Author
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Topic: Raise the minimum wage, then index it to inflation
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Michelle
Moderator
Babbler # 560
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posted 24 August 2007 07:57 AM
First of all, the minimum wage should be $10. No doubt about that.But after it's raised to the current liveable level right now, not today's liveable level three years from now, they need to index it to inflation. We should index the minimum wage quote: An estimated 22 per cent of Canada's work force belong to the "working poor." If they were all in one place, they would populate a city the size of Toronto. So they're an impressive segment of the economy, both as workers and consumers. And it could make us ask: In a country where so many CEOs and professional athletes make more in a year than most of us do in a lifetime, why are both federal and provincial leaders politically paralyzed when it comes to liberating the working poor?The reasons they give are as out of date now as they were when they were used to oppose the minimum wage act of 1937. One is the spectre of unemployment because raising the minimum, we're warned, will eliminate jobs. That might be enough to scare us all unless we ask what employers will do without all the people who do the drudgery work for them. Is the economy going to carry on if 22 per cent of the workers are just out on the street? There's no real common sense in another form of the same argument. We're told that all the mom-and-pop enterprises will be hit if the minimum goes up and they have to lay off the people they can barely afford to pay now. But that leaves out the massive number working at the minimum rate for national chains and big companies like the one that hired me for 34 cents an hour when, at age 16, I was not protected by the minimum wage act. It also ignores how most employers will do now what they've been doing any time the minimum has been raised in the past 70 years. That is, add the increase into their prices. Why not? Why should the rest of us make the working poor pay for our bargains? Let's face it. Those vacuous reasons are nothing more than rationalizations for continuing injustice in a human-rights society.
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001
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N.Beltov
rabble-rouser
Babbler # 4140
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posted 24 August 2007 08:45 AM
quote: Michelle: And as they say, what will happen is what always happens when the minimum wage goes up: prices will go up a bit, that's all.
In a back issue of This Magazine Bruce Gillespie has a good piece dealing with this issue. Gillespie quotes U of M Prof. Norman Cameron in pointing out that the price increases are not necessarily across the board. quote: But Norman Cameron, an economics professor at the University of Manitoba, cautions against assuming those increases are across the board. “This only affects parts of the economy that employ minimum-wage workers, who are 10 percent of the labour force at most,” he says. “It’s not going to affect the health, education, manufacturing, transport or wholesale sectors.”So, while the canny consumer will notice price jumps at service sector businesses—such as coffee shops, department stores and fast-food restaurants—those increases won’t have a dramatic effect on the cost of living as a whole. At most, it might translate into an increase of one-half of one per cent, Cameron says. And because increases to the minimum wage usually “trickle up” as employers try to keep their pay rates proportional, other low-income workers often aren’t burdened by an increased cost of living.
Furthermore, in very competitive sectors, higher costs are not automatically passed on: quote: It also isn’t a given that businesses will automatically push their higher labour costs on to consumers, especially in the highly competitive service sector, says Charles Beach, an economics professor at Queen’s University and editor of Canadian Public Policy. “It depends partly on the degree of competition,” he says. “If you’re close to going out of business, then you really can’t push your prices much higher.” As well, he says most businesses only pass on about two-thirds of their labour costs to consumers.
However, the big problem with current minimum wages levels is that the purchasing power has been eroded by inflation. For example, quote: The minimum wage was as high as $9.97 in 1976 (in 2007 dollars, based on the Toronto area consumer price index).
And I can vouch for that. I made less than $2000 over that summer and was able to pay for my college schooling, run my car, live off campus, pay for food, and so on. I made $3.68/hr (minimum wage) that summer. The claim is also sometimes make that increasing the minimum wage is a job "killer". This is contradicted by the evidence, however. quote: Studies of actual experience with minimum wage changes find employment impacts are either nonexistent or negligible. Why?˘ The impact of minimum wages is so small relative to that of other changes in the economy that no impact is evident comparing before-after employment levels. ˘ Most minimum wage employment is in industries that serve local markets. As a result, individual employers will not be at a cost disadvantage relative to competitors when minimum wages increase. ˘ Studies designed to isolate the impact of minimum wage changes from other changes (state-tostate comparisons in the United States) find no difference in employment patterns between states in which minimum wages increased and states in which minimum wages did not increase.
