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Does Minimum Wage Law Hurt the US Economy and Destroy Jobs?

Updated on July 19, 2013

I have been familiarized with minimum wage in multiple states across the country. Through high school, college, and even after college, I have worked in a variety of positions paying me the absolute minimum amount possible.

Although, like most people, I see my time as worth $50-$100/hr as opposed to the $7.50 I have been receiving, as a resident in a struggling community, a student of business, and a global Christian, I have started to ponder the value and effect of minimum wage law on our nation and the world as a whole.

I invite you to read the follow in an attempt to begin the journey of developing a better method of alleviating poverty and strengthening the global economy in an ethical (in my case Christian) manner.

A sweatshop in Chicago, IL, 1903.
A sweatshop in Chicago, IL, 1903. | Source

The History of Minimum Wage Law

The first country to pass a minimum wage law was New Zealand in 1894. Needless to say, this was due to the anticipation that New Zealanders had of making a lot of money when the Lord of the Rings trilogy was filmed in their back yards. Today, about 90% of nations have some form of minimum wage in place - though at varying amounts and measures of time (some are hourly, others are monthly).

Minimum wage law was initially passed in the United States in 1938. The primary goal of the law actually appeared to be a Northern attempt to maintain control over the South - as the goal was to put the low-technology, low-wage factories of the South out of business. This encouraged the large migration of workers from Southern towns to Detroit where they could work in the auto manufacturing industry where workers could find relatively high paying jobs.

While minimum wage laws in the US have continued to gradually increase, it has been stated by some economists that, for minimum wage to keep up with inflation, minimum wage would need to be about $11.50 per hour now. In other words, if you are working for the same minimum wage that was in place 80 years ago, you should be receiving several dollars more per hour than you are actually getting.

The idea behind minimum wage is to provide everyone with enough money to support themselves with.
The idea behind minimum wage is to provide everyone with enough money to support themselves with. | Source

The Perceived Benefits of Minimum Wage

Clearly, if you have ever worked for minimum wage, you understand the benefits of this law. When I work for $7.50 an hour, I am barely able to pay for the gasoline I need to drive to work and the grocery store. If minimum wage was less, trying to cover the costs of living would be a bigger nightmare.

The traditional belief is that minimum wage helps the little guy. Because big corporations are run by greedy businessmen who only care about making large amounts of money, minimum wage is a noble knight in shining armor that defeats the evil corporate dragon - providing at least a little peace and safety to the helpless. In fact, that's Robin Hoods motto: "Rob the rich to feed the poor"!

We have learned in high school history class about the sweatshops that our ancestors had to work in. These jobs required adults (and sometimes even children) to work 12 hours a day, 6 days a week, for barely enough money to buy food. Meanwhile, those that owned the factories were making ridiculously large amounts of money. This was an embarrassing and shameful time in our history.

Clearly, minimum wage laws are capable of minimizing the effect of unethical behavior by corrupt business professionals.

But is minimum wage actually the best method for alleviating poverty? Does minimum wage protect the marginalized in society?

The True Value of Money

An effective way to look at the value of money is to exchange money for time (after all, we get paid per hour). Let's say that the typical person's time is worth $10/hour. This means that if I hire you for one hour, then I will pay you $10.

Therefore, in a perfect society where everyone is equally strong, equally intelligent, equally creative, and equally productive, everyone earns $10/hour.

1 Hour of Work = $10

This is basic math, so I hope you understand it.

Now let's use this model to determine the cost of making a chair. It takes 1 hour to cut down the tree and bring in the wood, 2 hours to shape the wood into a chair, and 1 hour to find someone who wants to buy the chair. Therefore, how many hours does this chair take to make? 1+2+1=4. This means that, in a perfect society, this chair would sell for $40 (4 hours of work x $10). Then each person would walk away with $10 per hour of work.

When everyone receives $10 an hour, the chair costs a total of $40 to make.
When everyone receives $10 an hour, the chair costs a total of $40 to make. | Source

What Happens When Minimum Wage Increases?

