@drman321 Said 
Do you honestly think that a business will hire more people if they lowered the minimum wage? Walk me through the logic here. I run a business, if wages dropped I might consider lowering my assistant's wages (probably not though, she is damn good) but I'm not going to hire two people to do the work of one just because they are now cheaper. Lowering her wage would just add to my bottom line by taking from hers.
I thought it was a pretty readily accepted economic idea that lowering minimum wage would result in more unskilled workers being hired, and more importantly, less people being laid off. I believe this concept can be described as an elasticity of demand function, where as the wage increases, demand for unskilled workers decreases. I say unskilled because generally the minimum wage workers are under-educated, or right out of college or high school. I learned this in microeconomics class, and unemployment is explained this way (right next to the unemployment elasticity graph) in a text book I own by Paul Krugman, who publishes articles in the New York Times and won a Nobel Prize in Economics, so I'm really just regurgitating his ideas.
All that aside, I don't need a graph to know this makes sense. You have to look at different business models to see it in action, but I'll use a personal example first. I used to manage a feed store that had 23 employees, and most people were paid a few dollars above minimum wage, and worked 42 hours a week. We were always understaffed in the yard, but it took awhile to train new yard workers where all the different grains were located and the business was barely breaking even. Many times people were left waiting in the store for help because I would have to leave the counter to help the guys retrieve grain, so obviously output could be improved by more workers. By lowering our wages 2 dollars each (which also lowers his taxes), the owner would have been able to justify hiring the extra yard guy, and I'm sure he would have since we needed him but couldn't afford him. The yard guy would have made up for his wages by increasing the output of the business, and decreasing the number of unhappy customers who went elsewhere.
The same principle could apply to a Strawberry farmer, maybe he has 40 guys out there working for minimum wage but could increase his output by hiring another 10 workers. Lowering 40 workers wages by 2 dollars each would more than allow for the extra 10 workers to be hired on, and increase the productivity of the strawberry farmer.
As you pointed out, this would not work for business who is already at their peak of productivity, because they do not need additional workers. However, I have seen many, many restaurants who are understaffed and would most likely hire on more workers if it would increase their productivity while offsetting the cost for employing them. Obviously businesses who are already close to letting people go would keep their employees if they could pay them less instead of firing them, especially if productivity would suffer by firing them.
Jul 05, 2011 @ 19:39:05
