The Law of Unintended Consequences, or...

[Inquartata]

...When Bleeding Hearts Attack.

Despite being on the losing side of almost all of the economic arguments, minimum wage legislation continues to be a perennial favorite of politicians, activists and organizations who rely on plucking the heartstrings of the naive for their bread and butter.

Now some of the economic arguments are having the veil of tears drawn back a little after incautiously drafted laws in several states neglected to provide sufficient cover and let the consequences emerge clearly into the open:

Wage law may take jobs from disabled

reviewjournal.com -- News - Programs get dire news on minimum wage law

( This inflammatory rhetoric brought to you by the Council for Stirring Up Arguments and the Society for the Revival of the Politics Forum. )

[noodle]

tie minimum wage to inflation and be done with it.

[chefencer]

I think Inq has something more like indentured servitude in mind, rather than never-ending COLA's... he's pretty traditional.

[introspective]

One group goes nuts trying to help people, and people like me lobby like crazy, we put everything on the line only to see it all get ripped away, either over an old 'law' or 'technicality'.

But, presently what you're talking about is the ability of the disabled to work, and earn a living. It is disturbing to note that some legislators are simply motivated by greed and have no feeling for their constituents whatsoever. Legislation allows people to receive insurance for a disability, which is based in many cases upon previous employment contributions.

The most recent plan was that the disabled could also earn a salary not to exceed a certain amount of money per month. Believe it or not people are jealous of others who can receive a stipend as well as work. [ex: A blind vendor I know of earns about $1600 per month. - would anyone want to trade places with her?] The only stipulation being that a person must report their monthly earnings. All of this was designed to assist people who want to work, ease back into the laborforce if they choose to.

The downside was that as the hourly minimum wage went up, it stimied the Disabled and maybe some other groups.

Maybe the DOL should get a clue and develop a wage system that makes sence. The Minimum wage idea is a cursed plan. Forcing people to work by the hour - remember those people in the past who worked "by the peice"?
It's basically the same. Jobs should just be paid either weeklyl; biweekly; monthly or yearly. The fight over benefits can be solved presto-chango:
Offer two or three different plans to an employee: 70%-30%; 80%-20% or 90%-10%. So the company pays 70% of a health bill, the employee pays 30% and so on.

It really was the DOL. In spite of the recent hype on TV trying to win the public back into their good graces; the reply is this. DOL has too much to do with what people earn. They have too much to say about benefits; they have too much to say about the disabled and too much to say about people who lose their employemnt. They only need to serve one purpose:
1. take unemployment claims
2. payout unemployment insurance based on prior work contributions
3. for fun they can offer to keep vacancy announcements for the public and
4. hire staff to offer to point out where the vacancies are.

Other than that, it creates a problem and stifles freedom of enterprise, kills big business as well as little business all the way down to the blind person working at the vendor store.

[Inquartata]

tie minimum wage to inflation and be done with it.

Right, right...it has made things so much better for Social Security, after all.

Minimum wages are a form of price floor. And it's basic econ 101 that price floors and ceilings are always pernicious distortions of the market mechanism which lead to unfortunate things like surpluses, higher downstream prices, and so forth. Making them permanent is a truly horrendous idea.

[Inquartata]

A blind vendor I know of earns about $1600 per month. - would anyone want to trade places with her?

Er---yes. The blind person who doesn't....

[noodle]

Right, right...it has made things so much better for Social Security, after all.

Minimum wages are a form of price floor. And it's basic econ 101 that price floors and ceilings are always pernicious distortions of the market mechanism which lead to unfortunate things like surpluses, higher downstream prices, and so forth. Making them permanent is a truly horrendous idea.

1) social security is different
2) there would be no more permanence than there currently is, and there are different ways of tying it to inflation (its not like a businessowner can check up on inflation and change how much they pay by the day).

we already change it every X years to compensate for inflation, anyway. why not make it automatic by the year.

[introspective]

I don't know where anyone stands on this, but eeek again.
BTW micro or macro econ?

[Have At You]

I don't know where anyone stands on this, but eeek again.
BTW micro or macro econ?

Basic supply and demand.

Artificially increase the cost of something, above the free-market price, and you will reduce the demand for it.

So if you increase the minimum wage, above the free-market wage for unskilled and inexperienced labor, and you reduce the amount of jobs available for people who earn minimum wage.

In other words, trying to do the right thing for needy minimum-wage earners by raising their wages will increase unemployment among them. Some people will make more money, at the expense of others not being able to find work.

That's the tradeoff. A canny politician may decide that unemployed people don't vote much anyway, so who cares how many unemployed people I create? I'm going to raise the wages of the employed people and they will vote for me. A soft-hearted person may decide that the increased unemployment is worth it for the good feeling of improving the wages of teenagers with minimum-wage starter jobs.

[introspective]

Artificial Demand, Artificial Supply. But one thing may happen which has never been done before: a more global market based on equal value for the dollar/or for the hour. Whichever. It has to reach a saturation point in which everyone starts to have the same kind of earning power based on the kind of work that they do. [coupla hundred years] - then we can move into the area of pay-for work - and which job has more value.
ex: does a cosmetic surgeon have more value than does a burn expert.


okay, I'm only ankle deep in quicksand so....
It's a trap - go back

[Have At You]

ex: does a cosmetic surgeon have more value than does a burn expert.

