@llriv that is correct. Sowell writes about this in his book "a conflict of visions" and "the vision of the anointed". I congratulate you ! you have done your homework!
Mr. Clifford! You might not remember me, but I had your class years ago! I made you the music CD you always played that had We Like to Party, Sandstorm, and The Final Countdown on it. You were hands down one of the best teachers I've ever had in my entire life, I'm still applying the economic theories you taught me almost a decade ago. In particular, there was one day you showed everyone in my class why we should get a credit card and start paying credit bills as early as possible, I followed that advice and only recently am I starting to see the incalculable ways my credit score has made my life easier. I had no idea you made CZcams videos! I wish I knew if you were doing this back when I was in your class, I would have come in after school and helped out. It's great to see you applying your teaching abilities in such a creative way to a worldwide audience, the world deserves to hear your voice. Thank you again for everything Mr. Clifford!
@James Madison I disagree. The $15 minimum wage does not help a person whose productivity is worth less than $15. If you want to help unskilled workers you are barking up the wrong tree. You can help them by freeing up the economy and limiting government to its basic essential function (protecting individual rights). So much money is being drained from the productive private sector to feed the unproductive public sector. End that bleeding and you will see the cost of living plummet while the standard of living rises. Problem solved--no magic wand solution necessary.
@James Madison but they are though, from an economical standpoint. If one employee gets fired its very ez to hire another unskilled laborer. They as a whole mean a lot of but individually are not that valuable. Obviously you should know I'm not refereing to their humanity but just from a economical view.
In response to #7, we often see hours cut instead of jobs. Thus, in cases we see unemployment largely unaffected, like in Seattle, we instead find hours deeply slashed.
Hours are cut/split in order to avoid having 'excess' full-time employees, generating massive savings for the employers, with the primary externality being less value per unit of work for the employee. These otherwise-full-time workers lose out on all the standard benefits, can end up being disqualified for other opportunities based on this, or need to get a second job... which then needs to be juggled with the first and between commuting, vital sleep, getting anything at all done outside of work, etc... it ends up adding up to ~2.5 jobs, for less _total value_ than one full-time.
Employers already do this without minimum wage increases. That's the dishonesty of this argument. The toll of having to provide benefits (esp health insurance) has already driven virtually all unskilled jobs towards part-time or independent contractor status without mentioning anything about minimum wage. That's why we should convert to a nationalized health system like France or the UK, because businesses should not be shouldering the cost burden of providing that coverage.
this is the best and most balanced video about minimum wage I've ever seen. Usually if you are against raising it people will say that you don't care about the poor, but I think that the worst effect is that it won't help those that it intends to help.
Winter Land if you have to ask the government to pass à law to be paid à certain amount of money it probably because you cannot expect to have that amount base on market value. What would you say if shirt makers ask the government to pass à law that say that nobody can sale à shirt under 50 dollars ?
And what about longer term studies to show the knock-on effects of having a working class that is able to have a positive savings rate instead of being paycheck to paycheck all the time? If people weren't spending 70%+ of their income on rent, and were actually able to make investments in training e.g. nursing licenses, college degrees, etc - what do you think the increase in productivity, earning power, and CONSUMPTIVE DEMAND would be? There's so many factors that go into economics that isolating the effect of one policy change is nearly impossible, especially as time goes on. If you were correct, Australia, which has its minimum wage increase every year, would be experiencing constantly increasing unemployment among youth and minimum wage workers. If you look at the actual unemployment statistics, that would be completely wrong.
James Madison From a purely monetary Perspective that seems nice and all, but what you’re missing is higher unemployment, Lower work hours, lower corporate profits, and poor people getting hurt the most. Those welfare checks won’t help either, the problem with those are the inefficiencies that come with those unemployment benefits. A negative income tax would be a much much better solution for that problem as it doesn’t have all the bad effects of minimum wage.
+ACDCLeadership the law of the minimum wage is the most racist law that exists. It generates unemployment especially among black people, young and poor.
+ACDCLeadership I heard all the arguments, to me there is not one single good reason to even have a min. wage. Nothing positive comes from it. If there is any effect it is all negative.
+whyamimrpink78 There are a bunch of economists that agree with that, but I would think that there must be something good about it. It wouldn't even exist if it was 100% bad. Right?
you prolly dont care but does anyone know a trick to get back into an Instagram account? I somehow forgot the password. I love any tips you can give me!
@Kelvin Spencer Thanks for your reply. I found the site through google and I'm waiting for the hacking stuff atm. Takes a while so I will reply here later when my account password hopefully is recovered.
You forgot to discuss COMPRESSION and inflation. Raising the cost on employers raises all prices. Raising the cost of workers accelerates automation by making it more attractive financially.
News to you: employers are already automating things at the current minimum wage level. Are you saying that people should accept progressively lower wages (i.e. 7/hr today, and 6/hr next year) for fear of their job being taken by a robot? That's outlandish.
@@gregorythompson5334 Except when a robot takes a job, that's one less job for people. Sure you can get a skill but suddenly there's more skilled competition because there are no unskilled jobs left. Over the next twenty years, AI will start taking the skilled jobs away. What do we do then? There are no safe jobs, just the haves and the have nots.....
This is one of the best videos I've seen on this topic. Instant sub. The topic has been polarized and politicized to hell and beyond, and everyone joins extreme 'factions' built around views on this subject. Kudos for keeping things real.
Thanks, this was refreshingly unbiased and just presented the pros and cons on both sides. It's very hard to find anything like this now a days because people have become so polarized.
I just want to say thanks for just giving us the info and facts and not just pushing your opinion onto us. My microeconomics professor really just painted the picture that raising minimum wage would ruin the economy. He was extreme about the whole thing and I felt I had to do more research on the subject.
While it appears to be a good idea to almost everyone. We do not see the whole picture. All the giant corporations that already drag in money from pretty much everyone, will just raise prices. THEY WILL NOT be willing to lower their Profits, I mean look at most of How Greedy most companies are ALREADY. That OR they are ONLY going to take People who Can do the Jobs of 2 or 3 other people and pay them the new 15 dollar minimum.
+Ayl 87 Yes, I'ver hear that about Australia. You are the poster child for having a high minimum wage while holding back inflation and unemployment. Does it have to do with marsupials?
I'm not sure where I stand regarding minimum wage but in Australia, where I live, it's very high; one of the highest in the world (if not the highest), depending on whose interpretation of the data you agree with. Despite that: 1) We have a low rate of unemployment 2) We weathered the GFC very well with no decline in GDP for any quarter. 3) We provide many social services - free health care, interest-free university loans, retirement benefits etc 4) We contribute 4 cities to The Economist's list of the top 10 most liveable cities, including the number 1 city. Given all of that (and plenty more), I can't believe that a minimum wage - in and of itself - is a bad thing. Certainly it might be better suited to a given economy and not to another, but it's not seemed to have had any negative effects here.
I love your videos Professor Clifford!!!!! I wish you were my teacher! You have influenced me to major in Economics because you make economics so fascinating and less intimidating. Thank you for your videos!!!!!!
Do you have a video on universal basic income? Apparently Milton Friedman even suggested it and it is becoming more of a hot debate. It would be good to hear an unbiased video on the topic with the studies that are coming out about it.
Assuming inflation, keeping the minimum wage the same or eliminating it will be the same over time. Prior to laws regulating workplace safety, placing restrictions on labor for children and youth, regulating compensation based on a standard number of work hours, and maintaining minimum pay to workers, the economy boomed. This was not to the benefit of laborers who found that they were easily replaceable and that money can buy a solution to many problems. There is almost 80 years of data in the U.S. to show us how little minimum wage correlates to unemployment, crime or much of anything. As a laborer, you must not forget that productivity drives your value, but as a mortal you must not forget that hunger and desparation do not a polite society make.
I think the point people miss is that we all have choices. If you choose to work for minimum wage then that’s a choice to stay there. Most people start there and then gain skills to advance themselves. Others sit on there hands and wait for others to do things for them.
Misconception #7 is not a misconception. Increasing the minimum wage increases unemployment. Try passing a $40 per hour minimum wage and see how many people would be out of work. The only situation where a minimum wage doesn't cause unemployment is if the minimum wage is equal to the prevailing wage rate for low-skilled workers. But in that case, the minimum wage doesn't serve any purpose other than to help politicians score points with voters.
