This is really more of an update to my minimum wage law post than a part 2. I want to thank everyone for weighing in with their views. It was extremely refreshing to see that most agree with me than disagree. What I want to do with this post is touch on two other issues about minimum wage in general.
The Minimum Wage Is Not a Working Wage
Advocates of minimum wage laws always say the minimum wage should be increased to bring up the living standards of low income families. When the NDP was in power they tried to raised the minimum wage to $10 an hour from $6. I always wonder how they came up with $10 an hour. Why not $15 an hour, or $20 an hour? You want to give everyone a nice standard of living, right? Let’s raise the minimum wage to $40 an hour! I think we all know why this won’t work. BC’s current minimum wage is $8 an hour. If you weren’t making it at $6 an hour, chances are you’re not going to be making it at $8 an hour. The minimum wage was never meant to be a working wage.
Most minimum wage earners are young people. Seventy percent are between the ages of 16 to 23 and 78% live at home with their parents (source: Stats Canada). This was my situation when I was making minimum wage. My first job was at MacDonald’s. I lasted four hours before I quit. I concluded there was no way anyone can live on minimum wage but I didn’t bother looking for a higher paying job. Why? Because I was 15 years old, lived at home for free and didn’t have to live on minimum wage. As a matter of fact, I didn’t have to live on any wage!
Most Minimum Wage Workers Are Not Poor
One of the biggest misconception is thinking minimum wage workers are poor. Most low-paid workers are not from low-income families. The majority are from middle class families - the husband and wife have good paying jobs and their kids make minimum wage working at MacDonald’s (unless they quit in four hours). That is the typical minimum wage worker. Any increases in the minimum wage are unlikely to trickle down to low-income households.
The benefits of a higher minimum wage accrue largely to teenagers living in relatively affluent households. For most minimum wage earners, a higher minimum wage means they can spend more on cloths instead of putting more food on the table. Furthermore, to the extent that higher minimum wages raise the price of goods that poorer families tend to consume, increases in the minimum wage have a perverse impact on the distribution of real income across households.
As a society, we need to do our part to help poor and low-income families. However, higher minimum wages are unlikely to raise the incomes of the poor. Rather, they are likely to reduce employment opportunities for the unskilled and raise the income of certain low-wage workers who do not necessarily come from low-income families.
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Hey John, yeah minimum wage is horrible
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It seems like a trickling cycle of inflation though. In Southern California. The idea of minimum wage is good for the poor. Because the cost of living is so high. To have a studio in Southern California you would expect to pay 900-1000 now. To share a 2 bedroom apt it would range from 600-700.
So I think it depends on different locations.
Nice replying to your own comment there. And I seriously doubt John needs any help in increasing his Technorati fave count.
Back on topic. Nice points John. Absolutely, if you’re trying to achieve a certain standard of living based on a minimum job alone, you’re not going to make it. It was never intended to serve that purpose.
No no no! Don’t kill minimum wage! If I don’t succeed in blogging, I’ll have to go for minimum wage!
If you want to see my daily progression:
BlogaDollar.com
Greetings from France John.
P.S I was just kidding. I’ll succeed in blogging. Never let go!
You seem to have missed the point. Most people on minimum wage are not poor.
john has gone political
wait i thought john was evil… him going political would only lead to bad things!!!
Yes, I don’t think they are poor, but they are surely in debt. People try to live big then they are. Consumer culture in the states is an epidemic. Where most people who live here are slaving away against their own debt. When people do get a raise or if the minimum wage increases they actually don’t have more money, b/c the mentality is to spend more.
i couldn’t agree with you more, a minimum wage definately raises the opportunity cost of staying in school. Then you got this people walking around with minimum education.If the respective teenage dropouts only knew that they are likely to be unemployed because of the higher minimum wage anyhow, let me not get technical who am i to say? nice post John Chow. SEO just earned you a new reader!
The minimum wage law is all messed up. As a former employer I can tell you the statistic you posted regarding the percentage of minimum wage earners being kids and/or an adult’s second job is right on the money.
I couldn’t stand paying an ever increasing minimum wage here in Michigan to people who would happily work for less and who live at home with their parents and have no expenses. But on the other hand the overzealous spending of these teenage minimum wagers keeps the economy buzzing along.
You don’t know what you’re talking about. What worker would happily work for less in any situation? What an ignorant comment! Dumbass, that contradicts a basic assumption of all economic models… rational self interest.
Ever increasing minimum wage? You look like you’re 12. This is the first minimum wage hike in 10 years in the U.S. What the hell are you talking about? Hope you have better luck with your thin affiliate Credit Card site than you did as an employer…lol
This whole topic just shows the brainwashing job that Chicago School has pulled on the public by sweeping market externalisites under the rug.
