The Fair Wage and Community Revitalization Act (reintroduced)

[Gabu]

Nay, for much the same reasons as before.

I'll give the senators, say, two hours to make any last minute change of decisions before declaring the second amendment to have failed.

[12th Doctor]

Nay, for much the same reasons as before.

I'll give the senators, say, two hours to make any last minute change of decisions before declaring the second amendment to have failed.

Gabu, I proposed my own ammendment eight posts back.

[Jake]

I would like to propose an Ammendment.

Clause 1
The federal minimum wage of Atlasia shall be increased by $0.50 per hour over the next two years, until it reaches the level of $6.15/hour.

I can get behind this.  A wage hike, but one that's within reason.

[Gabu]

Nay, for much the same reasons as before.

I'll give the senators, say, two hours to make any last minute change of decisions before declaring the second amendment to have failed.

Gabu, I proposed my own ammendment eight posts back.

I know; I was waiting for voting on the current amendment to cease before continuing with yours.

With no senators opting to change their votes, I hereby declare that, with six opposed to one in favor (two if you count Nym's vote, but it doesn't matter), Sen. MAS117's amendment has hereby failed.

I now open voting on the following amendment introduced by Sen. Supersoulty:

Clause 1 shall be replaced by the following text:

"The federal minimum wage of Atlasia shall be increased by $0.50 per hour over the next two years, until it reaches the level of $6.15/hour."

[Colin]

Nay

[Sam Spade]

Nay

[12th Doctor]

I understand that $1 an hour per employee can add up to a lot of money for companies, but it won't be so much that it will cause a raise in general prices.  In the end, it will be beneficial for the economy and for the working poor.

[Colin]

I understand that $1 an hour per employee can add up to a lot of money for companies, but it won't be so much that it will cause a raise in general prices.  In the end, it will be beneficial for the economy and for the working poor.

Senator could you go into more details on how a minimum wage increase like this would be beneficial to the economy?

[12th Doctor]

I understand that $1 an hour per employee can add up to a lot of money for companies, but it won't be so much that it will cause a raise in general prices.  In the end, it will be beneficial for the economy and for the working poor.

Senator could you go into more details on how a minimum wage increase like this would be beneficial to the economy?

It's quite easy, acctually...

Every person gets an extra dollar, in their paycheck, for every hour they work.  After a standard work day, they will have eight extra dollars.  At the end of the standard work week, they will have $40 extra.  They will then spend this money on goods and services.  Perhapes they will be able to buy more gas.  The act of buying the gas puts money in the economy.  They will then be able to drive thier car to work.  This will put less strain on public transportation.  We will be able to cut funding for that and put the money else where, or let people keep it in a tax cut.

I can think of several more senarios where a similar result will occure.

$1 is a lot of money for small businesses, but not enough that anyone is going to go under.  In the end, the tax cut will acctually put more money into the coffers of small businessmen anyway.

I would like to see a measure similar to the one being pushed through the US SEnate at the moment which saves businesses money, while raising the minimum wage, but there is time for that later.

[WMS]

Things move fast around here.

Well, for the record:

ABSTAIN on MAS117's amendment.

And AYE on Supersoulty's amendment.

I think this is a reasonable proposal - it has been TEN years since the last minimum wage increase.

I am also quite open to the ideas Hughento proposed a bit back in which tax breaks could be given to small businesses as part of the tax reforms he has in mind - similar to my tax credits, but more comprehensive. A compromise on this issue is essential, folks!

[Gabu]

Supersoulty's amount is out of the "iffy" zone and into the "that sounds good" zone for me, so

Aye.

on that amendment.

[MAS117]

It should be more then $6.15 but Aye on Sen. Soult's amendment.

[Sam Spade]

I'm willing to compromise on things that won't turn the economy downward or hurt the businesses of this country and force them to lay off workers or downsize their worker pools or become more dependent on an illegal labor force.

By the way, this amendment will enact the largest minimum wage increase in the history of Atlasia.

http://www.dol.gov/esa/minwage/chart.htm

[WMS]

I'm willing to compromise on things that won't turn the economy downward or hurt the businesses of this country and force them to lay off workers or downsize their worker pools or become more dependent on an illegal labor force.

By the way, this amendment will enact the largest minimum wage increase in the history of Atlasia.

http://www.dol.gov/esa/minwage/chart.htm

Is that adjusted for inflation? And once a decade is hardly savaging the small businesses of Atlasia. And they're going to get a tax cut for it anyway.

The problem here is that many of the arguments used against the minimum wage de facto are used to say that it should never, ever, be raised, no matter how much inflation erodes the purchasing power of these minimum wage employees. For that matter, those arguments de facto are used to say that we shouldn't have a minimum wage at all, and I can't back that position - I've worked enough of those jobs to know that some places would pay 10 cents an hour if they could get away with it.