Also the workers fortunate enough not to get laid off will face shortages of the supply of goods that have increased costs with the rising wage. The min wage tries to take a hammer to a problem that isn't a nail.
Traditional economic theory does *not* say that minimum wage causes unemployment. Only first-year textbooks written for children in Republican states say that minimum wage causes unemployment. Traditional economic theory considers things like general equilibrium effects, labour market elasticity, monopsony, transaction costs, segmented markets, capital substitutability, and forward-falling labour supply curves.
You've got the theory, how about the math? Minimum Wage Increases are an insidious and deceptive way of taxing ONLY the poorest and lowest wage earners (Plus their employers- of course). The "windfall" to the Feds is 15.3% of every $$$ of increase. Assume 1.8 Million workers X ($7.75/Hr Increase) X 1,560 (Or 30 Hrs/Wk) = $22Billion +/-. Plus assumed increased IT, decreased Low Income credits, etc. Unfortunately, the skilled, trained, and productive Middle Class workers will automatically experience deferred/lost merit and performance wage increases as a result of the externally imposed wage compression. Increased labor costs without corresponding increased productivity result in the need for market price increases, and the financially stalled middle class is gets the brunt of the double-whammy.
Hello, you should consider making an updated 2022 video about the minimum wage topic!! I'd be super interested to see if there have been any changes in these misconceptions with updated economic viewpoints.
Instead of raising minimum wage do things that give people the opportunity to be better educated or trained for the job; therefore people who don't take the opportunity absolutely deserve to be paid 7 dollars an hour. By opportunity I mean lowering tuition or subsidizing education somehow so that people don't have to get into extreme debt kinda thing.
What a fantastically informative non biased economic video. A majority of minimum wage workers being 16-24 years old is a glaring statistic. There is no true fix other than making education even more accessible and affordable
There's a theory that when people who work 2 or sometimes 3 jobs are paid more livable wages they are able to reduce their employment to the more maintainable amount of 1 job. That being said, I think it is interesting that people claim that by default, higher minimum wage creates job losses. These job "losses" could very well be the people I mentioned earlier moving to a more livable employed life. I don't think it is a good practice for an economy to be supported by people stretched beyond their means. I'm not trying to say that the minimum wage should go up forever, but I am saying that the people who talk about these "job losses" could be committing a lie of omission. In addition to that, there is evidence that a reasonable increase in the minimum wage actually increases employment because it creates more economic activity because people have more money to spend.
+Eric Hensel I'm glad you brought that up b/c I was going to! Also why is no one bringing up the fact the CEO salaries have gone up astronomically in relation to their lowest paid workers and many of those employers take tax payer money in the form of incentives from local economies to open up shop? Something I might add that local mom and pop shops aren't privy too.
+marla79 What you mention is something that I also agree needs addressing. I think the problem is that we've allowed big business interests to setup our economy solely around their success, while leaving out the success of their very own employees. The point is, if you're going to setup a business that gains profit through the hard work of its employees you really need to provide these employees with their fair share of the profits.
+marla79 "why is no one bringing up the fact the CEO salaries have gone up astronomically in relation to their lowest paid workers" People bring that up all of the time. Like all jobs, there is competition. Companies would rather pay for a top CEO than run the risk of ending up with an Ellen Pao.
Hey Cliff here in my country, Bosnia, the minimum wage is actually pretty high for the country's per capita income yet unemployment is absurdly high at 45%, if my country decided to get rid of minimum wage entirely would that help create more jobs?
I was not expecting a balanced analysis. Kudos. Minimum wage isn't the only factor. The compliance costs that come with having employees can put a lot of people out of work. Raising minimum wage also raises some of these costs, mainly the SS matching and payroll taxes. Raising minimum wage by $2 costs employers more than $2.
Can I ask a question if min wage was raised to 15 like your saying what happens when THAT is not enough? I mean maybe this goes a few years and people say well now I need MORE than 15 an hour, but they don't have any desire to learn a trade or whatever they might need to do to increase the job skill set. I mean my question is essentially, if you do raise this where does it end?
Do people have a right to a descent standard of living in the US? In Europe they make sure you have a descent wage, descent living, they pay for your job training, so you don't think that can benefit the American people? We're different, we're exceptional, we have to prove to the world you don't need government assistance correct? Do you believe Americans are a exceptional people? No paid time off, no money in free college or job training, the American people are on their own and that creates stress. Is this the country you want?
So work for nothing for all I care. You don't want regulations when it comes to banking or labor is that correct? You don't think the government should be involved in wage regulations is that correct? What makes you think our country is better than Australia that has a minimum wage of 17.21? Why are you better?
@@Rpzinna we want less government involvement. The labor market for some types of industry is lower than others. All this is doing is hiking the cost of commodities, reducing the amount of available jobs and cutting new labor (unexperienced) from entering the workforce. Entry level jobs are not meant to be living wages, that would be a career. Minimum wage is to start like when you are a teen to gain experience. Do you really want to be late 20s still working fast food? Advance yourself and the wages get better.
Rising minimum wages have made a lot of stores shut down in areas of higher minimum wages. Places that saw $15 ended up losing many local businesses like restaurants. Mcdonalds has decided to eliminate ALL cashier positions and will be going only to kiosk designs.
Really liked this video, definitely wasn't biased on an issue that is very politicized. Although I think you should have brought up the minimum wage's effect on inflation.
How about doing an annual Cost Of Living Adjustment on the minimum wage, to keep pace with inflation? That way employers could predict, somewhat, what their wage costs will be this year, next year. Not perfect, but I think it would help a bit.
these videos normally lean politically to a radical side of the spectrum. I love the unbiased and factual info! first time watcher immediately subscribed! I did see Clifford on crash course, and that show turned me off with how left it leaned. This, however, was quite nice!
3:05 Could it just be that since the US minimum wage has pretty closely matched the inflation adjusted amount, there hasn't been a significant impact in labor demand reduction? Were these studies done in high minimum wage states with comparatively medium to lower overall prices? My thought is that consumers may end up paying more, if the minimum wage increases, but they maybe able to pay more.
I like to point ount that min-wage laws are not just restrictions on employers; these laws tell potential workers that they cannot take a job that they otherwise would like to have. Nobody is being forced to take any particular job, minimum wage or other. Put this way, it is obvious to almost anybody that these laws reduce employment (unless the minimum is so low as to be irrelevant).
Thank you so much for making this video. I've been watching your videos for a while now and i have actually used your videos on price ceilings and floors to prove to my friends that generally, implementing a minimum wage would not be beneficial to the economy. Glad to see that there is a video strictly just about this topic. I'll be sure to show this around!
It's called a, "MINIMUM WAGE" for a reason! If you could do more for your employer, you'd get paid more!! Raising it cause only the employer to pay the employees more. If they don't do that, they can go to jail. Simply stated, the government forces the employer to pay the employees more. There's no repercussion to the Federalis, they just enjoy the thought that they will get re-elected by those who NEED the government to have their wages increased. What does the employer do? Raise the price of goods and services to cover the cost increases to balance the books. So who suffers by an increase in the minimum wage? EVERYBODY!!!!! Oh, your taxes will go up as the taxpayer-funded federal, state, and municipal union workers will go on strike to get their share of the increase. The politicians will pass it on to the citizens because it isn't THEIR money! If you are so hurt by the workers making minimum wage, the give everyone at Walmart, McDonalds, Cosco, etc, you see $20 out of your own pocket! It'll make you feel good, no? "Socialism is a great form of government until you run out of other peoples' money!" -Margret Thatcher
The most commonly asked question is What is a livable wage for everyone working in the US if Rent is going high Gas aswell insurance and all else shouldn't there be some control on this situation.
that's slave labor pal. your labor is private property. do you agree with that? Your workers are your property right? Well selling labor below the poverty line is against international law. ever read the Nuremberg Trials?
Coercion is forcing people to "consent" when they really don't want to. And because the business has quite a bit of leverage over the unskilled employee, it's very easy to coerce them to accept lower wages than they otherwise would. Aka slavery.
I think a $15 federal minimum wage is like doing surgery with an ax. That is way too high for some areas and possibly too low for others. The Fed gov should set MW at a reasonable level toward the lower end and allow states and regions with higher costs of living to go up from there.
