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Eric Hazelle

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A stepped minimum wage

In the U.S., minimum wage has come up again. If it is raised, employers say they'll have to lay off minimum wage workers to cover the extra expenses. Proponents say it will give minimum wage workers a "living wage".

How about this? Have a stepped minimum wage. (The following numbers are just for discussion sake, not proposals for definitive compensation.) Let's permit kids age 14-15 to get work permits, for something like Macdonald's, or Walmart. They'd be allowed to work, say, 15 hours a week flipping burgers or stocking shelves and getting, say, $6 an hour. It would give them an income, teach them to handle money, contribute to their family, and they'd be able to work as long as their school work didn't suffer.

When they turn 16, increase their hours and pay to 20 and $7 an hour. Again, subject to school performance. At age 18 permit full-time employment as long as they've graduated from high school at $8.50 an hour, unless they're married and have a family, then give them the proposed new minimum wage. (What is it? $10.50 an hour? Anyway.)

From there, put percentages on the number of employees in each category an employer could have. Say a MacDonalds could have 20% 15 year olds, 20% 16, 20% 18 and so on. Tweak the numbers so they'd be paying no more than what they're currently paying.

Benefits; kids off the streets and productively employed, contributing to the family's income and learning working skills. A system that employers of minimum wage workers could support, and not be out extra money.

As I say, this is just for discussion; tweak the numbers, percentages and ages to get a workable plan, then see if congress could go for it.

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    Gail . 50+

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    Mar 17 2013: The problem with setting minimum wages without also setting maximum wages is that the disparity of wealth grows so vast that minimum wages increase at a slower pace than maximum wages increase, so the dollars are worth less. It's a cruel hoax that harms many as it gives them false hope. Disparity of wealth limits your ability to climb into higher economic realms.

    I suggest that you watch this video:
  • Mar 26 2013: Instead of having a minimum wage, maybe we should have a maximum wage. What if there was a law that the highest paid employee in a company couldn't make more than 100 times per hour more than the lowest paid employee? What if we used taxes (!) to pay for health care instead of tying it to work? What if we tied % profit allowed to wages? What if we allowed all people a minimum standard of living? My real point isn't that we should do any of these things individually or exclusively, but that we need to expand the conversation from minimum wage to societal needs because the minimum wage is clearly not enough.
  • Mar 24 2013: Oh, boy. This is not a discussion point for anyone who believes in liberty (which, in part, means free markets). Labor is a market, and prices must reflect the relative scarcity of the skills being offered. One can goof around with numbers and percentages as much as they want and it all boils down to the same thing - a bunch of needless regulations trying to manipulate a market. "as long as they've graduated from high school" - no. A high school diploma does not guarantee any skills (since people graduate without even being able to read), so it cannot guarantee any minimum money. Also, even if it guaranteed skills X,Y, and Z, there is not necessarily a market for those skills (as evidenced by all the kids with college degrees with no market). So a minimum wage will ALWAYS cause additional unemployment unless it is set below the fair market value of the labor, in which case there is no point in setting a minimum wage in the first place. Come on, TEDsters! Read Economics in One Lesson by Hazlitt - a free .pdf is out there. Please think critically about the ideas that you hear or read in media or the classroom.
  • Mar 23 2013: Unless we live subsidized lives our work has to add value to receive any payment. If we can work we are paid a proportion of the value added by our work.

    If our work fails to add sufficient value to support our lifestyle, we have to find some other work or improve our competence for higher value work.

    Such is our incentive to understand our strengths, study to change our brains and skills and to work smart at our art or service for others. Imagine our country supporting those who cannot work without these incentives.

    Eric's stepped minimum wage proposal would require a government bureaucracy so large to administer it even more of our wages would be consumed in running it.
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      Mar 24 2013: In Australia we've had this system for 50 years or so, and in that time we have gone from being a minor player to being the 12th largest economy on the planet.
  • Mar 20 2013: "Minimum wage laws simply reflect the deeper problem of the voting public deceiving itself into believing it can legislate natural laws of economics out of existence." -Setzer

