Attaboy!
The blogger formerly known as SKB has an op-ed in the local newspaper.
Personally, I think raising minimum wage is a largely pointless excercise. But kudos to R. Neal for doing the op-ed thing.
But leave it to B-Ho to be a dick about it. Bringing someone’s family and professional life (update due to email: and house size) into politics to score a few cheap points is pretty lame.
May 22nd, 2006 at 10:25 am
Lame indeed. Maybe Hobbs should investigate the anonymous emailer whose comment sparked the post. Who knows what undisclosed interests he might have. And I’m saying this as someone who considers all minimum wage laws to be worse than a pointless exercise.
May 22nd, 2006 at 9:32 pm
Mr. Neal has worked very hard at being a public figure in order to promote his views. He visits TV stations, writes op-eds plus his blooging and related activity at Looking South. He used his status as a small business owner to try and legitamize his argument and deny the survey by the small business group, which by the way would be a very good survey if the population sample was distributed properly. One could even argue that Mr. Neal’s outing last year was a result of his frequent seeking publicity which was at odds with anonymity.
A question was asked. It turns out that, as a business owner, higher minimum wages would have no impact on Mr. Neal’s business’s salaries. Having an expensive house in the burbs (I suppose he does) indicates that slightly higher prices would have little impact on him personally. (In the comments on his blog he quotes his wife as saying who can’t afford to pay another nickel for a frozen yogurt or something like that. Ironically, the people who would be least like to be able to afford another nickel are the very people he claims to be helping.
If I take my wife and kids to get treats the extra nickels add up. And what of the extra penny a gallon for gas because of the salary increases at gas stations, etc, etc? Mr. Neal is the man who rants about oil companies, CAFE standards (while driving an SUV that gets 18 mpg across the country), freely calls other public figures names, vulgar language and more. Yet, he expects special consideration he doesn’t give to others.
May 22nd, 2006 at 11:34 pm
Being a blogger is not being a public figure. If he were a politician, it might be a different story, but even politiicians have some right to privacy. One would assume that most business owners who advocate for a higher minimum wage already pay their employees more than minimum wage, because…drum roll please…it would be hypocritical of them not to.
Furthermore, R. Neal’s large home is a testament to the fact that paying out high wages doesn’t put a small business owner in the poorhouse…(and if I remember correctly, he has a handful of employees who aren’t his wife).
May 23rd, 2006 at 8:18 am
I believe the quote was, “As the Mrs. said, he’s not willing to pay a nickel more for an ice cream cone so the guy dipping it can afford gas to get to and from work every day?” Maybe, you, your wife, and kids don’t care about the guy working at the store for you and whether or not he gets to/from work.
If you are so concerned about my family’s finances, what are your thoughts on Mr. Stanley’s finance’s? He works for a very large invesment company. Maybe the company he works for takes your 401k money and invests it for you. He has no employees, but is an employee. I doubt his company has minimum wage employees. As a State of Tennessee Representative, he represents Germantown in the Memphis, TN area. Germantown is a very high income area. They probably have to bus in the minimum wage employees. But, please, this is not the point.
We started out our married life at minimum wage, $1.65/hour. We had one junker car (that we repaired ourselves), lived in a trailer park, bad plumbing, no telephone, barely any money for food. When we started making $1.85/hour (the new minimum wage), we thought we were in the money. A second junker car (no bus service), afforded us more flexibility for transportation to jobs, and thus more flexibility on selecting jobs to further our careers (if you could call it that). Of course, maybe Dissenter knows all of this. It seems he/she is tracking our lives very carefully.
Since I have been in a minimum wage person’s shoes, I can empathize. When I was making minimum wage and couldn’t afford to put gas in my car, buy groceries, pay for phone service, I was not real concerned whether an ice cream cone cost 75 cents or 80 cents, $2.50 or $2.55. I have always had goals in my life, but I did not let jealousy of physical things blind me.
We, my husband and I, have worked very hard to get where we are today. We made choices, we made mistakes. One thing we never forgot is to always try and live below our means. Someday we (you) too may be once again working for minimum wage with no health insurance and no retirement.
You would begrudge someone an extra dollar an hour so your family can buy an ice cream cone? You would begrudge someone gas money so you can have another TV in the house? You would begrudge someone food on the table so you can send your kids to college? You would begrudge someone healthcare so you can have two cars, cell phones, cable TV, high speed internet, Latte’s a couple of times a week? That’s fine.
I don’t think you have to give up any of that. I just said we should be willing to pay a nickel more for an ice cream cone so the guy dipping it can afford gas (bus fare, whatever).