This is why unions should be strengthened instead, they can negotiate the wages to their maximum viable level instead of just making a sweeping amount of change that could disproportionately affect entire states. The minimum wage should be the base viable set, which should be determined by states rather than federal law, while unions fill in the blanks.
So basically, by the study you posted, 900K people had improved conditions and 500K were pushed out of the workforce...therefore if taking that into account with 30M being affected by the $15 minimum wage hike would mean less than 20M would have improved conditions, while more than 10M would be pushed out altogether??
Some of the biggest things that push families into poverty is the expense for taking care of children. One of the rather over looked ways we could help those in poverty would be to offer more readily available child care services. Ranging from reducing schooling costs, daycare services, to child healthcare. All those things would help reduce poverty for families since alone they are so expensive. Additionally providing healthy safe services such as these to children will help them grow up to be more capable and healthy adults. Many of these services are offered at a state level depending on where you live but there's not a lot of federal talk of child care.
It is, in my opinion, that positive implications of minimum wages are apparently insignificant when weighed against the negative effects of these labor market price floors to the point that essentially the only reason minimum wages exist is to provide a sense of security among workers. But the evidence “for” minimum wages doesn’t really provide the actual positive economic results of minimum wages rather they suggest that evidence against minimum wages, in the short run, doesn’t perfectly reflect what classical models suggest. But all prices are flexible in the long run and this short run micromanagement of labor markets exacerbates 2 long run issues (unemployment, lower annual earnings among the low skilled, etc) for every short run issue it attempts to fix (poverty).
In my opinion, it's all about focusing on who you want to sell your products to. If you want to sell your products of citizens of your own contry then raise the minimum wage. Then the demand will grow and this will be a good thing for the overall economy (Keynes). If you want to export more rather than selling in your country, don't raise it because it could increase production costs and decrease productivity. But the problems with not raising the minimum wage are : - Political moral : all of the income go to the profits and not to the workers even though they work hard. - If all the countries decided to lower the minimum wage (to export more), then companies would lower wages to have a higher productivity and less production and the overall demand all around the workd would fall and nobody would buy what you were trying to export by decreasing costs. That's my take on the subject so I'd prefer to raise minimum wage rather than taking the risk of lowering the demand.
+HardStickman Alas, no. Even Keynes did not take the absurd (and contrary to the empirical evidence) stance that raising the minimum wage puts more money in people's pockets to increase demand. Moreover, the notion that workers are "underpaid" and that more goes to profits has been empirically disproved. Workers are paid the risk-adjusted marginal revenue product of the labor services they provide or, in layman's terms, workers are paid what their labor services are *actually worth* so neither "problem" is valid in the slightest.
The marginal proportion to consume is an argument to increasing the minimum wage in itself because it states that the poorest people are the more they will spend in proportion of their revenues. And I disagree. Empirically, increasing the wages has always led to a growth of the wealth except between 1973 and the 90's because the wages were so high that compagnies had not enough to invest.
+HardStickman The term you are looking for is the marginal propensity to consume but it doesn't work in the slightest as an argument in favor of the minimum wage as the minimum wage has literally *never* resulted in "the poorest people" (or anyone else for that matter) having more money to spend. instead, minimum wage laws are economically destructive as the loss in opportunities, cuts in hours, benefits and training and outright job loss result in less productive activity, a weaker economy, an increase in welfare rolls and a reduction in the long term earnings prospects of low wage workers. While it is certainly true that an overall increase in real wages results in growth, but, again, it is factually wrong to suggest that minimum wage laws have ever resulted in such an outcome. And the period between 1973 and 1990 doesn't help your case in any case as, just like both before and after, total real hourly compensation increased steadily and substantially over the entire period (despite the relative loss in purchasing power of the arbitrary wage floor). The "stagnation" myth has been long debunked. Empirically, the minimum wage has never benefited workers or the economy - the evidence is overwhelming (and excluding the "research " that has been discredited, virtually unanimous).
HardStickman - Excellent points! We have seen this in our own history. Before we had the minimum wage we had slavery and slaves cannot afford to buy anything so by paying those hard workers a minimum wage we now have a lot more consumers.
Wouldn't a rise (particularly a sharp one) in the minimum wage also cause inflation to increase because of the imbalance of spending power vs resources causing the prices of good to also rise? Eventually, this would lead us more or less back to where we were. Except now, things cost more and firms would likely have be incentivised to provide goods and services with fewer people... Does what I am saying make hypothetical sense?
+danmks2 Yes, some people worry that mimimum wage causes inflation and if it goes up to much that will likely happen, but as one person said in (rather technically) "If minimum wage hikes were entirely offset with price increases, it would not be possible to raise the inflation adjusted minimum wage"
what about the fact that the minimum wage contributes to inflation? it's like getting no raise at all since all the products you would have purchased go up by roughly the same factor,or more. the reason being that it increases cost of production.
+JathTech Minimum wage will never be able to cover basic amenities because the people who sell those basic amenities are hired at minimum wage. Changing the minimum wage just decreases the purchasing power of everyone who isn't working minimum wage. When the min was 7.50, so was a combo meal. When it went up to 8.75, so did combo meals. This isn't a difficult trend for people to follow. You'd think all of the acedemic jack-offs who need their institutions to keep and coddle their fat asses away from fast food would pick up on it and stop screaming about the minorities that only make up 23% of minimum wage workers being underprivileged.
Thanks Jacob. There is no way I'm going to go against Friedman, Sowell or the Austrian school on minimum wage. It really does cause issues for min wage/low skilled workers with the increase in production costs for the same workers and same skills because once those costs are absorbed fewer products are going to be produced either through the lagging indicator of unemployment, something these newer studies missed, and the reduced access of goods to the newly wage increased employees despite making more.
guess all the fast food and food service industry in Seattle Washington and California that either cut hours, personnel, or just closed are the exception
what about the people that are making 13 14 15 dollars an hour now at their job and then you change minimum wage to $15 are we going to have to double their pay to make them feel like they're appreciated with all their knowledge
It drives me mad watching Americans debate minimum wage, seemingly not only oblivious to the fact other countries don't even need the minimum wage, and still have 2-3 *_times_* the effective minimum wage of the US, but also oblivious to the fact that you had the solution one time yourself. Why don't you google "unions the red scare" and treat yourself to a little history lesson? That's right, Unions, in Norway for instance, we don't have a minimum wage, and we have no problem. Example: I now work part time along my studies, at a pizza delivery shop. I earn about 18$ an hours. In Norway this is considered pretty damn close to social dumping, most Norwegians would never work for such a low salary, not even unskilled workers. You want your mind blown even more? The industry loves this model about as much as the workers. Here is how it works(extremely simplified): Each year representatives for the workers and representatives for the industry sits down at the table and engage in "salary negotiations". And they are basically free to form whatever agreement they like. This usually goes very smoothly, but a few occasionally it may end in strike, short term. This is great for many reasons: - It makes your own salary an active prosess to be fought for each year. This makes people interested and engaged in something very important about their own lives. - No one can hide behind some arbitrary law or regulation, you have to face people in negotiations, people who have the power to refuse your proposal if they don't like it. It's very hard to defend unreasonable proposals in this model. - It's gives the local industries and their workers flexibility. Maybe the industry is going through some tough shit, and in order to survive costs must come down. Well, in this model it let's the people who understands this bettern than anyone, decide, workers involved! Then they might voluntarily agree to all take a salary cut that year, in order to lower the burden on the company. Or the business is doing fine, but salaries are not really what workers want, maybe they want something else changed, well then they are free to negotiate that. All in all, this makes it a better system for both parts. That being said though, remember that the condition for this to work is that you have very strong unions. In America today you must have the minimum wage, because you have nothing else, but you could have! So I would suggest that the long term goal should be this active negotiation model, with both sides being equally powerful, rather than fighting for a minimum wage that will never be just right for anyone.
Hold up. You just said that when adjusting for inflation the minimum wage has not increased significantly. Then you say that the increasing minimum wage over the years has not lead to job loss. Which reality are we accepting here? Did the minimum wage actually increase and not cause young adults and teens to lose their jobs, or did it not increase like you mentioned earlier in the video?
