Structuring of Wages and Minimum Wage

What are wages? How are they structured? What is a minimum wage? Is it a good or bad thing? Anyone who is now or will ever be employed will want to know about this stuff, so give it a watch!

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[twinnerNet]

I would argue a minimum wage also helps prevent companies from leveraging people's desperation against them in times of high unemployment.

[TheSandkastenverbot]

As you've said, the effect of a minimum wage is surprisingly hard to foretell. The only responsible and yet moral way is to raise them regularly but cautiously until layoffs, productivity loss etc. become too large. In Germany we have exceptions for internships, student jobs and the like. In some cases the government then has to provide the difference between minimum and living wage. It's actually very simple but still easily overshadowed by normative arguments like "people get lazy then" or "the market has to be left alone".

[Dan-udhz]

People who work full time shouldn't face homelessness.
If a business can't afford to pay a living wage, that business doesn't deserve to exist.

[ianthompson]

Professor Dave, as someone who studied finance and has finance degrees, I appreciate the way that you brought up both sides of the debate. The one thing I disagree with, is that minimum wage hasn't outpaced inflation. For that I would need a place to compare the modern minimum wage to, for instance when started, the minimum wage was $0.25 in 1938, adjusted for inflation that is $4.93, that would mean that minimum wage has outpaced inflation for that time period. The graph given was adjusted for 1982-1984. I think using one adjusted for 1938 would give a more accurate representation of minimum wage changes through time, it is time to up minimum wage, and it's hard to predict what changes that might happen although a lot of the possibilities were raised in this video (Kudos). The current level should be around 10-12 dollars an hour according to a lot of the research I read but that may have changed since recent inflation levels are high.

[steveswangler]

having a minimum wage doesn't create layoffs and outsourcing. corporate and stockholder greed and managerial shortsightedness does.

[MisterItchy]

It's been a minute since you put out something that's simple enough for me to understand! Thanks!
I am not an economist or even a smart person. It seems to me that an employer needs to pay a full-time worker enough for that worker to live on. The current federal minimum wage is not that. If the employer needs to raise the prices for it's services or products or, heaven forbid, take a smaller bonus, in order to accomplish that, so be it.

[kajekage]

Professor Dave is a planetary treasure.

[hein]

Hi Prof. Dave just wanted to say youre content is really inspiring to me and you are awesome lots of support from South Africa

[celticlightning]

Minimum wage is a joke until the $15 hour raise. Even then it seems everything doubled in cost so when I was making $9.50 hr. at Rite Aid well $9.67 with my .17 raise there was absolutely no way in hell I could meet minimum living requirements. Now making $18. at another company I felt like I had possibilities. But I'm starting to see that slowly drain away since Covid. I wonder why? Every year seems I'm starting to go back to having to give up either a car or roof over my head.

[Bruno_Noobador]

I am really impressed by the animation in this video. I'm glad to see this channel improving.

[GARYTHDawson]

Love your analysis of wage structuring and how you make it understandable. On this occasion I have a slight disagreement on the simplification of the automation argument. I believe automation is driven by the affordability of the technology first and will always replace labour once economical.

[miked]

Unless we quickly evolve into a more empathetic society, minimum wage/standards in general, are necessary.
I do not see the recent significant increase in certain state's minimum wage as productive though. Minimum wage needs to go up, at least to match inflation. But, playing catch up hurts more than it helps.
Raising the minimum wage [typically] 1-3% per year is somewhat manageable to absorb the increased costs - assuming those on fixed incomes [SSI] also receive that increase.
Raising minimum wage ~10% per year for several years, negatively impacts small business and those in the lower middle-class/upper lower class. Most employers cannot sustain those wage increases and employees in the aforementioned classes creep closer to the poverty line.
If this is just statewide, there is also competition from surrounding states.
If your company can be impacted by labor in other states, for example US-Made washing machines can be made [reasonably] anywhere in the US and shipped to the box store. Therefore, having the manufacturing facility in a higher labor state (without any return benefit - higher skill) doesn't make sense and the consumer market will reject the price increase.
Why buy US-Made brand A for $1, 000 when you can buy US-Made brand B for $950?
- Assuming all things being equal.

[aleksszukovskis]

Well, what politicians say isn't a good indicator either.

[grmpEqweer]

Paying living wages will expand the market, because workers will be able to buy more stuff. We are a consumer-driven economy, right? So, ironically, it's actually good for business if workers get paid more across the board.

As far as "It'll cause inflation!" We have inflation anyway.

We also have automation. A business is always going to automate away any need to hire if they can do so.
In fact, businesses hire as few people as possible. Hiring is driven by _customer demand for goods and services._
Which go up if people as a whole are making more money...

[Kenshin]

Hey the quality of your videos have gone way up recently. Keep it up! These videos are 😃👍.

[beowulf]

Thank you for breaking it down to basics. As a leader in Fight for 15 for years it's great to see this issue discussed. We have raised the wages in 25 states and 56 localities in 2022. We're going to get all of them. We've passed Medicaid expansion legislation and right to counsel ordinance for evictions. Low wages actually place a blight on a whole community because poverty spreads. No investment leads to neglect and so on. It's really good common sense and a moral question as well.

[codehound]

The minimum wage is ways $0.00. An employer can not pay a worker more money than the employee produces. The employee will soon be out of a job (either let go or the business fails).

[scottclark]

Hmmm. Minimum wage also raises the cost of goods, especially those stocked or handled by minimum wage workers, like in grocery stores. This causes a structural inflation that offsets the benefit for raising the minimum wage for the lowest paid workers. In the meantime, it raises the prices for those in the middle class, who do NOT get a pay raise when minimum wage is increased, thus lowering their buying power and their ability to spend. And also you should look into that wage gap. The one based on minorities has some evidence behind it, but the study on the male/female wage gap has some serious methodological flaws. They didn't control for industry, nor the amount of hours worked. I find these to be serious flaws. Of course someone working in a higher paying field working more hours is going to make more money than someone in a lower paying field working the minimum. Man or woman. And if you thought the former was a male automatically, that's because your brain was playing the odds. Men do work more hours than women. Even when women are given the exact same opportunities, like in the Scandanavian countries. I think a more nuanced look could be more useful.

[prschuster]

A big part of the racial pay gap is the education system which results in more college graduates among Whites and Asians, and this has a lot to do with differences in social class. With women, it's more about choosing lower paying people oriented careers like teaching instead of engineering, as well as the division of labor in households where women tend to spend less time in the workforce and more time raising a family. Discrimination, based on race and gender, also exists to some degree. That said, I am in favor of the minimum wage being the same as an affordable wage.

In 1970, the minimum wage was $1.60 in the US, Inflation has increased 7 fold and the cost of an apartment has increased 10 fold. So according to this, the minimum wage should be either $11.20 ($1.60 X 7) or $16.00 ($1.60 X 10).

[NobleMarcos]

Minimum wage was often used to push the budding competition under.
Those poor and black people are doing our job cheaper? Politician man, please stop them, you can say it's to stop poverty.