Your thoughts on minimum wage

Problem with low minimum wage being below poverty line, being paid by wealthy corporations.

http://money.cnn.com/2013/06/04/news/companies/walmart-medicaid/

it may cost less in social assistance to increase minimum wage. Certainly it is more compassionate.

and minimum wage goes up, operating costs of "corporations" rise. These costs are passed on to customers/consumer and inflationary pressure causes people to seek an increased minimum wage.

and the cycle continues...

I know this is a very simplified view.... People do need to be paid a fair and equitable wage. The minimum wage argument is fundamentally challenged. it only becomes beneficial if the government policies are highly supportive of imported goods alone form lesser trading partners (read sweat shops in some cases). if you are seeking to support domestic manufacturing, the theory falls down.

I never could see the benefit for Canada, of free trade agreements with countries (like Mexico) that pay their workers pennies an hour. Just means our workers have to compete with that, and in order to do so, minimum wage has to be below poverty line.

Canadian workers are limited to primary industries, supplying raw materials to those countries with cheap labour, and tertiary industry selling cheaply produced foreign made goods. Instead, Canada could create well paying domestic jobs in secondary industries which have the greatest potential for value increase and decent wages.

As minimum wage rises, it strongly influences the minimum price of things while barely affecting the top end. For example, in Oz with minimum wage of something like $18/hr, coffee is $4 or more, but a nice steak dinner is still ~$40.

In a $15 minimum wage environment, Tim Hortons would have a hard time existing as many of their customers would be forced to make coffee at home as they couldn't afford $4 a cup (or don't want to spend that much). Starbucks prices would only be minimally affected and would probably see very little change in volume.

The second major problem with raising minimum wage is that people that have worked long and/or hard to get a raise, will now lose the progress they made. As an example, I can't imagine that if you are making 30% above minimum wage right not that most employers would bump you to 30% above the new minimum wage. This is demoralizing to those employees and encourages people not to try, just to rely entirely on government to advance their wages with time.

I agree people should make a living wage, but imo forcing up minimum wage is not the right way to get there. I'd much rather have a voluntary program to encourage higher wages (something like government matching of raises up to 25%, so the employer would pay $12.50, employee would get $15). This still creates problems and would not likely work. We should be either a capatalisitic society where every person fights for themselves, or socialist where everybody is equal, this grey area in between just creates a million more opportunities for abuse (both from those at the top taking in ridiculous money and those at the bottom that could work but choose not too).

My impression is that Canada is more socialist/less raw capitalistic than the US. Agree with me so far?

it is also my impression that in general, average Canadians are better off than the average American. (Statistics could be dug up on this.) Still in agreement?

So it follows that if Canada veered more to the right, we would head in the direction of the US where the rich get richer, the poor poorer, and the middle class disappearing. In fact, this has happened over the last several years in Canada with Harper at the helm.

The US is like a social test tube with capitalism, unfettered by social conscience, on trial. IMO, it's not going well.

This is a pointless discussion.
The system is in place by design and works perfectly now.
Corporations keep more profits (top tier employees) and the Government will raise taxes to cover the social costs incurred e.g. welfare and law enforcement.

-D- said:

This is a pointless discussion.
The system is in place by design and works perfectly now.
Corporations keep more profits (top tier employees) and the Government will raise taxes to cover the social costs incurred e.g. welfare and law enforcement.

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"Working perfectly" is certainly debatable!

Minimum wage is only a way of your employer of saying "I would pay you less, but it's illegal"

-D- said:

This is a pointless discussion.
The system is in place by design and works perfectly now.
Corporations keep more profits (top tier employees) and the Government will raise taxes to cover the social costs incurred e.g. welfare and law enforcement.

Click to expand...

Go to a homeless shelter and ask yourself if the current system works perfectly.

Already prices are increasing everywhere in the GTA. Go to any food court and I bet you going to be paying close to $10 for a small lunch.

When I was in school back in 1995, I paid around $5 bucks for lunch.