Even _the_ premise is problematic, as far as lower income workers go. Adjusting for inflation means if eggs, milk, bread and cheese costs 1.40% more, you get _exactly_ that 1.40% increase - and in my experience, it's usually less in real life scenarios. And with jobs paying nominal raises of what, $0.15-0.50 every other quarter? AIN' NO RAISE. Fuck.
well, isnt min wage a type of price floor? and in that sense it may create a shortage of workers? I know this video talks about a theory that says human labor might be somewhat inelastic, but after working at a fast food joint, wages are something that the managers were ALWAYS concerned about. meaning wages are a large burden. especially for brand new workers with no training whatsoever. this often caused shifts to be short handed or raises being declined or simply not hiring new people
raising the minimum wage does nothing. the only way to put more money in your pocket is to strengthen the buying power of the dollar. the minimum wage is meant to be a starting point and stay consistent with inflation.
As somebody who is actually on minimum wage, you live in a constant awareness that your employer values you so poorly, that if they were to pay you any less, it'd be illegal!
one thing you don't touch on is the fact that the cost to produce goods increases and then the cost to purchase said goods increases but the middle classes wages didn't increase. This creates a loss of purchasing power essentially a pay cut for middle earners. This is just one step closer to a 2 class system.
I agree on focusing on education, but I doubt that will get the same pull politically as promising hire wages. If a candidate is looking for numbers then it is easier to promise "free" money rather than long term change.
If you raise the minimum wage then it's going to raise the rents, when you raise the rents you're going to have to build affordable housing, then you'll have to tax people to build the affordable housing, then people move out of the city and you'll have to raise taxes on the people that remain in the city, and this is how you hallow out the economy of a major metropolitan area of the US.
when you increase the minimum wage it's not just for the person who serves the coffee, it's for the person who delivered it, the person who brought it into harbour, the person in the factory where it was allocated, so forth. This could lead to very considerable increases in prices which chop down the standard living of the minimum wage earners it was meant to help. It's worse for the percentage - however small - of people who lose their jobs because of it.
Minimum wage $15.00 an hr. X 40 hour work week = $ 600.00 per week .? $ 600.00 × 52 week= $ 30,000.00 plus per year ?? I believe this puts worker over the Federal poverty level ??? So if they are on any Federal programs SNAP, Rent assistance, Medical insurance ect . They would be excluded from these programs. Am I correct ??? .
I don't study economics, but it seems a bit off to suggest that increasing the minimum wage hurts unskilled workers, because employers simply won't take a chance on them. If I need to fill an unskilled job, my prospects will be unskilled. I'm paying minimum wage, and those with skills will not want my job, because they're looking for something else. Is this not true?
What it means is that if the minimum wage for an unskilled job is higher than how much you value the job as an employer you'd rather not employ the person at all. For example if you need someone to mow your lawn and you would pay 5 bucks for it, but min wage is 10 bucks you'd rather not employ someone at all.
@@shrawanipal Then I wouldn't get my lawn mowed, or I would be forced to do it myself, which is not going to happen. Well, I can mow my own lawn, but certainly I can't sell millions of dollars in tacos by myself. I don't think this is logical, assuming that those jobs wont be filled. They need to be filled.
@@johnwatters3431 Good point. It is true that if there is demand for labour it will have to be filled despite the price that might have to be paid for it
If I open a lemonade stand, I can choose to sell it at $100 per cup. I won't sell much, and I'll soon realize that I should bring the price to a level which mutually benefits me and my customers. Similarly, if I post a job for a lemonade stand server at a penny an hour, I won't have any luck. I will be forced to raise the salary to a level that mutually benefits me and the employee. I have heard no one suggest that the government should impose maximum prices on goods. Why then should they impose minimum wages?
Excellent both sides video. And I’d like to remind commenters, one size fits all, doesn’t. Buying power in some parts of this country will demand more than $15, some does not. Look at home prices in Iowa, Mississippi, rural Kentucky. If you can still find housing for less than $100,000, those small businesses may not support $15. But I like shooting for $15 cause everyone will eventually compromise at $10
Anyway to incentivize businesses to offset any decrease in hirings and hours? Starting a business is a risky thing and should be given a lot of benefits.
Surely unemployment statistics are relevant when talking about changing minimum wage too. If unemployment is low, there's an opportunity to increase minimum wage because there's market pressure on employers to keep their staff (make hay while the sun is shining, basically). If unemployment is high, or job openings are low, trying to force a minimum wage only looks to reduce the chances of lower skills workers getting work *anywhere* in favour of those who look for the same job, but have more skills. It's a much more niche problem, but one that could cause problems in the future. Ultimately, increasing it slowly over time will eventually pull some of that money from the top downward.
Denmark's minimum wage is (last I heard) $20.00 per hour. Their economy is doing fine. All the Scandinavian nations, Germany, France, Australia all have minimum wages way over $15.00. But thinktank financed sites want to serve their greedy corporate bosses.
How about we explain inflation. Because there is no rational reason why a competitive market will magically charge more and more for products over time while productivity increases. There will always be a new market entrant if profit margins get too high.
you know you're unbiased when both sides hate you in the comments
+AdmiralPrice this sentence is gold ..diamond or even fertilized uranium ...
I hate you in a non-gay way!
AdmiralPrice I agree with this video, especially when he called me a non- scrooge mcduck.
Maybe that's the goal. If both sides hate you you're on the right path!
@James Madison I might be wrong, but if they do not wanna pay more then to keep help around, then it just comes down to greed on corp side.
"no solution, only trade offs"
wow I'm going to remember that, applies to many things in life, not just economics.
Steven Tyler econ herpes
"no solution, only trade offs"
aka, have no principles. Nope. Minimum wage is a price control. Price controls, on principle, don't work. Period.
@llriv that is correct. Sowell writes about this in his book "a conflict of visions" and "the vision of the anointed". I congratulate you ! you have done your homework!
Economics is not only about money it is the whole. so it applies to economics only
it was said by thomas sowell
Mr. Clifford! You might not remember me, but I had your class years ago! I made you the music CD you always played that had We Like to Party, Sandstorm, and The Final Countdown on it.
You were hands down one of the best teachers I've ever had in my entire life, I'm still applying the economic theories you taught me almost a decade ago. In particular, there was one day you showed everyone in my class why we should get a credit card and start paying credit bills as early as possible, I followed that advice and only recently am I starting to see the incalculable ways my credit score has made my life easier.
I had no idea you made CZcams videos! I wish I knew if you were doing this back when I was in your class, I would have come in after school and helped out. It's great to see you applying your teaching abilities in such a creative way to a worldwide audience, the world deserves to hear your voice. Thank you again for everything Mr. Clifford!
+Nicholas Halsey Of course I remember you Nick. Thank you for the kind words. I'm glad that you enjoyed my class and are still using econ. Miss you.
@James Madison
I disagree. The $15 minimum wage does not help a person whose productivity is worth less than $15. If you want to help unskilled workers you are barking up the wrong tree. You can help them by freeing up the economy and limiting government to its basic essential function (protecting individual rights). So much money is being drained from the productive private sector to feed the unproductive public sector. End that bleeding and you will see the cost of living plummet while the standard of living rises. Problem solved--no magic wand solution necessary.
@James Madison but they are though, from an economical standpoint. If one employee gets fired its very ez to hire another unskilled laborer. They as a whole mean a lot of but individually are not that valuable. Obviously you should know I'm not refereing to their humanity but just from a economical view.
In response to #7, we often see hours cut instead of jobs. Thus, in cases we see unemployment largely unaffected, like in Seattle, we instead find hours deeply slashed.
Hours are cut/split in order to avoid having 'excess' full-time employees, generating massive savings for the employers, with the primary externality being less value per unit of work for the employee. These otherwise-full-time workers lose out on all the standard benefits, can end up being disqualified for other opportunities based on this, or need to get a second job... which then needs to be juggled with the first and between commuting, vital sleep, getting anything at all done outside of work, etc... it ends up adding up to ~2.5 jobs, for less _total value_ than one full-time.
Good! Once you get paid enough, you no longer have to work two jobs.
Jobs are cut. Businesses are cut.
Employers already do this without minimum wage increases. That's the dishonesty of this argument. The toll of having to provide benefits (esp health insurance) has already driven virtually all unskilled jobs towards part-time or independent contractor status without mentioning anything about minimum wage. That's why we should convert to a nationalized health system like France or the UK, because businesses should not be shouldering the cost burden of providing that coverage.