CCPA: Minimum Wage Fact Sheet This Magazine piece by Bruce Gillespie
From: Vancouver Island | Registered: May 2003
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Stephen Gordon
rabble-rouser
Babbler # 4600
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posted 24 August 2007 09:36 AM
quote: An estimated 22 per cent of Canada's work force belong to the "working poor."
This may be true, but it may lead people to vastly overestimate the effectiveness of the minimum wage as an instrument for reducing poverty. Increasing the minimum wage has no measurable effect on poverty quote: [E]ven if the effects on employment are small, that doesn't mean it'll do much to reduce poverty. It's instructive to play around with a few numbers here. In a study using Canadian data from 1993, Nicole Fortin and Thomas Lemieux find that 26.4% of minimum wage workers were from households in the bottom two income deciles (there's no official poverty line in Canada, so I'm using that). That's an over-representation, so an increase in the minimum wage that doesn't affect employment will have a progressive redistributional effect. That's a good thing, but the effect will be very small. If we suppose that this ratio held in 2005, then we can use the fact that 4.3% of workers earned minimum wage and that the employment rate was 62.7% to find that the proportion of people in the bottom two deciles who are minimum wage workers is about 4%. The vast majority of those in poverty would not benefit from an increase in the minimum wage.
Fortin and Lemieux did find a 'spillover' effect on people who are earning just over minimum wage, but it was about as significant as the employment losses. The two effects - spillover and employment loss - are small, and essentially cancel each other out.
From: . | Registered: Oct 2003
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jrootham
rabble-rouser
Babbler # 838
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posted 24 August 2007 09:46 AM
quote: Originally posted by Stephen Gordon:
Fortin and Lemieux did find a 'spillover' effect on people who are earning just over minimum wage, but it was about as significant as the employment losses. The two effects - spillover and employment loss - are small, and essentially cancel each other out.
Would I then be logically justified in assuming that the net effect of raising minimum wages is to raise the incomes of those earning minimum wages by the amount of the increase? So we are looking at a small positive benefit for society? Given the relative ease of increasing the minimum wage (not that it's easy, but the alternatives are really hard) that sounds like a solid justification for doing it.
From: Toronto | Registered: Jun 2001
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N.Beltov
rabble-rouser
Babbler # 4140
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posted 24 August 2007 09:49 AM
Prof. Gordon is in the habit of regurgitating the argument re minimum wages and poverty so it's probably a good idea to regurgitate one of the better worded replies... quote: unionist: Minimum wage legislation is not about providing minimum needs to household units. It's about putting a lower limit on how far employers can exploit working people. Providing for people's needs requires a whole lot more than wages in a progressive society. It requires public delivery at no (or nominal) charge of all kinds of necessary goods and services, such as education, health care, child care, and housing, plus readily available job and skills training, plus full employment policies, as well as generous programs for those who are unable to work or who have finished working.
More social programs to transfer wealth from the rich to the less well off - that's what's needed to attack poverty. But we live in a society whose dominant ideology supports the opposite. [ 24 August 2007: Message edited by: N.Beltov ]
From: Vancouver Island | Registered: May 2003
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Pogo
rabble-rouser
Babbler # 2999
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posted 24 August 2007 10:17 AM
quote: Originally posted by Free_Radical: I have a question about tying wages to inflation . . .Since increasing wages are one of the factors that drive inflation, wouldn't this carry the danger (though I'd imagine it would be very slight) of a cycle of ever-increasing inflation? Inflation increases, so wages go up, Wages go up and inflation increases, Inflation increases . . . &c.
Well old age pensions are tied to inflation and the world hasn't come to an end.
From: Richmond BC | Registered: Aug 2002
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Stephen Gordon
rabble-rouser
Babbler # 4600
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posted 24 August 2007 10:31 AM
quote: Originally posted by jrootham: Would I then be logically justified in assuming that the net effect of raising minimum wages is to raise the incomes of those earning minimum wages by the amount of the increase?So we are looking at a small positive benefit for society? Given the relative ease of increasing the minimum wage (not that it's easy, but the alternatives are really hard) that sounds like a solid justification for doing it.