When minimum wage goes up, one of two things takes place:

  1. The cost of products increases to compensate for cost of minimum wage.
  2. The production of the product is taken to a country where minimum wage is lower.

This makes sense when you look at money as time. After all, the chair will take 4 hours to make regardless of whether the employees are being paid $10 an hour or $20 an hour. Therefore, the owner must either sell the chair for more, outsource the work to somewhere where it is cheaper, or go out of business - none of which actually help the economy.

Let's look at these scenarios a little bit closer.

The Cost of the Chair Increases

When minimum wage increases, the cost needed to make the chair suddenly increases equivalently. Think in terms of "time" not "money" - it still requires the same amount of time to make the chair.
When minimum wage increases, the cost needed to make the chair suddenly increases equivalently. Think in terms of "time" not "money" - it still requires the same amount of time to make the chair. | Source

As you can see, the chair now costs $80 to make instead of $40 - even though the amount of time needed to make the chair remains the same.

Let's say that Bob makes the chairs. Bob has needed to buy a new chair for a while, but it costs Bob $40 to purchase a new chair (before the minimum wage increase). Therefore, Bob would have to work 4 hours to earn enough to purchase the chair.

Because Bob wants to buy the chair without working as hard, Bob votes on the bill to higher minimum wage from $10 an hour to $20. He is ecstatic when it passes because now Bob only has to work 2 hours to earn the $40 to purchase the chair. This thrills Bob.

The day after the bill is passed, Bob goes to work only to discover that the chair now costs $80 instead of $40! He is devastated.

And why does the chair cost $80? Because Bob's employer has to pay him $20/hour for the 4 hours of work needed to make the chair - a total of $80.

Of course, Bob is incredibly upset and refuses to buy the chair for $80, so his employer is unable to sell the chair - leading to the next option.

The Building of the Chair is Outsourced

Bob's boss has to sell chairs to survive, and now Bob will not buy the chair because it costs too much. Therefore, Bob's boss has to do something to lower the cost of the chair so that Bob will buy it.

Bob's boss has heard about outsourcing. He discovers that Jack, who lives in the neighboring country, is still willing to build the chair for $10 an hour. Therefore, Bob's boss decides to hire Jack to build the chair for $40 (4 hours of work).

The price to pay Jack to build the chair in another country is half the price of having Bob build the chair in the US.
The price to pay Jack to build the chair in another country is half the price of having Bob build the chair in the US. | Source

This all happens over the weekend and Bob sees that the cost of the chair is $40 again. Excited, he purchases the chair and goes home to sit in it.

Now, when Bob shows up to work the following Monday, he discovers that he no longer has a job. Why? Because Jack, from the neighboring country, is doing Bob's job.

One of two things can happen to Bob at this point. If he is lucky, he can find another job for $20/hour. If this is the case, he is then able to continue buying chairs for just 2 hours of work (even though it requires 4 hours of work for Jack). However, if Bob has bad luck, he will not be able to find a job and will have to receive unemployment.

The Case Against Minimum Wage

After spending some time thinking and studying about the concept of minimum wage and it's affect on jobs being outsourced, I have concluded minimum wage is not the solution for minimizing poverty.

There are three reasons that I believe minimum wage is worthless as an attempt to help those that are struggling:

  1. It has no long-term benefit in saving people money: When looking at costs in terms of "hours" instead of "money" we can see that, even when minimum wage increases, the number of hours needed to make a product remain the same. There is a temporary benefit - the time it takes for products to increase in price - but this is short-term and provides a false sense of wealth.
  2. It causes jobs to be outsourced: The entire reason people want a higher minimum wage is to purchase more. This means that people want things for as cheap as they can purchase them. Therefore, the only way that companies can please customers is through outsourcing the work to another country.
  3. It reduces jobs for the under-educated and under-experienced: Minimum wage laws don't hurt the CEO's of companies, the well educated, or the politicians. Minimum wage laws hurt people with little experience or little education. After all, the jobs that are outsourced are the jobs that would go to someone who is not capable of complex tasks. Yes, $5/hour is low pay, but is it better than no pay at all? Or worse yet, no job at all (remember, most of us work for a sense of purpose, not only for the paycheck).

