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Gap between the Rich and the Rest

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Stephen Gordon
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Joined: Oct 27 2003
I'm not going to apologise for linking to my summary of the literature; one of the reasons I started the blog was so that I wouldn't have to keep repeating myself on issues like this that come up again and again.

And you will no doubt have noticed that the link makes many, many references to other sources. I'm not promoting my ideas; I'm summarising the work of experts in the field.


Fidel
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Joined: Apr 29 2004
quote:Originally posted by Stephen Gordon:
When the minimum wage bites

quote:So what have we learned from all this?

- No-one has been able to find any evidence to suggest that increasing the minimum wage has a measurable effect on reducing poverty.

This last point appears to suggest that progressives seeking minimum wage raises are focused on this "symbol" alone in alleviating poverty. And I don't believe that's true. For example, the Washington-based EPI says that regular minimum wage as well as the earned income tax credit are parts of the overall effort to fight poverty.

Next to the U.S., Italy and Mexico, Canada has one of the lowest minimum wage rates among richest nations. And these same countries rank similarly when it comes to child poverty, a national disgrace for such a rich country relying increasingly on exporting raw materials and energy to prop up "the GDP", another meaningless symbol.

quote:Peggy Nash, the NDP MP for Parkdale-High Park, hastens to say her private member's bill to raise the minimum wage to $10 for workers in banking, transportation, telecommunications and other sectors covered by federal labour law is no panacea.

"It's just a start,
a renewed effort to get people talking about why a G-8 nation tolerates so much poverty and suffering," Nash says. "And with luck, it will encourage provincial governments to raise their minimum-wage levels."

Minimum wages affect relatively few people directly, but tend to lift incomes for tens of millions of people earning above the minimum wage since general wage levels move in tandem with them. "When you raise the minimum," says Nash, "you lift everyone, directly or indirectly," outside the Far North, at $8 an hour.

But the highest minimum wage in North America is Washington State's $9.33 (Canadian). In Israel, the minimum wage is $5.55 (Canadian).

And it's now the State of Maryland that has the highest minimum wage in North America. The First Right to a Living Wage State

[ 19 May 2007: Message edited by: Fidel ]


Erik Redburn
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Joined: Feb 26 2004
Good luck in the future convincing real workers that inflation and investment are Their problem, not their now vastly overpaid bosses or the jobs lost to countries with wages so low we couldn't Possibly "compete" without causing a total collapse in our own pricing structure. Who'd buy all the crap then, who'd pay all the rent? Questions like that are strangley never asked by "the experts" anymore. Marxes' prediction was right, except that the hoped for solidarity among urbanized workers has been diffused again by all the "outsourcing" guys like you cheered on. Good move.

Edited to cut out unnecessary personal crap of my own.

[ 19 May 2007: Message edited by: EriKtheHalfaRed ]


Erik Redburn
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Joined: Feb 26 2004
JW: "If both the amount of wages and costs go up no ground is gained."

Wage hikes don't Have to lead to inflation, Jerry, we don't have to shop at stores that jack up prices nor do we have to allow companies to lay off workers everytime they demand decent wages, nor do wage increases in one particular sector have to affect prices everywhere. Not like the thousand percent hikes given by CEOs to themselves as a reward for all their brave downsizing. The profit margins are still there, if we don't keep looking for more-infinitum first.

Governments can even step in and impose price but not wage controls, reverse of what Bill Bennett got away with twenty something years ago. Or worker owned cooperatives could be encouraged in vital insdustries. Foreign investment can be damned if they'll only invest in low wage low tax ghettos. We don't have to buy Their crap either. We have enough in our own backyard already. Wouldn't be easy or risk free, but could be done if the knowledge and will was there.

It is an interesting admission though about the lack of competition out there --at least among our conservative members here- that some companies just wouldn't undercut others that way for more business, not anymore, despite all the "free market" nostrums our society has by and large swallowed. What's good for them is good for Everyone they say, but somehow, what's good for us Isn't. Sorry but some things are exactly how they seem, of that I have no doubt anymore.