    Here is the best adjustment to the minimum wage. A flat $0.00 NO quotas NO tinkering by people who don't even live in the town of the employer's location.
  • Mar 31 2013: The best way to raise the minimum wage is to completely do away with it. Allow the market to determine what it can afford to pay people and still make a profit. The most effective managers of American business are those that are in it. Most of the lawyers and intellectuals that fill the halls of Congress and live on Pennsylvania avenue have no clue what it is like to own and operate a small business. Neither do a majority of the population; most have never done so. "Working" in a small business and "owning" one are completely different and sadly most "employees" have no clue in regards to the copious requirements, in both time and capitol, to conceptualize, open, and operate a business. The "everyone gets a trophy" generation that represents a great number of our young workers right feel that a certain standard of living or wage is due them simply because they are able to draw a breath when they awake each morning. The idea of outworking your peers to advance is seldom evident anymore.
    Our economy continues to show anemic growth due to over-reaching government interference, not because government has not done "enough". Unfortunately, we'll never really know the heights of productivity and innovation the American economy could reach were it allowed to flourish under a model suggested by the likes of Thomas Sowell or Milton Freidman. The claws of tyranny and regulation are already sunk way too deep into the tissue of American business.
    As one who owned and operated a successful business from 1989 until 2007 and now works for someone else, I can't imagine opening another business in the current political/economic climate. I'm not alone. More and more people who once owned small businesses have gotten out and will not jump back in unless political winds were to bring us a Congress and Administration that pledged to repeal many of the cumbersome regulations that hamper growth, do away with the minimum wage, and replace our current tax system in favor of a flat tax.
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      Apr 16 2013: The minimum wage was instituted during the great depression. I'm not sure what your 'everyone gets a trophy' comment refers to. It isn't like a minimum wage job is much of a reward. Furthermore, if we allowed the market to pay as little as possible and still attract a warm body, who would buy our output? The workers
  • Mar 23 2013: Numerous studies and basic economics show that if you raise the cost of something, less is used. The whole idea of raising the minimum wage is based on the idea that large numbers of bread-winners are paid minimum wage. Our own census data shows that is not the case. Young people and the unskilled are paid the minimum wage as are part-time workers. These people are not heads of households. As these folks develop skills they move up in salary. IRS studies have shown that people do not stay in the minimum wage category or any other category over 10-year periods. There is a constant movement to higher wages as people gain experience ending when retirement causes income to fall. The impetus for raising the minimum wage is to support Union claims for increased wages. "If unskilled labor gets a raise our members deserve one too".
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    Mar 22 2013: See this is where we lost capitalism, Why should somebody that got married or graduated be guaranteed a wage higher than some one that hasn't. Maybe we should guarantee $25 an hour for someone that has a bachelors degree. Should it not be what he/she is worth to the company and them selves for what they get paid. I don't agree with minimum wage because it doesn't help the poor obtain a "living wage". It interferes with business and the markets, people hire less making less wealth in are community for everybody including the poor. More Jobs equal more production which equals more wealth. With wealth the conditions of living will rise across the broad from poor to wealthy. There will always be inequality, we were born unequal with different skills and different families. Inequality has more to due with wealth mobility than minimum wage and we need to find out why we have lost are wealth mobility in the US and I bet government has something to do with it!!!
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      Apr 2 2013: Practically speaking the most efficient way to subvert the trickle down effect is to kill the person at the top and take his stuff. Not a bad option when the equilibrium wage lowers the standard of living below the care one would receive while incarcerated. Just a thought.
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        Apr 6 2013: Well that's what happens when we get more government, inmates and lower income citizens live better than the hard working lower middle class. We need less government power in are markets from schooling to prison. But yet some people think the government needs more power. They haven't learned that the government is the corporations. Are government is sold all the time, and it will always be for sale. The only way to fix the problem is to limit government powers by voting.
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    Mar 16 2013: Sorry Eric but this idea doesn't work any better than the minimum wage law.

    The reality is that the only real way to assign a value to a service is to see what someone will pay for it. If the wages are artificially high the work will be off shored or the owner of the business will do with out the extra help or maybe introduce automation.

    If the goal is put people to work? Then just get rid of the minimum wage entirely. And quit subsidizing workers with government assistance.
  • Mar 17 2013: Maybe some of you trust politicians more than me. Why did we collapse the wage structure? Why would politicians want to take Alexander Hamilton off the ten dollar bill? The father of tarriffs was right. Enough of pointy headed economics professors. Let's bring back what works. See Ravi Batra's book The Pooring of America.
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    Mar 16 2013: i imagine the poor guy right before his 16th birthday, desperately trying to find some job to help out his family, but not finding, and his current employer is not going to pay 7 bucks, and employing a 15 years old instead. he will hate your idea.
    • Mar 17 2013: but your also forgetting that you get what you pay for as age increases so does the maturity level. but also the cost of training new employees. also if a company want to hire just kids they will get what they pay for and probably wont be in business long
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        Mar 17 2013: on an average. but this particular kid did not grow in his capabilities according to your prescribed rate. he could find a job for 6, but not for 7. bad luck for him. expect him to show up at your front very angry.
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    Mar 16 2013: You would then need a lot of people in the Department of Labor with a lot of calculators to oversee this system. In other words - bureaucracy.

