Consequences of repealing the federal minimum wage rates.

An indefinite unenforceable “minimum benchmark” rate, (i.e. the labor market’s minimum rate) would naturally emerge if the legally enforceable federal minimum wage, (FMW) rate were eliminated. Other than during shortages of unskilled labor, (i.e. almost always) a market determined minimum rate’s purchasing power will be drastically less than that of our FMW at its lowest historical value.
There are many job tasks that do not (in the opinion of employers) justify the FMW’s rate. These jobs now exist because their performance is necessary and/or net profitable to the employing enterprises. If the FMW was eliminated those jobs will continue to exist. Furthermore due to markets’ lesser minimum rates, many additional jobs will be created that previously did not justify the expenditure of the FMW rate.
All of these jobs wages will be of drastically lesser than the FMW rate’s purchasing power.


Wage rates of all tasks and working conditions within a labor market are comparatively related to each other (with the exception of tasks requiring workers with attributes that are in short supply). The drastically lesser purchasing power of the market’s indefinite minimum rate will ripple through the labor market and to some extent reduce the purchasing powers of all those comparatively related tasks.

The numbers of unskilled and/or otherwise less qualified persons introduced to the labor market will exceed the numbers of additional jobs created due to the elimination of the FMW’s rate. Despite more people working USA’s unemployment rate for of all unskilled or otherwise less desirable workers will increase rather than decrease.

Because the additional jobs created due to the elimination of the FMW would be less demanding and of much less purchasing power, they would contribute comparatively little per job to our GDP and they will reduce our median wage.

Because an indefinite market’s minimum wage’s purchasing power is so drastically less than that of a FMW rate; almost all lower income wage earners will require public assistance.

Eliminating the FMW would be net detrimental to our economy and our wage earning families. It will be a disaster for our working poor families.

Respectfully, Supposn

Lousy businesses, always pocketing the savings.

1) Each industry and job would naturally have there own minimum wages. For example some movie studios might try to make some films for $0.50 per hour and many unemployed actors might try and get their foot in the door for $0.50 per hour. Yet, someone washing dishes might accept $8 per hour. However, there would be many more jobs and you and I might hire 100s for $0.01 per hour. Unfortunately they would not take the job unless there wa valuable work experience attached.

2) the net purchasing power of society will be at its maximum. A planned society will create inefficencies thus far less wealth and purchasing power. For example if you give a park ranger a $20 per hour job, yes he will have $20 per hour to spend but at whose expense? most likely someone that makes the products he is going to buy. They have to work longer hours at their expense to pay for the park ranger.

3) The unemployment rate should go to zero for all workers. There will be other government hurdles that will cost wages and freedom, but overall wages and wealth will increase. Unskilled wages should increase the most since they are already most free market. As unskilled laborers moved into "skilled" labor at lower price, there should be higher demand for "unskilled" labor and thus wages for that type of work.

4) Median wage could drop but so would the cost of goods. On a relative basis everyone would be richer. The is why during WWII, the United Sates won. It was generally freer than the rest of the world and thus wealthier. Japan was able to run over the poor China, despite their dictator the business was free and thus Japan was richer and their money spent on defense was higher. Both real GDP and median wages would be higher without a minimum wage.

5) The is governments choice. If workers are unable to afford housing and the price of food, they should move into farming and house building. With modern technology one farmer can feed 200. It becomes a land issue. It basically takes a week to build a house. the problem is restrictions and monopoly placed on land to enrich government workers. That is the real problem, government trying to figure out a way to make poor people do all the work while they sit in the government offices acting important.

6) Eliminating FMW will make the workers wealthier, freer, improve the defense, provide more vacation time, end unemployment (you also need to end the monopolization of land). All working class families with land will move to the wealthy elite. Government handouts and minimum wage are like handcuffs and slave whips to the working poor.

What can you do

1) End all unions especially public sector
2) Reduce public education spending especially K-12 and state colleges.
3) Allow corporations to set any wage they want, lower the better for society.
4) Cities should be fined if they pay a worker more than than replacements would be willing to do the job. If there are more than 100 qualified applicants, the wage of the job must be lowered.
5) Allow every citizen to have a lot, and tax lots based on square footage and resources. Many lots would be free and property tax free.

Respectfully Yours, Steelhouse

There is some evidence to what I say, it is the poor workers of California and New York that are moving to Texas. The only way you can explain that is basically above.

SteelHouse, within individual labor markets, the market’s absolute (financial) minimum rate is that lowest rate accepted by job applicants motivated only by their IMMEDIATE financial compensation.

Within all other of my other posts, the term “minimum rate” has and will continue to imply that to be the “minimum acceptable financial rate” within the labor market. I do not consider any lesser rate accepted by job applicants for other than their immediate financial gain as being that labor market’s minimum rate.

