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This Is Why Stagnant Working Class Wages Are Unsustainable...


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Raising the minimum wage will not reduce poverty. This is a well proven bad idea. Good rhetoric will convince people to do it, but it will not help.

It is like the misleading statement that the top 1% have more wealth than the bottom 40%. True but misleading. If you have a net worth of $0.01 or more, then you are wealthier than the bottom 40%.

"There are lies, damned lies and then there are statistics."-SC

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a rising tide won't lift all boats, it will only lift the ones that float. Some people will drown in the economy around them. I'd guess that to be around 10% of the population. It's the rest of them that I'm worried about.

The only boats that seem to be lifting right now are the yahts. It's a lot more than 10% of the people who have seen their wages stagnate or decline. I agree, it won't keep everyone upwardly mobile, but it should be a lot more than what it is now.

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"Who do these glutinous lazy POS's think they are eating more than one meal a day?" Ridiculous.

Who said that? Read my posts again. There's a bigger picture you are missing.

On a side note, I'm going to make some points to you that you can either agree or disagree. Nonetheless, they are cause and effect.

#1 Drastically raising minimum wage will not result in people at the bottom having more money. The extra dollars are symbolic of victory for your side, but those dollars will not go as far. McDonalds and Walmart are not going to leave prices the same if it costs them more to deliver the same product. They will not lose profits.

#2 If the price of goods go up, you are hurting the elderly that don't have nearly enough retirement money as it is, and they get 0 benefit from raising minimum wage.

#3 Minimum wage jobs are not meant to support a parent with children. The primary workers for these jobs "should" be High School and college students working to have spare money in their pockets or to support themselves in a studio apartment while getting a degree.

#4 Everybody that works 40 hours per week can afford to eat out at McDonalds.

#5 If you are a middle-aged man working ANY minimum wage job, you never cared enough to do better than that. If your side ever wins the argument and we move towards a more socialized system, I'm lining up for my Welfare and food stamps. Why should anyone work hard for anything if it's just going to be taken and given to somebody else?

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Who said that? Read my posts again. There's a bigger picture you are missing.

On a side note, I'm going to make some points to you that you can either agree or disagree. Nonetheless, they are cause and effect.

#1 Drastically raising minimum wage will not result in people at the bottom having more money. The extra dollars are symbolic of victory for your side, but those dollars will not go as far. McDonalds and Walmart are not going to leave prices the same if it costs them more to deliver the same product. They will not lose profits.

#2 If the price of goods go up, you are hurting the elderly that don't have nearly enough retirement money as it is, and they get 0 benefit from raising minimum wage.

#3 Minimum wage jobs are not meant to support a parent with children. The primary workers for these jobs "should" be High School and college students working to have spare money in their pockets or to support themselves in a studio apartment while getting a degree.

#4 Everybody that works 40 hours per week can afford to eat out at McDonalds.

#5 If you are a middle-aged man working ANY minimum wage job, you never cared enough to do better than that. If your side ever wins the argument and we move towards a more socialized system, I'm lining up for my Welfare and food stamps. Why should anyone work hard for anything if it's just going to be taken and given to somebody else?

Do you have some facts and evidence to support your claims, especially #1?

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One thing is certain amongst all the speculation regarding wages. Raising the minimum wage does not decrease the workforce. Anyone who knows, knows the businesses paying MW have cut labor over the years to the point they couldn't open the doors with one less employee

Btw, I wouldn't want my kid to watch paint dry for 7.25 an hour, lol

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Do you have some facts and evidence to support your claims, especially #1?

In 1974, the minimum wage was raised by 20%. The inflation rate the following 2 years was 11 and 9.1. Starting in 1978, the government started raising minimum wage every year to stay ahead of inflation, ranging from 6.5% to 13.21% in any given year. Those years saw inflation rates of 7.6, 11.3, 13.5, and 10.3. That is the only 3 year period since WW1 that saw inflation rates above 10 for 3 consecutive years. From 1982 through 1989, minimum wage was not raised and inflation didn't exceed 4.8 in any given one of those years. Inflation has averaged between 3 and 4% over the decades, and it was only 1.5% last year. Inflation has a direct impact on how far your dollar goes.

This could just be a coincidence. This does not "prove" anything. It is evidence to backup my statement though.

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in our system poverty will always exist. The idea that anything that helps the lower income workers that doesn't get rid of poverty as a failure is based on the faulty idea that the intent is to make everyone middle class. Raising the minimum wage certainly will not get rid of poverty, but it may help poor people afford basic necessities such as food and shelter so that the rest of us are not having to subsidize these needs. The true beneficiaries are the companies that can get away with paying crap wages and thus improving their bottom line at the tax payers expense.

We all do better when everyone is doing better. A person with a full time job should at least be able to afford the bottom layer of Maslow's pyramid.

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In 1974, the minimum wage was raised by 20%. The inflation rate the following 2 years was 11 and 9.1. Starting in 1978, the government started raising minimum wage every year to stay ahead of inflation, ranging from 6.5% to 13.21% in any given year. Those years saw inflation rates of 7.6, 11.3, 13.5, and 10.3. That is the only 3 year period since WW1 that saw inflation rates above 10 for 3 consecutive years. From 1982 through 1989, minimum wage was not raised and inflation didn't exceed 4.8 in any given one of those years. Inflation has averaged between 3 and 4% over the decades, and it was only 1.5% last year. Inflation has a direct impact on how far your dollar goes.