Clearly, since there have been mimimum wage increases in the past that didn't cause economic havoc - "Oct 1, 1996 - $4.75 for all covered, nonexempt workers" and "Sep 1, 1997 - $5.15 for all covered, nonexempt workers" did not cause an economic meltdown. If the increases are not too much and not too rapid, businesses can deal with them.

[Sam Spade]

The rate increases in 1996 and 1997 did not cause major economic turndown because the economy was in a period of growth than began roughly at the end of 1994, indeed it was probably the largest expansion in a long, long time (at least since the mid-80s, possibly since the mid-60s), buoyed by cuts in spending, cuts in capital gains tax rates, and good corporate reorganization during the early 1990s.

Whenever you're in a great period of expansion like we were then, these type of increases can be easily absorbed and should be encouraged.  I would have supported the increases at that point.  I presently do not think we're in that type of expansion.  If others would think that we are on the brink of that type of expansion now, then that's their opinion and I respect that.

I could go on the other hand and argue that the fact that the minimum wage was not increased did not exactly mean disaster for lower-income workers during the 1980s.  I would argue that raising it certainly did not help during the recessions of 1982-1983 and 1991-1992.

[WMS]

The rate increases in 1996 and 1997 did not cause major economic turndown because the economy was in a period of growth than began roughly at the end of 1994, indeed it was probably the largest expansion in a long, long time (at least since the mid-80s, possibly since the mid-60s), buoyed by cuts in spending, cuts in capital gains tax rates, and good corporate reorganization during the early 1990s.

Whenever you're in a great period of expansion like we were then, these type of increases can be easily absorbed and should be encouraged.  I would have supported the increases at that point.  I presently do not think we're in that type of expansion.  If others would think that we are on the brink of that type of expansion now, then that's their opinion and I respect that.

I could go on the other hand and argue that the fact that the minimum wage was not increased did not exactly mean disaster for lower-income workers during the 1980s.  I would argue that raising it certainly did not help during the recessions of 1982-1983 and 1991-1992.

Stratfor on the U.S. economy: "The dominant feature of the global economy is -- and has been for some time -- continued strong growth in the United States. The United States closed out the fourth quarter with growth at 3.8 percent, racking up a 4.4 percent overall growth rate for all of 2004.

Such growth is not just "adequate" or "rapid" -- it is probably unsustainable. During the heady days of the 1990s boom, average growth was "only" 3.7 percent. What is particularly remarkable about the current American growth is not simply its pace, but its staying power.

According to the U.S. Federal Reserve, the final word in U.S. monetary policy and de facto manager of the U.S. economy, the economy continues to perform superbly. Only the Cleveland district -- consisting of Ohio, West Virginia, western Pennsylvania and eastern Kentucky, where a mix of heavy manufacturing and rising input costs have combined to create the entire expansion's sole laggard -- is not reporting strong across-the-board growth. And even there, overall reports are upbeat, just not red hot.

Across the country, consumer, manufacturing and business spending is not just rising, but accelerating. The agricultural sector is strong, and the shipping industry is humming along with both imports and exports.

...If anything, Stratfor fears the United States is growing too fast. Apart from bubbles, an economy as large and diverse as the United States rarely grows so uniformly and so quickly across all regions and sectors.

But this is not a bubble. Among other things, bubbles occur when capital is being allocated irrationally -- such as during the tail end of the dot.com boom, when everyone and his grandmother seemed to be considering investing in gardenwidgets.com, or some other improbable investment. That does not seem to be the case now.

Moreover, bubbles tend to occur when inflation is high, since there is irrational demand for a wide array of materials and base products. The core Consumer Price Index -- the United States' most commonly cited measure of inflation -- for January was a whopping zero..."

They also have a graph showing that GDP growth has been positive since the 4th Quarter of 2001.

The rest of the world would kill for an economy as strong as ours...
[OOC: we are using the U.S. economy, right? If Atlasia's economy has already diverged via a previous GM, then the situation may be different.]

[Gabu]

By the way, this amendment will enact the largest minimum wage increase in the history of Atlasia.

http://www.dol.gov/esa/minwage/chart.htm

Maybe, but it's not exactly that huge.  Look at the following increases:

Jan 1, 1981 - $3.35 for all covered, nonexempt workers
Apr 1, 1990 - $3.80 for all covered, nonexempt workers
Apr 1, 1991 - $4.25 for all covered, nonexempt workers

In two years the minimum wage was raised by 90 cents, and I don't recall there being a gigantic economic downturn as a result.

In 1996 and 1997 an increase of equal magnitude was put into place, as well.

I personally think that those who argue for a total abolition of the minimum wage aren't examining the situation closely enough.  I'll show you what I mean.