[ 19 May 2007: Message edited by: EriKtheHalfaRed ]


Unionist
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Joined: Dec 11 2005
quote:Originally posted by Stephen Gordon:

The vast majority of those who are in poverty will not be helped by an increase in the minimum wage. A slightly-less-vast majority of those who will be helped by a minimum wage increase are not in poverty.

I've spent quite a bit of time researching this issue, and no-one has come up with any evidence to suggest that increasing the minimum wage will have anything more than a symbolic effect on poverty:

Gee, that's funny. Every time you trot out this canard, I remind you, patiently, that the movement for raising the minimum wage is not about ending poverty (it won't and can't), but about limiting exploitation of labour - the same as the movement for reduced work time, the right to refuse unsafe work, etc.

Poverty can only be ended by ending exploitation and wage labour altogether, and in the meantime it can be mitigated by the ever-expanding provision of needed commodities and services free of charge on the basis of social decision and requirement (housing, education, health care, child care, ultimately food and clothing...).

Your straw man must be feeling awfully threadbare by now.


Unionist
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Joined: Dec 11 2005
quote:Originally posted by Jerry West:

What people on the bottom require is more buying power in relation to those on top ...

Not at all. Social production should expand to meet the needs of all. The gap as such has nothing to do with it. We're not fighting over some fixed pie. The problem is who controls the means of production, and therefore the distribution of the fruits of production.


Stephen Gordon
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Joined: Oct 27 2003
Take of yourself, Erik. This is one of those issues that comes up fairly often; we can get back to it later.

Stephen Gordon
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Joined: Oct 27 2003
quote:Originally posted by unionist:
Gee, that's funny. Every time you trot out this canard, I remind you, patiently, that the movement for raising the minimum wage is not about ending poverty (it won't and can't), but about limiting exploitation of labour - the same as the movement for reduced work time, the right to refuse unsafe work, etc.

Could you explain this to those who try to sell the minimum wage as an anti-poverty measure?


Erik Redburn
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Joined: Feb 26 2004
quote:Originally posted by Stephen Gordon:
Take of yourself, Erik. This is one of those issues that comes up fairly often; we can get back to it later.

You know what Stephen? I'd like that. One thing I was wrong about was unfairly saying you were conservative about everything which isn't true, you have supported property taxes over working taxes, criticised overly high CEO "compensation" and agreed with some progressive environmental iniatives. Just for the record. I actually think there's more things we could agree on if we could discuss these things more thoroughly sometime. That would be nice too. Ciao.

[ 19 May 2007: Message edited by: EriKtheHalfaRed ]


Stephen Gordon
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Joined: Oct 27 2003
А la prochaine.

And just to clarify things for everyone, I am in favour of policies that reduce poverty and inequality. When I disagree with the general babble consensus, it's not because I disagree with the policy goal. It's that I don't see how it can be achieved with the policies being proposed.


Unionist
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Joined: Dec 11 2005
quote:Originally posted by Stephen Gordon:

Could you explain this to those who try to sell the minimum wage as an anti-poverty measure?

Sure, but maybe I'll just refer them to some of my posts on this and related subjects, rather than repeat myself:

On the wrong way to fight poverty

Entrenching poverty by replacing social programs with a GLI, similar to Harper's phoney baby bonus

More of the same

More on how GLI or GAI can't solve poverty

jrootham and unionist list some basic goals of raising the minimum wage: Avoid starvation, limit exploitation, limit competition among workers ("race to the bottom")

Aim of minimum wage movement:

quote:The movement to raise the minimum wage has nothing to do with poverty. It is aimed at raising the floor on exploitation of workers by employers, and reducing the detrimental effects of competition among workers for available jobs.