@John. You’re just plain wrong my friend.
Imposter!
What planet are you living on? I had 9 out of 10 of my student employees tell me they didn’t mind working for the wage of $5.50 an hour when it was raised to $7.15. I also referred to the fact that I live in MICHIGAN which has been increasing the minimum wage ANNUALLY for several years not the federal minimum wage hike.
As for people happily working for less I was referring to the vast majority of minimum wage employees who are students and don’t depend on the income because their mommy and daddy pay for everything. In Michigan students are struggling to find jobs at all because of the high rate of unemployment. If anything, my comment had more economic rationale than yours. All my employees were paid minimum wage and my annual employee turnover was less than 10%. It’s called creating a good work environment and respecting people. I also had a file folder filled with applications…
And my Credit Card site makes me a comfortable living, so go find someone else to pick on and accuse of being ignorant.
Where are you living? Just curious because I know people well over 30 that have to work 2 or 3 minimum wage jobs to support a family. I guess it really depends on where you live. Not everyone has a college education either.(And even a college education doesn’t guarantee more than minimum wage in some areas!) So that does account for the need for standards. Have you looked at how many over 45 people have been ‘retired’ at an old job but still have to work because they aren’t eligible for SS? (If they ever receive SS, the chances of these people needing an outside income to help pay for bills is still very high. SS is not the Godsend everyone seems to think it is!) These people are shoved into the minimum wage jobs simply because of their age. No one wants to hire people over 40! Now you may think that they get help from the government….but they don’t. The wages they make at these ‘posh’ jobs don’t even start to pay for their upkeep (medications, car insurance, health insurance not to mention keeping the household going.) Maybe the minimum wage should be reformed to state that there isn’t any minimum wage for teens! When teens refuse to work for less then these people who are simply trying to survive can pick up another 2 or 3 of these jobs to try to make ends meet. (Yes…a wee bit of sarcasm there!)
The country as a whole cannot depend on companies to pay a decent wage. All they are looking at is the ‘bottom line.’ If they could get people to work for a penny a day, they would. A mandated minimum wage is the only thing that keeps some families afloat. (Barely I might add but the alternative is even more dismal!)
I agree there has to be a better way but so far no one has fixed what ails the whole system. Taking Welfare away was the only answer politicians could come up with….their cure for what ails low income families. But what it really did was put more and more people in minimum wage jobs. (Anything that is below $6.00 I consider minimum wage. Feds only require $5.45 right?)
So until someone comes up with a viable….a real working model……solution to get these families in better paying jobs, minimum wage should remain.
Have you been to a McDonald’s lately? The teenage students have long ago been replaced by middle-aged poor immigrants.
I’m as Ayn-Rand-capitalist as they come, but I support the minimum living wage. I want to live in a society where entrepreneurs like myself can pay employees more and more by increasing their productivity. I don’t want a society where “businesses” rely on lowering wages to produce a temporary profit. Removing the minimum wage would start a race to the bottom.
I have to agree, my local Taco Bell has about three teenagers in it. The rest of middle-aged folk who look about as happy to be working there as I would look if I’d just eaten at Taco Bell.
Here in Thailand they have minimum wage rules, but not many companies adhere to them. A few of my students work at companies like 7-11 etc. and they only earn 20 Baht an hour (Roughly 60 US cents)
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To those who think John is wrong.
John’s understanding of economics, money and the marketplace is the KEY to why is he so successful.
He has just demonstrated a wonderful understanding of marketplace economics.
If you disagree with him chances are you would disagree with him on most other economics issues as well.
John’s approach to money is why he is successful today. I would advise you be careful not to dismiss his mindset so flippantly.
While I was arguing against him in his last thread, it was on a social basis and certainly wasn’t flippant.
If it is true that almost all minimum wage workers are teenagers generating supplemental income for themselves, then this all makes a lots of sense. I don’t have any stats on that kind of thing. I’d certainly be interested in seeing some.
I think this doesn’t apply. Yes, John is successful. But you can’t just dismiss all of the discussion for that reason alone. Some people grew up poor, some middle-class, and others well off, which is why the topic created so much controversy.
No offense, but agreeing with somebody solely because they’ve had past (and still present) success is pretty foolish.
This goes for any field, not just economics.
John, you make one mass generalisation, I think you are way off the mark. You should watch a documentary called “The American Ruling Class”
Just cause you dont see the poverty and hardship, doesnt mean it doesnt exist.
http://www.youtube.com/watch?v=gDgFiW2xtf0&eurl=
It may not be apparent in Canada or Australia for that matter, but whilst there is a lot of wealth in America, there are a lot of people doing it really tough. A minimum wage goes some small way from preventing them from being ruthlessly exploited.