But that's socialism, the Cons will try to tar and feather you
this is the best and most balanced video about minimum wage I've ever seen. Usually if you are against raising it people will say that you don't care about the poor, but I think that the worst effect is that it won't help those that it intends to help.
+Daniel Garay Thanks. I tried to keep it fair and balance...but not in a FOX news sort of way.
+ACDCLeadership What's wrong with FOX, if you wanted to be "balanced"?
It's about control. Can you run a business without permission?
ACDCLeadership how about cnn for a change. Fox news might not be perfect but at least they are better than cnn.
Winter Land if you have to ask the government to pass à law to be paid à certain amount of money it probably because you cannot expect to have that amount base on market value. What would you say if shirt makers ask the government to pass à law that say that nobody can sale à shirt under 50 dollars ?
The more I study the minimum wage, the less certain I am.
Kudos for the Sowell reference; his books had a big impact on me. After 7 years, I still love watching your lectures!
But it does cause some unemployment, and the demand curve is elastic over time.
+The Light True that.
And what about longer term studies to show the knock-on effects of having a working class that is able to have a positive savings rate instead of being paycheck to paycheck all the time? If people weren't spending 70%+ of their income on rent, and were actually able to make investments in training e.g. nursing licenses, college degrees, etc - what do you think the increase in productivity, earning power, and CONSUMPTIVE DEMAND would be? There's so many factors that go into economics that isolating the effect of one policy change is nearly impossible, especially as time goes on. If you were correct, Australia, which has its minimum wage increase every year, would be experiencing constantly increasing unemployment among youth and minimum wage workers. If you look at the actual unemployment statistics, that would be completely wrong.
recycling the problems there is never a solution to certain problems
James Madison From a purely monetary Perspective that seems nice and all, but what you’re missing is higher unemployment, Lower work hours, lower corporate profits, and poor people getting hurt the most. Those welfare checks won’t help either, the problem with those are the inefficiencies that come with those unemployment benefits. A negative income tax would be a much much better solution for that problem as it doesn’t have all the bad effects of minimum wage.
Ok, let's hear what you think about the minimum wage. Should we get rid of it, keep it the same or increase it? Is $15 too much?
+ACDCLeadership the law of the minimum wage is the most racist law that exists. It generates unemployment especially among black people, young and poor.
+Rodrigo Bah Milton Friedman would agree with you. He said it was "one of the most, if not the most anti-black law on the statute books."
+ACDCLeadership He was right!
+ACDCLeadership I heard all the arguments, to me there is not one single good reason to even have a min. wage. Nothing positive comes from it. If there is any effect it is all negative.
+whyamimrpink78 There are a bunch of economists that agree with that, but I would think that there must be something good about it. It wouldn't even exist if it was 100% bad. Right?
Fantastic job with this.
Hey
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@Dean Patrick instablaster =)
@Kelvin Spencer Thanks for your reply. I found the site through google and I'm waiting for the hacking stuff atm.
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You forgot to discuss COMPRESSION and inflation. Raising the cost on employers raises all prices. Raising the cost of workers accelerates automation by making it more attractive financially.
News to you: employers are already automating things at the current minimum wage level. Are you saying that people should accept progressively lower wages (i.e. 7/hr today, and 6/hr next year) for fear of their job being taken by a robot? That's outlandish.
@@puffman06 thats not what was said, just that he didn't mention compression and inflation.
@@puffman06 they are automating now in preparation to increased minimum wages. It makes sense. You don't wait until you need a skill to learn it.
@@gregorythompson5334 Except when a robot takes a job, that's one less job for people. Sure you can get a skill but suddenly there's more skilled competition because there are no unskilled jobs left. Over the next twenty years, AI will start taking the skilled jobs away. What do we do then? There are no safe jobs, just the haves and the have nots.....
This is one of the best videos I've seen on this topic. Instant sub. The topic has been polarized and politicized to hell and beyond, and everyone joins extreme 'factions' built around views on this subject.
Kudos for keeping things real.
Thanks, this was refreshingly unbiased and just presented the pros and cons on both sides. It's very hard to find anything like this now a days because people have become so polarized.
I just want to say thanks for just giving us the info and facts and not just pushing your opinion onto us. My microeconomics professor really just painted the picture that raising minimum wage would ruin the economy. He was extreme about the whole thing and I felt I had to do more research on the subject.
While it appears to be a good idea to almost everyone. We do not see the whole picture. All the giant corporations that already drag in money from pretty much everyone, will just raise prices. THEY WILL NOT be willing to lower their Profits, I mean look at most of How Greedy most companies are ALREADY. That OR they are ONLY going to take People who Can do the Jobs of 2 or 3 other people and pay them the new 15 dollar minimum.
Good to see you back posting videos!! Your econ vids are the most concise, informative and funny out there.
+Ayl 87 Thanks. I appreciate it. Comments like this inspire me to do more.
+Ayl 87 Yes, I'ver hear that about Australia. You are the poster child for having a high minimum wage while holding back inflation and unemployment. Does it have to do with marsupials?
I'm not sure where I stand regarding minimum wage but in Australia, where I live, it's very high; one of the highest in the world (if not the highest), depending on whose interpretation of the data you agree with.
Despite that:
1) We have a low rate of unemployment
2) We weathered the GFC very well with no decline in GDP for any quarter.
3) We provide many social services - free health care, interest-free university loans, retirement benefits etc
4) We contribute 4 cities to The Economist's list of the top 10 most liveable cities, including the number 1 city.
Given all of that (and plenty more), I can't believe that a minimum wage - in and of itself - is a bad thing. Certainly it might be better suited to a given economy and not to another, but it's not seemed to have had any negative effects here.
+ACDCLeadership Yeah, I think it's mainly the kangaroos. They unionise and have a lot of clout in parliament.
+Ayl 87 In our country we have Donkeys and Elephants, but they never agree. If you understand that reference, my hat's off to you
Excellent job covering this! It’s the most unbiased video covering the topic.
Thank you sir for your seemly unbiased and factual base take on minimal wage. I did learn a lot.
Hats off to your video editing skills:)
I love your videos Professor Clifford!!!!! I wish you were my teacher! You have influenced me to major in Economics because you make economics so fascinating and less intimidating. Thank you for your videos!!!!!!
+gloriaa0214 Thank you. I'm glad I am able to help. Good luck in school. Let me know if you want me to cover any different topics.
Do you have a video on universal basic income? Apparently Milton Friedman even suggested it and it is becoming more of a hot debate. It would be good to hear an unbiased video on the topic with the studies that are coming out about it.
Assuming inflation, keeping the minimum wage the same or eliminating it will be the same over time. Prior to laws regulating workplace safety, placing restrictions on labor for children and youth, regulating compensation based on a standard number of work hours, and maintaining minimum pay to workers, the economy boomed. This was not to the benefit of laborers who found that they were easily replaceable and that money can buy a solution to many problems. There is almost 80 years of data in the U.S. to show us how little minimum wage correlates to unemployment, crime or much of anything. As a laborer, you must not forget that productivity drives your value, but as a mortal you must not forget that hunger and desparation do not a polite society make.
This was great information, thank you!!
I think the point people miss is that we all have choices. If you choose to work for minimum wage then that’s a choice to stay there. Most people start there and then gain skills to advance themselves. Others sit on there hands and wait for others to do things for them.
That's an ethical framework that rests on accountability which is the precise opposite of what they teach in schools nowadays.
Thank You so much! This really helped to find creditable sources.
Misconception #7 is not a misconception. Increasing the minimum wage increases unemployment. Try passing a $40 per hour minimum wage and see how many people would be out of work. The only situation where a minimum wage doesn't cause unemployment is if the minimum wage is equal to the prevailing wage rate for low-skilled workers. But in that case, the minimum wage doesn't serve any purpose other than to help politicians score points with voters.
Well said, when #7 came through, i was like uhhh this doesn't sound right.
Also the workers fortunate enough not to get laid off will face shortages of the supply of goods that have increased costs with the rising wage. The min wage tries to take a hammer to a problem that isn't a nail.
Traditional economic theory does *not* say that minimum wage causes unemployment. Only first-year textbooks written for children in Republican states say that minimum wage causes unemployment. Traditional economic theory considers things like general equilibrium effects, labour market elasticity, monopsony, transaction costs, segmented markets, capital substitutability, and forward-falling labour supply curves.