This could just be a coincidence. This does not "prove" anything. It is evidence to backup my statement though.

Had more to do with Carter vs Reagan than minimum wage.

Beginning in 2007 when the largest wage increase in history began it's climb from 5.35 to 7.25, the inflation rates are as follows.

2.8

3.8

0.4

1.6

3.2

2.1

1.5-2013

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Raising the minimum wage will not reduce poverty. This is a well proven bad idea. Good rhetoric will convince people to do it, but it will not help.

It is like the misleading statement that the top 1% have more wealth than the bottom 40%. True but misleading. If you have a net worth of $0.01 or more, then you are wealthier than the bottom 40%.

"There are lies, damned lies and then there are statistics."-SC

The bottom 40 percentile is everything under 50K

I'm all for fun and games, but .01? lol

http://blogs.wsj.com/wealth/2007/02/01/rich-o-meter-20/

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In 1974, the minimum wage was raised by 20%. The inflation rate the following 2 years was 11 and 9.1. Starting in 1978, the government started raising minimum wage every year to stay ahead of inflation, ranging from 6.5% to 13.21% in any given year. Those years saw inflation rates of 7.6, 11.3, 13.5, and 10.3. That is the only 3 year period since WW1 that saw inflation rates above 10 for 3 consecutive years. From 1982 through 1989, minimum wage was not raised and inflation didn't exceed 4.8 in any given one of those years. Inflation has averaged between 3 and 4% over the decades, and it was only 1.5% last year. Inflation has a direct impact on how far your dollar goes.

This could just be a coincidence. This does not "prove" anything. It is evidence to backup my statement though.

Thank you. I'm a big believer in sharing facts and evidence to support our claims, as you know. We can disagree on policy preferences and value differences, but still at least have a discussion when we're incorporating facts into our discussions. I appreciate you looking that up.

During the time frame that you're talking about, inflation did indeed spike during a period of increased minimum wage. However, the key question is what was inflation during prior to those increases and does that correlation hold for more recent years? I pulled the minimum wage numbers along with inflation numbers from the 1950s to present (2012) and made this graph:

p24va.jpg

While you're right that during the 1970s, inflation peaked following minimum wage increases, the increase in inflation predates those increases. (Side note: There were steady increases throughout this period, so one could argue that this prompted inflation.) However, during the 1980s and into the 1990s, inflation continued to plummet even as the minimum wage increased, in some cases pretty dramatically.

Appropriate caveats - I did not index minimum wage to current dollars, so the later increases look larger on the graph than they are because dollar increases are exponential by nature. The point isn't to estimate the relative increase in minimum wage, however. The point is to show that the correlation you note is a coincidence unique to the 1970s and early 1980s. Other things are driving inflation and any effect of raising the minimum wage appears to be very minor, if there's any effect at all.

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Thank you. I'm a big believer in sharing facts and evidence to support our claims, as you know. We can disagree on policy preferences and value differences, but still at least have a discussion when we're incorporating facts into our discussions. I appreciate you looking that up.

During the time frame that you're talking about, inflation did indeed spike during a period of increased minimum wage. However, the key question is what was inflation during prior to those increases and does that correlation hold for more recent years? I pulled the minimum wage numbers along with inflation numbers from the 1950s to present (2012) and made this graph:

p24va.jpg

While you're right that during the 1970s, inflation peaked following minimum wage increases, the increase in inflation predates those increases. (Side note: There were steady increases throughout this period, so one could argue that this prompted inflation.) However, during the 1980s and into the 1990s, inflation continued to plummet even as the minimum wage increased, in some cases pretty dramatically.

Appropriate caveats - I did not index minimum wage to current dollars, so the later increases look larger on the graph than they are because dollar increases are exponential by nature. The point isn't to estimate the relative increase in minimum wage, however. The point is to show that the correlation you note is a coincidence unique to the 1970s and early 1980s. Other things are driving inflation and any effect of raising the minimum wage appears to be very minor, if there's any effect at all.

I don't have your flair for the dramatic (fancy city charts) but I did beat ya to the min wage vs inflation punch ;)

One of my pet peeves, I have much less than a hundred, is the MW chicken littles...smh

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The bottom 40 percentile is everything under 50K

I'm all for fun and games, but .01? lol

http://blogs.wsj.com...ich-o-meter-20/

Okay, maybe not 40%.

"nearly 25 percent of American households now with a net worth equal to or less than zero"

http://usatoday30.usatoday.com/money/perfi/basics/story/2012-05-12/households-net-worth-university-of-michigan/54912016/1

If you have a net worth of $0.01 you are wealthier than the bottom 25%

Edited by Flip Flop
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I don't have your flair for the dramatic (fancy city charts) but I did beat ya to the min wage vs inflation punch wink.png

One of my pet peeves, I have much less than a hundred, is the MW chicken littles...smh

Oh, I'm about to break out some Granger causality regression models with alternative lag specifications on people...as soon as I have another glass of bourbon.

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