John you are right on the money as usual. Marc and Ian are clueless on the real effects of minimum wage laws. The $1 menu at McDonald’s will be the $1.50 menu then the $2 menu in no time.
I once applied for a job at a radio station here in Oklahoma. I told them I would work for free. (Yes I said free!) I wanted to get experience in the radio industry. They told me they could not hire me and pay me nothing because of minimum wage laws and they could not afford to hire me at their company at that time. I was told by the program director he would hire me in a heartbeat (as I was the only person that had ever asked to be paid nothing.)
Minimum wage laws kept me from getting a job that I would have gladly done for free. I’m still hoping to get hired on when a paid position opens up, but I could have been working in the radio industry and had a year of experience under my belt by now if not for government interference.
There are tonnes of community run non profit radio stations where you could have gotten free non paid work experience. How did all of the other people get paid work at the radio station, yep, based on their merit, hey if you cant get a job based on merit and want to work for free, dont blame the system. Had the radio station hired you for free, all the talented and qualified individuals who had worked and studied hard would have had their chance ruined thanks to you. What if you eventually got a paid job at the radio station and some other people come along and offer to work for free, and they decide to terminate your employment and have people do your job for free or next to nothing?
I live in a country where there are minimum wage laws, where there is free medical care for everyone, it is a wonderful country, yes for those who consider greed to be good, i can understand how one would consider having a social conscience as being clueless.
John, this is a perfect example of the government doing something that actually has no positive impact on the very thing they claim to ‘do something’ about. It happens all the time.
I’m really glad you chose to focus on this topic once again!
I like these posts too. Perhaps some more economics related posts on this blog would be a good idea
I guess I’ll take the opposite position — John’s opinions are dangerous because so many people seem to look up to him.
I would prefer if he kept talking about his online business ventures (as he is very knowledgeable in this area) as opposed to discussing economic issues of which he doesn’t have a full understandings of.
Are you kidding?
John’s opinion is as valid as anyone else’s.
You’d rather listen to a bunch of supposed experts babble on about the subject?
‘Regular’ people have the ability to understand and make choices for themselves.
It doesn’t always require any special knowledge to know what is good for you or someone you care about.
Hmmm… I was living on minimum wage or just slightly above it until after I was out of college.
And Noooo… I was not living with the folks. I needed to work two jobs to pay the rent while going to school full time.
Sometimes I would go three days without sleeping. I remember hallucinating from time to time because I went so long without sleep. (I thought the wall was falling on me or I would reach for something that wasn’t there or I would see things like patterns moving on the wall, etc)
Time was sooo short… I usually only had short periods of time, like an hour or two between school and the jobs. I could sometimes only do one of three things with my free hour… I could either eat, sleep or bathe. (Sometimes I went several days without bathing - Yikes!)
On Fridays, I would work a tipple shift so I could have the next day off. I would work after school until 9:00 at night, go to my other job and work from 10:00 at night until 8:00 in the morning and then back to the other job at 8:30 until 5:00. (If you include school, it was 28 Hours)
I did that for about three years. Looking back, I have no idea how I was able to maintain that kind of work schedule for so long.
In my opinion, if you raise the minimum wage, all other products will go up in price making it hard for everyone to buy those products. Why? Increase in minimum wage is increase in cost of production. Therefore, since most companies are here to make money (profit), they raise their prices.
As a result, everyone stays poor as always.
Money doesn’t make you rich. Money has the power to make you rich and poor if you mis manage it.
Http://csgonsilou.blogspot.com
I said it before and I’ll say it again:
“Minimum wage has never been intended to be a living wage.”
Stop confusing the two! If you are older than 25 and working at minimum wage than there is something wrong with YOU!
Why are you still working a shit job? Those jobs are for teenagers not heads of households. You must lack the ambition and the drive to succeed in life.
In some ways my work experience is like Johns except that I stuck in longer than four hours!
My first job was going door-to-door and hanging flyers for Dominoes Pizza. My second job was picking up golf balls on a driving range. Both of those were minimum wage jobs.
In High School I worked at a discount store and was told I could jump up to management as soon as I graduated, I chose not too. Instead I went to work for a big print shop in South Boston. I stayed there for a year and then joined the army. After leaving the army I took a job with a telco, where I still am today.
My skills and experience got me my current job and it pays far more than minimum wage. No one handed me this job, I earned it.
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I do think John is right, having come from a poorer family myself and utilizing things that are made available to better myself like low interest federally subsidized student loans, local state grants, etc. Um hello, get that education, work part time at an easy job like McD’s or telemarketing or something and go to college. The minimum wage does have it’s affect on the poorer people in this nation, the ones that didn’t get an education, finish high school or for whatever reason are waitresses and cashiers at 53.