Any rate that exceeds the labor market’s financial minimum rate is by definition not THE minimum financially acceptable rate.

Regardless of the task or industry, (with the exception of tasks for which there’s a scarcity of available labor), an effectively enforced minimum (financial) minimum rate, (i.e. the federal minimum wage rate) or the labor market’s financial) minimum rate effects ALL of the labor market’s other rates.

The effect is inversely related to the tasks pay rate and the extent of the effect is proportional to the difference between the purchasing powers of the labor markets’ tasks and their minimum (financial) rate.

Respectfully, Supposn

It also effects all the other cost of goods. In Texas houses, gas, and cost of living is far less because the wages are lower. To try and dictate a minimum wage, will only result in less pay and freedom for the poorest of workers in the long term.

Despite the minimum wage not rising in several years the number on minimum wage has dropped and the economy has gotten better. Much of the problems of 2008-2010 were the result of raising the minimum wage.

The problem with the economy and the tax code is that most of it appeals to 1st level thinking. However, if you take the level of thinking to the 2nd or 3rd or 4th level. In the end it is probably not best to mess with capitalism. Yes, government spending can create tangents of new technology and opportunities but that is another story.

Respectfully, steelhouse

(2) I can’t conceive of “the net purchasing power of society”. Can you write using some other more familiar term such as our nation’s median wage?

Excerpts from this thread’s post #1:

(3) The numbers of unskilled and/or otherwise less qualified persons introduced to the labor market will exceed the numbers of additional jobs created due to the elimination of the FMW’s rate. Despite more people working USA’s unemployment rate for of all unskilled or otherwise less desirable workers will increase rather than decrease.

(4) Because the additional jobs created due to the elimination of the FMW would be less demanding and of much less purchasing power, they would contribute comparatively little per job to our GDP and they will reduce our median wage.

(6) Because an indefinite market’s minimum wage’s purchasing power is so drastically less than that of a FMW rate; almost all lower income wage earners will require public assistance.
Eliminating the FMW would be net detrimental to our economy and our wage earning families. It will be a disaster for our working poor families.

Respectfully, Supposn

I’m not very knowledgeable of farming but I did visit some dairy farms when I was stationed in Wisconsin. Doesn’t farming require capital and specialized knowledge? Can an individual lacking any of these resources and with no credit simply move into farming? Is this a practical suggestion for a young single urban dweller or for an urban family?

I’m somewhat more knowledgeable of house building. If a worker had the technical knowledge and craftsman skills, they would be able to afford food and housing.
USA’s system of general and vocational training compares poorly to many other nations. Our failure to prepare our children for their future and our scarcity of qualified labor are related to each other and are separate issue or issues worthy of their own discussion thread(s).

Regarding migration from NY to California, What evidence? Are we discussing only non-urban or only more rural workers and/or workers in some specific industries? Please be more specific and explicit.

Respectfully, Supposn

SteelHouse, Obama inherited severely poor economy from Busch.
Each and every time the federal minimum wage, (FMW) has been increased, it has always been to the net benefit to our nations’ economy.

The FMW’s adjustments are a political determination. Rather than the discretion of our congress, our FMW’s purchasing power should be retained by annual monitoring and determined by civil service statisticians. I’m a proponent of the FMW pegged to the cost/price index.

Respectfully, Supposn

Welfare, vocational training, government easy credit, and team of civil service statisticians to set minimum wage taken as a whole will reduce the pay of the working poor. It is the wonderful corporations like John Deere (DE ticker) that provided the framework to farm lands so productively. The poor should have equal access to the land, however they should seek farm equipment by savings, deals with manufacturers, renting from capitalists, The poor have no right to seek free capital, no government loans!

Your plans no offense are schemes written up in Marxist universities. Wealth is created by work and capital. Capital a material object created by labor, land, and man's ingenuity.

Working people in California with all its wonderful resources, are moving to Texas because the minimum wage is lower, less taxes, lower house prices, and lower gas prices.

http://www.forbes.com/sites/trulia/2...ut-people-are/

Respectfully Yours, steelhouse

Steelhouse, welfare or vocational training or the federal minimum wage, (FMW) CERTAINLY ARE NOT detrimental to the purchasing power of wages.
The proportion of our population in need of public assistance would be reduced and there’d be a net benefit to our economy if the purchasing power of our FMW would be increased and thereafter annually adjusted to our cost/price index.

Due to the annual upgrading of our social security retirement benefits and to Medicare, USA’s economy is no longer dragged down by what was our historical poverty among the elderly.

All hills at some points have both an up and a down side. Due to Medicare, people are living longer, increasing government expenditures for retirement benefits and Medicare. Our elderly are encountering more and different illnesses that they would otherwise have not lived long enough to encounter.

