Chicago Council Passes 'Living Wage' Act

Or, the suburbs lose again by (likely) gaining more Wal-Mart stores to occupy the landscape.

Let me welcome the rest of the world to my home town, Chicago - California of the Midwest.

Why not just raise the minimum wage? At least, that way, the legislation won't be overrulled by the courts in two monthes.

So, the choice becomes:
1. Raise their state's minimum wage indefinately.
OR
2. Couragously strike back at the corporations, and raise Walmart employees' wages by a much-needed amount for about two or three monthes.

@alkey - if you'd like the full list of reasons I've been given by legislators on why the minimum wage isn't being increased - email me. But it boils down to the fact that our legislators don't earn minimum wage - and neither do those who support them - so why should they care?

Unfortunately raising minimum wage does not do any good. If you raise minimum wage then the cost of goods goes up to compensate. The problem is it is not a proportional increase. Even though people on the low end of the pay scale make more money, it has the effect of causing a pay cut for everyone.

My kids always ask "How come stuff can't just cost one penny?" And really, there isn't any good reason why not. If EVERYTHING were free, then everything *could* be free - seriously. Think about it, if raw materials were free, then the products made would be free. But People want to be compensated for their time.....

Still, everything for a penny would be nice. Even if only for a day.

Sadly, scarcity dictates that things cannot be free. Everyone can't have as much as they want of everything they want.

@otto-e - I understand what you're saying, but I have a couple of questions. First - so you're saying we can't raise minimum wage because then the cost of goods would go up - but it's okay to continue to give raises to CEOs and our legislators - and basically everyone who makes well over a living wage? Why don't we lower those wages and raise the minimum wage? Second, how do you propose giving people a better wage without raising the minimum wage? Too many businesses refuse to pay above minimum wage because they don't have to - look at the service industry. A worker who gets tips only has to be paid $2.13/hour - if their tips to amount to minimum wage, then the employer must cover the difference, but this rarely happens. What do you propose is done about these hard working people who aren't even scraping by in a society where most living wages are $10+ and hour?

Miss Dev: You could change the CEO pay situation by becoming a board member of a corporation and then reducing the CEO's compensation.

Unfortunately raising minimum wage does not do any good. If you raise minimum wage then the cost of goods goes up to compensate.

The cost of goods has been going up anyway. Inflation has increased at a greater rate than have wages. Everybody is paying more for there goods than they used to. Not everybody is getting paid more (relative to the increase in prices).

You could change the CEO pay situation by becoming a board member of a corporation and then reducing the CEO's compensation

Then I would like to see the level of business talent that would be lined up to get a chance at that low paying position. Business executives are no different from star athletes or actors. You need a few on each team to have a successful company/team/movie/etc. And, you have to be willing to pay the price to get the talent to make the company work and, therefore, be able to hire lower wage earners (as opposed to laying them off).

@Jay - what I've always found amazing is that people are willing to justify the outrageous pay that actors and athletes get by saying you have to pay them that to get good talent. That is simply not true. Look at stage actors - even the extraordinary ones with huge pay rates for the theatre world make maybe what a mid-level business analyst makes (low six figures). But they continue to do it and people continue to join the theatre because they love it. Yes, there needs to be a certain amount of monetary compensation for doing a high-powered job - but does it need to be hundreds or even thousands of times what the main workforce of the company makes? No. Some CEOs earn eight figures a year - that is just astronomical! If we cut them back to seven figures, do you think all of the good business people would suddenly stop wanting to start running businesses? I guess my point is, if you love something and are good at it, you will want to do it and strive to do your best at it, no matter what.

Miss Dev, who is the 'we' that you're talking about here?

Some companies like Whole Foods have very reasonable differentials between front line worker pay and executive pay. Encouraging more companies to follow that model is a great idea. Legislating the pay down is not.

I agree that CEOs are paid more than they're worth. But then, I think the same thing about most everyone who makes much more than I do.

@Brian - I'm not sure - I guess the royal "we". Or by "we", I'm saying that if, as a society, "we" don't continue to justify these ridiculous wages for CEOs in our words, or in our votes, then "we" may be able to get a more fair wage system for all.

Can you go into more detail about Whole Foods' differentials system... I'm intrigued...

@MissDev

Work for peanuts or for free if you wish. It is a fact of life that money motivates.

What do you think it would be worth to the 335,000 employees, the 365,000 retirees and the shareholders have a superstar CEO save General Motors from bankruptcy? How about the tens of thousands who are going to lose their jobs? If Carlos Ghosn (the guy who saved Nissan and Renault) came along and said that he could save the company, but it would cost twice what Rick Wagoner makes, would it be worth the investment?

Or, would GM fare better by finding a bargain basement CEO to ride the company into oblivion?

@Jay - what about Enron? Do you think that the executives there deserved not only the huge salaries they earned - but the massive "severance" packages they received after the fall of the company? World Comm?

I never said money didn't motivate - but do you honestly believe that if someone is offered $1 million to do a job, they will turn it down unless its socially acceptable (as it currently is) to pay eight and nine figure salaries to CEOs? The CEO of my company doesn't make a massive salary even tho' he has some of the best credentials in the business and since he took over to company, we've only seen an increase in business by five times the industry average. He chose to not earn a huge salary in order to pass the benefits on to the "lower" employees.

For GM - it would be worth the investment - but only if other top execs were willing to make some sacrifices along with their employees - which many simply are not. And who's to say what qualifies "bargain basement"? Maybe someone just out of college has these amazing ideas on how to save GM, and is willing to give it a shot for $20,000/yr - but because he doesn't have experience, he won't get hired. Is that fair, either? No, it's b.s. I think if someone is truly motivated to help a company, they are willing to do it at some sacrifice - like saying, "I'll come in and help the company for 1/2 of what the current CEO is making - but once we start making a certain percentage in profit again, my rate goes to double what the current CEO is making." Why not?

Unfortunately raising minimum wage does not do any good. If you raise minimum wage then the cost of goods goes up to compensate.

Not always so. This is based on microeconomic theories that are far too simple for a situation like minimum wage or living wage laws. In fact, looking at data, raising the minimum wage often works to the advantage of the overall economy, increasing the number of available jobs and the buying power of individuals. Living wage laws do have the effect of lowering overall employment, but overall they reduce poverty without deepening poverty for those already poor.

Miss Dev - I'm not saying that the people working the low paying jobs don't deserve better salaries. I also don't know the answer to the problem. Maybe some sore of insentive to companies to pay better. This is the main problem with the trickle down economics system that we have. The rich don't share the money. They tend to hoard it rather then putting back into the economy.

Enron and WorldComm were illegal. They obviously took advantage of a system that had lax controls. Why don't we stick to CEO's who are not embroiled in scandal? Are they fairly compensated?

he doesn't have experience, he won't get hired

Ideas are valuable and experience is valuable. But, a CEO needs both otherwise it is a shot in the dark. That 20-year old might work about as well as buying a lottery ticket.

help the company for 1/2 of what the current CEO is making - but once we start making a certain percentage in profit again, my rate goes to double

That is exactly how many CEO's get the huge salaries that you criticize. Most board's compensation committees give the high level executives a decent salary supplemented by performance driven bonuses. Some of the performance metrics may have been poorly chosen and they may result in overpaying an executive. Remember when Lee Iaccoca took over Chrysler? He was paid $1 per year base salary. The rest was entirely performance driven incentives.

@Miss Dev, here's a great article on Whole Foods. When the company started executive pay was limited to 8 times frontline workers' pay. It's been adjusted some since then, it's now limited to 14 times frontline workers pay. 94% of stock options are owned by non-executive employees. It's a great example of applying progressive ideas to a public company, with regards to employee compensation. Each store also has a salary book, where everyone's salaries are written, no guessing, no secrets.

It's also really expensive :) Nobody does all their grocery shopping there, but they have great stuff. Though I have no idea how much is due to the extra food costs, and how much is labor. But the chain is thriving as far as I know, and in an industry that's been having troubles in my area.

Even giant public companies, that sell out of big boxes, do not have to fit the stereotypical 'corporate evil' mold. There is nothing about capitalism that requires it.