Depend on whom you ask... and when.

[introspective]

Classroom work aside, since I've seen the entire spectrum of world economy and the manipulations of government some of it good some of it bad. One person won't be able to make much of a difference.

To protect your own interests I would start saving money and putting it into Certificate of Deposits [CD's] and also what about investing in the Eurodollar?
It just took off in the early 1990's and may be a sound investment for the future.

????any comments from our economics???

[Inquartata]

1) social security is different

The age-old reply of the illogical...at least unless there is an explanation of HOW something is "different".

But seriously, what happens if there is ever deflation? Would we reduce the minimum wage commensurately? Not bloody likely---too many vested interests.

2) we already change it every X years to compensate for inflation, anyway. why not make it automatic by the year.

Because the underlying idea of a minimum wage is a bad one in the first place. Making it adjust upward---only upward---automatically merely makes things worse. As matters currently stand, at least the market has time to overtake the price floor and make it economically less pernicious...

[introspective]

1.We could just place our old people on a mountain ridge like we did in the early days of man...
2. The other point is lot of government jobs have COLA system built into it, they really can rake in the dough, there' a little conflict of interest in the equation if you will in that people with an interest in keeping their jobs and their investments have no compunction about tossing older Americans out into the rubbish heap
3. minimum wage is not bad in of itself, it just needs to catch on elsewhere, so that the global economy can catch up thereby allowing more work to find its way back to the United States, where we could, for example 'sew our own fingers to the bone' rather than send out work to Taiwan or China for sewing. As you may recall, the end of our garment district was the Classical example used in economics classes to illustrate the first giagantic case of outsourcing. Now everything is so-called "out-sourced" and I think many of us can see through this attempt to pay bottom dollar without having to spend a dime on heath insurance, under the guise of 'helping the 3rd world' make money.

[chefencer]

3. minimum wage is not bad in of itself, it just needs to catch on elsewhere, so that the global economy can catch up...

Haha! I'm keenly interested in the reaction of the fora to a global minimum wage. It's too bad Epee Pox isn't around Inq, please take your apoplexy medicine before you start bashing your computer poor keyboard with your Econometric Slide Rule...

*Hides under the Gobal Wage Floor*

[jeff]

Depend on whom you ask... and when.

Frivolous answer: it depends on how the procedure is coded and how much the HMO is willing to reimburse.

Non-frivolous answer: cosmetic surgery done for "I want to look better" reasons (that is, not part of reconstruction after, for example, a mastectomy), such as breast augmentation/reduction, nose jobs, etc, is a cash business. The doctor charges whatever the market bears and the patient writes a check.

A burn specialist would be compensated at the rate associated with the procedure's coding and the payer's payment schedule (HMO, Medicare, or Medicade). If the procedure is an emergency and the patient is under an HMO, and the provider is not signed up with an HMO, he/she can charge the "customary and reasonable" fee, and the HMO will pay some fraction of it.

[jeff]

Classroom work aside, since I've seen the entire spectrum of world economy and the manipulations of government some of it good some of it bad. One person won't be able to make much of a difference.

To protect your own interests I would start saving money and putting it into Certificate of Deposits [CD's] and also what about investing in the Eurodollar?
It just took off in the early 1990's and may be a sound investment for the future.

????any comments from our economics???

Hey, watch who you're calling an economist! Them's fighting words!

Your question above isn't for an economist, anyway - it's for an investment advisor. I'm not one, but: yes, saving money is a good thing. CD's may or may not be the right investment class to use, depending on your age, income, and what you already have.

Regarding minimum wage: it's not unamimous that economists are against it. Some favor increasing the minimum wage, some would like to get rid of it altogether. Claims that raising the minimum wage causes job loss have been challenged as mythical, as is the perfect efficient market (with balanced economic power between employer and employee) that would make minimum wage laws unnecessary.

Old economist joke: An economist is stranded on a deserted island without food. He's faced with starvation, and then a crate of canned food washes up on the beach. He looks at the cans of food and says "Assume a can opener".

[Inquartata]

Yes, Mango, er, Umb---ah, Introspective, minimum wage legislation IS "bad in and of itself". Inevitably and invariably. Well, it's bad economically, anyway. Apparently it's a rather splendid political tool. So if you're a politician, it's a dream for you. If not, a nightmare...

http://www.mises.org/story/2130

It's true that some economists have let their hearts lead their heads astray, and personally support raising minimum wages. They do not have much to offer in the way of economic theory to support their advocacies, though.

[introspective]

Worldwide New Years' Greetings

[jBirch]

Yeah, but the perfect market reflects a total mobility of resources and a "relegation to the scrap heap" of obsolete resources. Oddly, not too many people are happy with the notion of people as resources to be disposed of when they are no longer productive.

Arguments against minimum wage laws are essentially arguments for exporting unproductive labour to third world countries. Given, as South Park so eloquently put it, "a quarter of the populace is retarded", repealing minimum wage laws is rather unappealing to a large voting segment of the populace.

Gotta love democracy, eh? Got a built in decency mechanism.

James.