During the Republican presidential primary campaigns we heard the Republican Party’s solution which was “Let them die”!!

Respectfully, Supposn

SteelHouse, calculating the cost/price index is not an additional federal expenditure. Our government has and will continue to update that index every year regardless of where and how we choose to employ it.

Applying the annual change of that index to whatever is the prior year’s federal minimum wage, (FMW) rate is at most a five minute job.
We currently have to annually publish updated federal statutes and regulations. I would suppose by this time those required updates are located and changed with a computer program. We currently perform these updates for each FMW update act’s scheduled enactment. date. I’m a proponent of it being annually monitored and( if required), it be updated.

That’s an additional factor to be included within our annual updates of federal statutes and regulations.
It does not require a team of civil service statisticians dedicated only to annually updating the minimum wage.

SteelHouse, I’ll look at your referral links later. I have to sign off now.

Respectfully, Supposn

Welfare and Vocational training are detrimental to wages. The money to pay for these programs has to come from somewhere. If you tax the employer of someone on minimum wage, they are going to slow potential raises to the person.

I am a strong advocate of social security and medicare. Medicare should be replaced with Obamacare, private insurance of for profit corporations that can control costs. Social security checks would be much higher if not raided by government via inflation and low rate bonds. Social security should be pay as you go to prevent the ripoff of it.

As for let them die, if you want to help them you are free to do so. There is a box on the IRS that allows you to donate all of your income to the irs, you can help who you want. Why have so few donations been given each year? The reaity is most liberal democrats practice let them die, because they don't give more than they are required to the government. Otherwise donations would be in the trillion. It is very easy to spend other peoples money.

Prior to 1938 there was no minimum wage. Lets index $0 per hour. The great depression was caused by government and fractional reserve lending. See 100% money.

You are missing out on the main reason to end minimum wages (I think, the flow of logic in the OP is hard to follow).

Lowering wages -> lower expenses for business. Because we live in a world with competition, prices will fall eventually.

This means poor people (those with near minimum wage incomes) will benefit. Additionally, so will everyone else.


I have no idea why you mention GDP or "minimum wage’s purchasing power" as what I've said above is indisputable fact.

Fluorescenthippo, yyou're incorrect.

There’s a theoretical indefinite market determined minimum wage rate for every labor market.
Where there’s no enforced definite wage rate that is greater than the indefinite rate, the indefinite rate emerges as the labor market’s effective minimum wage rate.

The effective minimum wage rate is applicable to even the wages of the least qualified workers and/or least challenging job tasks; [i.e. within each labor market’s jurisdiction the minimum rate is absolutely the minimum wage rate regardless of any jobs’ tasks].

Labor employers’ are generally at greater and the working poor are at lesser advantage when negotiating wages or other factors of employment. An indefinite rate’s purchasing power would be generally and drastically less than any of the historic federal minimum wage, (FMW) rates.

[Other than the indefinite rate’s drastically lesser purchasing power, the characters and behaviors of the indefinite’s and FMW’s rates are exactly the same.
The minimum wage rate’s effect upon ALL individual jobs’ wages is inversely related to the difference between the minimum and the job’s purchasing powers. The minimum rate’s greatest effect is upon the working poor; its effect upon those earning more than the median wage rate is extremely less perceivable].

Eliminating the FMW would greatly increase USA’s poverty rate. It would not net decrease USA’s rate of unemployment but it will increase the working poor’s proportion of USA employees. Working poor with no dependents are not generally the beneficiaries of public assistance. If we eliminate the FMW, all of the working poor would have dire need for public assistance.

Poverty is a drag upon an economy and thus the elimination of the FMW would be economically net detrimental to our nation.

Respectfully, Supposn

Fluorescenthippo, I agree that we live in a world with competition. Other than that everything you wrote in this post is certainly refutable. (Refer to my immediately prior post).

The purchasing power of a U.S. dollar is not constant. Due to inflation, the dollar purchases less today than it did in 1932.
Social security retirement benefits are annually updated to comply with the changes of the U.S. cost-price index. Thus the purchasing powers of social security retirement benefits are retained.

I’m a proponent of doing the same for the federal minimum wage rate.

Respectfully, Supposn

Your posts are really hard to follow. You don't seem to be addressing the fact that lower expenses for business will cause prices to fall. Historically profit margins per industry are relatively constant which is evidence for my previous sentence.

Fluorescenthippo, the purpose of the minimum waqe laws are not to reduce the prices of goods or to increase jobs paying sub-standard wages; its purpose is to reduce instances of poverty in our nation.

To the extent that the federal minimum wage rate is enforced, it affects the wage rate of EVERY JOB in the USA; (even those jobs where it cannot be legally applied to).
Every labor market has a theoretical, indefinite minimum wage rate that’s applicable to the least challenging task within that labor market.