It's also really expensive :) Nobody does all their grocery shopping there

I do. The food there is worth the extra cost. In fact, I think the extra costs are more than paid for by the benefits. I've found, for me, it's actually less expensive because I make wiser buying decisions and am less likely to let the food go to waste. My health has improved (saving an unknown amount in medical costs), I feel more energetic (allowing me to accomplish more each day), and I feel more content after eating a meal prepared with food from Whole Foods (giving me the benefits of lower stress).

I'm not sure whether or not I'd buy groceries from a competitor which offered similar food items, but did not treat their employees as well as Whole Foods (even if that meant lower prices). The employees at Whole Foods have always been extremely friendly and helpful (at least at the local location - YMMV) and are a large part of the Whole Foods experience for me.

(I don't work for Whole Foods. I swear.)

Even giant public companies, that sell out of big boxes, do not have to fit the stereotypical 'corporate evil' mold. There is nothing about capitalism that requires it.

I agree with you, but I don't think we can say that exactly. Capitalism itself is fairly neutral. In the current climate the goal of consumers is to get as much bang for the buck as possible, while the goal of corporations is to get as much buck for the bang as possible. In that environment, any artificial restrictions placed on the corporation (such as using more-expensive eco-friendly raw materials) gives the corporations competitors a competitive advantage. So in that sense, the "corporate evil" mold is required for all practical purposes.

However, the "evilness" of the system is ultimately up to consumers. In that sense, its not really the fault of capitalism, but of consumer choice. For instance, If consumers care more about the environment than money, then they should buy the more expensive eco-friendly products. If that is what consumers demand, the corporations which offer such products will then have the competitive advantage and the other corporations will have to adapt or die. (Added benefit: In the long term this will result in cheaper eco-friendly products.)

It's just easier for people to label corporations as "evil" and try to mandate change through legislation than to actually make a social commitment themselves. That has the added approach of allowing the consumer to avoid all responsibility and feel good about themselves. It's a victim mentality. Unfortunately, the outcome is usually bad for small businesses since it increases startup and operating costs. Meanwhile, the "evil" corporations don't care because the costs are passed on to consumers anyway.

@Brian - thanks for the link!

@Lukas - I'm actually going to have to disagree with your statement that the quality of food makes up for the price - but only from my POV. In Denver we have Whole Foods, Wild Oats, and Sunflower Markets. All claim to offer organic/healthy foods. Most of the foods that Whole Foods sells - especially their produce - is not organic, and they are artificially inflating their prices because their customers are under the false impression their food is organic. Wild Oats offers mostly organic food, and their prices are comparable to supermarkets' prices. Sunflower Market is a locally owned market - and all of their food is both organic and, for the most part, locally grown. Their prices are closer to farmer's markets (so, cheaper than supermarkets). Whole Foods (Whole Paycheck is what we call it, here) takes advantage of its customers by advertising their organic selection while never making it clear what is and isn't organic. It's a great place if you are looking for gourmet, specialty items, but isn't the best for organic, reasonably priced food.

The cost of living in the cities is higher than the suburbs due to over-regulation--such as this.

The poor are not helped by such regulations. Target and WalMart are more than happy to build their stores over the city line and have the city residents travel there.

Chicago will lose millions in sales taxes.

Not only will it not help them, but it will hurt the ones who work there now. Wal-Mart's going to get their profits even if it means they have to lay off some employees. Raising the minimum wage a little is one thing, but raising it this high is ridiculous. They'll be making about twice as much now.

A lot of attention will be paid to the suburbs in the future, while I'm sure that the big box companies will probably start a long-term scale back of their presence within the city limits.

Given that these big box companies, with their lower prices, are some of the least cost-prohibitive, it would seem that the parts of the city that need them the most are going to have to suffer the consequences (and, ironically, pay more for their merchandise).

Once you raise the minimum wage, it's funny how prices seem to rise in proportion. I don't think people quite get basic econ.

"Once you raise the minimum wage, it's funny how prices seem to rise in proportion. I don't think people quite get basic econ." I guess by you logic if we start cutting peoples wages everything will be great, prices will come down and everything. Let lower minimum wage to 25 cents and hour, i mean why not people will find other jobs if they dont like the pay.[sacasm]
Oviously you dont understand basic ecnomics.
A certain amount of people have to be paid a "living wage" and it must increase with time, even with unskilled labor. The reason, is they become over time, too poor to afford alot of goods and services and hence fall out of the market. Poor people tend to spend every penny they have, So when you pay them more itcomes back into the economy. Then also more people get off welfare and food stamps. so you are already subsidizng their saleries. You are already paying for the increase in the form of taxes.
No i dont think we should raise minimum wage to $20 or more an hour..That would be extemismon the other end of the scale.
Over regulation = bad
no regulation = worse

The inflation / less jobs arguments are simply scare tactics. The only factor that matters to the corporations is profitability.

My question to those in opposition - doesn't more expendable income in the pockets of service sector employees sound like a PLUS?

My question to those in opposition - doesn't more expendable income in the pockets of service sector employees sound like a PLUS?

When products at Wal-Mart and Target start costing more, no, it doesn't.

Poverty is on the rise. So you honestly think these people need to stay in a pinch just so you can get your Wal-Mart Durabrand 19" TV for 89.97?

How is that moral? How is that ethical? How is that right in the eyes of God?

Poverty is on the rise. So you honestly think these people need to stay in a pinch just so you can get your Wal-Mart Durabrand 19" TV for 89.97?

What, you think middle class people like me are the only people who shop at Wal-Mart?

The lower class loves that store more than I do because of the deals. What doesn't hurt me because I have disposable income, will hurt them, even if the price increases are incremental over time. They are extra increases thanks to the new wage. And it's not TV's, that's oversimplication. Wal-Mart now has plenty of stores with grocery stores inside them. Lower class people, again, utilize that service. It hurts them.

How is that moral? How is that ethical? How is that right in the eyes of God?

It's moral because in order to help the few, the many must pay unnecessarily. It's not like they are slaves; they choose to work there. Many of the shoppers there cannot afford anything more expensive, and in many cases, it's the cheapest place around.

How am I supposed to know what God is thinking? What, I have a hardwire running under the desert that I can pickup and ask? What kind of freaking question is that?

Since when does a company have a moral obligation to pay workers a certain wage? There's no moral obligation for Wal-Mart to have employees at all. They could open a store run by robots if they wanted to. This is not a moral issue.

It's all good fun to philosophise how higher wages will raise prices in general, but you ignore the fact that these stores in Chicago are much more profitable than stores in small cities.

They could open a store run by robots if they wanted to. This is not a moral issue.

yes, wal-mart has no obligation to hire humans to work at their store. they could just hire robots, as you suggested. but, once they hire humans, wal-mart has the moral obligation to treat its employees humanely. i think that assertion is obvious enough, though feel free to challenge it with another straw man argument (maybe something with pixies this time, if you're sick of robots).

Since when does a company have a moral obligation to pay workers a certain wage?

umm...since we decided that slavery is wrong? a few questions for you: does wal-mart have a moral obligation to pay its employees? if not, why not just get slaves? if it does, does it have a moral obligation to pay them reasonable remuneration for their efforts? i mean, if not, why not pay them 25 cents an hour, as someone already suggested?

oh and i thought i'd point out this glaring inconsistency in RegBark's comment, cause I'm good like that.

It's moral because in order to help the few, the many must pay unnecessarily. It's not like they are slaves; they choose to work there. Many of the shoppers there cannot afford anything more expensive, and in many cases, it's the cheapest place around.

uhh...wanna explain to me how lower income people lacking significant job skills have any more choice in where they work than they do in where they shop? otherwise i'm gonna have to call this one out on severe lack of logic.

So let me get this straight. No one is forced to hire workers at all, but if you go to the trouble of hiring people and paying them, then you're immoral if you don't pay them enough? So it's more moral to pay them nothing than to pay them the same as every other store would pay them?

umm...since we decided that slavery is wrong? a few questions for you: does wal-mart have a moral obligation to pay its employees? if not, why not just get slaves? if it does, does it have a moral obligation to pay them reasonable remuneration for their efforts? i mean, if not, why not pay them 25 cents an hour, as someone already suggested?

Speaking of straw-men. Who said anything about slavery? Slavery is forced. No one is forced to work at Wal-Mart. It's voluntary. Either they pay you enough, or you go elsewhere. And yes, there are other jobs. They do have a choice.