Add a couple of 'very's before small, and you pretty much have it. It's essentially meaningless. And better alternatives are not hard: the US and Quebec already have an earned income tax credit. Why not focus energies on that instead?
From: . | Registered: Oct 2003
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N.Beltov
rabble-rouser
Babbler # 4140
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posted 24 August 2007 10:59 AM
The EITC is no more a single solution to poverty than increasing the minimum wage is. Stop trying to mislead people. The spending patterns of poor people that have to wait for a tax credit at the end of the year (if they are literate and able to actually fill out a tax return) is very different from spending patterns based on getting the money in your hands with a regular pay check. This can have a great effect on the actual benefit of any tax credit. quote: The federal Earned Income Tax Credit (EITC) combined with the minimum wage helps to reduce poverty, but the EITC is not a replacement for a minimum wage increase. The Earned Income Tax Credit is a popular federal anti-poverty program and an important piece of the ongoing strategy to make work pay. One reason for the EITC's popularity is that it is based on family income and is therefore well-targeted to poor families. In addition, it encourages work because the wage subsidy increases with earnings until it reaches the maximum credit level. The EITC and minimum wage work in tandem to raise a family's income. The effectiveness of the EITC in raising the incomes of the working poor above the poverty line therefore depends, in part, on regular increases in the minimum wage. This is because the EITC and the poverty threshold both rise each year to reflect increases in the cost of living, but the federal minimum wage does not. The EITC alone is not enough to keep a family above the poverty line, and a minimum wage worker gets further away from the poverty line each year the minimum wage is not increased.If the minimum wage is raised to $7.25 by 2009, these two policies would work in tandem to raise the income of a family with one full-time minimum wage worker above the 2007 poverty line of $17,170 for a family of three. A proposal that sets annual increases to the federal minimum wage to adjust for changes in the cost of living would ensure that the combination of full-time work and the EITC would always keep this family above the poverty line.
Minimum Wage FAQ Tax Credits or Minimum Wages? We need Both. There are, according to the author of the above article, two groups that support tax credits over an increase of the minimum wage. quote: Many business owners and their lobbyists prefer the EITC because they’d rather not have a higher minimum wage crimp their operating costs and profit margins. Their message to Congress: If you want to help low-wage workers, use the tax code and leave us out of it.
The other group is as follows: quote: Policy analysts like the tax credit’s more precise targeting of beneficiaries and lack of market interference. The EITC is based on family income, not wage levels, so low-wage workers in higher-income families don’t qualify for it. This is a legitimate preference, but it’s no reason to discount the importance of setting a national wage floor.The minimum wage is more than an anti-poverty program. It’s Congress’ declaration that market forces won’t be allowed to drive wages down to a pittance, no matter what the low-wage earner’s income. To judge a minimum wage solely by how effectively it targets recipients is to overlook a key reason for the policy. And, for the record, most of the gains from the wage increase do, in fact, go to working families in the bottom 40 percent of the income scale.
From: Vancouver Island | Registered: May 2003
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Stephen Gordon
rabble-rouser
Babbler # 4600
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posted 24 August 2007 01:49 PM
quote: Policy analysts like the tax credit’s more precise targeting of beneficiaries and lack of market interference. The EITC is based on family income, not wage levels, so low-wage workers in higher-income families don’t qualify for it. This is a legitimate preference, but it’s no reason to discount the importance of setting a national wage floor.
I rather think it is. Something like 70% of the people who would benefit from a minimum wage increase are not in poverty, and something like 95% of those who are in poverty would not benefit. quote:
The minimum wage is more than an anti-poverty program. It’s Congress’ declaration that market forces won’t be allowed to drive wages down to a pittance, no matter what the low-wage earner’s income.
So what? No-one is giving points for style here. [ 24 August 2007: Message edited by: Stephen Gordon ]
From: . | Registered: Oct 2003
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Fidel
rabble-rouser
Babbler # 5594
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posted 24 August 2007 02:53 PM
quote: Originally posted by Gir Draxon:
No, not necessarily, but I would imagine there is still a ripple effect. I make more than minimum wage because my work is worth more than the minimum, so if it went up then I would demand a raise too.