    Why not let the free market decide the wage that each job is worth, and eliminate the minimum wage altogether?
    • Mar 17 2013: I am an under skilled worker and I hate when they raise minimum wage. Because then me and others like me are back to where we started grrrr. They should do away with it its a self correcting problem if employer wont pay enough the employes will go somewhere else or go back to school. Raising minimum wage solves nothing. Nothing. Because as soon as it is raised business raise there prices so that there bottom line dont change. All it does is devalue the dollar. And pretty soon the peso will be worth more
    • Mar 17 2013: ...because it is not working to cause people to receive the fair amount of money that reflects the value of their work products and services. Incompetent CEOs are earning 350 times what the worker is earning and making stupid management decisions that cause companies to fair. Then, suddenly, they start believing in socialism or communism and want the poor and middle class to bail them out of their incompetence so they can continue to be overpaid and receive bonuses they do not earn. It's called JUSTICE. Let's inject some of that and some TRUTH into the system. Maybe then it will start working to benefit everyone.
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    Apr 16 2013: Many people devalue the work of high school students. "Let's lower the minimum wage for high school kids, because they don't really need the money." This may be true for a privileged few, but for many student workers, they need the money for their families, or to help them save up for college-related expenses. Instead of making second-class citizens out of our young people, we should teach them that hard work is rewarded.
  • Apr 15 2013: Not very much in favor of a step minimum wage. Most 14 year olds will out work a 25 year old in a minimum wage job. That 25 year old didn't utilize their opportunities to improve and move up from a minimum wage. People are paid what they are worth to their organization in terms productivity and intangibles.

    We do have severe problem of under employment in this country. Raising the minimum wage will make it worse. I have always held the belief an organization should have the bare minimum employees and compensate them well because they are the most productive people you can get.

    If you don't like your compensation, go find a place that will pay you what you think you are worth.
  • Apr 8 2013: James Clary nailed it. The government has limited us in so many aspects of our lives already. We didn't get to be the great nation that we are by rewarding ALL particpants. To manage a stepped minimum wage would require companies to devote more of their resources to the administrative tasks. Enough already. If people don't feel adequately compensated, they will find other employment. There are laws in place to prevent/discourage discrimination; the government needs to stop micro-managing our lives and our businesses. People's pay should be determined by what they contribute to the bottom line but that's apparently against the law.
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      Apr 16 2013: So, for example, if a business decides to pay women less money than it pays a man for doing the same job; the government should 'stop micro-managing'? If businesses really paid according to a workers contribution to the bottom line, that would be fine. Unfortunately, that can be difficult to measure, and in practice discrimination influences outcomes.

      The US became a great nation by allowing the poorest among us the opportunity to build a better life. The minimum wage is a part of that social contract, as are laws that ban child labor, and provide free public education to all of our kids.
  • Apr 6 2013: so just winging on a thought when minium wage is increased shortly there are the cost of living goes up they cancel each other out but the only one making more out of it is the government because higher pay means more for them in taxes right? so by the government raising minium wage is like them giving them selves a bonus like the banking indurstry
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      Apr 16 2013: Many economists believe that businesses will absorb the additional cost in most cases without raising prices. For example, Corporations are making record profits, and can afford the increased costs. The minimum wage has stagnated for so long, that it is nearly useless in many labor markets as employers pay above the minimum.
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    Apr 2 2013: You cannot pay some one less money for the same work, regardless of age.This is what is called prejudice towards age .
    • Apr 9 2013: I don't remember that in the Bill of Rights. The stickiness in your statement comes from your use of the term "same work". As an employer, should I be allowed to pay someone more who is a more helpful, kind, supportive team mate than another? Pay should be based on a worker's performance, not just in actual output, but in their overall attitude and support of the company. Of course, most people with cheerful dispositions would never complain they aren't getting paid enough because they probably are. If not, they get another job. That is how a "free market" works.
  • Mar 31 2013: The issue, at least in the United States, is not those under the age of 18 working. It is those over 18 that are un or under - employed and working at minimum wage. A stepped wage sounds like a wonderful idea, but when you look at 10 - 20% unemployment, depending on which numbers you use, then the minimum wage is not very helpful when you raise it. An increase is still nothing for those not working.