The problem here is that people want Wal-Mart to pay more than other employers are required to pay just because it's Wal-Mart. If you want to make a moral claim, then you at least have to make that same claim about all other employers. You can't say that Wal-Mart is immoral for paying ~$6/hour, while other companies do so without reproach. That's a double standard.

well this is almost like chatting with you, you replied so fast. so let's get started, shall we?

So let me get this straight. No one is forced to hire workers at all, but if you go to the trouble of hiring people and paying them, then you're immoral if you don't pay them enough?

once you hire people, yes you have an obligation to treat them with the respect and dignity due to all people.

So it's more moral to pay them nothing than to pay them the same as every other store would pay them?

didn't say that, did i? i said they had no moral obligation to hire people. subtl distinction, i know, but you should try and figure it out.

Speaking of straw-men. Who said anything about slavery? Slavery is forced. No one is forced to work at Wal-Mart. It's voluntary. Either they pay you enough, or you go elsewhere. And yes, there are other jobs. They do have a choice.

I think you're missing my point, so let me rephrase it for you: employers do have a moral obligation to pay their employees something, and that how much they pay them is also governed in part by moral considerations. it all falls under that umbrella of treating the people they hired fairly and humanely. you're right, slavery is forced, whereas working at wal-mart is not, but that's irrelevant to my point. and, out of curiousity, what would you call employees who are not paid? i'll use your term next time i refer to these poor hypothetical people.

as for your arguments against the 'living wage', i won't bother. my comments were responding to your assertion that wal-mart has no moral obligations to its employees. you haven't really defended it yet, so i'll assume you've conceded its ridiculousness. not a fair assumption, i know, but a hopeful one.

also, for future reference, you don't know my position on chicago's legislation, so you should avoid attacking it. otherwise...pie on your face. humble pie.

In advance, know that I acknowledge that you're only talking about a minimum wage in general, and I'll assume that you agree that this legislation specifically is wrong. I still think it's important to point out the problems with this legislation in addition to responding to your arguments, though, because that's really the point I was making. I'm not 100% against a minimum wage (as you'll see), but I don't justify it on moral grounds. I don't think we should justify it on moral grounds, because it doesn't make sense.

once you hire people, yes you have an obligation to treat them with the respect and dignity due to all people.

No, you don't. There's no legal requirement that employees be treated with respect. Sure, you can't harass them or injure them, etc., but you don't have to care about them. The reason employers do treat their employees well is because it benefits them to do so. Happy employees do a better job and stay longer. When you're dealing with unskilled labor, though, there's a lower standard for how much you have to do to make them happy. If some of them are going to demand better pay, then you can easily find someone else who's willing to work for what you think they're worth. If you're really paying too little, then they won't get anyone to work for them and they'll be forced to pay more. That's a free market. Supply and demand applies to workers too, but the supply of unskilled labor is huge.

That said, I admit that there are some benefits to a standard minimum wage in general. It sets a threshold that prevents a kind of employee wage-war. This isn't just a minimum wage, though. It's a "big company minimum wage". It only applies to some companies, and that's what makes it wrong. If mom-and-pop stores can pay $6/hour and be called moral, then why does Wal-Mart have to pay $10/hour to be called moral? That's ridiculous. That's the point I was trying to make.

I forgot to answer this:

...out of curiousity, what would you call employees who are not paid?

That's easy: volunteers! ;)

I'm not 100% against a minimum wage (as you'll see), but I don't justify it on moral grounds. I don't think we should justify it on moral grounds, because it doesn't make sense...
...There's no legal requirement that employees be treated with respect. Sure, you can't harass them or injure them, etc., but you don't have to care about them.

Well, you're right about justifying minimum wage on moral grounds...not a good idea given the diverse moralities around, and the equally as compelling economic justifications. But I wasn't suggesting that we do. You're right also that there is no legal requirement that employees be treated with respect. But, again, not my position. My point was that companies, being organizations of people, and sharing many of the rights of a person, have many of the moral obligations to their employees that are shared in all inter-personal relations, and that obligation very likely extends to paying workers a fair wage.

If mom-and-pop stores can pay $6/hour and be called moral, then why does Wal-Mart have to pay $10/hour to be called moral? That's ridiculous. That's the point I was trying to make.

Hard to argue with that. Of course, that point didn't really come across when you said:

Since when does a company have a moral obligation to pay workers a certain wage?

But maybe I just not reading between the lines? As for what i didn't respond to specifically, you can take that as implicit agreement.

Oh and as for calling my hypo-people "volunteers"...granted. though it lacks the rhetorical sucker punch of "slaves", doesn't it? ah well, let the strawmen burn together.

Man I wish the robot Wal-Marts would come out soon. I'd rather deal with a malfunctioning robot than some of the retards who work there now.

Hate to say it Brian, but I agree.

They've already begun the transition. Hence the "self-pay" lines.

If they are planning on employeeing less people then whats the point of having them in the city anyway... The quality of the workers should go up as well if they're getting paid more than people working at the mom & pop shops, because there will be more people wanting to work at wal-mart.

I am torn on this one, i do think it is unfair to single out corporations, but then i think it would be good to give the moms and pops a fightng chance.
Overall I am leaning more on the side, you shouldnt discriminate against even a big corp,.

...it would be good to give the moms and pops a fightng chance.

Why?

@Adam - several reasons. Mainly - it encourages competition and a free market. It also encourages diversity in services and goods. Also, if there are no more little businesses, then big businesses will have a monopoly - and if there are no businesses to challenge that monopoly - then even ruling it illegal will do little good. Finally, as businesses get larger, their quality suffers - it can be corrected, but many businesses just don't care. And with that quality slip - customer service slips because employees often have a hard time taking pride in a company where they are merely employees - such as at big box stores. "Visible" management inspires loyalty and pride, just like "visible" police forces inspire a sense of safety - thus creating a safer neighborhood. If a company has its managers and owners out with their lowest level employees (customer service reps) talking about how great the company is, the employee will believe the company is great - and is doing well - and will pass that confidence onto its customers. Speaking from experience, when I've working in family and customer owned businesses, all I wanted to do was make them better - to make the business succeed. When I've worked for big companies who clearly don't care about me - I don't care about them. Smaller businesses really benefit everyone.

@Adam - several reasons. Mainly - it encourages competition and a free market.

By encourages, do you mean it destroys? Any artificial price on anything discourages competition, because competition at that level is no longer necessary. Now, the companies don't have to compete for anything. They can, literally, do the bare minimum and not worry about others doing above the bare minimum. The bare minimum is now the automatic level for all competitors.

It also encourages diversity in services and goods.

How? By telling the companies they must pay extraordinarily more for each worker? Raising the wage to over $10/hour increases the cost of labor significantly and it increases the taxes the company pays, as well. If anything, they cannot afford to diversify.

Finally, as businesses get larger, their quality suffers - it can be corrected, but many businesses just don't care.

Their quality suffers in a variety of terms. First, customer service; they simply cannot hire the same amount of people to do the same work. In order to avoid incurring a substantial loss, they must not hire at anywhere near the same level. Less workers on the floor means less workers helping customers, which means less customer service overall.

"Visible" management inspires loyalty and pride, just like "visible" police forces inspire a sense of safety

Care, several studies have shown that a visible police force on the streets has no effect on the crime rate itself. It operates independently of the police prescense. What may look good ("visible") doesn't always result in what works. Which is exactly what minimum wage is. A good looking girl, with a flaming case of herpes.

@Reg - I was responding to Adam's question of why would it be good to give "mom and pop shops" a fighting chance. Not responding to the raising of the wages for big box companies. Please don't attack me when you don't understand what I am responding to.

I wasn't attacking you. I was responding to your actual points. Your individual points are contrary to economics itself, so I took the time and energy to rebut them.

Yes - they are - when taken out of context. So basically, you are saying that encouraging mom and pop shops destroys economics?

How? How? By telling the companies they must pay extraordinarily more for each worker? Raising the wage to over $10/hour increases the cost of labor significantly and it increases the taxes the company pays, as well. If anything, they cannot afford to diversify.

In response to me saying that mom and pop shops encourage diversity in the market - this response doesn't make any sense.

Basically, your entire argument is based on raising wages - mine is based on encouraging smaller shops instead of shopping at big box companies. So your argument makes no sense in my context.