Yes, that was my point. Traditional first year oversimplified economics suggests that minimum wage causes unemployment.
You've got the theory, how about the math? Minimum Wage Increases are an insidious and deceptive way of taxing ONLY the poorest and lowest wage earners (Plus their employers- of course). The "windfall" to the Feds is 15.3% of every $$$ of increase. Assume 1.8 Million workers X ($7.75/Hr Increase) X 1,560 (Or 30 Hrs/Wk) = $22Billion +/-. Plus assumed increased IT, decreased Low Income credits, etc. Unfortunately, the skilled, trained, and productive Middle Class workers will automatically experience deferred/lost merit and performance wage increases as a result of the externally imposed wage compression. Increased labor costs without corresponding increased productivity result in the need for market price increases, and the financially stalled middle class is gets the brunt of the double-whammy.
Hello, you should consider making an updated 2022 video about the minimum wage topic!! I'd be super interested to see if there have been any changes in these misconceptions with updated economic viewpoints.
Do a video on UBI plz and what you think about it. Positives and negatives. I would be really interested to hear your opinions!
Instead of raising minimum wage do things that give people the opportunity to be better educated or trained for the job; therefore people who don't take the opportunity absolutely deserve to be paid 7 dollars an hour. By opportunity I mean lowering tuition or subsidizing education somehow so that people don't have to get into extreme debt kinda thing.
I agree.
What a fantastically informative non biased economic video. A majority of minimum wage workers being 16-24 years old is a glaring statistic. There is no true fix other than making education even more accessible and affordable
Productivity over the last 20 years has doubled yet they pay us less than $8 an hour.. our value has decreased in the 1% minds
Once upon a time one person could work one job and pay for a family of 5 now it takes 2 people working 2 jobs to make ends meet.
There's a theory that when people who work 2 or sometimes 3 jobs are paid more livable wages they are able to reduce their employment to the more maintainable amount of 1 job. That being said, I think it is interesting that people claim that by default, higher minimum wage creates job losses. These job "losses" could very well be the people I mentioned earlier moving to a more livable employed life. I don't think it is a good practice for an economy to be supported by people stretched beyond their means. I'm not trying to say that the minimum wage should go up forever, but I am saying that the people who talk about these "job losses" could be committing a lie of omission. In addition to that, there is evidence that a reasonable increase in the minimum wage actually increases employment because it creates more economic activity because people have more money to spend.
+Eric Hensel I'm glad you brought that up b/c I was going to! Also why is no one bringing up the fact the CEO salaries have gone up astronomically in relation to their lowest paid workers and many of those employers take tax payer money in the form of incentives from local economies to open up shop? Something I might add that local mom and pop shops aren't privy too.
+marla79 What you mention is something that I also agree needs addressing. I think the problem is that we've allowed big business interests to setup our economy solely around their success, while leaving out the success of their very own employees. The point is, if you're going to setup a business that gains profit through the hard work of its employees you really need to provide these employees with their fair share of the profits.
+Eric Hensel You might understand the correlation better if you had the experience of employing people.
+marla79 "why is no one bringing up the fact the CEO salaries have gone up astronomically in relation to their lowest paid workers" People bring that up all of the time. Like all jobs, there is competition. Companies would rather pay for a top CEO than run the risk of ending up with an Ellen Pao.
Good info. Must watch video Minimum wage vs Honda Civic. Makes sense now
Would there be any disadvantage/advantage to gradually increasing the min wage over the the next few years? (as opposed to an instant jump)
+Daniel Newman That's usually how they do it. The change they made in 2007 was in three steps over several years.
people get fired
Hey Cliff here in my country, Bosnia, the minimum wage is actually pretty high for the country's per capita income yet unemployment is absurdly high at 45%, if my country decided to get rid of minimum wage entirely would that help create more jobs?
I was not expecting a balanced analysis. Kudos.
Minimum wage isn't the only factor. The compliance costs that come with having employees can put a lot of people out of work. Raising minimum wage also raises some of these costs, mainly the SS matching and payroll taxes. Raising minimum wage by $2 costs employers more than $2.
Very good video! Thanks.
Can I ask a question if min wage was raised to 15 like your saying what happens when THAT is not enough? I mean maybe this goes a few years and people say well now I need MORE than 15 an hour, but they don't have any desire to learn a trade or whatever they might need to do to increase the job skill set. I mean my question is essentially, if you do raise this where does it end?
What should the minimum wage be? I've seen CZcams videos where people on the street are asked this question. How would you answer it?
raising the minimum wage would undermine the possibility of jobs for new workers ie people who don't have the experience to work minimum wage
Do people have a right to a descent standard of living in the US? In Europe they make sure you have a descent wage, descent living, they pay for your job training, so you don't think that can benefit the American people? We're different, we're exceptional, we have to prove to the world you don't need government assistance correct? Do you believe Americans are a exceptional people? No paid time off, no money in free college or job training, the American people are on their own and that creates stress. Is this the country you want?
Ryan Zinna no, i just don't want a minimum wage
So work for nothing for all I care. You don't want regulations when it comes to banking or labor is that correct? You don't think the government should be involved in wage regulations is that correct? What makes you think our country is better than Australia that has a minimum wage of 17.21? Why are you better?
@@Rpzinna we want less government involvement. The labor market for some types of industry is lower than others. All this is doing is hiking the cost of commodities, reducing the amount of available jobs and cutting new labor (unexperienced) from entering the workforce. Entry level jobs are not meant to be living wages, that would be a career. Minimum wage is to start like when you are a teen to gain experience. Do you really want to be late 20s still working fast food? Advance yourself and the wages get better.
Clearly and precisely explained.Thank u
Pretty neutral but I just have one question, is there a DWL in the minimum wage since it is a price floor?
Rising minimum wages have made a lot of stores shut down in areas of higher minimum wages. Places that saw $15 ended up losing many local businesses like restaurants. Mcdonalds has decided to eliminate ALL cashier positions and will be going only to kiosk designs.
2021 here and technology is very quickly replacing humans in a lot of places.
very interesting what are your opinions an the sectoral barganing model with unions the nordic countries use?
does anyone know wht if unions support to increase the minimum wage wht will effect?
+ACDCLeadership Have you read Neumark & Wascher (2010, MIT Press)? Thoughts?
Really liked this video, definitely wasn't biased on an issue that is very politicized. Although I think you should have brought up the minimum wage's effect on inflation.
+Eoin Tyrrell I know. I screwed the pooch on that one. Next time.
+ACDCLeadership No problem
How about doing an annual Cost Of Living Adjustment on the minimum wage, to keep pace with inflation? That way employers could predict, somewhat, what their wage costs will be this year, next year. Not perfect, but I think it would help a bit.
where is the video on minimum wage diagram you mentioned
WOW WOW WOW WOW WOW WOW this is surprisingly non-partisan and I did not know some of these. Thank You!
these videos normally lean politically to a radical side of the spectrum. I love the unbiased and factual info! first time watcher immediately subscribed! I did see Clifford on crash course, and that show turned me off with how left it leaned. This, however, was quite nice!
3:05 Could it just be that since the US minimum wage has pretty closely matched the inflation adjusted amount, there hasn't been a significant impact in labor demand reduction? Were these studies done in high minimum wage states with comparatively medium to lower overall prices? My thought is that consumers may end up paying more, if the minimum wage increases, but they maybe able to pay more.
I like to point ount that min-wage laws are not just restrictions on employers; these laws tell potential workers that they cannot take a job that they otherwise would like to have. Nobody is being forced to take any particular job, minimum wage or other. Put this way, it is obvious to almost anybody that these laws reduce employment (unless the minimum is so low as to be irrelevant).
*point out (sorry)
should the market determine min wage vs government?
Thank you so much for making this video. I've been watching your videos for a while now and i have actually used your videos on price ceilings and floors to prove to my friends that generally, implementing a minimum wage would not be beneficial to the economy. Glad to see that there is a video strictly just about this topic. I'll be sure to show this around!
+abcdefgride Thanks. I'm glad that you like it. I tried to keep it nuetral.
It's called a, "MINIMUM WAGE" for a reason! If you could do more for your employer, you'd get paid more!!
Raising it cause only the employer to pay the employees more. If they don't do that, they can go to jail.
Simply stated, the government forces the employer to pay the employees more. There's no repercussion to the Federalis, they just enjoy the thought that they will get re-elected by those who NEED the government to have their wages increased.