Good luck on that if you're non-union. quote: How will unions take it if their members don't get a raise at least equivalent to the raise in minimum wage?
Collective bargaining come contract nenewal time.
From: Viva La Revolución | Registered: Apr 2004
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bruce_the_vii
rabble-rouser
Babbler # 13710
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posted 24 August 2007 03:36 PM
I call myself a jobs activist and a main thrust of my concern is a better minimum wage. In Toronto employers have to pay about $10 an hour to get staff that shows up everyday already. Below that and you get very high turn over. The coffee shops and that are almost exclusively immigrant women and they seem to be more stable. In Calgary tightened labour market has lead to a $11 - $12 minimum wage. This would be possible in many Canadian cities with just-in-time immigration. When there's job losses from an increase in minimum wage the customers move down the street and create other jobs. However a high minimum wage would slow economic growth, which is mostly in small businesses. I've talked to 1000s of people and everyone is concerned about low wages. There's a broad feeling that the 1% or 2% inflation a better minimum wage would entail is fair. I advocate a $12 minimum wage in cities. If mimimum wage was $12 at full employment the actual wage for a person that stayed with a company might go up to $13. A two worker couple that did some over time would earn $57k a year. Economic growth is mostly in small businesses and they payless. Thus this preoccupation with growth by economists is actually backward. Actually a contracting population would get rid of small businesses and produce higher per capita income.
From: Toronto | Registered: Dec 2006
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Michelle
Moderator
Babbler # 560
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posted 24 August 2007 03:45 PM
I keep hearing this bullshit about how minimum wage is okay as it is because many people who make minimum wage are students and dependent on families, etc. (Remember when the same argument used to be made for paying women like shit? In fact, I'm hearing some of that even now, that minimum wage jobs are often "a second income". We know what that's code for.)It makes me bitter as shit, because I lived for four years on minimum wage. And I wasn't a high school teenybopper and I wasn't a "second wage" and I wasn't some kid. I was young, but I was trying to live on it, and it was fucking hard, pretty near impossible. I had to get roommates and move in with my boyfriend to make it work. And I busted my ass for 40-50 hours a week. Don't bloody tell me that because some minimum wage jobs are held by people who "don't need to work" or are a "second income" or are "just teenagers looking for pin money" that this makes it okay to pay people who are doing a full day's work a non-liveable wage. EVERY FUCKING PERSON SHOULD BE ABLE TO LIVE ON THEIR WAGES. Every fucking person. No wife should have to be dependent on her husband financially if she's working full-time. No 18 year-old adult who is working full-time should have to depend on begging from family members in order to live - it's undignified, and unfair. No 14-17 year-old should be exploited by an employer who is paying them dick shit for their hard labour. This argument that somehow people who live with their family or have other wage earners in their household don't deserve more than minimum wage really fucking pisses me off. The reason I had to go back and live with my parents a couple of times during my young slave wage years is because I was financially desperate. All it takes is one emergency and you're screwed. And not everyone has a hubby or mommy and daddy to take them in when that happens. God this pisses me off. Such a goddamned specious argument.
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001
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Stephen Gordon
rabble-rouser
Babbler # 4600
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posted 24 August 2007 03:54 PM
quote: Originally posted by Michelle: I keep hearing this bullshit about how minimum wage is okay as it is because many people who make minimum wage are students and dependent on families, etc. (Remember when the same argument used to be made for paying women like shit? In fact, I'm hearing some of that even now, that minimum wage jobs are often "a second income". We know what that's code for.)It makes me bitter as shit, because I lived for four years on minimum wage. And I wasn't a high school teenybopper and I wasn't a "second wage" and I wasn't some kid. I was young, but I was trying to live on it, and it was fucking hard, pretty near impossible. I had to get roommates and move in with my boyfriend to make it work. And I busted my ass for 40-50 hours a week. Don't bloody tell me that because some minimum wage jobs are held by people who "don't need to work" or are a "second income" or are "just teenagers looking for pin money" that this makes it okay to pay people who are doing a full day's work a non-liveable wage. EVERY FUCKING PERSON SHOULD BE ABLE TO LIVE ON THEIR WAGES. Every fucking person. No wife should have to be dependent on her husband financially if she's working full-time. No 18 year-old adult who is working full-time should have to depend on begging from family members in order to live - it's undignified, and unfair. No 14-17 year-old should be exploited by an employer who is paying them dick shit for their hard labour. This argument that somehow people who live with their family or have other wage earners in their household don't deserve more than minimum wage really fucking pisses me off. The reason I had to go back and live with my parents a couple of times during my young slave wage years is because I was financially desperate. All it takes is one emergency and you're screwed. And not everyone has a hubby or mommy and daddy to take them in when that happens. God this pisses me off. Such a goddamned specious argument.
