Nurturing Resilience

Raising children to be competent and caring.

Will a Higher Minimum Wage Make People Happier?

“Does a higher minimum wage make people happier?” The obvious answer to this question is “Yes.” But the reasons why are far more complicated. More money does not equal happiness unless it brings with it social justice. Read More

What a bonehead idea...

Raising the minimum wage will not make it easier to buy new things. It is artificially inflating the price of labor on manufacturers. The effect is to decrease profits of the business. That robs the owners of the business of their income. To compensate, they will raise the prices of the goods and services that they sell. And it will be by a higher percentage than that of the minimum wage increase, because they have to make up for the lost revenue. And, as you said, it will mean layoffs for a number of people.

Raising minimum wage makes life for everyone worse. Only people that don't think through the consequences think it is a good idea.

Income inequality occurs because their is not enough profit in businesses. Share holders (the owners of a corporation), are chasing higher returns on their investments. They insist that the corporation hire the manager that is going to produce more profit for them. They look for talent, similarly to what sports teams look for in players. You pay your star players more money than the guy that is average. If everyone produced equally, then there wouldn't be a need to pay one person more money, because they are easily replaceable.

Therefore, to reduce income inequality, the solution is to reduce the number of regulations on business. That way, more businesses pop up, and the pool of talented managers increases. It also has the effect of reducing the need to hire super talented managers that can wade through the morass of legal restrictions.

Don't raise minimum wage. Reduce government regulations. It makes everyone happier and wealthier.

Bracketed minimum wages.

Bracketed minimum wages.

There are solutions that can both keep the bottom line of businesses from hurting as well as raise wages above the pittances that they are. One idea is to implement a bracketed wage system. Just as people pay income tax through a bracket that is dependent on their annual income, so too could a person's wage be dependent on the profit of the employer. If an employer like Walmart can afford to pay their employees fifteen an hour instead of less than ten, and still make a profit, then what's the problem? It would substantially increase the well being of millions, and it wouldn't take away from the ability of employers to make a profit. And to keep employers from raising prices as you say they would in order to regain the profit margins they want, you could instill in them the desire to avoid an even higher "bracket" where they would have to pay their employees even more.

We seem to have a different understanding of where income inequality comes from. It does not come from businesses not making enough profit like you say. It comes from attitudes like yours where the belief dominates that some people deserve more than others for ultimately superficial reasons. Some people are smarter than others, some people are more creative than others, some have more energy than others, some are more attractive, some have less health problems, some have better personalities, better ideas, better circumstances, etc. But none of that matters. Income inequality is unavoidable, to a moderate degree it's justified, but we're talking about society adhering to the idea that people deserve a minimum standard of living for their contributions however minor their opportunities. If you think that businesses are the ones who should control what the minimum wage is, you're insane.

Reply to comment | Psychology Today

Appreciate this post. Let me try it out.

You are right

This posting is incredibly naive. The author seems to have absolutely no sense for the principle of unintended consequences. Yes, many people might lose their jobs, if their wage is suddenly above their productivity. And empirically, it has been shown that more young people drop out of school when there is a higher minimal wage, because than that "low end" career suddenly looks more attractive. And to all people who think that the government can simply "order" a higher salary: Why not directly make everyone a millionaire?

I don't really understand how

I don't really understand how you could relate "making everyone a millionaire" to reducing income inequality. Of course not everyone can be a millionaire. It's impossible for everyone to have that kind of purchasing power. What I don't understand is what is so bad about redistributing purchasing power from those who have an abundance of it to those who have none at all.

Let's see if I understand your philosophy correctly. If you had a hypothetical supermarket that made 250k a day in revenue, and in profit let's say ended up with 10k a day after all expenditures considered, except employee salary costs. Maybe you have an equivalent of 25 full time employees working a typical day at the current minimum wage. Let's make it ten dollars for simplicity, and a typical 9 to 5. In total you are paying your employees $2000 for that day of work and yet their productivity resulted in an overall net gain of $10,000 for that day. If you doubled their salary, as an employer you would still pocket $6000, and your employees' lives would be a hell of a lot better.

If similar numbers exist in the real world, but employees still get paid only the minimum wage, don't you think that that is unequivocally wrong. A democratic government ought to be a powerful tool in confronting these injustices. But if you think there are unintended consequences, I'm sorry but I just don't get it. Do explain.

"What I don't understand is

"What I don't understand is what is so bad about redistributing purchasing power from those who have an abundance of it to those who have none at all."

How would you do this precisely? In order to pull off such an action successfully you need to have great power ...
The real problem is the proximity of big business and the top of politics that completely undermines democracy and in effect creates a plutocracy (while, officially, a narrative is being upheld that praises 'meritocracy' ...)

A low minimum wage = Welfare for the Walton family

If workers at Wal-Mart, McDonald's and other low-wage employers do not earn a living age, then they will sign up for food stamps and qualify for the Earned Income Tax Credit. Therefore the rest of the U.S. taxpayers will be subsidizing corporate profits. So, no, a higher minimum wage is not "robbing" anybody of anything. It is actually STOPPING rapacious business owners from robbing the labor of their employees without compensating them. And anyone who claims to be worried about manufacturing jobs fleeing the country if the minimum wage rises, is either uninformed or dishonest. What few manufacturing jobs are left in the United States pay higher than the minimum.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.
  • You may quote other posts using [quote] tags.

More information about formatting options

Michael Ungar, Ph.D., is a family therapist, a researcher at Dalhousie University, and the author of The We Generation: Raising Socially Responsible Kids.

more...

Subscribe to Nurturing Resilience

Current Issue

Let It Go!

It can take a radical reboot to get past old hurts and injustices.