What does the employer do? Raise the price of goods and services to cover the cost increases to balance the books. So who suffers by an increase in the minimum wage? EVERYBODY!!!!!
Oh, your taxes will go up as the taxpayer-funded federal, state, and municipal union workers will go on strike to get their share of the increase. The politicians will pass it on to the citizens because it isn't THEIR money!
If you are so hurt by the workers making minimum wage, the give everyone at Walmart, McDonalds, Cosco, etc, you see $20 out of your own pocket! It'll make you feel good, no?
"Socialism is a great form of government until you run out of other peoples' money!" -Margret Thatcher
The most commonly asked question is What is a livable wage for everyone working in the US if Rent is going high Gas aswell insurance and all else shouldn't there be some control on this situation.
Who is anyone to tell you can't sell your labour for less than minimum wage?
that's slave labor pal. your labor is private property. do you agree with that? Your workers are your property right? Well selling labor below the poverty line is against international law. ever read the Nuremberg Trials?
slavery is when workers are not consenting.
Coercion is forcing people to "consent" when they really don't want to. And because the business has quite a bit of leverage over the unskilled employee, it's very easy to coerce them to accept lower wages than they otherwise would. Aka slavery.
I think a $15 federal minimum wage is like doing surgery with an ax. That is way too high for some areas and possibly too low for others. The Fed gov should set MW at a reasonable level toward the lower end and allow states and regions with higher costs of living to go up from there.
Major cities that raised too $15 caused a shift in it's economic workflow such as Seattle.
This is why unions should be strengthened instead, they can negotiate the wages to their maximum viable level instead of just making a sweeping amount of change that could disproportionately affect entire states. The minimum wage should be the base viable set, which should be determined by states rather than federal law, while unions fill in the blanks.
I just wanted to inform you that your in-video links are not working. I've verified this on separate browsers and with other CZcams videos.
What does ACDC Econ stand for?
So basically, by the study you posted, 900K people had improved conditions and 500K were pushed out of the workforce...therefore if taking that into account with 30M being affected by the $15 minimum wage hike would mean less than 20M would have improved conditions, while more than 10M would be pushed out altogether??
Some of the biggest things that push families into poverty is the expense for taking care of children. One of the rather over looked ways we could help those in poverty would be to offer more readily available child care services. Ranging from reducing schooling costs, daycare services, to child healthcare. All those things would help reduce poverty for families since alone they are so expensive. Additionally providing healthy safe services such as these to children will help them grow up to be more capable and healthy adults. Many of these services are offered at a state level depending on where you live but there's not a lot of federal talk of child care.
It is, in my opinion, that positive implications of minimum wages are apparently insignificant when weighed against the negative effects of these labor market price floors to the point that essentially the only reason minimum wages exist is to provide a sense of security among workers. But the evidence “for” minimum wages doesn’t really provide the actual positive economic results of minimum wages rather they suggest that evidence against minimum wages, in the short run, doesn’t perfectly reflect what classical models suggest. But all prices are flexible in the long run and this short run micromanagement of labor markets exacerbates 2 long run issues (unemployment, lower annual earnings among the low skilled, etc) for every short run issue it attempts to fix (poverty).
In my opinion, it's all about focusing on who you want to sell your products to.
If you want to sell your products of citizens of your own contry then raise the minimum wage. Then the demand will grow and this will be a good thing for the overall economy (Keynes).
If you want to export more rather than selling in your country, don't raise it because it could increase production costs and decrease productivity.
But the problems with not raising the minimum wage are :
- Political moral : all of the income go to the profits and not to the workers even though they work hard.
- If all the countries decided to lower the minimum wage (to export more), then companies would lower wages to have a higher productivity and less production and the overall demand all around the workd would fall and nobody would buy what you were trying to export by decreasing costs.
That's my take on the subject so I'd prefer to raise minimum wage rather than taking the risk of lowering the demand.
+HardStickman Alas, no. Even Keynes did not take the absurd (and contrary to the empirical evidence) stance that raising the minimum wage puts more money in people's pockets to increase demand. Moreover, the notion that workers are "underpaid" and that more goes to profits has been empirically disproved. Workers are paid the risk-adjusted marginal revenue product of the labor services they provide or, in layman's terms, workers are paid what their labor services are *actually worth* so neither "problem" is valid in the slightest.
The marginal proportion to consume is an argument to increasing the minimum wage in itself because it states that the poorest people are the more they will spend in proportion of their revenues.
And I disagree. Empirically, increasing the wages has always led to a growth of the wealth except between 1973 and the 90's because the wages were so high that compagnies had not enough to invest.
+HardStickman The term you are looking for is the marginal propensity to consume but it doesn't work in the slightest as an argument in favor of the minimum wage as the minimum wage has literally *never* resulted in "the poorest people" (or anyone else for that matter) having more money to spend. instead, minimum wage laws are economically destructive as the loss in opportunities, cuts in hours, benefits and training and outright job loss result in less productive activity, a weaker economy, an increase in welfare rolls and a reduction in the long term earnings prospects of low wage workers.
While it is certainly true that an overall increase in real wages results in growth, but, again, it is factually wrong to suggest that minimum wage laws have ever resulted in such an outcome. And the period between 1973 and 1990 doesn't help your case in any case as, just like both before and after, total real hourly compensation increased steadily and substantially over the entire period (despite the relative loss in purchasing power of the arbitrary wage floor). The "stagnation" myth has been long debunked. Empirically, the minimum wage has never benefited workers or the economy - the evidence is overwhelming (and excluding the "research " that has been discredited, virtually unanimous).
HardStickman - Excellent points! We have seen this in our own history. Before we had the minimum wage we had slavery and slaves cannot afford to buy anything so by paying those hard workers a minimum wage we now have a lot more consumers.
Really informative and neutral video, it's great!
Wouldn't a rise (particularly a sharp one) in the minimum wage also cause inflation to increase because of the imbalance of spending power vs resources causing the prices of good to also rise? Eventually, this would lead us more or less back to where we were. Except now, things cost more and firms would likely have be incentivised to provide goods and services with fewer people... Does what I am saying make hypothetical sense?
+danmks2 Yes, some people worry that mimimum wage causes inflation and if it goes up to much that will likely happen, but as one person said in (rather technically) "If minimum wage hikes were entirely offset with price increases, it would not be possible to raise the inflation adjusted minimum wage"
I think that minimum wage and low wage workers are such a small part of GDP that their increased wages would contribute very little to inflation.
Jacob!! That is so cool!!
+Allison Talbott Hi Ali! I miss you guys back in San Diego. I hope everything is going well.
I love that 77.4 % of a 115.6% total... Great source you have there...
Not to mention he ignores the rate of minimum wage payment for minorities in comparison to white people. The RATE is higher.
what about the fact that the minimum wage contributes to inflation? it's like getting no raise at all since all the products you would have purchased go up by roughly the same factor,or more. the reason being that it increases cost of production.
+JathTech Minimum wage will never be able to cover basic amenities because the people who sell those basic amenities are hired at minimum wage. Changing the minimum wage just decreases the purchasing power of everyone who isn't working minimum wage. When the min was 7.50, so was a combo meal. When it went up to 8.75, so did combo meals. This isn't a difficult trend for people to follow. You'd think all of the acedemic jack-offs who need their institutions to keep and coddle their fat asses away from fast food would pick up on it and stop screaming about the minorities that only make up 23% of minimum wage workers being underprivileged.
Replacing the minimum wage with a negative income tax is 👌😩💯💦
There was a spelling error in Misconception #9; it said "ineqaulity" at 4:05. Other than that, this video is great.
+Mr. Game & Watch Yeah, I know. I mentioned that in the description. I'm better at economics than spelling:)
+Mr. Game & Watch You're hired.
Thanks Jacob. There is no way I'm going to go against Friedman, Sowell or the Austrian school on minimum wage. It really does cause issues for min wage/low skilled workers with the increase in production costs for the same workers and same skills because once those costs are absorbed fewer products are going to be produced either through the lagging indicator of unemployment, something these newer studies missed, and the reduced access of goods to the newly wage increased employees despite making more.
Good stuff
Looks like your stats come based off minimum wage but wouldn’t of effect every job under 15$hr?
Hi, Jacob.
