Thomas Pisarchick

This conversation is closed.

Geo-economic minimum wage.

In many areas the minimum wage rate in America at $7.25 per hour adds a lot of fiscal stress. The idea that the bare amount needed to survive on New York City is comparable to the cost of living of Edinboro Pennsylvania or elsewhere in "small town America" is preposterous.

Having to pay an employee a higher minimum wage leads to higher costs which leads to product price increase. So where the first week of a wage increase might help it quickly is compensated for by price increases in retail products. People that were making above the minimum before it was raised end up getting the short end of the stick having to pay more and often not getting a pay increase being that it wasn't mandated.

The minimum wage should be based upon more locational factors. Paying someone working a small town grocer $5 per hour could allow the grocer to keep the price of produce down so that the people could afford to eat for less. In small towns rent is lower and the grocery store employee does not need as much. This would also get jobs to the poorest spots in this country because companies would set up shop in the area where that they could pay their employees the least, help little towns compete against outsourcing. Factors such as average rent, food, and healthcare costs will be used to calculate the cost of living in that area. This calculation would be the scale in which the regional minimum wage is set upon.

Ideas or arguments?

Closing Statement from Thomas Pisarchick

Thanks for all who participated here. We got into some interesting ideas. While the initial question still lingers in my mind other solutions have been offered. Thanks to Richard Hardlovic we looked into a differential ratio for the highest to lowest paid employees. This is an intriguing solution to the distribution of wealth and I look forward to exploring this idea in more detail. We also saw examples why a minimum wage system was so important, how the corporation would exploit their workers without it. The crown jewel seems to me to be the idea of employee owned companies as an attainable way to assist in changing the mentality of corporate ruthlessness. ESOPs create a democracy in the work place and bring in the minds of people who are motivated more then just bringing in a profits to the decision making process. This will inevitably lead to more responsible and human decisions. A group of people representing many factions of society is much less likely to dump toxic waste in a stream or decide to open a sweat shop to exploit children. On top of this this style of company distributes the wealth better, provides a better pay differential ratio. So this leads to how do we create a climate where an ESOP is seen as the best path to conduct business?

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    May 21 2011: Minimum wage standards do vary from by region, Oklahoma for instance has a possible minimum wage of $2.00/hour for companies that employ under 10 employees at a single location and net less than $100,000 annually. many states seem not to have any standard minimum wage, and some have above federal standards. San Fransisco I believe has a minimum wage of around $10.00 per hour. The Federal standards also vary by region to compensate for differences in living standards.
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      May 22 2011: I was unaware of these variances. I know that different areas can have different amounts although the $7.25 wage set by the federal government is the least someone can be paid legally. Even when waitresses get $2.50 per hour if their tips don't make up the difference to the minimum wage then the employer must.
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        May 24 2011: "was unaware of these variances"
        It would seem that the Federal minimum wage is not applicable to all labor, there are many exempt forms of labor and types of business that are not covered or are not strictly held to the standard. For instance any business that does not do interstate business is exempt.
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    May 21 2011: A good portion of the ongoing and moving exploitation of people around the world comes from outsourcing seeking the lowest price tag for labour inputs. Perhaps a world wide minimum wage would stop this exploitive strategy that is right out of "The grapes of wrath" (and originally depicted such issues in America as poor east coasters flooded California in search of work because family farms were eaten up by corporate farmers. )

    I am not sure that what you are suggesting Thomas is quite ideal but it is worth looking at all the aspect. I might start by having all countries agree that there should be basic standard of work conditions, safety legislation applying to companies, and other issues that are fundamental to ensure the wellbeing of labouring individuals. Then the actual wage could be made comparitvely equal based on the economy of the region. This situation would still keep companies shopping for cheaper labour but at least not for starvation wages.

    The most positive outcome would be for companies to start doing business in their own back yards so that they have to face the looks on their neighbours' faces when they are inhumane in the grubbing for that last penny of profit and more expensive golf clubs for their CEO.
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      May 21 2011: You make a very good point; outsourcing largely capitalizes on the lower human/workers rights standards around the world. It is cheaper to produce things in China and ship them all the way across the world than it is to make things here or even in mexico because there are very low standards for human/workers rights bringing down the cost of production. We never abolished slavery, we just outsourced it. It is a huge geopolitical hypocrisy that desperately needs correction.
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      May 22 2011: Had not thought of a world wide policy, interesting thought though. It would be very hard to get all the countries to agree to such a thing. The countries would first have to care about human rights before bothering with worker rights. I'm not sure if having to look in the face of the neighbors would affect many CEO's, seems like the ones with no morals would just laugh at the misfortune they have helped create.
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        May 22 2011: "wold wide policy.....It would be very hard to get all the countries to agree to such a thing. the countreis would first have to care...."
        This is what international politicking is all about. The use of embargoes and other political tactics are very valuable for encouraging other countries to raise human rights standards. But when our ideals of a just world come into conflict with our desires for cheap goods, we cave. It is unacceptable. Demanding human rights for our citizens while capitalizing on the exploitation of other nations is abhorring, and a major root to global problems. 1st world nations are taking advantage of 2nd and 3rd world nations by doing business with any that do not measure up to our level of minimum standards. By doing business with any nation that does not meet our standards of human rights, we are not just condoning those practices, we are directly imposing them on those nations. If we stopped doing business with any nation that did not meet minimum standards of human rights, things would change almost overnight but instead of financially incentivizing human rights we are economically imposing incentives to keep global standards low so that we can buy cheap crap. Bleh!
        edit: nations don't need to care about human rights or anything else, they just have to want our money enough to do what it takes to get some, in this we of the 1st world have leverage to incentivize other nations to raise standards.
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        May 22 2011: There are global standards and they are set through the Wolrd Bank and the IMF whose debt related lending conditions actually feed exploitation wolrldwide and actually supercede any laws a country may try toput into effect to improve working conditions, wages, or impose "barriers to trade" like healthy water and absence of polution Ostensibly the idea is that countries who have debt to the IMF and World Bank must export as many goods as posisble to insure thatthey can payy off the devbt to the IMF and Wolrd Bank.. I am collaborating with a freind to bring a conversation about that soon to Ted Conversations and hope you will join me there.
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      May 22 2011: That'sa very good point Debra what you mentioned about outsourcing. In this fiercely competitive business world while companies coming up with products / services with no / low differentiation , putting Cost Of Goods (COGs) & Operating Cost down are two major areas of maximizing profit what is named in nice word "Improvement In Productivity". In both cases hit goes to human capital and basically to lower portion of Corporate Pyramid.