You can't encourage competition by placing different restrictions on some companies than others. Wal-Mart does not have a monopoly. In fact, it cannot. The only way that a retail store could have a monopoly is if it managed to get a deal with every supplier such that only it could resell those goods. Otherwise, any other company could sell the same goods. In fact, many do. Target and Sears (their "Grand" stores are very similar to Wal-Marts) both compete with them, and other stores compete in more specialized markets.

The fact that Wal-Mart has lower prices is a result of its efficiency, which is thanks in large part to the fact that it's huge. That's not a bad thing. If smaller stores want to compete, they can do so by offering better service, better selection, or target niche markets. If the market really values those, then the smaller stores will survive.

You can apply these same arguments to Dell, which has a huge market-share. Before Dell, many people got their computers from smaller, local companies. Now, very few people do this. Does Dell have a monopoly, though? No. They offer cheaper computers very efficiently. Still, small companies are able to survive by adapting to the market and offering services and personal touches that Dell can't provide. They can order specialty parts, for instance, whereas Dell either carries a part or it doesn't.

Forcing rules on large companies in order to help smaller ones compete is the opposite of a free market, and it does not benefit anyone in the long term.

Anytime any (and I mean this sincerely), any sector of the market is forced to set levels, it acts contrary to the principals of economics. Mom and pop shops included. It makes no sense to force any sector to do anything. Encouragement means just saying, "you should do this". Forcing is minimum/living wage. Tell the mom and pop stores to do something and set a level like that, it will have adverse effects. That's just how it works.

@Adam - I agree. I just wanted to see you justification. And I was challenging why you said "why" to it being good to give mom and pop shops a chance - rather than the argument that this wage increase will help mom and pop shops.

Thanks!

I would just like to take the time to pint out that inflation did not soar 160% when we raised the minimum wage from 3.25 to 5.15, and there were pleny of regbarcs back then that were screamin it would be the end of capitalism. I still would like to hear regbac say lowering the minimum wage would help the economy, or expalin how I an already not paying extra for that tv when my taxes are being used forfood stamps for people working at these places making minimum wages.
It is very true there is a fine ballance, kind of like interest raise. Raise them too much at the wrong time and you have problems, same with lowering them.
It is the exact same with minimum wages.
Monopolys also arent illgeal, i will say it again, monopoies are not illegal, monopolistic practices are, you dont have to BE an actually monopoly to break the law, you just have to dominate the market and use you dominace to harm other companies..

I am not arguing that this is a good thing that is happening in chicago, i havent researched their situation enough, i am just saying you cant just blanekt say that raising the minimum wage is bad, shoot look at california, one of the biggest economic powers in the world. It is ranked 5 in the entire world. They have a minimum of $7.30, how come peopel dont have to drive to my state to shop at walmart? we are only 5.15. How come california is collapsing, while my state is struggling?

I honestly meant to spell check and re look over this..
how come people dont have to drive to my state to shop at walmart? we are only 5.15. How come california is collapsing, while my state is struggling?
Should have read/// how come california ISN'T collapsing. But i think you get the point.

You are arguing about stuff already proven wrong.

While large corporations don't have a complete monopoly, they do come very close. The definition of the word is:

Exclusive control by one group of the means of producing or selling a commodity or service

"One group" here is not "walmart", it's "companies that earn huge amounts of money". Nowhere does it say that this only applies to walmart.

Companies like walmart are in a position to sell items for less than anyone else, while still earning a profit at the end of the year. This means that smaller businesses are almost completely unable to compete with the big guns, and therefore they might as well have a monopoly. Having to pay higher wages will force them to either raise prices or cut their profit margins. If they raise prices, it will give smaller businesses a chance to compete.

Wether or not this law is a good idea, there's no doubt in my mind that it will probably encourage competition, and certainly never "destroy" it as someone mentioned earlier.

But I'm a bit biased, because even $10 USD is way lower than the minimum wage where I live. We don't have walmart here, but we have Target and all the rest, which are almost identical and perfectly capable of paying good wages while still having very cheap prices.

Wal-Mart is unique in the fact that it does offer cheaper services and goods to the market, it is one of the most efficiently run companies in world and for the most part, many people do flock to Wal-Mart for goods. The downside is, Wal-Mart, with it's dominant position in the economy and the way it distributes goods in the market, forces it to bully the smaller shops it works with. For example, when a store goes to Wal-Mart with a product, there could be four or five different firms offering a similar product, Wal-Mart will only select two or three of these, bully them for lower prices and then sell them to their customers. It is only an illusion of diversity in products, within one store - the fact of the matter is, Wal-Mart is too large now for mom and pop stores to survive. You either don't have Wal-Mart beforehand or you accept Wal-Mart into your community and suffer the consequences of having a juggernaut indirectly squeeze out competition, through their buying power.

The recent law we had in Maryland specifically targeting Wal-Mart was thrown out in like two months. That law was about spending on health care. But the reason the law was tossed out was that Wal-Mart has the right to offer the same benefits to employees in any state, rather than deal with a patchwork of different laws. So while raising the minimum wage generally is fine, I doubt that this law will survive more than a few months.

Washington DC has a minimum wage rule that as far as I know is not a law, I think the article is wrong. Any firm that does business with the city government has to offer a living wage, but they enforce it by just not doing business with the company if they don't offer a living wage, not through legislation. And again I think that any city that has an actual law like this applies applies it to all businesses, or at least all businesses over 10 or 15 people, or whatever the normal cutoff is for being treated differently.

On the question of the inevitable force people see Wal-Mart being - exactly what do you all buy at Wal-Mart? I've shopped there twice in the past 4 years and it sucked both times with huge lines and crappy merchandise.

I think most tech geeks I know only go to Wal-Mart only to get newly released DVDs (typically TV shows or box sets) that Walmart cuts the price down moreso than Best Buy or online stores the first week of sale, sometimes close to 50% - in other words, something that Wal-mart doesn't make and thus the quality is already known ahead of time. I otherwise only use it if I need some household good "now" and it's the only close store.

@regbarc - I'm going to try this one more time. I understand what you are saying - I am only pointing out that you misread my statements and your responses make no sense in my context. I am going to re-write everything I said so that you understand it:

Adam asked why we should give mom and pops a fighting chance.

- I replied that we should give mom and pop shops a fighting chance because they encourage diversity in a market. - Also, if mom and pop shops are eliminated, then big businesses will have a monopoly - and if there are no businesses to challenge that monopoly - then even ruling it illegal will do little good. - Mom and pop shops as a rule must have good quality in their products as well as customer service - or else they won't survive. A bigger business can have bad products and service in one market because there will be another market to support it. - Mom and pop shops foster a sense of loyalty because the managers and owners of the shop aren't some nameless/faceless entity - but rather real people who really work at running this shop. Employees appreciate being able to go straight to the top if they have concerns - and customers enjoy knowing everyone who works at a shop - from the top down.
- Speaking from experience, when I've working in family and customer owned businesses, all I wanted to do was make them better - to make the business succeed. When I've worked for big companies who clearly don't care about me - I don't care about them. Smaller businesses really benefit everyone.

You will notice that no where in here do I say we need to set limits - or do I say that this court battle is right in what it was trying to achieve. I was simply stating that mom and pop shops should be encouraged and trying to show Adam why that is. He asked why we should give mom and pops a chance - not how - I was responding to the why. So, when taken in this original context, your responses (save your last one about the police) make no sense because they are dealing with setting limits, which I never talk about. As I said - I understand your points - they just make absolutely no sense in the context I set.

It is up to the people to change this.

Why don't people like yourself and others change this by opening up your own chain of discount department stores, paying your workers much more in wages and benefits!

Nothing is stopping such a movement. George Soros and Teresa Kerry could put up the initial capital and you're on your way. Movie stars could contribute millions. And if the 59,000,000 people that voted for John Kerry put up an average of just $50 a piece, you'd have another $3 Billion Dollars!

Don't tell others what to do! Lead by example!

Don't tell others what to do! Lead by example!

lol and i guess we should build our own non polluting factories..screw telling them not to pollute that is just liberal regulation and forget making them take lead out of paint and gas, lets make our own lead free companies. And we will save the world despite the big evil companies.
See it doesnt work like that, Companies that pay their employees crap will succeed over companies that dont. As long as they are allowed to pay their employees crap they will.