Labor can be considered as a market in which the suppliers are those who want to work and the consumers are those who want to hire the suppliers.  Then we can draw the supply and demand curves like this:



where P is price, Q is quantity, and P_M and Q_M are the price and quantity at market equilibrium.

Now, a minimum wage can be seen as a price floor of sorts, because employers must pay a certain amount for laborers' skills, so a minimum wage looks like this:



where P_floor is the minimum wage, Q_S is the quantity supplied, and Q_D is the quantity demanded.  Q_D < Q_S, so we have a surplus of labor: in other words, unemployment.  It's at this point that most people stop and conclude that a minimum wage causes unemployment and is therefore undesirable.

However, consider the market in which the employers run their business.  It is likely that those who would benefit from the minimum wage increase are in this market, so it's certainly possible that the average income of consumers in this market could increase, resulting in an increase in demand:



Because total revenue is equal to P times Q, and both P and Q have gone up, total revenue for the company has gone up as a result of the minimum wage in this example, and profit has likely gone up accordingly (although this depends on other factors).  Because a company can now afford to expand and will consequently want to hire more workers, there is a distinct possibility that the following will happen:



In other words, both the consumer and the producer did, in fact, benefit from the minimum wage in this example.  Employment was increased, wages were increased, and the company is making more money.  Because the labor market is a special one - it dictates, in part, the demand in every other market - market failure, the inability of the free market to achieve the most optimal outcome, can occur in the labor market.  If the increase in income dwarfs the decrease due to unemployment, and if the increase in profit enables the company to overcome the unemployment created, then the minimum wage has actually solved market failure.

Of course, reckless increase of the minimum wage is not advisable.  If minimum wage is too high, the unemployment created will dwarf everything else and the minimum wage will have solved nothing.  However, I don't feel that $6.15/hour is an unreasonable amount.  If it turns out to be as such, we can always scale it back.

[King]

Apr 1, 1990 - $3.80 for all covered, nonexempt workers
Apr 1, 1991 - $4.25 for all covered, nonexempt workers

In two years the minimum wage was raised by 90 cents, and I don't recall there being a gigantic economic downturn as a result.

No gigantic economic downturn? 

How could you forget "It's the economy, stupid!"?

[Sam Spade]

The 1991-1992 recession was the last major recession in the US economy (the period after Sept. 11 was almost a recession, but never became one, at least in terms of GDP).

As I remember very well, the recession cost George H. W. Bush the Presidency and allowed Bill Clinton into office.

I am not saying that this minimum wage increase caused it, not at all.  The 1990 budget, which alienated much of Bush's conservative vote, also raised taxes (remember No New Taxes) and increased spending strongly.

I happen to think that all of these factors, plus some of the downsizing that would have naturally occurred anyway (in order to lead to better American companies) lead to this recession.

The 1982-1983 recession was much worse than the 1991-1992 one.  Of course, most here, including myself don't remember it.

In your graphs, I understand what you are talking about in the terms of its mechanics; I just happen to disagree with its model, mainly because the income that a worker takes home through a minimum wage increase may or may not directly affect the employer.

Most mandatory pay increases or wage (inflation) hikes, as this minimum wage increase does, usually cause the employer to have to shift his costs one way or the other.

His basic material cost is fixed, but his labor costs have grown.  The most logical option to paying for these higher labor costs is to raise the prices of his goods.  Not only does this lead to an inflationary jump in prices for his workers (should they purchase with their newfound monies something of his), but it also leads to an inflationary rise in prices for all of us.

I am willing to predict where we will see this raise most significantly affected in terms of price, will be in base restaurant prices, construction prices, many consumer good prices, et al.  Places where minimum wage workers tend to be a larger part of the workforce.

I will say this, this wage increase is clearly the least odious of the ones that have been proposed before. 

[WMS]

Well, at least this bill has had a good debate over it, even if no one convinced anyone else.

I lean toward's Gabu's viewpoint, as I don't see things in such zero-sum terms economically...

[12th Doctor]

Hmmm... guess I haven't acctually voted on my own amendment yet.


Aye

[John Dibble]

Gabu - your argument doesn't take into account one very important factor. That is the cost of production. When the minimum wage increases, the cost of production for firms affected increases - meaning that they may have to fire workers or raise prices. Firing workers often means they can produce less, meaning supply decreases, so they may end up raising prices anyways. Any price increase will be detrimental to those whose wage has not been increased by the minimum wage increase - their income remains the same, but their purchasing power has decreased.

[Reaganfan]

NAY

[Sam Spade]

WMS, these are the economic figures that I've been using in my arguments.

They would seem to be more accurate for Atlasia than the mythical United States. 

https://uselectionatlas.org/FORUM/index.php?topic=17967.msg386975#msg386975

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[Nym90]

Aye