"BUT WAIT!" You holler at my loudly. "Won't big corporations taken advantage of not having a minimum wage law?"

My reply: YES.

The Problem Behind Minimum Wage

Now you may be really confused. If I believe that corporations will take advantage of workers if there is no minimum wage law, why do I believe it should be removed?

Well, now that you understand that money is simply a holder of time ($10=1 hour of work), this should be an easy thing to understand:

Companies succeed only when they provide the customer with what he/she wants.

In other words, the problem is not minimum wage, the problem is our desire to consume more than we produce (look at the chair story again).

See, you and I each want to be able to buy, eat, drink, burn, and destroy more than we make. In order for this to be able to happen, someone else, somewhere, has to make all of this extra stuff for us to consume.

Notice the comparison below:

Bob can do the exact same job as Jack but make enough money to buy twice as many chairs as Jack. Is this fair?
Bob can do the exact same job as Jack but make enough money to buy twice as many chairs as Jack. Is this fair? | Source

Notice how the chair costs the same amount of money, but Bob only has to work 2 hours to be able to purchase it, while Jack has to work 4 hours. This means that Bob is able to buy 2 chairs for every 1 chair that Jack is able to buy.

In other words, Bob can own twice as much of everything as Jack is able to own. If Jack's house is 1000 sq. ft., Bob's is 2000. If Jack owns one car, Bob owns two.

This is exactly what happens in the world today. Bob is an America or European, Jack can be Mexican, Chinese, Indian, African, etc.

For Christians:

God calls on us to love our neighbor as ourselves. And when asked, "Who is my neighbor?" Jesus shared a parable that made it very clear that everyone is our neighbor.

With this in mind, can we continue to live in luxury at the EXPENSE of others? I am not asking if it is ethical for you to have a lot if others have little - I am asking if it is ethical for you to have a lot because others are working for little.

Would you feel comfortable paying someone $1/day to make your clothing? What would Jesus think of that? What DOES Jesus think of that?

The Wal-Mart Dilemma

In all reality, everyone who speaks out against minimum wage falls into one of two camps:

  1. Those who are willing to live with fewer possessions and NEVER shop at Wal-Mart, Apple, or other corporations that employee oversees laborers who work for under minimum wage.
  2. Sick, egocentric individuals who believe that Americans are superior to everyone else.

The only reason corporations are able to succeed when they pay employees so little is because consumers want to pay as little as possible. Americans enjoy the convenience, acceptance and power that come with owning as much stuff as we can.

Did you know that a laptop which costs about $1000 now, would cost closer to $10,000 if it was produced in the United States? That means that the people making your iPad, smartphone, and computer are receiving, at the most, 1/10 of minimum wage here in America. Of course, some companies are starting to produce here in the US, but guess what, they are hiring robots, not people. So bad news - your "Made in America" computer is still not producing any additional American jobs.

This should shock and disgust you. How can we complain about making $7.50 an hour when we know that someone else is making $.75 an hour for the same job (in many parts of the world the pay is closer to $.10-$.20 an hour).

We now have a problem: it is unethical for us to shop at Wal-Mart and support minimum wage because Wal-Mart is selling items made by people for $.10-$.20 an hour. Unless you believe that Americans deserve to own more stuff than people in other parts of the world, minimum wage laws in America are unethical.

It is said that, if slavery had never been outlawed in America, we would not have slaves today. Why? Because the cost of owning, feeding, and providing for a slave would be more expensive than paying someone in China to make everything for you.

Is this ethical?

What Would Happen if Minimum Wage Laws Were Abolished?

The purpose of minimum wage laws are do regulate ethics. Sadly, there are people who will always attempt to take advantage of others without. It's a part of the world we live in. The question is, can government regulations create ethics, or can it only require the unethical to get more creative?