      Besides outsourcing taking away jobs not only from one country to another but also across continents while Governments are blamed (I am not favouring Govt. just mentioning as matter of fact) not to be able to create enough job !!!

      @ Meher very rightly said about the existance of ensuring minimum wage on the basis of "Cost of Living" already in place. Das Capital of Carl Marx explained how profit maximization happens at the cost of human labour.

      Use of Child Labour or labour of Illegal Immigrants is one of the way out to many businesses to keep the operating cost down to maximise profit and keep Wall Street Index up for their companies.

      In such situation UN in recent past came up with a resolution named "Global Compact" to ensure human rights , basic wages etc etc. Many organisations signed in it but implementation is real big question mark !!!
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        May 22 2011: Das Capital was Marx's Magnum Opus. Its a shame that people don't read Marx out of some revulsion towards communism, as his theories of economics are some of the most interesting and revealing; regardless of whether one buys into the communist ideology, there are many great insights that every worker should be aware of.
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          May 22 2011: I can't agree more Meher !!!

          Is not that attitude an expression of another kind of "Extreme Fundamentalism"?
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        May 22 2011: Absolutely! It is insane totally crazy that people disregard such good information for such silly reasons. Just because one does not agree with the conclusions drawn from the study does not mean that the observations made are not worth considering even if to a different end. Marx got a bad rap for an ideology that got a bad rap, from a bunch of nut jobs that gave them bad raps. And now everybody runs around with these strong held beliefs and uniformed opinions on the stuff even though they have never even read or dealt with any of the material. Same goes for capitalism, people accept the stuff on blind faith and think they know what the concept is because its a part of the culture but have never actually picked up a book on the theory of capitalism, but feel totally entitled to throw around words like laissez faire just because they heard it once and it sounded good rolling off the tongue; absolutely ridiculous!
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        May 22 2011: The power of a cultural event like the McCarthy witch hunt for communists stays with a country and can have long term effects that are seldom acknowledged. In all honesty I place the blame for the current business practices and the lack of balance in ideology -ignoring information and knowledge -on a couple of things. First the McCarthy hearings made the fear of not conforming to the mainstream thought in America acute. The propaganda of the day was very effective. Secondly, the professors of business schools like Harvard seriously promoted their 'social experiments' that changed the world of business from believing in individual ethics to corporate conformity to the bottom line. Nothing that businesses tried- from discipline of labour in the '80s and beyond in the form of union busting and outsourcing - did not come from the classes of MBA courses at these prominent schools. From there the 'approved' tactics moved into the corporations with 'a blessed or annointed bullet'.

        How the heck can such an education be so effective in turning of a person's humanity. It must have to do with conforming to peer groups and other social psychology issues. How do these guys squander their richest one more gold covered faucet knowing that money to buy it came out of the hide of a poor kid in a factory half way across the world or the hide of the welling being of their own countrymen who cannot find any work to support their kids? Is this just my naivity or is it my fundamental humanity that has gone on tilt like a pinball manchine in the presence of such psychopathic greed?
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    Jun 1 2011: This conversation has been informative and brushed upon some interesting ideas. In a couple of days I will write some type of conclusion. Thank you all for participating and if you have any final points please make them soon.
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      Jun 1 2011: Look forward to your closing remarks.

      .Just wanted to let everyone that has particpated here that our Ted Survey on universal values www.goo.gl/mod/0073

      includes a value on fair wages and safe wokring conditions which has no support at all. ( if you believe fair wages and safe wokring conditions are auniversal right pleasse go vote at the above link and get it onto the front page)

      .interesting..not sure what that means..,,except possibly that we need to keep this isue before the Ted
      Community.