One area to think about the unforeseen consequences of a higher minimum wage is child care. Child care workers (daycare) tend to be working for close to--a little above minimum wage. If you raise the wages the costs go up. Even if they make $15 today, raise min wage to $15 and now you have to jump all of them up as well (maybe not to 20 but say 18 or 19) to keep them.

Now you have the working poor getting maybe a few dollars more per hour but their childcare costs will spike. In many cases they will not be any better off, in some cases it may mean they cannot work.

As far as fast food etc. I think some costs will be passed on but it may not result in say a near 50% increase since wages are not the only input cost. For daycare, wages are a much bigger percentage of the costs so the prices will spike. There are many other small business cases where wages are a big portion of cost and here is where you will see the big negative impacts (child care is just one example).

It is one of those things that sounds good from a social perspective but may actual hurt the working poor if not well thought out.

For big corps, it just means some shuffling, higher prices, maybe fewer workers. The big impact is small business where wages are a big input cost, here we will see the biggest price increases and/or job losses. Specially with a drastic change like a jump to $15.

how about cutting income tax on low income earners?

So let me understand, as long as "we" the above minimum wage people are affected by an increase in minimum wage, we all agree that increasing the minimum wage is bad right?

After all "if we pay them more, they will never strive to succeed" right?

The cost of living will continue to increase regardless of the minimum wage, after all companies need to increase their year over year earnings, if we don't adjust the minimum wage, they basically have less money to buy the same products. Republican "like" theories aside, it is the right thing to do IMO

Boots said:

Go to a homeless shelter and ask yourself if the current system works perfectly.

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And homeless shelters have been around for how long now...
see, the system is working by design.
Government uses it as reason to claw in more taxes from everyone and the corps blame the Government.

ZX600 said:

So let me understand, as long as "we" the above minimum wage people are affected by an increase in minimum wage, we all agree that increasing the minimum wage is bad right?

After all "if we pay them more, they will never strive to succeed" right?

The cost of living will continue to increase regardless of the minimum wage, after all companies need to increase their year over year earnings, if we don't adjust the minimum wage, they basically have less money to buy the same products. Republican "like" theories aside, it is the right thing to do IMO

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You got it. Probably no money in doing the right thing.

There are more food banks than ever and they are increasing so you see nobody needs to do anything because you will get the ppl that care give their time and efforts to try and help others.

It's much like saying we should decrease crime by being proactive and educate instead of incarcerate.
And on the other side you will get someone say oh well build some more jails.

Riceburner said:

how about cutting income tax on low income earners?

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It is already pretty low now. Not sure of the exact rates but I believe under around 40K it is 20% for fed and prov combined and you have the personal exemption of somewhere around 10K. In the end a full time min wage worker is paying around 2K on the year (just about 10% all said and done), drop the rates in half and they see maybe $100 per month in their pocket (optimistic), same as about 75 cents an hour raise. Give or take but this will be real close...

The catch is, by dropping the rates you drop it for everyone. So the guy making 100K a year will now pay the lower rate on the first 40K and the current rates above 40K. This means a big hit in tax revenue. Unless an even more complicated solution is developed...

Some of the other costs though like CPP and EI could be an area to look at, not sure of the dollars in pocket impact though. WSIB is also another one from the employer's costs (raise wages, lower WSIB to help offset???), but that will depend on the type of work.

ZX600 said:

So let me understand, as long as "we" the above minimum wage people are affected by an increase in minimum wage, we all agree that increasing the minimum wage is bad right?

After all "if we pay them more, they will never strive to succeed" right?

The cost of living will continue to increase regardless of the minimum wage, after all companies need to increase their year over year earnings, if we don't adjust the minimum wage, they basically have less money to buy the same products. Republican "like" theories aside, it is the right thing to do IMO

Click to expand...

The issue is the unforeseen consequences like the one I pointed out above (there are many more). In general it should be tied to inflation (makes small steps) but a big jump is going to have impacts much deeper and far reaching than corporate profits and it may actually hurt low income people in ways we did not think (again, like childcare costs).