If minimum wage law was removed in the United States, here are the positive things that would happen:

  1. Manufacturing jobs would return to America: Although the pay would probably be $3-5 an hour, jobs would appear back in America - jobs for people who do not have the capabilities or education for more complex occupations.
  2. Products would become cheaper: Because McDonald's would be able to pay employees $4 an hour instead of $8, the cost of a Big Mac would be less for everyone.
  3. Youth and those on welfare could gain work experience: I live in an urban community and people living on welfare are constantly knocking on my door for work. Although they would like to work, no company will hire them because the company is not confident their work value is $7.50/hour. If a company could hire them for $4, to see how well they work, it would be much easier for them to find jobs.
  4. People would become more entrepreneurial: Some people do not like the idea of working for $2 an hour. These people would then have the opportunity to create businesses of their own - and they would have the opportunity to hire employees.

The negative side of minimum wage would be big corporations charging next to nothing for workers. This would, however, require local people to take action. If McDonald's paid workers $1 an hour, and I believed this to be unethical, then I would not eat at McDonald's. Once enough people did that, McDonald's would increase minimum wage to an acceptable amount.

The problem is that the fear we have of big corporations taking advantage of people is already a reality. It's just that this happens so far away from us that we never take the time to think about what is going on.

Ultimately, minimum wage is not only hurting our own economy by sending jobs to other countries, but it is requiring people in other countries to work in environments worse than we could even imagine. Additionally, when the work conditions are in another country as opposed to here, we don't cry out against it - suggesting that we support the slave labor of companies like Wal-Mart.

The daily GDP per person for the entire world (the average amount everyone produces each day), is about $10 per person. That means that $10 worth of products are created every day. Therefore, this means that every day I live on more than $10, someone else, somewhere in the world, is required to live on less.

If you consume $40 worth of products/food/fuel every day, then 4 other people are having to share $10 a day.

Do you believe that minimum wage is a good idea?

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How to Solve the Problem: Remember the Value of Money

Neither Democrat or Republican will be able to solve this problem. It cannot be solved by Occupy Wall-Street. It cannot even be solved by the big corporations themselves. The only solution can come from me and you.

Remember our discussion about money earlier? Money is simply a way to measure time.

If I am paid $10 an hour, then the product will cost $10 more because of my labor. If I am paid $100 an hour, then the product will cost $100 more because of my labor.

In other words, it doesn't matter how much money I get paid in an hour. What matters is the amount that I produce.

None of us like the idea of having to work for everything we get. After all, the American image is one of lavish consumption - living in a huge house, owning multiple cars, and eating extravagant meals. American value is based on the amount that we consume - this is bad news for both non-Americans and Americans.

Think about the chair again. If I want to work 2 hours to buy a chair that takes 4 hours to make, then I am essentially saying that my time is worth double that of the other person.

Of course, some jobs require greater skill, knowledge, and motivation - people who have these abilities have every right to be rewarded for them. It is when I expect to be paid more than someone else doing the exact same job as me that things become unethical.

Minimum wage laws have created an unfair world where poverty runs rampant in developing countries while Americans sit comfortably in our well-heated homes, talk on our smartphones, and live off of government welfare when our jobs get outsourced.

As we are noticing more and more, this is becoming a big problem. Our nation is losing it's prestige and strength in the global marketplace.

Politicians have many different ways of trying to resolve this. Sadly, none of them will work as long as Americans desire to eat, buy, break, and throw away more than they could ever create. This lifestyle is never maintainable. We have no choice but to learn to live on less.

You have now read my thoughts and ideas on this issue. I understand that it is a big problem with no easy solution. Our world has changed a lot in the last 50 years and we must start thinking seriously about how we need to adapt to this new environment.

If you have thoughts, opinions, or ideas on this topic, I invite you to share in the comments below. The purpose of this article is not to provide a solution, but to add to the conversation in the hope of finding a solution.