      Thanks Thomas for giving us a good start on that.
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    May 23 2011: i think the issue is a minimum wage as seen today does not reflect what an actual living wage in todays world would have to be.
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      May 23 2011: That is an issue, but is a standard wage for all economic climates really conceivable? Even if the wage is raised to reflect basic needs for survival what area would it be based from and what factors should be used to calculate what it should be?
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        May 25 2011: im not sure to be honest. here in phoenix az, minimuum wage is 7.25 i think, but to be honest a living wage here for part time would have to me around $11.00
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      May 23 2011: By this do you mean capping potential earnings?
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          May 24 2011: This is an interesting concept. It brings to mind employee owned companies. This type of company is a great example of how wealth can be spread more evenly while creating a quality product and strong community. One example is the King Arthur Flour Company in Vermont http://www.kingarthurflour.com/about/

          Please share a little more on your thoughts of the differential limits.
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          May 26 2011: I am a big champion of ESOPS (Employee owned compansues) as it solvesso many problems and also, importantly, gives family owned companies which have been important local and regional employers a way to grow and thrive into the future. Also saves the seller all kinds of taxes and hassles..basically the employee buy out provides an annuity for the former owner ( more complicated than that but thi sbois very tiny)

          We have a wonderful expmaple of that here in Maine..the brilliant engineering companyy Cianbro a major employers staewide and actually through their experetise in many places where jobs are scarce. Instead of going public, the comoany opeted for ESOP and under that the company has grown and diversified and thrived. the employees are stake holders in the profitability of the company,.in all its business risks.. It does have management and executive leadership of course but as shareholders all employees have a voice in wages, raise, working conditions etc.

          I hope employee ownership even in conversion of large exsting publicly manufacturing sector busineses where these conflicts are greatest, will become more and more the standard.,
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          May 26 2011: I think you present a very hopeful concept for the future in this post Lindsay.
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          May 26 2011: This conversation is all over the place, but they all seem to be leading to interesting and relevant (albeit not to the original topic) ideas. With that said let me further add to the diversion by asking how can we promote and bring more into the main stream this concept of employee owned businesses? I'll start one, but how do we get more people to follow suite?
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          May 26 2011: Thomas..lets' finish this one out to its end and you do your closing sateent whichmight refer to Part III.ESOPS...I will put together a few links and a little vbackground to help you post one of ESOPS if you like. ( I'll be your admin) It is important and it would be great to bring to Ted.

          Until we have esops as the norm we do still have and have to resolve all the isues of inequity and justice your excellent conversation here is about.
          (You're a good moderator)
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          Jun 1 2011: Thomas, I do find many TED conversations to be more like mindmaps than linear threads of specific topics but I have to confess to loving that. I love the way one idea spins out another. For example, I would never have considered the great potential of ESOPs as a tool for the future for reducing disparity but I think it is brilliant.
          Your original idea of a Geo- Economic minimum wage made people not only think but it sparked creative and constructive new ideas.
          I call that good work on your part!
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          May 24 2011: I agree that rather than basing minimum wage on market variables such as resources, services, and products, it may be more useful to base it on a relative pay scale. Thomas, you had suggested determining the minimum based on the price of things like cost of living, but the cost of living is highly variable. Cost of rent, energy, food, etc. may change from one day to the next and wages cannot be adjusted to keep up with these market swings.
          I had suggested in 2 previous posts (which I deleted because they were a little mathematically nonsensical and convoluted). my concept was to determine minimum wage by normalizing the wealth distribution using the central limit theorem so that we could use the Z table to determine a statistically appropriate lower limit, for instance K standard deviations.
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          May 25 2011: Yes, this is an interesting suggestion. The geo-economic wage I had originally suggested was based on physical location, where that may still be possible and something to look into this idea also holds merit. It also may be a lot easier to figure out, although there may be a lot more resistance to it.
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          May 26 2011: my bad, I miss-wrote, Not normalize the wealth distribution, but rather the data on income. The usefulness in this is to establish an interval of the estimated mean, and set the lower limit based on a certain number of standard deviations from it. My math skills are kind of sub par so sorry if that doesn't make sense. I just remember that the central limit theorem has been very useful for determining things like this in other areas.
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      May 24 2011: With the ratios there would have to be a skill or education variant. Take for instance a hospital that specializes in neuro-surgery there are the surgeons that have spent many years and many dollars honing their knowledge then there are the janitors that have no secondary education. While the janitors should make enough to live should they make anywhere close to what the surgeon makes?
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          May 25 2011: Would it be better to have pay differentials within company or within industry, or both? As far as the ratio I think we need to take into account the investment required to get into the top paying position. the lowest paying positions require no effort, not even completing high school. Where the higher paid position requires not only a monetary investment but also a serious investment of time. Should the ratio be proportionate to the investment?

          As to your side note I agree that nurses are more valuable then bankers, by far. Even when you look at the common mentalities. Nurses tend to be kind people who consider others where banks are often my self centered and greedy. Also I feel that pro athletes get paid entirely to much.
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    May 22 2011: Thomas Federal minimum wage laws apply only to certain classes of jobs. Minimum wage is mainly a local government issue and does vary regionally and there are exemptions. http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

    Laws and regulations are very awkard tools for social and ecenomoc justice but its all we have.