I dont know worth the price on education or not, but I do know that you misspelled the word 'has' in misconception number 8 :)
Can you make a video on UBI?
guess all the fast food and food service industry in Seattle Washington and California that either cut hours, personnel, or just closed are the exception
what about the people that are making 13 14 15 dollars an hour now at their job and then you change minimum wage to $15 are we going to have to double their pay to make them feel like they're appreciated with all their knowledge
It drives me mad watching Americans debate minimum wage, seemingly not only oblivious to the fact other countries don't even need the minimum wage, and still have 2-3 *_times_* the effective minimum wage of the US, but also oblivious to the fact that you had the solution one time yourself. Why don't you google "unions the red scare" and treat yourself to a little history lesson?
That's right, Unions, in Norway for instance, we don't have a minimum wage, and we have no problem. Example:
I now work part time along my studies, at a pizza delivery shop. I earn about 18$ an hours. In Norway this is considered pretty damn close to social dumping, most Norwegians would never work for such a low salary, not even unskilled workers.
You want your mind blown even more? The industry loves this model about as much as the workers. Here is how it works(extremely simplified):
Each year representatives for the workers and representatives for the industry sits down at the table and engage in "salary negotiations". And they are basically free to form whatever agreement they like. This usually goes very smoothly, but a few occasionally it may end in strike, short term.
This is great for many reasons:
- It makes your own salary an active prosess to be fought for each year. This makes people interested and engaged in something very important about their own lives.
- No one can hide behind some arbitrary law or regulation, you have to face people in negotiations, people who have the power to refuse your proposal if they don't like it. It's very hard to defend unreasonable proposals in this model.
- It's gives the local industries and their workers flexibility. Maybe the industry is going through some tough shit, and in order to survive costs must come down. Well, in this model it let's the people who understands this bettern than anyone, decide, workers involved! Then they might voluntarily agree to all take a salary cut that year, in order to lower the burden on the company. Or the business is doing fine, but salaries are not really what workers want, maybe they want something else changed, well then they are free to negotiate that.
All in all, this makes it a better system for both parts.
That being said though, remember that the condition for this to work is that you have very strong unions. In America today you must have the minimum wage, because you have nothing else, but you could have! So I would suggest that the long term goal should be this active negotiation model, with both sides being equally powerful, rather than fighting for a minimum wage that will never be just right for anyone.
What stops strong unions from forming in US? Unions are legal.
If there was no minimum wage there would be far more unions.
that may be a better way to approach this topic.
Hold up. You just said that when adjusting for inflation the minimum wage has not increased significantly. Then you say that the increasing minimum wage over the years has not lead to job loss. Which reality are we accepting here? Did the minimum wage actually increase and not cause young adults and teens to lose their jobs, or did it not increase like you mentioned earlier in the video?
Even _the_ premise is problematic, as far as lower income workers go. Adjusting for inflation means if eggs, milk, bread and cheese costs 1.40% more, you get _exactly_ that 1.40% increase - and in my experience, it's usually less in real life scenarios. And with jobs paying nominal raises of what, $0.15-0.50 every other quarter? AIN' NO RAISE. Fuck.
well, isnt min wage a type of price floor? and in that sense it may create a shortage of workers? I know this video talks about a theory that says human labor might be somewhat inelastic, but after working at a fast food joint, wages are something that the managers were ALWAYS concerned about. meaning wages are a large burden. especially for brand new workers with no training whatsoever. this often caused shifts to be short handed or raises being declined or simply not hiring new people
Nice video
raising the minimum wage does nothing. the only way to put more money in your pocket is to strengthen the buying power of the dollar. the minimum wage is meant to be a starting point and stay consistent with inflation.
in an exam:
"there are no solutions to this question. There are only trade-offs."
As somebody who is actually on minimum wage, you live in a constant awareness that your employer values you so poorly, that if they were to pay you any less, it'd be illegal!
one thing you don't touch on is the fact that the cost to produce goods increases and then the cost to purchase said goods increases but the middle classes wages didn't increase. This creates a loss of purchasing power essentially a pay cut for middle earners. This is just one step closer to a 2 class system.
I agree on focusing on education, but I doubt that will get the same pull politically as promising hire wages. If a candidate is looking for numbers then it is easier to promise "free" money rather than long term change.
higher*
+Travis Sturges Yes, that's the reason why it is is such a big deal right now. In my opinion, minimum wage is a small battle in a much bigger war.
If you raise the minimum wage then it's going to raise the rents, when you raise the rents you're going to have to build affordable housing, then you'll have to tax people to build the affordable housing, then people move out of the city and you'll have to raise taxes on the people that remain in the city, and this is how you hallow out the economy of a major metropolitan area of the US.
Why pay taxes anyway? What was wrong with the economy of 1789?
when you increase the minimum wage it's not just for the person who serves the coffee, it's for the person who delivered it, the person who brought it into harbour, the person in the factory where it was allocated, so forth. This could lead to very considerable increases in prices which chop down the standard living of the minimum wage earners it was meant to help. It's worse for the percentage - however small - of people who lose their jobs because of it.
This is why unions are so necessary, they can fill the blanks case-by-case where the government can’t.
Minimum wage $15.00 an hr. X 40 hour work week = $ 600.00 per week .? $ 600.00 × 52 week= $ 30,000.00 plus per year ??
I believe this puts worker over the Federal poverty level ???
So if they are on any Federal programs SNAP, Rent assistance, Medical insurance ect . They would be excluded from these programs. Am I correct ??? .
I don't study economics, but it seems a bit off to suggest that increasing the minimum wage hurts unskilled workers, because employers simply won't take a chance on them. If I need to fill an unskilled job, my prospects will be unskilled. I'm paying minimum wage, and those with skills will not want my job, because they're looking for something else. Is this not true?
What it means is that if the minimum wage for an unskilled job is higher than how much you value the job as an employer you'd rather not employ the person at all. For example if you need someone to mow your lawn and you would pay 5 bucks for it, but min wage is 10 bucks you'd rather not employ someone at all.
@@shrawanipal Then I wouldn't get my lawn mowed, or I would be forced to do it myself, which is not going to happen. Well, I can mow my own lawn, but certainly I can't sell millions of dollars in tacos by myself. I don't think this is logical, assuming that those jobs wont be filled. They need to be filled.
@@johnwatters3431 Good point. It is true that if there is demand for labour it will have to be filled despite the price that might have to be paid for it
@@shrawanipal That's what I'm saying. The original argument comes across as nothing more than a scare tactic.
If I open a lemonade stand, I can choose to sell it at $100 per cup. I won't sell much, and I'll soon realize that I should bring the price to a level which mutually benefits me and my customers.
Similarly, if I post a job for a lemonade stand server at a penny an hour, I won't have any luck. I will be forced to raise the salary to a level that mutually benefits me and the employee.
I have heard no one suggest that the government should impose maximum prices on goods. Why then should they impose minimum wages?
Excellent both sides video. And I’d like to remind commenters, one size fits all, doesn’t. Buying power in some parts of this country will demand more than $15, some does not. Look at home prices in Iowa, Mississippi, rural Kentucky. If you can still find housing for less than $100,000, those small businesses may not support $15. But I like shooting for $15 cause everyone will eventually compromise at $10
Excellent Video Mr. Clifford. I even got my boyfriend to watch it. 😁
Anyway to incentivize businesses to offset any decrease in hirings and hours? Starting a business is a risky thing and should be given a lot of benefits.
Surely unemployment statistics are relevant when talking about changing minimum wage too. If unemployment is low, there's an opportunity to increase minimum wage because there's market pressure on employers to keep their staff (make hay while the sun is shining, basically). If unemployment is high, or job openings are low, trying to force a minimum wage only looks to reduce the chances of lower skills workers getting work *anywhere* in favour of those who look for the same job, but have more skills. It's a much more niche problem, but one that could cause problems in the future. Ultimately, increasing it slowly over time will eventually pull some of that money from the top downward.
Denmark's minimum wage is (last I heard) $20.00 per hour. Their economy is doing fine.
All the Scandinavian nations, Germany, France, Australia all have minimum wages way over $15.00.
But thinktank financed sites want to serve their greedy corporate bosses.
How about we explain inflation.
Because there is no rational reason why a competitive market will magically charge more and more for products over time while productivity increases.
There will always be a new market entrant if profit margins get too high.