Oh, and by the way, Manish, we do not currently have any employees besides my husband and myself. We currently use temps, contractors, and partners at a much higher rate than minimum wage. Thanks, though. And, a note to B-Ho, et.al., anybody who know us would know that we are an equal opportunity employer, we are 50-50 all the way. My spouse is not threatened by me and I not by him. In addition, for those not in the know, your retirement savings is higher, the higher income you have. If I only made minimum wage, I wouldn’t have much retirement savings, would I? Any accountant should tell you, it is important to have your own, separate retirement savings (or a great pre-nup, I guess).
Back to the topic of the op-ed piece, what about the report that says, “the number of small business establishments grew twice as quickly in states with higher minimum wages (3.1 percent vs. 1.6 percent),” and “employment grew 1.5 percent more quickly in high minimum wage states.” What are Tennesseans afraid of? Success?
May 23rd, 2006 at 8:51 am
Four words: post hoc ergo propter hoc. By the same logic, I have little doubt that on the average, people who bought brand-new BMWs in 2005 will earn a hell of a lot more in 2006 will those who bought 10-year old junkers with 100,000 miles or more on them, or who haven’t bought a “new” car at all in a while. Does that mean the rest of us should rush out and buy BMWs in hopes of becoming more successful?
May 23rd, 2006 at 9:19 am
What has purchasing a BMW have to do with raising minimum wage? Small business grows faster and employment more quickly in higher minimum wage states. That is success. Buying a BMW is not an indicator of success.
May 23rd, 2006 at 10:36 am
It’s called an analogy. Both examples rely on the same faulty reasoning, which is confusing correlation with causation. Economic growth and higher minimum wage laws probably do correlate, but only in the sense that states with strong economies are more likely to be able to afford minimum wage hikes than are states with weaker economies. To argue that opposition to a minimum wage hike is motivated by fear of success is to argue that a minimum wage hike will cause economic growth. That makes about as much sense as arguing that buying a BMW will cause me to earn more.
May 23rd, 2006 at 10:59 am
Yeah, in Tennessee … Ah, whatever floats your boat.
May 23rd, 2006 at 12:36 pm
Minimum wage laws do nothing except to increase the amount of people considered to be “in poverty”, reduce business revenue making business less able to give raises to its employees, and cause prices to rise even higher then they are now. We would all do well to oppose a raise in the minimum wage law.
May 23rd, 2006 at 3:34 pm
Wow. I always knew Hobbs was a dickhead, but sheesh!
May 23rd, 2006 at 3:38 pm
Xrlq:
Umm, not exactly. I think if R. Neal had been using this example to argue that increasing the minimum wage would help the economy, you might have a point, but I’m not at all sure that this is why he brought it up. If I read it right (and I may not), I think he’s using the example to refute the oft-bandied-about criticism that increasing the minimum wage will hurt small businesses. If that criticism were true, we wouldn’t expect the higher minimum wage states to out perform the lower-wage states.
Can you conclude from this (and this alone) that higher minimum wages help? No. But it does belie the “forced-higher-wages-hurt-businesses” line.
May 23rd, 2006 at 3:39 pm
Although on further review I can see how you read that into R. Neal’s reasoning.
May 23rd, 2006 at 9:23 pm
Not if we assumed all other things were equal, but my argument is that they are not. Rather, my position is that minimum wage laws in excess of the federal minimum are a luxury only high-earning states can afford, and which only high-earning states therefore dare to adopt. That position could be wrong, of course, but I don’t think it’s fundamentally irrational.
Not really. I think a case can be made that no matter where you sit on the economic totem pole, buying a Beemer is more likely to harm your personal version of the economy than it is to help it. However, it will harm you by the same amount of dollars no matter who you are, so if you are working class, it will wipe you out, while if you are semi-rich you can afford it, and if you are ultra-rich you’ll barely notice the cost at all. So of course more rich people will buy them than will poor people, even after you factor out those who can’t. So too with states and the minimum wage; it doesn’t help anyone’s economy (except maybe those of individual union workers who have previously negotiated salaries pegged to it, and then only in the case of minimum wage hikes), and hurts business everywhere, but it doesn’t hurt everyone equally. In states with strong economies, its impact is as negligible as Bill Gates’s Beemer, and it makes everyone feel warm and fuzzy inside, so why not. But in states with troubled economies (to say nothing of Third World countries), its impact may be devastating. So they don’t do it.
It may not be why he brought it up (in the op-ed piece), but it is an argument that she (M. Neal) made in the earlier comment I was responding to.