    Now, a better plan might be to step your support for those who are working at minimum wage. Include insurance and such for support as most minimum wage jobs provide no insurance, time off, or benefits for the employees. That is where most people can't catch up or get ahead. They are spending every dollar of their paycheck just to survive. The addition of basic benefits would help many of these folks to maintain or get ahead in their daily lives.
  • Mar 28 2013: Look people who make only the minimum wage are an economic sink if we look at it in a thermodynamics sort of way. Can't raise the minimum wage - Are you saying we are all failures and education doesn't pay?
  • Mar 28 2013: it's a good point to start with. keep in mind that a minimum wage only costs employers money in the first week. the very next day all their customers have more money in their pockets which means their sales go up. this also means that any time someone can be employed for less than someone else, the whole economy suffers - if a 15 year old is employed at $7 an hour, this means that someone else isn't employed at a higher rate, which means there is less disposable income in the country as a whole, which means less sales for american businesses. the rich would like gullible people to believe they create jobs, when that fact is that it's customers who create jobs.
  • Mar 26 2013: Great idea! Kids should be allowed to work at 14 or 15 a few hours a week, getting experience and money handling skills. As they get older the allowable hours per week should increase as would the minimum wage. The real world is the best teacher. A lot of kids want to work at these ages to begin earning some money.
  • Mar 25 2013: True, Australia climbed while the economies of other countries fell. I've seen nothing to attribute this disparity to a stepped minimum wage.
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      Mar 25 2013: I agree there is no evidence to suggest that the stepped minimum wage is responsible for the economic success but it does show that a stepped minimum wage doesn't instantly destroy your economy like many tedsters seem to think.
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        Mar 28 2013: Too small of a sample test, Pedro come on you are a man of science aren't you?

        No it is not instant but it surely is a lowering of the VERY people you purport to help.

        Do I really have to teach you remedial economics. Sad to say that is my lot in life, learn the heathens which way is up.
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          Mar 28 2013: Can you give me an example of a country where the introduction of a stepped minimum wage system resulted in calamity. Irealise my assessment is based on one result from one country, but that's one more result than any of the nay sayers have produced. Yes Pat I am a man of science and science tells me that even insufficient evidence is better than no evidence.
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        Mar 28 2013: Ok Pedro

        Oh here is one, this county called the United States, through the Davis Bacon act, please peruse the words of a couple of the smartest fellers I know the Sowell man and Walter E (not jazz musicians but economists) the facts are there but you won't hear me anyway so I'm not going to go to much trouble on this.

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          Apr 2 2013: All your problems would be solved if you could just get dem boys to work for nuttin like in da old days.
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        Apr 2 2013: Nope them fellers have learned me plenty.

        What they are saying indicates a very real problem with the minimum wage you are so proud of.

        You are trying to divert my point, hopefully most will see through your digression and it's dubious intent.
  • Mar 24 2013: Kids should play! Teenagers should look for themselves! beacuse job life is a dull life, your first years on this world are the years you are going to remember are the ones that are going to define you, should we work on those days?
  • Mar 23 2013: I agree about having a stepped minim wage but that is what we have but they keep changing it does any one know why? When I started working it was 2.65 then I got raises that is the steps in my wage hence steeped wages? The bottom should never change its the upper that should change. If my employer feels that he is better off firing me and hiring someone with no experience to save a few bucks that is up to him but experience and refining my ability's is saving him money and over all cost because it would take 2 people to do my job. Even the CEO’s that are making 300 times my pay must be worth what they are getting paid because there still there and still getting paid they stole thousands of dollars from my personal retirement plan in a manipulated scare market and then on top of that also forced me to bail them out with my tax money because I would have never bailed them out “they can all burn in H _ _ L” and are not in jail??
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    Mar 21 2013: Good, valid question but it needs MUCH more research...There is one minor fallacy in your opening statement....The implication that employers can not afford to pay a living wage...The problem is that over the past 35 years while we as a nation have seen incredible growth in worker productivity the wages and Bennes paid those workers have remained static or lost ground. If (for example) the MINIMUM wage of 1968 had kept pace with inflation and productivity it would now have to be over $22.00 per hour. The other hidden fallacy is that corporations can't afford to pay higher taxes.. The Corporations are lying..They absolutely CAN afford both a living wage and the higher taxes but it would cut their profit margins from double digits to the old (1980s) standard of 3% to 6%...THAT is what the wage fight is about from the corporate perspective...that is also why the past 6 administrations have allowed unfettered illegal immigration...it drives wages down...
  • Mar 20 2013: As long as money is involved, nothing will ever work.
    Why not get rid of money and then all jobs will be of equal value and each person will be of equal value?
    All the work currently done will still need to be done and everyone can participate in working at something.
    Just because a job is some form of menial labor doesn't mean it isn't necessary.
    All the things, chores, activities and efforts humans put forth into living are equal in value and importance and can be done by more humans sharing more of the work load instead of long hours, added stress and dog-like competition to survive.
    Everyone needs to survive and all can survive and thrive not if, but only when we are all equal.
    That is how we create equality by making all our job-like endeavors of equal value.
    Still, because we are human, curious, creative, daring and so on, we will still desire, seek, learn, teach, build and do all the things we already are doing but doing mostly because we are struggling to survive.
    What we see in societies around the world that is negative behavior and actions, is not because that is our human nature but it is because so many are not getting their needs met and survival kicks in with all its strength.
    That is natural and there is nothing wrong with surviving and we humans can do this differently if only we could seriously think in a different state of consciousness.
    I call that state, "sanity."
    Most cannot because they are not sane.
    They can only think 'round and 'round in the circles they've been given as a form of consciousness.
    They are asleep and boxed in, so they can't think or imagine outside the box.
    Thus, all the talk revolves around all the same old methods, tweaked anew, and the same old philosophies which are openly failing.
    Things don't........"get done".........because of money.
    Things ...........don't get done".....because of money.
    Nothing costs money.
    Everything costs people.
    • Mar 20 2013: That would pave the way to communism because it would create a disincentive for work; you'll call me crazy and I'm not smart enough to understand your utopia. I live in the real world where no one is equal, we're all different, unique, and have abilities others do not. We are born equal but achieve different results based on actions and motivations.

