NJ referendum on raising minimum wage. Opinions?

[Shalom]

OK, we have a general election coming up Tuesday in this great state of Joisey.

The main event is the Governorship of the state. Christie, Buono, and a bunch of also-rans, some of whom I have to say sound like crackpots. (One of them is running on the slogan "NSA Did 9/11". I mean, come on.) Then there are elections for two Members of the General Assembly, one Sheriff, and two Members of the Bored Frozen Cheeseholders Board of Chosen Freeholders. (That's a Joisey thing: county government. We only ever hear from or about them at election time. I've been living in this state since 1998 and I still have only a vague idea of what the hell it is they actually do.)

Then there are two referenda. The first one is to "allow veterans' organizations to use money from existing games of chance to support their organizations"; the said moneys will be used "only for educational, charitable, patriotic, religious, or public-spirited purposes". Basically this gives veterans' groups the same rights as senior citizens groups, who are currently the only groups authorized to do this. Whatever, I don't play bingo, it doesn't affect me, so I might as well go along with it.

It's the second one that's controversial: "Do you approve amending the State Constitution to set a State minimum wage of at least $8.25/hour? The amendment also requires annual increases in that rate if there are annual increases in the cost of living."

Here are my thoughts on the matter. I am a pharmacist; my wife is a teacher; we both make more than minimum wage ourselves, so this does not directly affect us.

On the one hand, it's pretty obvious that the current MW of $7.25/hour isn't a hell of a lot of money. If you get 40 hours/week for 52 weeks/year, that adds up to $15,080 a year, which isn't enough to live on if you want to live elsewhere than a cardboard box under a railroad trestle. Especially in New Jersey, everything's expensive here, even railroad trestles. (OK, we have the lowest gasoline prices in the Northeast. Everything else is high, especially the real estate taxes, but that's not likely to be a concern to a minimum wage earner, except indirectly in the form of higher rents.)

On the other hand, when did you ever know corporate America to raise payroll? If the minimum wage goes up, the big businesses (chains, etc.) will just cut everyone's hours, again, to make up for it, and the workers won't be any better off: in fact they'll be worse off, because they'll be expected to do the same work in less time. Expect PHBs to spout inanities like "Well you're being paid more, so work harder."

Small businesses, who can't reduce hours because they won't have anyone left to do the actual work, may instead wind up having to raise their prices, or they won't be able to afford their new payroll. This passes the cost on to their customers, many of whom are the very same people who are now making an extra buck an hour, but who now have to pay that back in the form of higher prices. If the cost of living goes up, as per the constitutional amendment, next year the minimum wage goes up again. Lather, rinse, repeat.

So I just don't know what to do on this case. You're screwed either way you look at it.

Any thoughts?

(As an aside, nowhere does it say that this "Public Question", as it is styled, is a binding referendum that becomes law immediately on passage, or if it's just a suggestion that the state government can take under advisement and ignore if they see fit. I still can't get a straight answer on that one, even from poll workers.)

[Andara Bledin]

I've been involved in some fairly serious discussions regarding poverty, livable wages, and similar on another forum recently.

Anything that will help raise the base wage to a livable wage is to be desired.

Corporations can't really cut any more staff than they already have or they would have done it already. There are a minimum number of people you have to have to run a business and maintain any profit at all.

However, raising the base level of income has an uplifting effect across all sectors, including education level, happiness level, and safety level.

While it might be tough on small businesses in the short term, the fact that people have more money to spend will help balance that out.

[Gravekeeper]

What Andara said. Raising the base minimal wage to a livable wage is a net positive for everyone involved except short term profit gouging corporate assholes. The problem is rich assholes seem to think that if you give the plebs more money they'll do the same thing they do ( Move it offshore to a tax shelter the Cayman Islands ) thus removing it from the economy.

When in fact if you give people more money, they spend more money. It doesn't magically disappear. While conversely you improve worker morale and productivity because they no longer have to work full time AND collect food stamps ( McDonalds. -.- ).

Up here in Canuckistan, the minimum wage where I live is $10.25/Hour and is raised periodically with the cost of living. Every province has raised its minimum wage at least once in the last 3 years to keep up. But there's still a push in the government ( <gasp> ) from some parties to raise it further.

[Andara Bledin]

Fun fact: Workers who make more money are more productive.

In a comparison between Costco and Sam's Club (similar stores that serve similar markets at similar prices), the Costco employees achieve twice the sales figures as the Sam's Club employees with less employee turnover. And all of that is achieved by a slight bump in wages, slightly better benefits, and treating them like a commodity instead of a liability.