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    • Robert Erich profile image
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      Robert Erich 5 years ago from California

      I agree with you completely here. It is true that the service industry focus is causing much of the problem. And it is true that more manufacturing would assist with that (or another alternative is providing services to others - such as teaching English abroad). Conclusively, I believe that the world will be changing significantly over the next several years. It will be interesting to see how things turn out!

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      "Talented and educated people in the US have far less of a challenge finding work." Very true, indeed.

      So what is to be learned of this? Invest into education? Yes.

      "After all, once a machine is used instead of humans, it eliminates the need for 100's of jobs." Quite right, but don´t overestimate mechanization. In the late 19th century about 40 to 50% of working population were employed in agriculture, growing food. How much is it today? 2%, not quite the 1 over 100 ratio but certainly very significant. Today we have combines, food factories, technological progress. You don´t want to reverse this process, do you?

      I share your uneasiness about productivity gains, about letting a machine do what 50 workers used to do. Major economic crisises evolved from this. The great depression in the late 20ties resulted from productivity gains after world war I (Henry Ford, automobile manufacturing, assembly lines, use of electricity, communication telephone, radio..) Less people could produce more, but excess workforce was set free and eventually triggered the great depression. I think it was not Roosevelts "New Deal" that helped out of this. I believe it were the extra efforts of WWII and rebuilding the world after the war that channelled productivity gains to economic growth.

      A last sentence about creating economic wealth and how to distribute it: Wealth is only created by something, that can be produced, preserved, stored and traded, something like potatoes or your coffee machine if you will. You cannot create wealth, prosperity by doing service, but doing something, which is not storable. Even if i like pizza, i can´t eat a dozen of my favourite pizzas in advance, only because i know i will eat that much within the next 2 months. I can´t fly in advance 3 times to Washington DC, even if know i will have to so within the coming 6 months. That is service, void at the point of sale. Service is good for distributing wealth, not for creating it. And here is where the fish starts to smell. The US has too little producing industry to produce enough real wealth for its population. This is true even if we forget about uneven income distribution. So with too little wealth to distribute, isn´t any discussion on low wage, minimum wage jobs pointless? The US already has too many Pizza bakeries, too many service related jobs, which compete for participating in the real prosperity distribution. Doesn´t matter if you pay 10 dollars for 1 guy doing the dish washing or 5 dollars each for 2 guys doing the same job. Doesn´t change a thing in economic situation.

    • Robert Erich profile image
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      Robert Erich 5 years ago from California

      I like what you are saying, but I still do not believe that it provides jobs for uneducated people (which are the one's working minimum wage jobs). I currently live in a city of 10,000 but has an "inner-city" personality to it. Of those 10,000 people, only 60% have a high school diploma, and only 4% have a college degree.

      Let's say that 50% of the population have service based jobs. How do you employee 5,000 people (only half of which have a high school diploma), in a job that pays more than minimum wage? If we bring in an auto manufacturing plant (which would be a huge challenge in and of itself), how many cars would we have to produce if the process is automated and we have people overseeing robots? After all, once a machine is used instead of humans, it eliminates the need for hundreds of jobs. Mind you, I'm not saying machines are bad, but they are not the solution for solving unemployment. If everything becomes automated, we'll have a huge need for engineers, but a very low need for unskilled laborers. How do the unskilled laborers make a living? Or do we just leave them to sit around and twindle their thumbs? (Mind you, this leads to incredibly high crime rates - as in my city of Benton Harbor, MI).

      I believe that minimum wage law requires one of two things - either outsourcing to a developing country, or automating (as you have mentioned) of low-skill jobs. These are the people in America that are struggling to find jobs. Talented and educated people in the US have far less of a challenge finding work.

      My scenario and article are discussing how to resolve the issue of providing unskilled labor jobs for people with a lot of time, but no education or skills. These are the jobs that have been removed due to minimum wage.

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      Ok, Robert, lets get down to basics.