Poverty is not primarily an issue of employment, and it cannot be addressed in any significant way by increasing the minimum wage. The appropriate means of addressing it include (but are not limited to) full employment policies aimed at those who can work, generous social assistance of various types for those who cannot, child care, health care, pharmacare, low-cost housing, and providing as many essential goods and services as possible free of charge.

Whenever poverty is mentioned as one of the reasons to hike the minimum wage, someone will pipe up and refute that argument. Better to just drop it. Why not confine them to the old bogeyperson that "higher wages kill jobs". It looks better on them!

Again:

quote:Minimum wage legislation is not about providing minimum needs to household units. It's about putting a lower limit on how far employers can exploit labour. Providing for people's needs requires a whole lot more than wages in a progressive society. It requires public delivery at no (or nominal) charge of all kinds of necessary goods and services, such as education, health care, child care, and housing, plus readily available job and skills training, plus full employment policies, as well as generous programs for those who are unable to work or who have finished working. Please don't mix up minimum wage legislation with solving the poverty problem. There is absolutely no connection.

Further down:

quote: quote [img]redface.gif" border="0[/img] riginally posted by Southlander:
What about a graduated pay scale where people over a certain age earn $10? Then the 2/3 living with parent/s arn't forced out of a job.

Uhh no. Wouldn't employers just love to pay some workers less because they're younger, or because they're not the only wage-earner in their family. Dangerous thoughts like these come from the theory that minimum wage legislation is about averting poverty. It's not. If a billionaire's daughter gets a job at McDonald's, she should get her $10.00 just all the older and more "needy" types.

Stephen and unionist again:

quote: Originally posted by Stephen Gordon:
It astonishes me that anyone who claims to be progressive would want to sell the minimum wage as 'the' issue. As anti-poverty measures go, increasing the minimum wage is pretty much useless: most people who earn minumum wage are not in poverty, and most people who are in poverty don't earn minimum wage.

Stephen is correct (we seem to have this running dialogue every time). Those who promote minimum wage legislation as an "anti-poverty" measure are on the wrong track. Minimum wage legislation is a protective measures - like maximum hours, minimum vacations, right to refuse unsafe work, notice of technological change - aimed at reducing the exploitation of workers, whether the worker happens to come from a wealthy household or an impoverished one. It's also designed to tell employers what standards of abuse our society will not permit them to descend beneath.

I'd be more sanguine in supporting Stephen's argument's about minimum wage not being a solution to poverty, if he were a little more enthusiastic about supporting increasing the minimum wage for all the right reasons. Sadly, he still buys into the "job-killer" neurosis, albeit in a more sophisticated fashion. So, while we are both right, we must agree to differ!!!

Further down:

quote:Originally posted by Stephen Gordon:
An earned income tax credit would be much more effective in reducing poverty.

An increase in the minimum wage would be paid for by employers.

An earned income tax credit would be paid for by everyone.

Why should everyone have to pay for employers to be required to pay a decent minimum fair wage according to non-Third World standards to Canadian workers?!

The employers want to hire labour, they should pay for it - and not below $10.00/hour.

And so on, endlessly.


Lard Tunderin Jeezus
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Joined: Aug 27 2001
quote:If we suppose that this ratio held in 2005, then we can use the fact that 4.3% of workers earned minimum wage and that the employment rate was 62.7% to find that the proportion of people in the bottom two deciles who are minimum wage workers is about 4%. The vast majority of those in poverty would not benefit from an increase in the minimum wage.
But Stephen, there are people not earning minimum wage ($7.25) who are not earning $10.00 an hour. Anyone earning from $7.26 to 9.99 an hour will also benefit, but remains unaccounted for in your figures.

Left Turn
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Joined: Mar 28 2005
To really solve the growing wage gap between the rich and the poor, we need to overhaul our economy. We need to pull out of NAFTA, and then we need to gradually nationalize our economy. Once sectors of the economy are nationalized, the government can provide all workers in those sectors with wages that put them above the poverty line. Other measures can be taken in nationalized sectors of the economy to stretch incomes further.