      Which is why America has the most robust and innovative economy in the world because people are rewarded for their talents and hardwork.
      • Mar 21 2013: First of all, please don't try that sad old method of demonizing and dismissing with one word. That word is communism. Your use of the word implies I am suggesting that, as far as I am concerned. The world has never had a communistic system that didn't involve money, hence any system involving money becomes corrupt because of money, not because of theory. And the corruption is in practice and that is reality.
        No money does not create a disincentive for work, which is disingenuous of you to say that. Not having a monetary system means humans could finally go about solving their problems because it is money and always has been money, that stands in the way of solving them. Read this again until it sinks into your programmed brain.
        Things don't........"get done".........because of money.
        Things ...........don't get done".....because of money.
        Nothing costs money.
        Everything costs people.
        No we are not born equal but so what? We parse out value and worth to individuals based on birth, country, belief, luck, greed, occupation and many other features that increase inequality and widen the gap between our common bonds.
        All jobs are of equal value because we humans need them all done. Thus, everyone can contribute and survive while we produce all we need for everyone's survival. That is what people are trying to do for Christ's sake and you think, what? that it is somehow wrong, immoral, of lesser value, not worthy of dignity, or comfort, or lack or worry? The list could go on.
        And don't leave out how Americans hard work involved stealing a country and stealing the resources of other countries so they could "realize their dreams". Americans have worked hard at killing other peoples, invading and destroying democracies forever, and then using their advantage to keep the rest of the world poor as best they could. They have contributed more pollution, more use and waste of earth's resources and use the threat of terror on their own citizens.
        Rethink your position
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          Mar 24 2013: your basing your idea on everybody getting along perfectly. government is a useful tool. but only without corruption. maybe fight corruption instead of infrastructure. a.k.a. "money"
          there are too many problems in the world stemming from other issues (mostly morality issues) to be blaming it on "money" start at the base of the problem then work out of it.
          a house with a weak foundation will always have a weak foundation no matter how you make it look.
    • Mar 21 2013: Essentially what you're describing is communism and while it sounds all wonderful and utopian,in practice it has been anything but. Worker disincentivization is just one of many problems. Another major one is that communism historically has led to dictatorships, violence, and war.
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      Mar 21 2013: agreed with the two statements above.
      this would effectively limit a lot of research, organization, and job motivation.

      besides the whole America Paragraph.: "Which is why America has the most robust and innovative economy in the world because people are rewarded for their talents and hard work." America is so far from getting it right.

      minimum wage issue is not the problem. maximum wage difference increases productiveness minimally while it massively separates the country into inequality. From this stems some of America's oh so obvious problems.

      please watch this talk if you don't believe it.
      • Apr 16 2013: Commenting on your ABOVE above statement. The one 2 comments up.
        Money causes corruption.
        If someone has it they want more of it.
        The government is corrupt because of many business owners decide to take up
        politics as a hobby. And then they lobby. And they protect each other. Business, HUGE ONES, monopolizing ones, give government what it needs to keep going. Money. Government in turn gives protection to make even more money. MONSANTO IS THE PRIME CANDIDATE FOR CORRUPTION OF GOVERNMENT USING CROOKED BUSINESS.