This months blog will be a response to an op-ed in the NY Times. A friend on Facebook asked me to respond and here is that article and response.
Paul KraftonJohn Tommasi
May 28 at 10:50am ·
John, if you have time...
What's your opinion, with economic facts, on articles such as this.
The Article is by Mark Bittman. http://www.nytimes.com/2015/05/27/opinion/can-we-finally-treat-food-workers-fairly.html?smid=fb-share
My response is as follows:
Hi Paul Krafton, I couldn't disagree more but coming from the NY Times, I'm not surprised. First, an overall commentary on minimum wage preceded by a brief econ lesson. Life to the economist is simple. If the benefit exceeds the cost, you'll do it. For instance, that coffee you bought this AM at DD, cost $1.56. Would you have paid $1,57? If the answer is yes, then the benefit exceeded the cost.
Let's now go to pay.
What's the cost of working. In other words, what are you giving up by working? That would be foregone leisure, so if someone is willing to work for $5/hour (and he/she is rational), then their leisure time is worth less than $5/hour. I think that a federally mandated minimum wage is ludicrous. Given the different cost of living in various geographic area's in the US, this "one size fits all" doesn't pass muster. If you make $90,000/year and live in Manhattan, you are living at the same level of someone who is making $38,000 and living outside Jackson, Mississippi (CNBC and confirmed by my research). If there is a minimum wage, it should be left up to individual states.
WalMart! I am tired of hearing how Walmart puts small businesses out of business. Walmart doesn't put theses businesses out of business, the consumers who choose to shop at Walmart do. Why would I pay more for the same item form a different location? Enough said. People make minimum wage for a reason, they either are uneducated and/or don't have the work ethic/motivation to make more money. Fifteen dollars/hour for fast food workers is nothing less than ludicrous. If the only job you can get is taking orders at McDonald's, there's a reason. I am not going to pay someone $15/hour if they are only making me $10/hour; (remember principle of econ where you maximize profits where MR=MC) and none of these NY liberals (or California or Massachusetts liberals) seem to mention what would happen to prices. It is the consumers, not businesses that will bear the brunt of the cost, and of course, when prices increases ( as they most assuredly would given a $15 min wage), demand will decrease. Just look at the US automobile industry. There were 1.5 million UAW workers in 1979, there are now 380,000. We're not making less cars, the car companies automated their assembly lines. You can rest assured, if min wage went to $15/hour that would happen at fast food joints. You would go to the drive thru, push buttons and voila.
Paul KraftonJohn Tommasi
May 28 at 10:50am ·
John, if you have time...
What's your opinion, with economic facts, on articles such as this.
The Article is by Mark Bittman. http://www.nytimes.com/2015/05/27/opinion/can-we-finally-treat-food-workers-fairly.html?smid=fb-share
My response is as follows:
Hi Paul Krafton, I couldn't disagree more but coming from the NY Times, I'm not surprised. First, an overall commentary on minimum wage preceded by a brief econ lesson. Life to the economist is simple. If the benefit exceeds the cost, you'll do it. For instance, that coffee you bought this AM at DD, cost $1.56. Would you have paid $1,57? If the answer is yes, then the benefit exceeded the cost.
Let's now go to pay.
What's the cost of working. In other words, what are you giving up by working? That would be foregone leisure, so if someone is willing to work for $5/hour (and he/she is rational), then their leisure time is worth less than $5/hour. I think that a federally mandated minimum wage is ludicrous. Given the different cost of living in various geographic area's in the US, this "one size fits all" doesn't pass muster. If you make $90,000/year and live in Manhattan, you are living at the same level of someone who is making $38,000 and living outside Jackson, Mississippi (CNBC and confirmed by my research). If there is a minimum wage, it should be left up to individual states.
WalMart! I am tired of hearing how Walmart puts small businesses out of business. Walmart doesn't put theses businesses out of business, the consumers who choose to shop at Walmart do. Why would I pay more for the same item form a different location? Enough said. People make minimum wage for a reason, they either are uneducated and/or don't have the work ethic/motivation to make more money. Fifteen dollars/hour for fast food workers is nothing less than ludicrous. If the only job you can get is taking orders at McDonald's, there's a reason. I am not going to pay someone $15/hour if they are only making me $10/hour; (remember principle of econ where you maximize profits where MR=MC) and none of these NY liberals (or California or Massachusetts liberals) seem to mention what would happen to prices. It is the consumers, not businesses that will bear the brunt of the cost, and of course, when prices increases ( as they most assuredly would given a $15 min wage), demand will decrease. Just look at the US automobile industry. There were 1.5 million UAW workers in 1979, there are now 380,000. We're not making less cars, the car companies automated their assembly lines. You can rest assured, if min wage went to $15/hour that would happen at fast food joints. You would go to the drive thru, push buttons and voila.
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