      First of all the whole thing is not about direct financial impact of minimum wage on the economy. Just follow this little math: There are some 160 Million American job keepers or job seekers. I would assume that about 25% of them (40 Million people) is doing work at minimum wage. It is a good bet that work is part time, so i would assume in average some 800 hours per year that each of the 40 Million low wage people work. Multiply and you get: 36 Billion work hours. Then how much is a 1 USD increase in hourly wages? 36 Billion USD/year. The 36 Billion is almost nothing compared to the GDP of 15 Trillion USD (some 0,3 %). Either way, add or take 1 USD of poor minimum wage hourly pay will not disrupt economy. It takes only 10 to 15 days of public debt accumulation to get to said 36 Billion bucks.

      Secondly, try to follow this chain of rational:

      Increased wages -- leads to more automation -- less people employed in low wage jobs, but more people in higher qualification jobs to create automation -- less vulnerability to competition with outsourced production in low cost countries.

      You think this is just academic rant? It is not. I recently talked to a German businessman who is supplier for the automobile industry. He was asked 10 years ago to outsource production to low cost countries. He did not. Instead he invested heavily into automation. This improved his competitive edge, he sold more and could hire more people and expanded business. Today he exports to low cost countries, because his production is cheaper in high wage Germany than in low wage Vietnam or Ukraine.

      The kick in was to start from a high wage level, the incentive to go for automation was very obvious.

      I could continue with personal experience from my professional life, but i think that you understand my point.

    • Robert Erich profile image
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      Robert Erich 5 years ago from California

      Very good point Chris. It is true - machinery is taking over many jobs as well - requiring only a monitor or supervisor. This, however, leads to three problems: 1) robots are taking away the jobs (only increasing our current problem of low employment rates - and taking away jobs from those who are unable to do anything besides manufacturing work because of a lack of education or ability). 2) Rob is only monitoring what someone else has created (say Bill). Therefore, Bob's work must support Bill as well. Not only that, but while Bill is essential to chair making because he has discovered a new concept to produce (the robot), anyone can monitor the robots - suggesting Rob does not need to get paid that much because someone else will take the job. Additionally, Bill still has to pay the costs of the robots - so Rob's work must compensate that.

      My point 3 deals with your last paragraph. I believe the contrary is true - the elimination of minimum wage will increase productivity. After all, if I can get paid $10/hour, I am not going to make a lot of money, but I will make enough to survive. However, if minimum wage dropped to $2/hour, I would quickly find ways to make more money on my own. I would become creative because just a little creativity would increase my paycheck greatly.

      Ultimately, you are right, robots and computers will continue to do more. And that is great for creative, motivated people. However, for those that are undereducated, incapable of thinking deeply, or just plain lazy, robots will eliminate a need for them. Then who pays their bills? If you say the entrepreneurial, will you not be decreasing the motivation to work hard an be creative?

      Great points, I think we both need to ponder the solution more, however.

    • CHRIS57 profile image

      CHRIS57 5 years ago from Northern Germany

      I read through your hub and i like your chair maker example. However i believe one aspect is missing in your simplified example: The impact of productivity. Why not introduce Rob into the comparison. Rob is someone who is only in little chair factory to supervise a fully automated production of chair. Everything is done by robots. How much do you want to pay him? That certainly depends on the number of chairs produced in the same time period as Bob and Jack use to make a chair.

      If you introduce enough factory automation, you won´t have to worry about outsourcing or minimum wage jobs. From this perspective the elimination of minimum wage is counterproductive, it eliminates the incentive to increase productivity and that in turn hurts the whole economy.

    • HoneyBB profile image

      Helen Laxner 5 years ago from Illinois

      Very interesting hub! However, I'll take the $20.00 an hour minimum wage and sit on the floor! That's gotta be better than sitting on the ground outside the door. Voted +++

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Great input! It is a privileged to have such a well read and educated person comment on this article. I will have to examine the video and look into several of the resources that you have mentioned here. I will also keep an eye on your profile for poetry about it and other articles you may write.