Although on further review I can see how you read that into R. Neal’s reasoning.
Bingo. I don’t think there’s much else a man can read into this:
May 23rd, 2006 at 9:33 pm
What are Tennesseans afraid of? Success?
Apparently so. The argument seems to be that higher wages and BMWs are better reserved for better states where people can do better or even succeed, not states like Tennessee.
OK, then.
Expectations, self esteem, self-fulfilling prophecies, etc., et. al., forever and ever, Amen.
May 23rd, 2006 at 9:37 pm
P.S. Xrlq, I’d like to talk about your business, and your wife. What does she do? How much does she make? What business are y’all in? How big is your house? How many employees do you have? Have either of you ever worked for minimum wage? I think I’d have a much better perspective on your perspective if I just knew all that.
May 23rd, 2006 at 9:47 pm
Randy, in X’s defense, he did say of hobbs:
May 23rd, 2006 at 10:36 pm
P.S. Xlrq, you say “bingo, etc.” about my reasoning, and then quote my wife. I think you are getting us mixed up, just as both of us are confused by your BMW analogy. I think I addressed your actual point in my next to last post. Your wife and your business or how much you pay your employees doesn’t really have anything to do with it, unless you’d like to have her chime in, so never mind on that.
May 24th, 2006 at 6:24 am
Not hardly. The argument is that from a purely economic standpoint, higher mandated wages and BMWs are a bad idea no matter who you are. They’re only “better reserved” for the rich states/individuals in the sense that it’s better to waste resources you can afford to lose than it is to waste resources you can’t afford to lose.
May 24th, 2006 at 5:02 pm
X:
Just curious, but can you hold up an example of someplace where there is no mandated minimum wage, that you’d rather live and work in than the US?
In any case, I’m not sure I’m convinced that there’s any evidence at all that a minimum wage hike would harm anyone. Now if you talked about doing something dramatic, like tripling the minimum wage, that could certainly do it, but I just don’t see how a moderate minimum wage hike would do widespread harm. The businesses that employ lots of minimum wage workers would likely reflect any increases in their prices to their customers, I suppose, but I seriously doubt it would bankrupt anybody.
Maybe you could point me to information on the massive recessions and huge spikes in bankruptcies and unemployment that occurred the last couple of times the minimum wage was hiked.
May 25th, 2006 at 9:08 am
Tgirsch, I can’t point to any country I’d rather live in than the U.S.; howver, I don’t thank the minimum wage for that. The only time in my life where the minimum wage affected me directly was my first job or two in high school, when it probably made the job search harder since I was worth less than that. Almost by definition, “massive recessions and huge spikes in bankruptcies” should not be expected to result from “a moderate minimum wage hike.” Massive minimum wage hikes – commonly known as “living wage” laws – surely would, as you yourself acknowledge. Granting that small versions of bad policies only produce small harm, I don’t really get too exercised over the minimum wage as implemented in this country, which generally trails inflation and really wasn’t all that high to begin with. It’s a mistake, but an affordable mistake. The question is, for the small amount of harm it causes, what real good does it do? Even if we assume that no one gets laid off, and everyone making below minimum wage gets a slight pay increase, which in turn results in a slight increase in the cost of whatever they produce, what good does that do to the workers themselves? At the end of the day, they make a little more, but they need a little more to live on. The only one who comes out ahead is the government, which gets to keep a higher percentage of their earnings.
May 25th, 2006 at 6:11 pm
The problem I have with your line of reasoning is this: you’ve presented no evidence whatsoever that the minimum wage actually is a bad policy/mistake. It seems it’s an article of faith. Of course, you could toss the same argument right back at me. It seems intuitive to me that the country would be a worse place without the minimum wage, and it seems intuitive to you that the country would be better without it. So that brings us to, how do we find out who’s right?
At the end of the day, they make a little more, but they need a little more to live on.
The key question is, are those two “little mores” the same or comparable amounts? And the answer, I think, depends on what types of costs would increase as a result of a minimum wage hike, and which wouldn’t. I’d expect costs to increase only in sectors where large numbers of people in that sector work for minimum wage. (And, to a lesser extent, those sectors that are heavily dependent upon heavy-minimum-wage sectors even if they don’t directly hire people at minimum wage.) In other words, I don’t expect the costs associated with a minimum wage increase to go up across all aspects of a minimum-wage-earner’s expenses — only for a subset should this be the case. More specifically, for example, I’d expect things like food and clothing costs to be directly impacted by a minimum wage hike, but would not expect things like fuel costs, housing costs, and health care costs to be directly affected.