1. Once banks are nationalized, service charges can be completely elimnated.

2. Once air travel is nationlized, prices can be dramatically reduced.

3. Once elctricity, phone, internet, and cable tv are nationalized, prices can be reduced. Once cell phone service is nationalized, the cost of cell phone service can be reduced to the same price as land lines.

4. Once BC ferries is brought back within the full control of the BC government, fares can be reduced.

5. Public transit fares can be reduced.

6. The government can build large numbers of social housing units with affordable rents.

7. Tuition can be reduced, and eventually eiminated. In the meantime, student aid can be increased, and can be fully converted to grants.

8. Medicare can be expanded to cover all medical services, so that nobody has to pay any medical costs out of pocket, ever.

At the same time, corporations should cease to exist as legal entities, the stock market abolished. Then there should be limits set on the maximum wage that any employee may earn, and the maximum profit that any company may accrue. Eventually, these privately owned companies can be nationalized as well, so that everything is publicly owned.

Of course, this requires electing governments that will implement this economic strategy, and the far more progressive taxation system necessary to implement it. None of the currently electable political parties, not even the NDP, are up to this task. We also can't expect this economic plan to function if implemented under the current departmental structure in ottawa, or the current ministerial structure in the provinces. The nationalized economy must be democratic, or it will be bureaucratized as it was in the Soviet Union; where choice was restricted, and where equality was not given much, if any, consideration.

[ 19 May 2007: Message edited by: Left Turn ]


Jerry West
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Joined: Oct 9 2001
quote:
Unionist:
We're not fighting over some fixed pie.

Yes we are, and our solutions should start with that premise. A present population the planet has about 2ha of productive land to support each person. When one uses more than that someone else gets less. Canadians use over 7ha on average, Americans over 9ha.

Efficiencies may reduce the amount of land required, but the pie still remains fixed and if population grows faster than efficiencies can keep up the average living standard goes down.

Conversely as the population goes down the amount of available resources per person goes up. Barring intervention from outer-space the amount of resources on this planet are a fixed pie.

Minimum wage increases to be most effective must come from reducing profits and higher wages, not through increasing overall costs. If we just give some more without giving some less we are basically treading water.

We can come up with all sorts of methods of achieving this, but the fundamental fact remains, the answer to poverty is through reducing the concentration of wealth and redistributing it more equitably throughout society.

quote:
Left Turn:
2. Once air travel is nationlized, prices can be dramatically reduced.

Air travel is a luxury now subsidized by the environment. Why would we want to encourage more of it? Unless, of course, we may be talking about dirigibles?


Erik Redburn
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Joined: Feb 26 2004
It depends on what you mean by "fixed pie". Wages are arbitrary and there are economies that can be applied. What has to be looked at more closely is how excess profits can be redirected back to where they rightfully belong and are needed, how the leverage gained by globalized capital can be countered effectively, and how any savings or gains made by the average consumer/producer can be redirected to more useful, less wasteful economic activity. Just cutting back isn't good enough by itself if factories end up idling and stores end up empty, noone will accept that either. Those are all tough questions that need more objective research by everyone concerned. There has to be better ways that haven't been tried yet.

[ 20 May 2007: Message edited by: EriKtheHalfaRed ]


Jerry West
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Joined: Oct 9 2001
quote:
EriKtheHalfaRed:
What has to be looked at more closely is how excess profits can be redirected back to where they rightfully belong and are needed....

One of my points exactly. I would include excess wages and salaries along with excess profits.

But no matter how you look at it, we are still dividing a fixed pie, not baking a bigger one. Applying more efficiencies and a better division of resources does not increase the pie size, it only makes its exploitation more effective.


Erik Redburn
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Joined: Feb 26 2004
Well that's also one of My points exactly, Jerry, so who's arguing with who here? Or is it whom? [img]wink.gif" border="0[/img]

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