    I am more concerned now about an apparent move in the US to bust through and bfeak down laws that provide for safe wages and healthful working conditions. The plan afoot seems to be avoid that extra costs of shipping goods in from China by having exploitation righ there at home. All eyes should be on that.
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      May 22 2011: From what I gather there are a small few situation that can be compensated less then minimum wage. Even if the state has a lower minimum wage then the fed it seems most of the jobs will still require the fed rate.
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        May 22 2011: yeah..and is there any place in Ameirca where anyone can live reasonably on under $10,000 per year most likely with no benefits or health insurance? Th eold rule of thumb on housing costs was that it should be not more than 25% of your gross income. Where can you rent or own anything for $200/month? My electric bill is more than that ( and i hardly ever turn on anything)
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    May 21 2011: As long as it doesn't become another political tool, it's not a bad idea now that we have computers that should easily be able to come up with the data to support the variances.
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      May 21 2011: Economics is always political :(
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      May 22 2011: Indeed, but do you have any clue what the calculating factors should be?
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        May 22 2011: Not sure I understand the question, could you elaborate?
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          May 23 2011: I was wondering what factors would be used to calculate the regional wage standards. I'm sure things such as housing costs, food costs, and accessibility to goods would be some determining factors.
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        May 23 2011: HOLLY COW!!! Turns out that the federal minimum wage determination is totally arbitrary, nothing but a politician submitting a bill and it either makes it or it doesn't, totally random, no formula, calculations, Nada, just a couple dueling banjos on capital hill with no rhyme or reason to the formulation. what a joke.
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          May 23 2011: Sounds about right. So how should we calculate what the appropriate wage is?
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          May 23 2011: Housing mainly fluctuates between areas and condition. For the condition the standard could be based on what ever the regulations are for Section 8 housing. This standard to be used to compare between multiple regions.
          Food is an area that may not be a good indicator, too many variables. Food would better reflect the area if the majority of it was grown locally. Growing the food locally is also good in so many other ways. So locally grown food is something we should already strive for. For areas that can not feasibly grow their own food the excess from other regions would be on the market. It really makes no sense to grow the food for the masses where water is a problem. Also I personally feel that food should be a right a g.i. provided basic. People could chose to go to a different store and go to restaurant but there would be as store where people could go get an allotment of food. That is a entirely different conversation though. Maybe another day.
          Population? Level of skill for most jobs in the area may play a role, what else?
          Really interested in what would be good consistent factors.

          Basing minimum wage on a relative wage scale seems that it would lead to ever higher wages and increased inflation. Basing on buying power is an interesting idea, although if the value of the dollar changes per area wouldn't the buying power would be somewhat standardized? Basing on the cost of crucial expenses I think would be good.
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      May 24 2011: Would dependency on federal aid be a factor?
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    May 21 2011: what is the reason behind the minimum wage? why not drop altogether?
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      May 21 2011: Minimum wage was a term coined by Marx and is based on the calculations of maintaining the most basic provisions necessary for survival. For a better understanding of this concept I recommend reading Wage Labor and Capital (I think that is where it is first defined). To drop the minimum wage would be to reinstate slavery.
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        May 21 2011: that last thought is also from marx? or it is a known fact? in the latter case, could you show some evidence for it? or rationale?
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          May 21 2011: It is an extrapolation from the concept of minimum wage. But it does not necessarily follow that by not meeting the minimum wage slavery is the following institution in absolute terms, there are other scenarios perhaps that might not be considered "strict slavery", but by almost any definition I would deem most if not all of them exploitive operations of "slave like conditions", but I also consider minimum wage to be slavery as it provides only the most basic necessary compensation to maintain and perpetuate the modes of production without compensatory surplus of any kind. Wage labor and Capital is only like 15 pages or so, give it a skim, it is insightful and pertinent.
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        May 22 2011: marx wrote a lot of silly-billy things on the issue. i can only hope that you also read literature that came after.

        labor market is a similar market as any other one. since employees are free to move, employers have to bid for them. as the total productivity of the economy goes up, wages (in real terms) also goes up. a wage of a worker tends to equal to his marginal revenue product.

        on the contrary, slaves are not allowed to move, and because of that, no such bidding happens.

        minimum wage is not such a sacred thing. it is yet another price fixing and nothing more.
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          May 22 2011: yes, I also read the modern stuff as well but it lacks the type of quotable passion that I deem worthy of my reference, (in case it wasn't obvious that was a joke). Marx did indeed write some silly-billy stuff as you put it, but he also wrote some foundational stuff and some revelatory stuff, and some insightful stuff.

          Freedom to move about is not necessarily freedom, but that is a different discussion all together.

          the assumption that employers bid on employees I think is backwards as if there is a surplus of laborers the competition is in finding work, not fending it off. And those industries that do need to vie for the best person for the job are the skilled labor positions not the minimum wage stuff where this conversation is focused.
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          May 23 2011: "labor market is a similar market as any other one. since employees are free to move, employers have to bid for them."