If that all holds (and it may not — I’m certainly no economist), then there’s a good chance that minimum wage earners could be well served by a minimum wage hike — that is, they could very well come out ahead on the deal. That’s why I tend to think that a minimum wage earner would, on balance, benefit from a minimum wage increase. Note that the expenses that shouldn’t be directly affected are generally the lion’s share, and the ones that aren’t are a smaller portion.
May 25th, 2006 at 11:44 pm
By looking to see what will happen if the minimum wage is hiked by a larger amount. At some point, the small bad idea / small good idea will turn into huge disaster / resounding success. I’m not wild about running that experiment, because I’m convinced the minimum wage is bad. If I thought it was good, I’d be tempted to try. Are you?
I would. Money is fungible. Like water, it flows in all sorts of unpredictable directions when you attempt to corral it. Once food and clothing costs go up, along with everything else manufactured by unskilled laborers, watch for a price increase for everything else that relies on these products and services. It’s like watching the price of gas go up, but expecting the price of stuff that gets transported around the country to remain constant.
That said, my own stipulation that the entire wage hike goes into an increased price is unrealistic. Some of it will no doubt translate into unemployment. Some will translate into lower shareholder profits, which in turn will mean less investment in industry, less competition, higher prices, ad nauseam. In the end, there is no free lunch, but there are a million places to hide the cost.
May 26th, 2006 at 12:29 am
Xrlq:
By looking to see what will happen if the minimum wage is hiked by a larger amount. At some point, the small bad idea / small good idea will turn into huge disaster / resounding success.
Well, your huge assumption here is that the function involved is linear or at worst logarithmic or exponential, and that it’s not quadratic or polynomial or sine-like, where differently-sized increases could result in positive or negative results. If this assumption of yours were true, there would simply be no such thing as a “point of diminishing returns” in any economic proposition — there would only be varying degrees of gain or loss (never a mix) based on a change in one of the inputs.
In a complex system such as the modern economy, it seems clear that such an assumption is absurd. Proof of concept: shift it so that not only is there no minimum wage, there’s no requirement to pay a wage at all. By your reasoning, companies would clearly be better off not to pay their employees at all, but this is clearly not the case. No, I suspect there’s a “sweet spot” (or a range, anyway) wherein returns, profits, and overall benefit (to both employer and employee) is maximized. Paying employees too little or too much would both be harmful.
Admittedly, it’s impossible to come up with a one-size-fits-all number that works, but it doesn’t seem unreasonable to set an absolute minimum that states and localities can choose to increase (or not) based on local conditions. Which brings us to another good reason for some sort of mandated minimum wage: in any economy where the number of potential workers exceeds the number of available jobs, what’s to prevent abuse? What’s to prevent a race to the bottom?
Some of it will no doubt translate into unemployment.
You say “no doubt,” but I doubt. 🙂 If increasing the minimum wage leads to an uptick in unemployment, we ought to be able to see that in the numbers. Can we? It’d be easy enough to check, given the time or the inclination.
Some will translate into lower shareholder profits, which in turn will mean less investment in industry, less competition, higher prices, ad nauseam.
Kind of like untargeted tax cuts “no doubt” result in increased investment in industry, a vibrant economy, increased competition, and prosperity for all, while tax hikes no doubt lead to economic stagnation and/or recession? 🙂 Whoops!
May 27th, 2006 at 4:32 pm
Not exactly. I understand that a little liquor can be good for you while a lot of liquor is bad. But it’s harder to make that argument in cases where the large amount of X clearly produces bad results, and it’s not clear that the small amount of X has any notable impact at all.
What makes you think it didn’t?
May 27th, 2006 at 5:50 pm
But it’s harder to make that argument in cases where the large amount of X clearly produces bad results
Again, it depends upon what you’re talking about. As you point out, alcohol is an excellent example of a case where a little is good and a lot is bad. But there’s no evidence that I’ve seen that something similar isn’t the case with a minimum wage. As far as I can tell, it’s all article-of-faith type stuff. Once again, if hiking the minimum wage automatically results in deleterious effect, you ought to be able to document this quite readily based on the last few minimum wage hikes.
What makes you think it didn’t?
The fact that there’s no solid evidence that it did. The economy did not magically improve as a result of Bush’s tax cuts, just as the economy didn’t magically tank as a result of Clinton’s increases. Of course, the cop out answer is that the economy would have been even better if not for Clinton’s hikes, and even worse if not for Bush’s cuts, but that sounds an awful lot like the tail wagging the dog to me. This is why evidence is important.