I am not for over regulation but no regulation is capitalistic anarchy, and that type of extremism doesnt work as much as crippling regulation doesnt work.
Everything must be studied and I highly doubt that anyone in this comment thread has the background or the information at hand to truly comment on this specific situation and say it is a good or bad thing.

You could also shop at other stores. Vote with your feet (and your wallet). I can't really say whether you shop at these stores or not, but it seems that most people who complain about unfair wages have no problem buying from those stores, even when the products were made by people in other countries who made even lower wages. They support the very business models that they protest against.

Why don't people like yourself and others change this by opening up your own chain of discount department stores, paying your workers much more in wages and benefits!

Wanting to change something is one thing, having the necessary skills to open up a chain of department stores is quite another.

Doing it in a world that demands low prices is basically impossible, no matter what qualifications you have.

Lefty,
Could you please stop using Christian sayings in your arguments, your making us(Christians) look like idiots. I'll let Ayn do all the arguing for me.

America's abundance was not created by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. – Ayn Rand

If workers struggle for higher wages, this is hailed as "social gains", if businessmen struggle for higher profits, this is damned as "selfish greed". – Ayn Rand

Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man's well-being is not their goal. – Ayn Rand

It stands to reason that where there's sacrifice, there's someone collecting sacrificial offerings. Where there's service, there's someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master. – Ayn Rand

ajs: i simply see this as a moral issue. my morality is based mostly in my religious philosophy. i'm not trying ot project it on you.

Leftist, I am guessing that you find it hard to match your political philosophy with your consumption pattern. Two quick example: 1. do you drive a car? Fuel companies have a MUCH greater markup than Wal-mart and yet only pay somewhat more. That seems to violate your goal of maximizing profits for the worker. 2. You apparently use a computer. Unless you wrote your own operating system you paid a massive premium on your OS, while the Microsoft or Apple employees are not all living in mansions.

Your point, in part, seems to be if the worker benefits the most than the profits aren't really evil.

JoulesBeef

Don't tell others what to do! Lead by example!

lol and i guess we should build our own non polluting factories

Build a business! That's what Sam Walton did.

That's what Capitalism is about.

We should stand up for people at the expense of these ultra-profitable corporations. So many Americans are brought up entranced by the capitalist/consumerist propaganda. And now they're afraid to point out the injustice.

There is nothing wrong with corporations and profit. But the profit must be second in priority to treating employees with respect. If the corporations can't manage this, it is up to labor unions and legislation.

That is why the government is run by PEOPLE and not COMPANIES.

Exactly what injustice are you talking about? I've never worked at Wal-Mart, but I've worked as a cashier before. And as a waiter, a sheet metal worker, construction worker, delivery driver, all kinds of @!$%#ty jobs. I can't say that any of those jobs treated me 'with respect'. Which is why I quit them, and decided to move on to something better. Were these places evil? No. Were they unjust? No. They were just @!$%#ty jobs that anyone could get into easily. I knew exactly what I was going to get out of them. Most of them were small companies. Let me tell you, from my perspective a @!$%#ty job at a mom and pop store doesn't seem any different than a @!$%#ty job at a big chain. Does it make a difference if these businesses were losing money? Does that make them not evil?

For the most part the smaller companies I've worked for treat you worse, they don't give you time off when required, and they jerk you around when there is no work. At least with most bigger companies you can get a 9-5, 40 hrs a week job. Alot of smaller companies also just do away with 15 minute coffee breaks and give you an hour of unpaid lunch.

once the "big-box" stores move out of the city.

If you read the article carefully, you'll see that is clearly states there are no Wal Marts currently operating within the Chicago city limits. So all of the arguments of "this will 'cause the stores to close and open somewhere else" don't really fit into this scenario.

When did I say Wal-Mart? I said big-box. That means everything from Wal-Mart to Costco to all kinds of other deep discount warehouse-style stores. I want to see how this will affect restaurant supply stores... if it does, then you can expect the cost of restaurants in Chicago to rise as well.

how about the CEOs take a pay cut instead.
corporations have only one goal, to increase profits. that leaves very little room for morals, they only fit in when convenient. so if walmart can increase profits by paying their employee's the bare minimum, sending them into poverty, so be it, the stockholders demand it. CEOs continue to rake it in. it's not moral. living wages are a good step forward to ending poverty.
good for Chicago, i hope it works out and catches on in other cities or states.

clearly i'm taking a humane approach to this problem, but i think a different strategy is in order since it is clear the current way things work doesn't allow employee's to break above the poverty line. i think it's disgraceful and refuse to shop at walmart.

Schwab: do you think that all employees are basically worth the same?

no, and i didn't say that nor did o say that all employees should be paid the same. I was just trying to say there's something wrong when the higher ups in a company make exorbitant amounts of money while their employees are in poverty.

If people are going to have differing compensation, on what basis should the pay difference be based in an ideal world?

I think that most of us, if we're being honest, would agree that it would be better to earn CEO money than min. wage. Until the workers at Wal-Mart (et al) perform duties commensurate with higher wages, why would the CEO decide to give them more money? Because the head of a company *could* afford to pay his workers more doesn't mean he/she should. This isn't communism. What would be the reason? You pay workers more money if they are performing more duties, are performing skilled tasks (that there is a demand for) or for various other reasons, but you don't pay workers more out of altruism. I have a job and I have bills. Does that mean that my employer is obligated to pay me enough for me to afford to pay my bills? The answer is obviously "no."

Is Chicagoan a word?

It is now :)

I really wouldn't think Wal-Mart is bluffing. They routinely shut down any store that manages to unionize. It's cheaper for them to just avoid localities that cost them extra.

If wages are high enough, they won't have to hire "destitutes".

Bill Gates made his money without a higher ed. degree.

Bill Gates made his money without a higher ed. degree.

Are you serious? You're really going to use a few select cases to generalize that education isn't necessary? Would you like to stack this one man (plus whatever other extraordinary cases you'd like to pull up) against all the other people in the country that would be making more or would be able to enter a more lucrative career path if they had a college degree?

1. Bill Gates is just the one case that is well-known. Many of my friends and acquaintances that make more money than I do did not graduate from any university. I attended a university for mostly non-monetary reasons, though it has given me a stable, though limited, income.

2. Many people with advanced degrees are unemployed or not working anywhere near their degree field.

3. You are implying that earning $10 an hour will somehow allow a person to be able to afford a college education, even though it is only a little more than the current minimum wage.

Bill Gates made his money without a higher ed. degree.

You're right, he was born into a rich family. He was a millionaire the day he was born. It is a lot easier to drop out of school when you've got a safety net like that. The world is full of anecdotes of people who've dropped out of college and go on to make a fortune. The internet is full of people who think anecdotes have any value whatsoever in policy debates: they don't. Actual population-wide studies have consistently and incontrovertibly proven the benefit of graduating from college on future wage earnings.

Actual population-wide studies have consistently and incontrovertibly proven the benefit of graduating from college on future wage earnings.

"Consistently and incontrovertibly proven" is a very strong series of words, maybe it applies to some industries & individuals, but I don't believe it applies to all cases.

Forget bill gates, lets look at myself. I'm 20, and have no qualifications whatsoever. Unlike Bill, I don't come from a wealthy family, my parents were on welfare during some of my upbringing, I was raised by my mother and had very little contact with my father in the first 15 years of my life.

I'm a freelance software developer and when I'm not working on building my own business I charge my clients $80 an hour. A few months ago I chatted with someone working late nights at the cash register of a grocery store, turns out he holds a 5 year university degree in my field, and almost certainly knows far more about the subject than I do.

But despite his studies, he doesn't have my experience or my connections. I'm earning $80 an hour part time and spending the rest of my days building a business that will hopefully be very successful in a couple of years. He's working at a grocery store, earning minimum wage, and has no concrete plans to do anything with his degree.

I have no doubt that in some professions a college degree is valuable, but in my profession (and I suspect many others) 5 years of experience is worth at least 20 years of study.

hy=why

Hard to pay for food, rent, health insurance, raise a family and get education on 5.15/hour.

Yeah. And very hard to afford weed. Hopefully this will make weed much more affordable.

Hard to pay for food, rent, health insurance, raise a family and get education on 5.15/hour.

Guessing by there low wages, no previous education, age, and race they could probably get a huge amounts of cash from FAFSA and many scholarships are available for low end wage families. FAFSA alone would probably pay for the whole amount. Plus community colleges are very cheap compare to there 4 year colleges. I really don't think money is a issue for them.