          It should also be noted that employers are much freer to move about to hunt for the cheapest means of production than are employees to find the best paying job.
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      May 22 2011: The Fair Labor Standards Act was instilled in the 1938 creating the minimum wage to protect the worker from corporate greed. This is shortly after the great depression. President Roosevelt was the one who passed it. He was very much for the economic rights of citizens. If the minimum wage were to be removed there would be companies that would take complete advantage of their workers, essentially creating slavery as Meher has said.
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        May 22 2011: you provided a little history, then stated again that minimum wage prevents slavery. but i still see no rationale. argue for it.
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          May 22 2011: I'm not quite sure what you want proof of. Do you ask for proof of corporate greed or that corporations will take advantage? Both seem to be all to evident to me, you don't see this?
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          May 24 2011: Krisztian, I think what we are all arguing is that there is evidence that wages can be surpressed to the point of slavery or murder by the employer.

          http://en.wikipedia.org/wiki/Homestead_Strike

          http://youtu.be/zw9DGwmVZ7o
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          May 24 2011: Thanks for this Debra, although I must admit it's a little embarrassing to learn of U.S. history from a Canadian. Especially that I grew up not even a few hundred miles from Homestead.
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          May 24 2011: Thomas - we all need a little help from our neighbours.
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        May 22 2011: thomas, i didn't ask for proof. i asked for rationale. "evident" is often misleading.

        as i said to the gentleman in green costume and with no name above, wage is determined on the market. there is a competition between companies for workers, and the highest bidder hires the worker (roughly speaking). this sounds logical and does not contradict our experience.

        now i would like to hear why should we fix the price of labor.
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          May 22 2011: in our country, Krisztian,Ffair Wage, Osha & Workers Comp all gew out of exploitative labor practices that were inconsistent with American values of dignity, social and economic justice. in our country these values are part of what we value and need no defense or explanation. here thomas is only asking whether theprotectuoions we have in place need revisiting. .This conversation was not set up to revisit our country's comitmentt to fair wage but I leave it to our host to deciide whether this thread of denating the value of fair wage laws is off topic. Of course you can start yourown conversaation on that remise and invite thatdebate. But that is not what is invited here.
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          May 22 2011: Since you are reiterating the question I will redundtify my response. (also, my name is Meher, Polansky, its nice to make your acquaintance)

          In low skill industries that provide minimum wage it is not the companies that are in competition but rather the laborers who are in competition as that is where the surplus lies.
          You state that wage is determined by the market, and by this I assume you are speaking of supply and demand, and it is in that that my rational is founded as the supply of unskilled labor is proportionally much higher than the demand for it. Without a bottom line industry could drive wage to any low and workers will tear each other apart trying to undersell themselves for the work.
          Addendum:
          Examples of this concept can be seen all over the world in regions with no minimum wage where workers are desperate for work and are forced to accept slavery and slave like conditions for employment.
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        May 22 2011: indeed i was referring to supply and demand. and if you know what it is, you also know that there is no such thing as supply being bigger than demand. the price falls or rises to the point where the two equals. ironically, minimum wage prevents this by not allowing the price of labor to fall below a level, and thus creating a higher supply and a lower demand. that is, unemployment. minimum wage laws exactly hurt those unskilled people who can not possibly get the minimum wage, as their marginal revenue product is lower. employers has no other choice than not hiring such people.
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          May 22 2011: I know what supply and demand is but I don't accept that the "invisible hand of the market" creates a perfect balance in which supply and demand are equalized, and there is no reason to believe in such a thing. Proof is in the analysis of economic history which rather than portraying a market stasis displays peaks and valleys which suggest a very different view. Supply most certainly can exceed demand and happens all the time. Many things are produced that are not met with an equivalent demand, especially in a constantly changing world of tech. example, a new phone comes out, is very popular at first and so many are produced with the expectation that they will be sold, but instead people move on to the next big thing, now you have a surplus of goods not being met by demand. If supply and demand are ever equal, it is only in passing and not by normality.
          "ironically, minimum wage prevents this by not allowing the price of labor to fall below a level, and thus creating a higher supply and a lower demand and thus creating a higher supply and a lower demand. that is, unemployment. " Unemployment is the result of more people needing jobs than there are available. you seem to be asserting here that minimum wage creates the conditions of supply and demand leading to unemployment, but I see no causal relation, can you elaborate please?
          I also do not follow how minimum wage hurts employees, (in your last statement) as I pointed out earlier employers have the choice not employees.
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        May 22 2011: i don't see how would the principle of demand and supply be violated. it is one of the most basic economic fact. suppose we have 10% unemployment in an imaginary country. do you really think that by lowering the wage level, demand for labor would not go up? that there are no companies wanting to hire a worker at the previous wage level, but willing to hire on the lower level? unless we have a total lack of elasticity, lowering wages will reduce unemployment.

        or imagine a labor market that is in equilibrium. if you introduce a minimum wage law, do you really think that nobody will change mind, and decide to seek for a job for this higher wage? and that no potential employers will decrease production, or choose a less labor-intensive method, like automation?