That’s not the majority of minimum wage earners. They are indeed teenagers and young adults. This country offers more than enough assistance to all of its’ poorer citizens in order to better themselves, you DO have to work for it, but that’s the American Way. Your success in life really is up to you and you alone.
Get a clue please. When my high paying highly technical job went offshore because it could be done at a cost of less than U.S. minimum wage that proved to me in hard cold reality, that education is no more important than a strong back.
If you are a lawyer, a doctor, an engineer, an architect, a programmer, whatever. You’re job can be sent offshore for less than minimum wage.
Why don’t you wake up from your 1950’s era dream and smell the global coffee.
Luckily for Americans, they are unable to offshore the Wal-Mart greeter position. Seems like minimum wage is all we’ll have left.
I support paying a minimum wage.. i came from a poor family, and even worse, both my parents were uneducated..
the misery of going through life then, is something that you would not know..
paying a minimum wage will defiantely help the poor , and will guarantee protection for wage earners..
yours truly,
http://whygossip.blogspot.com
p/s- i am still studying, and internet is my only source of income.. but i belive the goings will get better one day
It has shown that in states where the state took initiative to raise minimum wage over the federal minimum wage that their economies have gotten stronger.
Another great post, John. Beyond the simple political pandering and bad economics on which the MW is based, there are ripple effects of driving the MW up. Some regulations and laws are based on multiples of the MW, so the negative effects are felt by businesses at various levels, not just near the bottom wages.
-bill / bweaver.net
What I’d like to know is, just who exactly says that most folks who make minimum wage aren’t poor? Because I sure as hell was poor when I made minimum wage, and I wasn’t a teenager living at home either. I was a reasonably educated adult in a town that had no use for educated people, and suffering from post-traumatic stress because of a domestic abuse situation that I’d escaped (and it was a family member, not a spouse, not someone I had a choice about being acquainted with).
I really think that before you can make any sort of informed statement about minimum wage, you have to try living on it. REALLY living on it. No car, accepting handouts from family, because if you didn’t you wouldn’t eat every day. Freezing in a basement suite underneath people that don’t turn the heat on unless it’s below 35 outside (which happens in Alberta occasionally) because they’re also poor and trying to save money. All of this because you were temporarily unfortunate, and in my case born into the wrong family.
Yes I made it out, under my own power, and I did it through sheer determination, and no, a couple extra dollars a month wouldn’t have fixed everything. What it would have done is given me a tiny bit of much needed breathing space. After 2 years at the job I’d gotten one single 50 cent raise, because they weren’t required to pay me more than that. And my boss had to really, really push the owners to get me that raise too. I couldn’t leave, because there really wasn’t anything else in that small town that would have paid me any more.
You’re dreaming if you think that employers will pay decent wages in order to make it easier to find employees willing to work for them, without being legally required to do so. If they can pay less they will, because there’s always someone desperate enough to work 2 or 3 jobs for low wages, and for more reasons than I think you can possibly think of, because all your limited imaginations can come up with is “there must be something wrong with you”.
I’m appalled at the ignorance I’m seeing here. I used to think Vancouver was a nice place to live where one was less likely to be judged (than Alberta where I grew up), but it looks like it’s acutally a place where they only accept you if you’re rich. If you’re not, then you’re defective somehow.
Shame on you all. You’re emblematic of all the things that have changed for the worse in this Province. You make the rednecks in Alberta that I grew up with look enlightened and compassionate and liberal by comparison. Not a single one of you has been at the mercy of the system, and I pray you never will be, because it’s truly miserable.
News Flash: Having money does not make you awesome. Therefore, not having money does not make you not-awesome. Get over it.
I think that many of the things stated in this article are meaningless, because the minimum wage should be aimed at those who really need it, not the people who live at home with their parents. The fact that they benefit from it is not evidence to suggest that the minimum wage is not needed. It’s not ideal, it may even reduce efficiency, but again, none of that means minimum earning standards are not required.
Most people are not victims of the floods over here in the UK, but who is going to argue that we shouldn’t spend money on flood defences? The economy may well be stronger spending that money elsewhere, because “most” people don’t benefit from the flood defences, but it’s still certainly required.
I’m all for a free market economy, but I don’t believe it is possible to have an enconomy that is 100% driven by market forces, if you want to make sure that those right at the bottom of the chain aren’t spat out by the system.
It’s also very difficult for those who aren’t directly concerned by the existence of the minimum wage to comment (including myself), since it is all too easy to take the view that it should be simple for everyone to be make their own future.
Minimum wage is really an illusion, life what you make of it, period.