[Greenday]

Shame I won't be home to vote. C^2 will obvious win though. Buono just comes off as a nut. Her entire campaign is "Chris Christie is bad. I'm good". I don't think I've ever heard her offer a solution to any problems.

I have a lot of family coming to me to ask why raising the minimum wage would be a bad thing. It just comes down to small business. Small business owners are already getting taxed out the ass. Then they have to pay for everyone's health insurance. Add in extra pay and are they even making any money at all?

[Rapscallion]

Fun fact: Workers who make more money are more productive.

I can see where you're coming from, but there's also the consideration that companies paying higher wages are going attract the better quality employee and weed out those who aren't as good. I can't see it being quite cut and dried.

Rapscallion

[smileyeagle1021]

I can see where you're coming from, but there's also the consideration that companies paying higher wages are going attract the better quality employee and weed out those who aren't as good. I can't see it being quite cut and dried.

Rapscallion

An excellent point. I've argued for a while that the fast food places that pay $15 an hour are only successful because there are so many paying $7.25 that it makes it worth while for an employee to strive to do well to excel in that job so that they do not risk going back to a place that only pays $7.25.
Though, for the claims about how minimum wage increases will kill the economy... let's look at where I work as an example, we have roughly 100 full time employees, if we raised the wage of every one of them by $1 an hour (I'll include all employees, even those making above minimum because I don't know the breakdown of who is paid what) that would be roughly $233,000 a year more in payroll expenses (including payroll taxes paid by employer)... which sounds like a lot, but that is $638.24 a day more, on any given day. I obviously can't tell you what our daily profit is, but I can say that $684.24 would barely register. Now that small business that everyone says will be hurt terribly with only 10 employees is looking at $64 a day. If $64 a day is what breaks them when they are already spending $462.72 per day (this is assuming that all payroll is spread evenly over 365 days in the year) on payroll alone, then they probably weren't going to last that long anyway.

[drunkenwildmage]

The problem is, that the $64 a day could very well be the "make or break" point of a small business.

The problem with Minimum wage is that when it goes up it forces the hands of employers. Regardless the size of the company they have budget numbers they need to meet. If they don't meet the numbers then chances are they will loss money and cease being a company. Granted the numbers vary for each business, but normally they are not something that is pulled out of their asses (Altho sometimes it feels like it), but someone, some group of people pushing numbers in calculators and/or compiling a metric butt load of spreadsheets came up with the target number. When minimum wage goes up, that target number doesn't change. So, to achieve that target number, management has to do something to keep those costs in line. So that leads into a cut of number of hours(or employees) or raising prices.

Now I can see alot of people start bitching about that fact that the company makes 500 trillian dollars/pounds/Euros in profit, and can "Afford" the raising of the minimum wage, but the sole reason for almost any company is to make a profit. Yah. Some people will ague that the reason GM exists is to make cars, and the reason Wal-mart exists is to sell us crap, and the reason coke exists is to sell pop, but in truth.. those are just the means to get a profit. With out that profit motive most companies would've not gotten started, and the stuff that we take for granted everyday wouldn't exists.

[Andara Bledin]

Nobody's time should be worth less than it costs to survive. Full stop.

Just because we've allowed a situation to exist where companies (mostly huge corporations) can externalize their costs onto the public (via public programs because people working 40 hours at minimum wage can't actually afford to support themselves in much of the US) doesn't mean that situation is right, desirable, or even good for their own long-term profits.

Just a recap: The profits the corporations are making off of being able to pay everyone minimum wage are coming out of the pockets of everybody in the US who pays taxes.

[Barracuda]

The corporations definitely keep too much money at the top, and it is true they manage to get sweetheart deals where they keep their profits and in many cases (not all corporations, but some,) manage to shuffle their debts off onto the public. (The banks come to mind, with the bailouts getting rid of their debts, but of course they keep their profits and expect loanholders to pay them.) But raising the minimum wage won't work, just from my personal experience. I started working at 15 at a minimum wage job.

Back then, minimum wage in my state was $5.50 an hour. Low, right? However, you must also realize that gas was less than $1 a gallon, most sit down family style restaurants only charged about $5 or $6 for a decent meal, and the "Dollar Menu" at fast food places actually had some decent size items (Medium drinks still sold for under $1 at most places.) Now, the minimum wage is $9.50---but gas costs 3 times as much, decent meals at family dining places cost usually at least $9 and sometimes up to $11 or more, rents have doubled, and medium drinks at most fast food places (with a couple exceptions) cost almost $2 or more. Frankly, having SEEN the results after 15 years of a minimum wage hike, first to $6.50, then $7.50, then $8.50, now almost $10, I say that minimum wage hikes are not the answer. At least, not alone. Maybe combined with other measures, but alone they do nothing except cause inflation.