        it is a very bold claim that the labor market somehow does not follow these simple principles.
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          May 22 2011: You suggested that "minimum wage is not such a sacred thing," and now I am suggesting that those "simple principles" you outline are not such a sacred thing. I gave what I thought to be valid examples of the faults of unregulated minimum wage by referencing real world applications of the concept in regions were a minimum wage is not mandated. Not having a minimum wage has not resulted in better standards for workers but rather higher profits for industry. Industry does not vie for those who seek higher pay, but those who are forced to accept low pay. The competition is exerted in the form of "who will work for the cheapest", driving the conditions of labor as far down as possible for the cheapest possible production, not raising them up up as you say. (are you suggesting that the market has some underlying humanistic altruism?)
          "unless we have a total lack of elasticity, lowering wages will reduce unemployment," yes this may put more people to work as industry would capitalize on the 2 for the price of oneness of this situation, but as I pointed out before, being employed does not mean gainfully so=slavery/slave like conditions.
          "or imagine a labor market that is in equilibrium." seems a bit far fetched but okay....
          "if you introduce a minimum wage law, do you really think that nobody will change mind, and decide to seek for a job for this higher wage?" everyone will want higher pay but will be out competed by those willing to do the job for less.
          "and that no potential employers will decrease production, or choose a less labor-intensive method, like automation?" Yes, machines will do the job cheaper than anyone, minimum wage in this instance is merely the maintenance of equipment, human labor in this scenario being cut out in favor of the ultimate minimum wage, something that will do the job better and cheaper and without a need for rights (this by the way is what Marx predicts will happen to the labor market),
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          May 23 2011: Meher is right on this one. There are towns that have over 50% unemployment. Without a minimum wage in place a company could move in and pay people $2 an hour and still have more applicants then available jobs. These would be where the slavish mentality would take root. On the other hand the market would balance itself out with the correct wage standards where that the essentials are priced accordingly to labor rate.

          It would be nice if companies fought over employees. I suppose they do, if that employee is in the upper echelon or at the C level, but not for general labors.
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        May 23 2011: meher:

        you are reiterating previous points. don't go back in time.

        no, low wage does not mean slave-like conditions, because slaves are not allowed to move, and workers are. that makes the situation completely different, as workers can choose the best paying employers, hence, competition exists.

        i don't find any examples in your posts here on how lack of minimum wage creates worse conditions. you said it can be found "all over the world", but no details at all. i doubt though that any such data is useful, since a lot of other parameters will be different too. we need reasoning.

        so far, we agreed that minimum wage is a price fixing, and the demand for labor is elastic. so reasoning actually says that it creates unemployment. it is debated? do you have any data or counterargument?
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          May 23 2011: Being allowed to move is completely different from being able to move. When someone is making just enough to keep a roof over their head and some meager scraps on the table they really can't move. How would they? This would be used to the advantage of the corporations and perpetuate slave like conditions. the people wouldn't be actual slaves they wouldn't be technically owned, but many of the circumstances would be similar.

          Why do you think that a minimum wage creates unemployment?
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          May 24 2011: Krisztian, Industry is much freer to move about to find the cheapest labor than are workers to find the highest paying employment. I assert that the problem is not minimum wage, but rather the lack of minimum wage that is the problem. When standards of employment are enforced industry leaves because it means a higher cost in production, business seeks out the cheapest means of production. Just as there is a minimum cost to produce a product, there is also a minimum cost to maintain a worker, minimum wage is price fixing only in that it sets a minimum standard for this maintenance, as we are humans and not just products on an assembly line, it is reasonable to demand a certain level of standards for how employees are to be treated, without these minimum standards industry will drive cost to every possible low. Industry exploits the lowest standards, so I don't think it is safe to get rid of standards but rather raise them up all over the world because when standards are high in one place industry will leave to exploit the low standards of another. In this I assert that the root of the problem is not that standards are to high, but rather that they are to low elsewhere.
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        May 23 2011: thomas: and those people are not better of with $2 than nothing? nobody is willing to look into why there is no business there? why people can't find any useful activities? why not start local businesses? why they have no better education and skill? maybe solving the real problem would really help. unlike minimum wage, that creates 50% unemployment.
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          May 23 2011: Krisztian, There are still towns in this country that do not have plumbing. Currently $2 an hour is worse then nothing for a lot of these folks because if they accepted the $2 then they would lose federal aid. Many of these towns had business then the business moved. Some moved to outsource employment to other countries where they could get away with terrible working conditions and low pay. Others moved because their run was done, such as coal mines that dried up. As far as why people don't have more education or skill, many of them didn't need it because when they were growing up there was work available and now higher eduction isn't really accessible or practical. While there is a surge in online course many of these courses are irrelevant to the people in these towns. there must be business to be employed, if if the job seeker is the most educated man in three states. Minimum wage does not create 50% unemployment. Not sure where you are from but apparently it's a place without this system. Please let us know how it works, not for skilled workers but for the general laborers.
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        May 23 2011: thomas:

        1st post above: by move i meant move from one company to another, or start own business, etc. but moving physically is also a possibility of course. if it is impossible to move in any sense, you need to think about how to solve that, because that is the real problem.

        2nd post: federal aid is a natural lower limit for wage. if it exists, why setting a minimum wage too? but actually federal aid is also not a good thing. covers up the real problems. why people can't contribute to society? aid makes them slaves to the state.

        minimum wage can create any level of unemployment, depending on the geographical distribution of unskilled workers. which typically uneven. here, in hungary, not only because of the minimum wage, but for mixed reasons, we have small towns with 80% unemployment, on the verge of civil war. so you have still room for "development". there is always a path downward. don't follow that path.
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          May 23 2011: I think you are misunderstanding federal aid. How do you think it makes recipients slave to the state? They get money for being poor, not having to work. Maybe this conversation is more difficult being that you don't know the American system.