Anti-minimum wage people are religious in their belief that it will cause massive upheaval in the economy. There is no room for actual data in their dime-store economic theories. Card and Krueger's papers have been around for over a decade now and their findings are still unknown in virtually every discussion like this that comes up. The anti-minimum wage people don't even argue against Card & Krueger...they are simply utterly aware. They've staked out their position and they don't care about learning anything about the topic.

Actually, real economists are quite aware of Card and Krueger's study and several others like it. The problem is that any empirical study in economics is dependent on the way in which the data is sorted. The type of study done by C&K is called a "psuedoexperiment" -- in that it attempts to find two similar things with one crucial difference and measure the effect of that crucial difference.

So, in the example above you compare New Jersey to Pennsylvania with the crucial difference being their minimum wage rates. However, anyone with half a brain cell knows that there are other significant differences between those two states besides their minimum wage laws -- so typically a psuedoexperiment will try to use data from multiple states or multiple metropolitan areas in order to cancel out other factors besides the one under study. But does that methodology really work? Is it fair to assume that all non-minimum wage law factors in various states cancel out if you use "enough" states in your sample? It is just as likely that some of the factors will have an additive effect throwing off the entire study. Even if all other factors do have purely random effects upon the data, you are still only coming up with a correlation between two factors -- causation is not proven.

Economics is not physics. Controlled experiments are impossible. Any attempt to do "empirical studies" wholly divorced from known economic laws is just an exercise in data massaging. C&Ks study not only isn't a good argument, it is purely an act of faith to accept their "study" as meaningful.

Economics may not be physics, but economic "laws" (or at least, conventional wisdoms like the expected impact of a rise in MW on unemployment) have to be substantiated by empirical evidence, no matter how difficult it might be to isolate causal factors. Otherwise the whole business is circular: the laws are whatever we say they are. Economics may rely greatly on mathematical proof, which does not rely on empirical evidence, but it is far from being pure mathematics: the applicability of the proofs themselves depend on how well the variables have been harvested from the real world, which depends upon empirical data.

Essentially, you're mistaking a model for the reality. Hence the saying, "the map is not the territory." The "laws" are not known in advance, and any self-respecting economist recognizes that much economic work must be about testing economic models against the reality. Which is precisely what the C&K study and others like it are about.

You put the word "laws" in quotation marks without realizing that law is precisely the correct term for economic knowledge. The laws in mathematics and in economics are both derived from deductive proofs. This is because in both of these fields running an "experiment" is nonsense. One does not test 2+2=4, it is true because of the nature of numbers.

Consider: If you were an atom and you were studying physics, there are certain aspects of reality which would be obvious to you because you have those properties by your very nature. It would be ridiculous to run an experiment to verify your "atomness." Economics is deductive because it is the study of human action and humans are doing the studying. Any induction from empirical data that conflicts with the nature of human action is obviously wrong. The deduction is superior because of superior perspective. You cannot disprove your own "humanness."

The "laws" are not known in advance

Because they are laws (no quotation marks) they can be known in advance. Further, since they are laws it is ridiculous to use uncontrolled "experiments" to "verify" them in the same way that when doing a math problem one cannot use a wrong answer to disprove addition.

This is not to say that economics comes into existence fully formed and no further effort is needed. The struggle in economic theory is to ensure that the phrasing and relative emphasis of the laws are correct. That can be tested based on the general explanatory power of a particular version of economics. Thus, for example, there cannot be an "economics for agricultural societies" and an "economics for industrial economies" since the starting point of the deduction is human action (which exists in both types of societies).

Is it even theoretically possible to do a controlled experiment in economics? To do a controlled experiment you need two (or more) entities whose properties can be considered identical and then act upon each entity differently and measure the difference in response. This requires treating two or more people as identical. Thus, experimental control in economics would require psychological control mechanisms currently beyond human capability (and definitely in violation of any current standard of ethics!).

I had a much longer post written up, but I think it's better to simply refer you to a couple articles:

http://www.berkeley.edu/news/features/2001/nobel/index.html

http://www.economist.com/business/displaystory.cfm?story_id=7159491

Also, for your consideration, some relevant stuff from Wikipedia:

http://en.wikipedia.org/wiki/Economic_theory#Is_economics_a_science.3F

These articles do not seem to help your position. The Economist article that you cite (in particular) discusses serious pitfalls associated with any attempt to model an economic system. The chief failing, as noted toward the end of the article, is that you can reasonably model how present distribution will be affected by a policy change, but that the future equilibrium set in motion by those changes is indeterminate. Furthermore, it should be pointed out that such models attempt to apply known laws of economics in mathematical terms in order to calculate future outcomes. This is an attempt to use the deductively derived principles of economics as a forecasting tool, not an experimental verification.

The wikipedia article does provide links to a further article about attempts to create economic experiments. The key line in that article is "the ability to control for certain influences is limited or non-existent."

The Akerlof article should dissuade you from the idea that knowledge of human behavior in economics is merely deduced from self-knowledge.

With regards to the Economist article, I have to ask, what, for you, constitute the "known laws" of economics, in contrast to a mathematically defined economic model? I can certainly grant that some assumptions in economics are not really debatable. But it's incumbent on you to demonstrate that C&K's conclusions necessarily violate undebatable economic laws, as opposed to a given economic model, which are continually being revised against empirical data.

Because if this were the actually the case, then I would be inclined to assume that this debate wouldn't be happening in the first place. Because if this were really about violating irrefutable economic laws, then we could expect to see economists (like, say, Mankiw) objecting to C&K's results on purely logical grounds ("They violate such-and-such known laws of economics"), rather than citing or creating counter-literature objecting to them on the basis of data-gathering and empirical grounds. And yet many economists (like, say, Delong), regardless of whether they agree with C&K's results or with increasing the minimum wage, appear to think that the issue must be decided on empirical grounds.

That's a little strange, don't you think? I mean, assuming you're correct, they could've nipped C&K in the bud a long time ago, far more definitively and with far less effort. And folks like Mankiw and Delong are some unquestionably smart guys. But in my experience, it's actually the non-economists who simply accept the traditional wisdom (increasing the minimum wage will always be disastrous!) as brute fact and object to anything that doesn't reinforce it as obviously illogical.

I cannot (and did not) deny that many economists want to use empirical methods to prove economic law. Our culture has developed a severe bias against knowledge gained by deduction, largely due to the success of physics (a field in which induction necessarily has primacy). The result is a desperate attempt by economists to use empirical methods in order to gain "respectability." Unfortunately, this has a regressive effect on the quality of economic research.

But it's incumbent on you to demonstrate that C&K's conclusions necessarily violate undebatable economic laws

Simple. Minimum wage laws are price supports. If a law mandates that the price of a good shall be higher than what was previously dictated on the market then the legal market for that good will change. Specifically, purchasers of that good will either:
a) purchase less of the good
b) purchase a substitute product or c) purchase the same amount but buy less of something else.
If the good being purchased is unskilled labor (as in the case of a minimum wage) then purchasers (employers) will either a) hire less workers, b) automate production or c) buy less of other factors of production. We know this because of two undeniable facts. First, that the wealth to pay the increased wages must come from somewhere and second, that employers' unwillingness to pay more than the pre-minimum wage amount is revealed by the plain fact that they did not do so already.

We cannot know what mixture of these alternatives employers will take, but they must do some combination of them. Options a) and b) obviously result in unemployment. Option c) potentially will as well since the providers of those other goods will see a drop in demand. Now, the counterargument is that the increased incomes of the workers will drive up demand for other products resulting in a need for new workers elsewhere in the economy. But even if this effect occurs, it is offset by the drop in demand for products previously demanded by producers (see above) and those industries would presumably see a drop in employment. To the extent the products purchased by employers and low wage workers are the same, these demands offset. To the extent they are different, there is a transfer of profits from firms that sell to low wage employers to firms that sell to low wage employees.

The undeniable conclusion is that employment at or below the minimum wage level will decrease. The only way it could remain the same is if all affected employers paid the higher wage and none of them ceased purchasing any goods produced by low wage labor. This is so unlikely that it isn't worth considering. An increase in employment in such industries is logically impossible.

Thus any study showing that minimum wage increases "caused" employment to increase must be failing to control for all relevant factors.