    • tsmog profile image

      Tim Mitchell 5 years ago from Escondido, CA

      Very well written proposing great questions to ponder. Thank you for offering a view to consider. Reminds me of R.W. Grants poem and eventual book The Incredible Bread Machine: A Study of Capitalism, Freedom, and the State published in 1966. We watched that film back in High School. The 1975 Release can be found at this YouTube link http://youtu.be/ycGRERrGsMo as a contrast / compare to the discussion of business ethics and minimum wage.

      Controversial most assuredly, yet thorough. Propaganda for sure. Toss in other books like the 1972 publication None Dare Call It Conspiracy by Gary Allen, who was a Standford student, and another book Bellwether by Connie Willis on fads, sociology, and statistics and a novel is being written as fast as the word processor can be tapped.

      Adding to your argument I would supplement with a healthy dose of Francis A Schaeffer fifth volume - A Christian View of the West. What an eye opener that one is. That causes one to ponder the chair theory regarding the cinema and theater costs today. How much is popcorn today anyway. I haven't been to the theater in years.

      I go with the trickle down theory having basic cable. Sooner or later the good-uns will be broadcast on a local network affiliate station. I could get a movie channel and see it within a year, maybe, as it is reused and recycled at that level.

      I apologized for not being coherent since I just woke up from sleep in the mid morning. And, what did I do, yup, check the emails and popped into Hubpages while CNN has something adding background sounds.

      I've got a hankering to write a poem on somethun . . .

      Again, thank you Robert for offering thoughts to ponder, the question becomes - How can I capitalize on that and create a profit?

      Tim

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thank you for your input xstatic. It does certainly help out one's personal checkbook to have minimum wage and unions. I suppose what I am still questioning is if minimum wage has the ability to hurt Americans because they will lose their jobs to other countries where there are much lower minimum wages.

    • xstatic profile image

      Jim Higgins 5 years ago from Eugene, Oregon

      Food for thought alright. Oregon's minimum wage will go to $8.95 in 2013. Despite your well-reasoned article, I believe in minimum wage laws, because I believe employers will pay as little as possible for as much work as they can get a person to do. In Texas, long ago, I worked in a chain grocery store for 40 cents an hour. got promoted from boxboy to checker at 70 cents an hour. When we moved to Calif, where there were unions, I got a job checking for $1.90 and hour, while still in high school. I don't see fair wages being paid without some coercion by unions or government regulations like minimum wage laws.

    • Robert Erich profile image
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      Robert Erich 5 years ago from California

      Thank you rfmoran. It's a difficult challenge - figuring out how to adapt to the new world. But it is certainly an important area to ponder.

    • rfmoran profile image

      Russ Moran 5 years ago from Long Island, New York

      Very thorough analysis. You did your homework.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Very insightful aethelthryth. If you prove that you're worth it, then people will pay more. And that's fantastic that you have your kids working a little for neighbors. I remember getting paid $.25-$.50 for doing jobs around town or selling home made cookies. Really, just gaining work experience and an understanding of the value of money while young is the most valuable aspect.

    • aethelthryth profile image

      aethelthryth 5 years ago from American Southwest

      I am liking working on freelance sites like oDesk, because it forces me to prove that my writing work is actually 40 times better or faster than someone in the Philippines could do the same thing. Because if it isn't, it is very easy for someone to hire someone courteous, competent, and often even a good English speaker, from the other side of the world.

      I hear others complaining "I can't get a job on there because I have to compete with these people working for $1/hour." But I think that is just the point - if you can't compete, how can you say you are really providing more value than they are?

      And I don't think $1/hr is a bad wage; it all depends, as you point out, what you can buy with $1. I know that in Turkey some time ago you could get a restaurant meal for $2. My children "helped" rake leaves for the neighbors for pay the other day, and I told the neighbors to consider the pay scale to start at $0.00/hr and end at $0.50/hr. Because at their most helpful, $0.50/hr is about the value they provide at the moment.

      If I knew babysitters who would consider their value to me rather than base it on minimum wage, we would employ babysitters much more often.