I do not think it takes away the strive to succeed etc.

Schneller said:

My impression is that Canada is more socialist/less raw capitalistic than the US. Agree with me so far?

it is also my impression that in general, average Canadians are better off than the average American. (Statistics could be dug up on this.) Still in agreement?

So it follows that if Canada veered more to the right, we would head in the direction of the US where the rich get richer, the poor poorer, and the middle class disappearing. In fact, this has happened over the last several years in Canada with Harper at the helm.

The US is like a social test tube with capitalism, unfettered by social conscience, on trial. IMO, it's not going well.

Click to expand...

We spent labour day W/E in Arkansas and the discussion came up. In the hospitality industry, motel, restaurants prices are way lower. $10.00 gets a nice hot supper buffet, $70 a decent motel. The minimum wage in a lot of states is about 2/3 of ours, $7-8 an hour. Gas $3.25 a gallon. However groceries are about the same price as here. Beer and insurance price rants could go on forever.

In some southern states you can buy the equivalent of a Rosedale mansion for the price of a so so condo here.

Then the discussion turns to medicare and it's a whole new ball game. IIRC there are 24,000 pages explaining how it works and each state can tweak the master agreement or make up their own.
As I understand it in the USA one pays, one way or another, for their own insurance. Here it comes out of the collective coffers where the burden is shared by the more affluent and padded up by the HST and other government incomes.

I talked to a guy from PA and he doesn't have health insurance for himself due to PA opting out of Obamacare. PA has their own system and he falls through the cracks. He has insurance for his wife and kids and has all his property in their names.

IMO having a low minimum wage is cooking the books of reality.

One big problem is regionalism. The minimum for TO should be different than Burpsville.

There will be a ripple effect. If people have to pay more for their Molly Maids they may not have enough cash to go and watch multi-millionaires play hockey or baseball. Or eat out.

The conundrum is that our present economic game plan is leading us to hell but correcting it is like going from the frying pan into the fire.

Re the USA and capitalism: To me capitalism is a fair fight for the consumer's money. If you look at US protectionism, subsidies, and back room deals it is anything but fair. More like economic cannibalism.

Canada? Still behind but we're trying to catch up.

Also Average Canuck vs Average American isn't a good comparison. Mean points are more representative. A few high rollers skew averages.

Our complete tax system is a screw up. To correct it would mean re-writing the constitution and reneging on tons of agreements. Minimum wage is only a small part of the problem and going after it would, as Shakespeare put it, be like the pound of flesh nearest the heart.

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
• The first four men (the poorest) would pay nothing.
• The fifth would pay $1.
• The sixth would pay $3.
• The seventh would pay $7.
• The eighth would pay $12.
• The ninth would pay $18.
• The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers”, he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
• The fifth man, like the first four, now paid nothing (100% savings).
• The sixth now paid $2 instead of $3 (33%savings).
• The seventh now pay $5 instead of $7 (28%savings).
• The eighth now paid $9 instead of $12 (25% savings).
• The ninth now paid $14 instead of $18 (22% savings).
• The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!” “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!” “That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!” “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

backmarkerducati said:

The issue is the unforeseen consequences like the one I pointed out above (there are many more). In general it should be tied to inflation (makes small steps) but a big jump is going to have impacts much deeper and far reaching than corporate profits and it may actually hurt low income people in ways we did not think (again, like childcare costs).

I do not think it takes away the strive to succeed etc.

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*not aiming comment at you
right! let's do nothing because doing something might cause a problem...but oh wait, we are dealing with a problem.
I have a cut, don't put a band aid on it because you might cause a problem and get it infected and you don't know if the band aid you just opened is sterile and you could be allergic to the band aid...mean while you are still bleeding and blood is getting on your clothes

oh look someone shot you, wait sit there and consider how every probable possibility might not work.

hey you know where we have seen this movie recently...the US telling ppl they will die with government healthcare like Canadians do.

like I said, the system is working as designed