If the enforced FMW is greater than the indefinite USA’s labor markets’ rates, it is the effective minimum wage rate within those USA labor markets; otherwise within each of those markets, the indefinite market rate’s the effective minimum wage.

The effective minimum wage is legally applicable to even THE LEAST challenging job within the labor market.

If you increase the FMW rate by a half dollar, it will generally increase every wage rate in the USA by no less than a half dollar per hour. Almost all employers will increase their pay rates by more than a half dollar because they’d be ashamed to be perceived as extremely stingy employers. There are detrimental consequences upon enterprises that are so disreputable.

A FMW rate that not enforced or is of lesser purchasing power increases poverty and is thus a drag upon USA’s economy. What is it about this post that you find confusing?

Respectfully, Supposn

Gonna need a citation on the bolded.

I can't tell if you're being serious or just trolling. But here I go.

If the job task does not justify the FMW's rate in the opinion of employers, then why would they hire them for the FMW? If it doesn't justify the rate it means it is not profitable to employ these people at these rates.

Unless when you say "does not justify" you mean cases where the business owner hires someone of excessive abilities for the job offer, and makes a less profitable deal than they would by hiring a lower skill worker (or two) for a rate that is lower than the FMW per worker.

In either case, the FMW keeps low-skilled workers unemployed and it destroys profit opportunities for the business owners, which means there is less productive output in the economy.

Not really. All that will happen is that more workers will find jobs, and more businesses will find an increase in opportunities to hire additional workers for a profit; therefore, productive output will increase, thus prices will drop. Yes, that will include prices for wages, but not as much as prices for everything else. The result is that purchasing power will go up for the average person (not for the average wage earner of course, because now there will be a lot of previously unemployed people who found jobs for low wages)

This doesn't make any sense whatsoever. Unless you're talking about the fact that more people will try to find jobs, who before had given up looking because with their lack of skills, they believed there was no way they would get a job for a wage as high as the FMW. Either way, it's a benefit for them and for all.

Who cares about median wage or average wage? What should matter is median income or average income (actually, purchasing power rather than nominal income). If someone who has no job finds a job for low pay, that is an improvement for themselves *and* for society as a whole. The fact that their entering the labor market dilutes the statistics tracking people who have jobs is irrelevant.

First off, this is false. Many of the low wage earners will be teens or young adults still living with their parents and/or studying. But secondly, and most importantly, do you really not see that someone who requires public assistance when working for a low wage, is already requiring much MORE public assistance because they're unemployed due to the FMW?

This would be much better done with a redistribution tax. Say 5% of your income is confiscated and redistributed equally to everyone. You might have $5000 base income from this redistribution tax. From that income, there would be no minimum wages laws. This way you allow poor people to start businesses and compete with the large businesses that can afford the minimum wage. The unintended consequences of minimum wage is slavery, poverty, and less freedom.

The concept is this: http://en.wikipedia.org/wiki/Basic_Income_Guarantee

You had better set the base income a bit above $5k.

Checking this against reality might be a good idea.

A list of countries with no minimum wage set at national, state, city levels or through the courts or other non-market method. All clearly lacking in slavery, poverty and as examples as bastions of freedom:

Bahrain
Brunei
Barundi
Cambodia
Cape Verde
Cyprus
Djibouti
Egypt
Eritria
Ethiopia
Fiji
Guinea
Kiribati
Lichtenstein (the one winner on the list)
Namibia
Nauru
Qatar
UAE
Yemen
Zimbabwe

Not on this list is the United States before 1938 (really 1960). However, what I really would like to do is form an Aynation within the United States, free of minimum wage, free of building permits, land ownership limits. The list above has the problem of why don't businesses want to move there? I picked Zimbabwe and it looks like there are actually high business taxes there. Then I look at Fuji, "Trade and investment with Fiji have been criticized due to the country's military dictatorship". The problem in these countries is that they are anti-business.

$5K is just base if you do nothing. If you know what you are doing you can live like a king on 5K a year ($15 a day).

We decline.

What are you so scared of. That is the problem, there is no where to escape from. I could move to Modoc country but I am still subject to the sales and income taxes and nightmare of Sacramento. Why not just let one county be free within the United States.

1. No federal or State income tax. Sales tax maybe 5%.
2. Limit land ownership to 10,000 square feet.
3. Property taxes of 1 ounce of silver per 1,000 square feet per year.
4. Car tax if you drive roads (up to 10 vehicles), but you may be the only driver. However you can group own a car, and pay only one fee.
5. Government employees must be lowest priced that meet qualifications. you write down wage when you apply.
6. No building permits.
7. government owned and leased farmland.

According to Rand, the purpose of government is police and the courts.