to the degree that they are.I mentioned earlier in this thread that the minimum wage in the US was $1.50/hour in 1969, so as measured by inflation the minimum wage is too low right now. I expect it will be increased once we're safely out of the economic woods.--Percy

You're cherry picking and conflating macro and micro economic theory - perhaps not deliberately. The wiki on the minimum wage is quite good but you have to read all of it and not just pick the bits you think makes your case:Minimum wage - WikipediaYou'll see that the evidence is mixed and also surprising and that economists don't agree at all - no surprises there I suppose.But there's a few things to understand1. The economy as a whole (macro) is enormously complex, so working out how a global change in a supply input (wages) will effect an output is very difficult, possibly impossible to know in advance. Whether the minimum wage increase results in a decrease in emplyment though will depend on how close the minimum wage requirement is to what is actually being paid in the market. If it's not a big change, not much will happen but a large change will obviously impact the economy is various ways and standard economic theory says that it must result in the loss of jobs.2. The effect an increase in wages has on an individual company will depend on how big a proportion of their costs are affected by it and how big the change is. If McDs has 30% of its costs for wages and the minimum wage increased them by 10% it would result a 3% loss of profit. (All other things being equal as the economists say.)What do you imagine McDs would do? I'd say that they would try to increase their prices - but because the unit price is a bigger number than the increased unit cost, the actual increase would be tiny.If that happens across the econom the increase in wages has increased inflation. And increased inflation errodes the value of wages, so you go back to square one. Not at all - in fact the main course of industrial development has been the driving out of labour costs and replacing them with mechanisation. Every time labour increases in price it makes a new business case to replace people. Jobs are also lost to lower wage countries. Companies don't care about contraction and expansion - they care about profit. "Turnover if vanity, Profit is sanity." Bu of course they try for both. That's a very interesting bit of evidence but, as I say, it's cherry picked.But I don't think it matters; I think all developed countries should have some form of minimum wage and progressive taxation simply on humanitarian grounds and we need to live with the economic consequences in order to develop a fairer society - which I believe will actually be more profitable in the end.

Aren't you making the same mistake you just identified? The 10 per cent increase in wages only caused a 3% increase in costs. How does that return you to square one?

Each step in the production process of a finished good or service presumably adds some value to the good or service. Each step is also presumably essential.The problem with your method of estimation is that it is very likely that the removal of any one step (or role) will result in no good or service, leaving us to concludeerroneouslythat such step was responsible for 100% of the economic benefit provided by that product. Obviously this is nonsense.To really see the impact that each step has on the good or service, you have to look at the selling price of that good or service before that step and after that step. That is, the cost of the input and the price of the output. That is how we figure out the benefit of a certain role to the good or service it helps produce.Your method cannot work, because removing any step in the process leaves us without the good or service we want and causes us to conclude that every step individually contributes 100% of the economic benefit; which is clearly nonsense.JonEdited by Jon, : No reason given.

Don't forget that McDonald's has a hefty customer base of low-wage earners.A universal increase in minimum wage might just result in an increased demand for sloppy cheeseburgers and soggy fries.

Yes, I'm being sloppy 'cos I'm on a iPhone waiting for a woman to make her mind up about something in a shop.

No, I can't imagine any way for that to be correct.

Are you actually disagreeing with those two statements concerning rewards? Are you actually denying that those statements are derived from linking economic benefit and reward? Not linked in the idiotic calculating salaries way you keep implying. But indisputably dependent on a link nevertheless. I am well aware what you think the implications are. I am well aware that you think any suggestion of a link demands a much more concrete and universal relationship than anyone is actually advocating. This is your straw man. I know you think that. Because you seem incapable of differentiating between price and value of any kind. So at the risk of making your blood boil here is the sort of economic benefit in terms of utility that I am talking about.

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Note that economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price. The difference between the value to the consumer and the market price is called "consumer surplus". It is easy to see situations where the actual value is considerably larger than the market price.

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Value in the most basic sense can be referred to as "Real Value" or "Actual Value." This is the measure of worth that is based purely on the utility derived from the consumption of a product or service. Utility derived value allows products or services to be measured on outcome instead of demand or supply theories that have the inherent ability to be manipulated. Illustration: The real value of a book sold to a student who pays $50.00 at the cash register for the text and who earns no additional income from reading the book is essentially zero. However; the real value of the same text purchased in a thrift shop at a price of $0.25 and provides the reader with an insight that allows him or her to earn $100,000.00 in additional income is $100,000.00.

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Wiki On Economic ValuePercy — What is the ‘real value’ to the business of the labour being withheld by the striking workers? I entirely understand that. But If you were negotiating a pay deal on behalf of the striking workers do you think the fact that the employer in question was losing millions per day as a result of labour being withheld would be at all relevant to the negotiations at hand? Why do you think infamously low wage employers such as McDonalds and Walmart are sooooo anti-union? Because they derive considerable economic benefit from their lopw wage workforce perhaps? All necessary jobs provide economic benefit. Or value in terms of utility if you prefer that terminology. OK. I’m simply arguing that those who provide considerable economic benefit should be paid a living wage and those who don’t shouldn’t enjoy massive rewards for ineffectiveness and failure. Yes. This is the case with many, but not all, low wage jobs. Like our network engineer example. If employers have staff who provide no utility value at all, staff who might as well spend everyday for two years sitting at home playing Xbox rather than turning up for work for all the difference they make to anything then that employer really needs to look at their employment and efficiency levels. They have considerable bargaining power based on the immediate economic benefit their labour brings the company in question. In the immediate term this is probably true. Because the economic benefit from running a staff cafeteria costs comes in longer term measures such staff retention. If you want to estimate the economic benefit of funding a staff cafeteria you would need to estimate the longer term effects of not having that facility. That is how you could try and assess the economic benefit of a staff cafeteria. I know your entire position rests on that premise. But that doesn’t make it true. Furthermore the complete and utter disassociation of reward from economic benefit results in absurdities which you have failed to tackle in this thread. For example if reward and economic benefit are completely unlinked then why not make me the 10 million dollar a year CEO? I can bring no discernible economic benefit to that role for huge rewards along with the best of them Estimating the effects of staffing decisions is just not the economic mystery your position requires it to be. Sorry. It is apparently necessary to again mention that both of the following depend on some sort of link between reward and economic benefit:1) At a shareholder meeting shareholders question the $10 million annual salary and benefit package of the CEO on the basis that he has failed to bring sufficient economic benefit to the role to justify that level of reward.2) A government minister makes a speech in which he states that those who provide considerable economic benefit to highly profitable multinational corporations (economic benefit that is well in excess of their salary) can reasonably expect to earn enough to feed, clothe and house themselves.Yet your position of complete and utter disassociation dictates that such complaints be thrown aside as the mad ramblings of economic illiterates who foolishly believe that there should be some link between reward and the economic benefit one provides.