Can Rescheduling Explain the New Jersey Minimum Wage Studies?

I can actually agree with you that there's an overbias for empirical methods (thanks to the success of the physical sciences), which have warped human and social inquiry for the worse. I nevertheless believe that the most rigorous human and social inquiry must maintain a constant dialogue between empirical and non-empirical findings (a failure to do so has cost analytic philosophers of language a great deal). With the possible exception of pure mathematics, there is simply no discipline that can presume to remain aloof from the empirical. That researchers have often overestimated the role of the empirical does not imply that the empirical should play no role.

Nicholas, that was uncalled for. Discrimination was not in reference to "race". It was in reference to one employer being treated differently from another. Words don't necessarily apply the same way everytime.

Maybe they can now that they are getting paid more.
I'm really tired of this argument that "if people don't like their pay they should get education."
Education is not free. You have to pay for it from the same pool of funds that your rent, bills, food, medicine come from. You have to set aside time for it; time that might be spent working and possibly raising kids.

The hell with it, I'll just come out and say it. Anyone who's raising kids on $5.15/hr or even Wal-Mart's new 'living wage' is an idiot.

E to the Z: I concur that education is not the "be all end all". It is just one way, and somewhat more predictable improvement in income than many other routes. For example, what happens if a family working at Wal-mart gets used to the increase to $10 an hour, and the next city council votes to rescind the "living wage" act? The more skilled the laborer, the less controlled they are by external forces like that.

BTW- Wal-mart isn't in the Newsvine spellchecker?

I'm really tired of this argument that "if people don't like their pay they should get education."
Education is not free.

In reference to my other comment from above:

Guessing by there low wages, no previous education, age, and race they could probably get a huge amounts of cash from FAFSA and many scholarships are available for low end wage families. FAFSA alone would probably pay for the whole amount. Plus community colleges are very cheap compare to there 4 year colleges. I really don't think money is a issue for them.

I can understand time maybe a factor but community colleges are very flexible with time with night/weekend/ and online classes.

I'm making under the Chicago "living wage" and I am single with no kids. It's very difficult paying for all the neccessities along with finding a way to afford the last 2 semesters of college I need to take.

The hell with it, I'll just come out and say it. Anyone who's raising kids on $5.15/hr or even Wal-Mart's new 'living wage' is an idiot.

When my family moved to this country, my mother had no education. She worked in a garment factory in Pittsburgh for minimum wage to pay the bills and help raise me.

Now my parents live in a nice suburb in Houston, TX and are well into the upper middle class. I don't think my parents were "idiots", and I find your opinion pretty offensive. It sounds like you have no concept how hard working class people have to struggle to make it off the bottom economic rung.

Yes I do. My dad was the only wage earner until I was 5, my mom stayed at home with me and my brother. We made under the federal poverty limit then. They make plenty now.

Do I regret they had me? Heck no. But honestly it's idiotic to bring a child into the world if you can't support them.

The problem with moral issues is people have different morals.

What should be the law is the issue.

But I have a question, Leftist. If I start a business, should I be entitled to make a profit, and a "Living Profit", at that?

Honestly, who would disagree with eliminating poverty, lifting people up, and restoring their dignity. Plus, the capitalists would love more potential consumers with more expendable income.

The question is how to do it. There is no morality is raising the minimum wage if it throws the poor out of jobs.

BTW, you didn't asnwer the question... If I start a business, should I be entitled to make a profit, and a "Living Profit", at that?

Leftist, do you think it is possible to restore people's dignity by giving them things? It hasn't much worked for Africa or Latin America, or for that matter, most impoverished schools here in the US of A. Doesn't dignity more profoundly come from within?

So should car manufacturers be forced to stop using machines to build cars, and go back to the slow human-run assembly lines that operated at maybe a tenth of the speed? It may make some new jobs, but the price of a car would go up considerably.

I think it's time to state the obvious: The goal of any business if to make money. It's not to help society or benefit the poor or make people happy. It may be that a company can make money by accomplishing those goals (many do), but the motivation always comes back to "what can make a profit". If a company can save money by replacing paid workers with more-efficient, cheaper machines, then they should do that. The result is that whatever product they make will be cheaper, and that can only be good.

@Adam -

If a company can save money by replacing paid workers with more-efficient, cheaper machines, then they should do that.

But only if quality doesn't suffer.

Take making beer for an example - it is cheaper and much faster to do massive batches, to only clean the lines at certain times, rather than between each batch, and to pasteurize. The companies that do one or more of these things make a lot of beer and a lot of money - but the product isn't that good. As we have been witnessing, there is a huge upswing in the craft beer market, and that profits for mass producers is plateauing. So, while it may initially be good to cut costs by cutting corners - in the end it will catch up to your business.

That depends on who you're selling to. If the customer cares more about price than quality, then you can do pretty well in that market. Just think of all the cheap beer you can buy. Those companies make a lot of money on that cheap beer. :)

The goal of any business if to make money. It's not to help society or benefit the poor or make people happy.

And that's why government intervenes on behalf of the people. Businesses have no loyalty to country, society or people at large and so we have laws to restrain business.
It's the duty of government to protect its citizens, not only from foreign military threats, but also threats from within the country that imperil the people's ability to make a living and advance on the socioeconomic ladder.

Which threats are those, and which laws are you referring to?

See my comment above, and read the comments to the blog post you linked to.

It's just ONE paper, Walt, others dispute its findings:

From Cafe Hayek---

Minimum wage stuff

Russell Roberts

In this post of a week ago, I invited readers to react to the following claim: if the minimum wage causes unemployment, why don't states with high state minimum wages have high unemployment rates.

A lively discussion ensued. Particularly trenchant points were made by:

1. John Dewey (and Don of CrossMolina.blogspot) who argued that the minimum wage only applies to a very small proportion of the work force. It would be unlikely that the impact on the total unemployment rate.

2. Mark Adams and Eric H and others pointed out that unemployment may not be the right measure. You might want to look at employment opportunities. If you can't find a job and give up you don't get counted as unemployed.

3. Steve Bass pointed out that whether a state has a minimum wage is endogenous. Maybe states with healthy labor markets are more likely to have a state minimum wage.

I think these are the three main points, but a long debate ensued after that, with lots of interesting back and forth. At one point, Econgeek mentioned the Krueger-Card paper:

Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania David Card; Alan B. Krueger The American Economic Review, Vol. 84, No. 4. (Sep., 1994), pp. 772-793. http://links.jstor.org/sici?sici=0002-8282%28199409%2984%3A4%3C772%3AMWAEAC%3E2.0.CO%3B2-O

as the "standard reference in the empirical literature.

That's half right. It has become the standard reference for those who don't believe that minimum wages are bad for the poor. Whether it's a reliable source of information is a different question. It follows, I don't know, 25 or 50 or a hundred or more papers that found that minimum wages reduce employment opportunities. Is it better than the others? Maybe. It might be. But I'd be worried about basing public policy on one paper that looked at one industry, the fast food industry, using a phone survey eight months after the minimum wage was increased in New Jersey to conclude that minimum wages don't effect employment for low-skilled workers. I'd worry about whether eight months was a long enough time for people to react to the new law. And I'd worry about whether the rest of the econometric analysis was done correctly.

http://cafehayek.typepad.com/hayek/2006/03/minimum_wage_st.html

It's just ONE paper, Walt, others dispute its findings:

Of course, there are plenty of other studies that find the same thing. This is why in his Slate piece on the flaws of minimum wage studies Steven Landsberg could write "In fact, the power of the minimum wage to kill jobs has been greatly overestimated. Nowadays, most labor economists will tell you that that minimum wages have at most a tiny impact on employment."

Observer, the 1994 Card-Krueger paper is essentially what started the debate. As one of the commenters on the Cafe Hayek post points out, this is why it's a "standard reference", which doesn't mean the sole reference. As eidolon points out, there are other studies that take similar positions. Russell Roberts himself (the author of the Cafe Hayek post) seems oddly unaware of the literature and debate about the Card-Krueger 1994 paper, not taking much of a stance on it aside from voicing a few concerns about what might be wrong with it. Not exactly a knockout punch in the debate over how increases in minimum wage affect unemployment (or the poor).

That explains the expansion plans of Metra, the highways, the booming development in the Loop, Millenium Park, the new McCormick Center. Oak Brook ain't all you think it's cracked up to be.