          Still unsure why you think minimum wage creates unemployment. Perhaps you can expand on this idea?
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          May 24 2011: " there is always a path downward. don't follow that path."
          I can't help but giggle at this statement as it seems to me that you are the one asserting lowering standards and blazing a trail towards institutionalized economic oppression.
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        May 23 2011: thomas: again: elasticity in supply and demand in the labor market. companies will have to decide if they are willing to pay the higher wage, or lay off a worker and shrink business. some will decide one way, others will decide the other way.
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          May 23 2011: You seem to be thinking about starting a minimum wage where there was not one before. This is not the case. The minimum wage in America has been around for three quarters of a century. While it does drive some jobs out of country, I don't see that it creates unemployment. If there was no prior minimum wage and congress decided to pass one then I could see some companies dipping out and laying off many workers. So I'll rephrase the question. In a system that is accustom to minimum wage how does the minimum wage create unemployment?
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        May 24 2011: debra: i quickly checked the event at wikipedia, but i see no evidence that the strike would have been cause by outrageous wages. in fact, the AA that organized it, was a union of the skilled workers, who represented the higher earning minority of the workers. it seems that aggressive union policies and/or unlawful reaction from the firm cause the clash, and not desperate people fighting for survival.
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          May 24 2011: The underlaying cause of the escalation seems to be when the Carnegie Steel company offered a 22% pay decrease.

          "Frick immediately countered with a 22% wage decrease that would affect nearly half the union's membership and remove a number of positions from the bargaining unit."
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        May 24 2011: thomas: it is a comparison. the statement is: minimum wage increases unemployment compared to a system with no minimum wage. obviously there can be other factors that contribute to unemployment. and what we observe today is a compounded result of these.

        also, it is not something you can get used to. if a worker simply can not produce (as marginal revenue product) the minimum wage, he will not be hired, not matter how well accustomed everyone is to the system.
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          May 24 2011: To your post below (I couldn't get it to reply in sequence). Please do not mistake my respect for you for disingenuous politeness. I believe very strongly in being polite but I believe more strongly in truth and respect.

          I did not respond directly to your point because you asserted that it was not relevant to what you were saying and that it did not measure up as evidence. In good faith- I accepted that and promised to look for more.

          I don't forget much- and I never forget a kindess. You were able to open my mind to see some of your logic before and I was asking you to do so again.

          The answer to the questions you pose about aid changing societies is a different matter than exploitative practices. I am not sure many people of the world had terrible lives in their native conditions. I think it is likely that in Canada our 14 separate nations of Aboriginal people were pretty happy until someone came along who 'saw the potenital'. A 'primiative' life is not necessarily a bad life- in fact many people long for a simpler life.
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        May 24 2011: Krisztian, you are right. The evidence is not exactly on point. I will look for something more compelling.
        I know, with my heart and mind that you are very intelligent. You see third world countries and the exploitation of the workers by mulitnationals and that people go from agricultural lives of subsistence but able to feed their families to working for corporation and barely able to feed themselves where even small chldren must work to keep the family afloat.
        I know that this must be my block but can you help me understand why you feel that the system itself would fix this? You helped me really see your point in another discussion and I am hoping you will do it again.
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          May 24 2011: wow, how polite of you that you didn't reply to my post, so i can simply reply this, and don't have to scroll up two yards :)

          there are places on the world where people just die in hunger. half dollar a day saves their lives. so i think it is exactly half dollars above the "normal" wage at the area. the correct question to ask is: why those people can't create some minimal level of economy themselves? what is the barrier? why they are dependent on one single foreign firm? or a few firms? minimum wage is not the correct answer, and probably won't solve anything. we must go to the root of the problem.
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        May 24 2011: debra:

        geez, never use the word "disingenuous" about yourself. i was just expressing my frustration about this conversation interface.

        i don't believe in exploitation. many people if not most, tend to exploit any given situation. would not a worker ask for a scandalous wage if he was in position? if the company is in a dire situation? i personally know stories of that kind. and i'm not talking about banksters. i'm talking about a programmer guy, who developed a software only he understood. the question is not the intent. i believe, we will have to accept this intent for the time being.

        the real question is what can we do about it. and the real answer is: empower people to choose between different paths. unlock those who are locked. make business thrive in all locations, wherever people live. let capital and products flow all over the world let people join in in this grand scheme of cooperation. let them find their place in it. we don't need the government's help. we need freedom and opportunities.
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        May 24 2011: debra,

        maybe this topic worths an own conversation, since you digressed far from the minimum wage.

        so to be ridiculously brief: how would you alleviate this problem with minimum wage? we should defend ourselves. the government won't. they are psychopaths in suits too.
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        May 25 2011: this thread is completely messed up, nobody can follow it anymore.

        "Industry is much freer to move about"

        which is irrelevant. i'm OK if i can choose between various offers. that ensures competition, and fair wages. i don't care if companies can move.

        "When standards of employment are enforced industry leaves"

        hence: demand curve of labor is elastic.

        "we are humans and not just products on an assembly line"

        so what? it does not make laws of economics false. the law of supply and demand will not go away politely, because we are humans.

        "it is reasonable to demand a certain level of standards"

        no it is not. any level of standards must be achieved. consumption is limited by production. you can consume as much as you produced. regulations won't change that. only magic could.

        "industry will drive cost to every possible low"

        possible is set by competition, and in a competitive environment it tends to be the marginal revenue product.

        "raise them up all over the world"

        it would basically halt the economies of the developing regions. as always, minimum wage hurts those whose productivity is below the artificially set wage limit.