[Andara Bledin]

The problem is that minimum wage doesn't provide a minimum level of survival.

If 40 hours won't net you just about double the local rate for a low-end flat, then the companies are being allowed to externalize costs onto the state. That there are people who think this is ok, is a major failing of our society.

[Barracuda]

I'm not saying that is ok. I'm saying that if you raise the minimum wage to double the cost of an apartment per month, the costs of apartments per month will go up in response till you're right back where you started. Keep raising the minimum, and prices keep going up in response, which leads to massive inflation, wiping out the value of people's savings and investments.

[Gravekeeper]

The problem is, that the $64 a day could very well be the "make or break" point of a small business.

If that's the make or break point though, that business is already in dire straights and its failure is just a matter of time anyhow. A business making $63 a day is already up shit creek and is one unexpected expense away from demise to begin with.

The US has not only one of the lowest minimum wage medians of all of the first world countries, but it also has historically low minimum wages based on its own economic history. The doom and gloom scenario of raising minimum wage that the GOP pushes is bullshit. Because its never happened before every other time the minimum wage was raised in areas of the US.

Companies respond to a raise in labour costs by seeking methods to reduce overhead costs, increase efficiency and increase worker productivity. An increase in productivity that goes hand in hand with increased employee wages. When the minimum federal wage was increased in Alabama and Georgia, only 8% of businesses surveyed considered cutting jobs as a solution to make up the labour costs. Conversely the most important thing the businesses in question listed to offset the cost was increasing performance standards. ( Per a 2011 study from Georgia State University ).

Additionally, the top 10 States with the highest minimum wages have FASTER small business and retail business growth. They also hired more workers and expanded their businesses more. Whereas in the other 40, small business growth was actually a net negative. ( Per the Fiscal Policy Institute ).

Finally, a profit boom for practically everyone involved always follows an increase in minimal wage. The Chicago Federal Reserve Bank conducted a study in 2011 on the effect of a minimum wage hike on spending habits of households. An increase in $1 in minimum wage causes a household to spend twice as much money on large durable purchases ( New appliances, electronics, furniture, home improvement, cars, etc ) in the next quarter. Additionally, spending on goods and services increases for two quarters BEFORE a minimum wage hike goes into effect.

So that whole argument is bunk and you're surrounded by historical evidence to the contrary. Yes, some small businesses might fail. But they are businesses that were not going to survive long term anyway.

That's called capitalism.

[Gravekeeper]

I'm saying that if you raise the minimum wage to double the cost of an apartment per month, the costs of apartments per month will go up in response till you're right back where you started. Keep raising the minimum, and prices keep going up in response, which leads to massive inflation, wiping out the value of people's savings and investments.

Windmills do not work that way. -.-

[Panacea]

Frankly, having SEEN the results after 15 years of a minimum wage hike, first to $6.50, then $7.50, then $8.50, now almost $10, I say that minimum wage hikes are not the answer. At least, not alone. Maybe combined with other measures, but alone they do nothing except cause inflation.

Real wages have actually been stagnating for 20 years and more. During that time, however, wealth has been increasingly concentrated in the hands of the wealthy. The top 1% got 95% of the gains in the recovery since the 2008 meltdown.

The causes of inflation are complex. Certainly when inflation rises, currency buys less. That's actually good for debtors, because over time their debts are worth less.

However, the real cause of inflation comes when the supply of money is greater than the rate of economic growth. That's why people are concerned about quantitative easing that the Fed has been doing: they're artificially creating money to support the economy, giving it an infusion of cash. That will result in higher inflation at some point. That's actually a greater risk to the economy than raising wages.

I'm not saying that is ok. I'm saying that if you raise the minimum wage to double the cost of an apartment per month, the costs of apartments per month will go up in response till you're right back where you started. Keep raising the minimum, and prices keep going up in response, which leads to massive inflation, wiping out the value of people's savings and investments.

That's a fallacy. Prices don't shoot up that high that fast when the minimum wage is raised. The law of supply and demand still applies. We've raised prices many times in our history, and massive inflation has never happened.

We did get stagflation when Nixon tried to institute price FIXING, which is a horse of a different color.

The real value of our wages is actually declining. Prices are historically low, as is inflation. If, in unlikely even, prices were to rise in response to wages, raising inflation, it wouldn't happen over night. If it did happen, the Fed would take steps to reduce inflation by raising interest rates.

We need to increase the minimum wage. We have a skewed economy when the government subsidizes private industry by paying for public assistance for the employes of companies that won't pay a living wage.