Yeah that would be a great job Robert. I could go to work and make $0, or stay home and watch tv and make $0. If they don't pay you enough for your time you don't go to work.

Robert Bell, at the other end of the spectrum, how should the head's of companies be compensated?

Yeah that would be a great job Robert. I could go to work and make $0, or stay home and watch tv and make $0. If they don't pay you enough for your time you don't go to work.

except you wouldn't have a home or a tv.

Is it not a pity for large corporations that people refuse to work for free.

Why would people work for free? The job market is no different than the market for goods. If you can find a customer willing to pay a higher price (salary), wouldn't you work to them? If you are the employer trying to undercut salaries, would you really expect to get qualified people at bargain basement prices? If the larger corporations started paying less, I would bet that there would be a huge flight toward small- and mid-sized companies that might be willing to pay a bit more to get the talent they need to operate.

Your statement is analogous to saying that customers would pay $0 for a car if they could. Would that car be able to do anything you need (like run)? Probably not.

I think you misunderstand.

I think you misunderstand.

I don't think so. I think that corporations will pay the minimum amount to get the skills they require. Potential employees, on the other hand, are looking for the best price for their skills.

So, if it were possible to get skills for nothing, companies would pay $0. In reality, skills are in demand (in some fields more than others), so it is impossible to pay $0 since you would have no job candidates willing to work for that rate. There are other places to sell skills for a better rate than that.

Lots of Americans do work for free, it is called volunteering. Now maybe Wal-Mart could begin to frame itself as such a force for good in society that people work for nothing. Maybe they already do that?!?

Lots of people do volunteer, but how many of them do that without having a wage earning job as well?

Why would people work for free? The job market is no different than the market for goods. If you can find a customer willing to pay a higher price (salary), wouldn't you work to them?

Not necessarily. It's not just about money. If someone paid me a bit more to do twice as much work, I wouldn't consider it. The people you work with, the opportunities that you're going to get with each company and a variety of other things come in to play.

Not necessarily. It's not just about money. If someone paid me a bit more to do twice as much work, I wouldn't consider it. The people you work with, the opportunities that you're going to get with each company and a variety of other things come in to play.

Compensating differentials don't really affect the point of Jay's argument. There is a price at which you will not work and there is another price at which you will work for someone else. Compensating differentials (such as who you work with) are part of that price. All else being equal, every single person here would work for the company which paid the most.

Lots of people do volunteer, but how many of them do that without having a wage earning job as well?

Case in point: Me. For five years I volunteered work and equipment to an organization I helped build. I could not have done that without a paying job.

bit more to do twice as much work

Apple to apples. I would be foolish to buy half as much car for the same money. There are some other factors in play. If I were to be presented with an opportunity to earn twice as much doing the same type of work, but I really liked the people at my current job, I might be a little reluctant, but I would take the huge increase in money.

The government should encourage behavior that helps people avoid poverty. Programs such as the 1996 welfare reforms encouraged work -- and the rate of poverty fell. Proposals to encourage marriage, like President Bush's plan to eliminate the marriage penalty, could also have similar benefits.

That's well and good, but that doesn't do much for the people that are poor now? Do we just write them off? "They already made their bad decisions so let them live with the consequences." Too bad for their kids.

That's well and good, but that doesn't do much for the people that are poor now? Do we just write them off?

How about cutting their taxes and raising the EIC?

There are very few ways to cut their taxes. They don't pay federal income tax. In fact, they often get huge amounts of money back. They pay hidden taxes in everything they buy, Social Security, Medicare, etc, but these won't be cut because to do so would cripple the programs.

I would implement the FairTax(fairtax.org), which would completely eliminate the federal tax burden on the poorest of the poor.

Are you sure those aren't just luxuries that the richer folks have? Often times people can't finish high school because they are poor. They are poor because they have a part time job or are un-employed and can't get a job.

Only 2.6 percent of people 16 years or older with full-time jobs are poor.

That is 2.6% of people who are working full time who are under the poverty line.. thats an arguement for raising minimum wage. If you can't make it in this world while working full time something is wrong.

If you can't make it in this world while working full time something is wrong.

Agreed.

Most of these things are changeable with free will, thankfully. Unfortunately, it takes more effort for some than for others.

Well said. Some are dealt better hands than others. But, I would take the will to overcome adversity over having a slightly better start in life and a lack of motivation.

Often times people can't finish high school because they are poor. They are poor because they have a part time job or are un-employed and can't get a job.

The only scenario I can imagine where poverty prevents graduation from high school is if the children have to work full time in order for the family to make ends meet. In that case the parents are clearly having children they cannot afford. Other than that...?

Please explain how people only working part time or not at all cannot attend free high school.

By the way, I lived below the poverty line when I was in high school. That was because my mother chose to have additional children she could not afford. Rather than work, she chose to stay home because welfare provided her with more money than work less daycare costs. That's because she chose not to go to college. Yet this didn't prevent me from graduating from high school (and I even worked part time).

Yes, that is generally true, especially over longer periods of time. I used to feel badly about the Indian and Chinese employees making so little money, until I decided that for the most part that is all they are worth on the international marketplace for such work. I quite believe that without the minimum wage laws period, we would not have sent so many jobs oversees, since some jobs simply are worth more than $2 an hour (or whatever number).

better a minimum wage break a company than break hard working people.

Who do you think is most affected when a company is 'broke'?

The hard working people, that is who.

i'd say the owner is most affected.

Tell that to the out of work people, that just went on welfare and unemployment that YOU are paying more for.

Oh! BTW, it doesn't take effect until 2010.

Why? What do the struggling people do until then?Could this just be a political ploy? Could this be a way to get the precious UNION workers a defacto raise, since their pay is attached to the minimum wage?

Chicago will lose jobs and taxes from this. San Diego fell into a huge budgetary hole after this one, since the city workers got great raises, with not enough increase in taxes to cover.

After this does take effect, Chicago will look like Detroit, about 6 years later.

i'd say the owner is most affected.

A man with $10000 loses $500 and a man with $10 loses his means of generating income. Who is more affected by the loss?

A man with $10000 loses $500 and a man with $10 loses his means of generating income. Who is more affected by the loss?

Who cares. They both lost. Now they both need to expend effort to find another means of making up the loss. One will have to put in more effort than the other. That's life.

A man with $10000 loses $500 and a man with $10 loses his means of generating income. Who is more affected by the loss?

How about looking at it this way. A who has worked hard all of his life has 80% of his assets tied into a company he owns. The company fails and he loses his ability to retire.

How does losing a job equate to losing your ability to generate income? Could this man not take his skills and find another job at another company? It might take some time to find another job, but it is certainly more of a temporary setback.

Jay,

My statement was in response to the idea that government interference necessarily helps the "little man" even as it negatively affects the owner. There are situations where that may be true, but my question shows that it is not necessarily true. In most cases the truth is - as bmvaugn points out - that both lose (not to mention the consumer).

I think that would be true - but I think that often smaller shops offer more than the minimum wage to their employees (at least, all the ones I've worked for have). But it's not as simple as that - there are other benefits to working for a smaller company, and many people will choose a smaller company even if they pay isn't as great initially because of possibilities to advance, opportunities to learn new skills, etc.

I think you have a point - but it's not the main reason this is a bad idea.

I would think that in a smaller company there would be fewer opportunities to advance or learn new skills, due to the fact that there are fewer employees, which usually means less turnover.

If it doesn't kill off the mom and pop stores directly from that, then it may due to the fact that the people working at those stores would be the ones who managed to get fired from Wal-Mart :)

right on!

My personal profitability = my happiness. Financial freedom is my goal.

And you are free to educate yourself and get a better job and increase your profitability. You are not guaranteed to get rich through just any job and if you think you can accomplish that working in a Walmart store, well theres not much to say about that.

free to educate yourself and get a better job and increase your profitability

Who says I am not doing that? I am continually educating myself with that goal in mind. There are no guarantees to anything. But, desire, motivation and effort certainly increase the odds. Maybe I will have to start my own company to get really rich.

Does that make Wal*Mart jobs bad? Hell, no. I have and I am sure many of the rest of us have held jobs that pay worse and have fewer benefits. Wal*Mart can be a good place to begin the "pursuit of happiness". With hard work, I am sure that it can be accomplished either by staying on and advancing within the company or by leaving the company for greener pastures.