        "I assert that the root of the problem is not that standards are to high"

        you assert that, with zero data, argument or reasoning. you should show what is the marginal production of workers, and compare that to the wage. good luck with that.

        as i reread this post, most of what i wrote is repetition. the debate became circular, and i won't continue that. if i don't answer anymore, it means that the answer can be found in one of my earlier posts here.
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          May 25 2011: This thread is clarifying the need for a different reply system that has been suggested in the conversation by Will True about improvements to TED.

          If standards were raised accordingly to the current economic climate I don't see it hurting the economies of third world countries. The wage could still be lower there just more reasonable then a dollar a day. Also, is it better to protect the developing economy or the human rights of those nations?
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      May 24 2011: I am still wondering what the argument is that called for the pasting of this comment from Meher's discussion.
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        May 25 2011: Hii Thomas and Hi Krisztian. Mea Culpa- I was winging way off course with my thinking and it did not have to do with minimum wage.
        I apologize.
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    May 21 2011: According to Pareto principle around 20% people controls 80% wealth. So putting pressure in to the 80% people's income that represents only 20% wealth (here only minimum wage matters to ensure basic human need), will not bring product price down rather it will end up generating extra PROFIT creating further imbalance of wealth distribution hence wider poverty.
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      May 21 2011: The stats you list are a little simplistic and are not an accurate representation of the distribution of wealth. But your point is valid.
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        May 22 2011: Hi Meher
        Yes you are right it's simplistic. I didn't use statistics as it may vary from country to country , region to region thats why mentioned Pareto Principle of 80:20 just to capture overall sense.
        Using Hans Roslings' Stat from GAPMINDER will defintely be more accurate.
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          May 23 2011: Interesting that when starting a business there tends to be 20% of the tasks that take 80% of your time.
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        May 22 2011: actually may hare..those are pretty accurate and current stats
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          May 22 2011: I was only partially aware of the Pareto distribution, and it is useful as Salim pointed out to "capture an over all sense" , but really it is even more revealing to bracket income disparities with something like a quantile distribution which better illustrates the growing inequity of economic classes. The Pareto distribution, for example, overlooks the trending of the top 1% which controls a disproportional amount of even the top 20%. The Pareto principle actually makes the distribution seem even more normalized than it really is. I believe also that the global distribution is even more skewed than the 80:20 representation of the Pareto principle, I'll try to dig up the numbers or an article later.
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        May 24 2011: @ Thomas you pointed out right to great extent, that's the beauty of Pareto Principle, despite having some practical skewness for different reason , its widely applicable theoretically in many aspects.

        You may find 20% of your activity generating 80% revenue
        20% of your product / service generatinf 80% profit
        20% of your customer generating 80% top line
        20% of your task taking 80% of your oprerational time.

        Now I am hypothesising if you can find mutual inclusiveness of those multi facet 20% and allocate 80% resource you might increase profitabilty , with out lowering down minimum wage to further minimum.

        Wish you will find it in your business and bring operational efficiency as well as profit.
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      May 22 2011: Locationally it would help with price of crucial goods. Some companies would find a way to take advantage of it, that's part of the free market. What ever you do there will be companies to take advantage of it. This would help the towns that have been watching all industry anf jobs leave for the past couple of decades. The ones that a majority of the population is on some type of government assistance program. So while companies try to take advantage of the poor it would help the poor.
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        May 22 2011: "Locationally it would help with price of crucial goods."
        Only for goods and services produced by those industries paying a lower minimum wage and also only if the price of goods is mandated to decrease in conjunction with the lower pay rates. But any products produced outside the region would not be adjusted for the local wage rate and so actually would generate lower living standards as Salim points out. What your suggesting Tomas is kind of like a reverse inflation, lower minimum wages in order to lower price of goods and services, (is this correct?), the problem is that lowering the minimum wage in one region does not mean that the costs of goods or services will go down in conjunction so all you will be doing is making the poor even poorer (if i'm understanding your proposal correctly).
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          May 22 2011: A price mandate would not be necessary for goods, other then maybe for energy if not produced locally. So this economic reform may lead to energy reform that is also clutch. Produce would be most practical to be grown regionally. The market would keep the price of the locally produced produce in check. It's a good policy in many ways to have local produce anyways. Services such as cell phones would have to create a new type of billing structure, but it could be done. One tricky thing would be traveling for business to more affluent areas. Although with real time virtual meeting sites traveling for business is going to be less crucial and when it is necessary the additional cost could be planned for.

          When someone in a small town has to charge $4.15 for a gallon of milk to be able to stay in business because the market is small and they must pay employees $7.25 per hour it's hurting the entire areas bottom line. If the areas were once again able to curtail their economics to their individual needs then it would ease economic strain. Thinking of the States instead of globally I'm sure there would be federal assistance to smooth the edges.

          Another thing to consider is, if the exporter takes a unit that both parties import (maybe energy could be a standard import) the ratio between costs of the common import could be the ratio in which the export is priced. This could lead to a balanced trade system. The standard could also be something that the importing area exports. Using energy however could create a partially energy based economy. This would surely lead to people being more energy efficient. If supply and demand determined the price of energy and energy determined the price of imported goods then areas would likely try to decrease demand to lower the cost hence lowering the cost of all imports.