The point about the EITC is that it's aimed at those who need it. People who are in your former situation would be helped. So would people who earn a decent hourly wage, but aren't able to get enough hours to get by. [ 24 August 2007: Message edited by: Stephen Gordon ]
From: . | Registered: Oct 2003
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N.Beltov
rabble-rouser
Babbler # 4140
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posted 24 August 2007 03:57 PM
You might want to have a look at the .pdf file from the CCPA that outlines an age group breakdown of those on minimum wage. This provides evidence to substantiate your own personal hardship and experience. Minimum Wage Fact Sheet quote:
45% of full-time wage earners aged 15–24 are low-paid.Low-wage employment is prevalent among full-time workers in other age groups as well: ˘ 16.3% in the 25–34 age group ˘ 13.1% in the 35–44 age group ˘ 12.0% in the 45–54 age group ˘ 14.4% in the 55–64 age group
Furthermore, this is not a temporary condition for many people. quote: 47% 47% of workers who were lowpaid in 1996 were still lowpaid in 2001.27% of men and 72% of women who were low-paid in 1996 were still low-paid in 2001.
Anyway, have a look. You'll also see how the data substantiates the claim that women and visible minorities fare much worse than men, etc.
From: Vancouver Island | Registered: May 2003
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jrootham
rabble-rouser
Babbler # 838
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posted 24 August 2007 05:54 PM
quote: Originally posted by Stephen Gordon:
Only if they're lacking in integrity.
Actually, no. Style points are how politicians get elected. Integrity (or at least its appearance*) gets you lots of style points. *The least risky way of getting the appearance is to actually have it.
From: Toronto | Registered: Jun 2001
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CUPE_Reformer
rabble-rouser
Babbler # 7457
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posted 25 August 2007 09:10 PM
Originally posted by munroe quote:
I should add, only the Christian Labour Association would agree to less then minimum wages. They would be very concerned with the employer's profit and lifestyle.
munroe:"Exemptions should be minimized and more workers protected by the Employment Standards Act." Ontario employment standards (Time for Change) [ 25 August 2007: Message edited by: CUPE_Reformer ]
From: Real Solidarity | Registered: Nov 2004
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Fidel
rabble-rouser
Babbler # 5594
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posted 26 August 2007 11:05 AM
quote: Originally posted by bruce_the_vii: I don't see the arguement that 16 year olds on their first job couldn't be paid less. The point isn't that they aren't trying hard rather that they make mistakes, have attitudes and may not be socialized.
But they are paid less. Nobody earns less than teenagers other than maybe the adults I see in the neighborhood delivering newspapers and advertisement flyers on foot. The way I see it is this. If other rich countries can afford to pay higher lower-end wages than here and deliver on EITC for poor families and deliver on political promises to reduce child poverty and fund national daycare programs and have national affordable housing strategies, then what are the bozos in Ottawa doing to earn their pay besides nothing ?. I didn't vote for them, and neither did more than 76 percent of eligible Canadian voters in last year's election vote for Steve Harper or his illegitimate government. As a socialist, I think we have to build a sense of inclusion which has been dismantled over the years by phony majority governments. We need to raise standards for all working Canadians through social pay in the form of: socialized health care, unemployment insurance benefits for the other 60-65 percent of unemployed who were made ineligible in the recent past by Liberal governments with Tory support, higher minimum wages, pensions, and higher welfare rates for Canada's most vulnerable citizens. Global Economic Competitive Growth Index It's simple, we shift to the right politically and become even less competitive than we were. [ 26 August 2007: Message edited by: Fidel ]
From: Viva La Revolución | Registered: Apr 2004
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