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Originally Posted by Zarley
This is wrong. Minimum wage growth between 1965 (the year in which it was implemented) and 2014, expressed as an annual compound rate, was 4.85%. Inflation was 4.14% over the same period, also expressed as an annual compound rate.
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By all means if you don’t believe that the minimum wage in 2014 would have been higher if it would have been increased annually with the rate of inflation since its inception go ahead and do the actual calculations for each year.
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Economically, a minimum wage should be set at the market wage for an entry level, unskilled job. As a policy, a minimum wage is designed to protect vulnerable employees from exploitation. It's not an effective means of raising living standards for working people because of the significant number of distortionary impacts on the economy produced by setting a minimum wage policy above the market minimum wage.
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If it protects workers from exploitation do you not consider that to effectively raise the living standards for working people? At what point do consider the wage an employer pays to be no longer exploiting an employee?
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I think you may have had trouble understanding the example. I was only illustrating that, in this specific case, the minimum wage increase has produced the opposite of its intended effect: an absolute decrease in aggregate earnings at this firm.
Yes I misinterpreted your post as speaking in general terms as opposed to only in relation to your specific example.
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Because a manager needs to earn more than the staff they are managing, otherwise there is no incentive to take on the additional responsibility.
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I agree to some extent however I think you’ll agree that a guaranteed income vs relying on tips would be considered as a strong incentive. Similar to how in some more labour intensive industries managers may earn less overall than their employees who work a lot of overtime but would make more per hour that they actually work.
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If you look at the annual numbers, which provide a more stabilized picture of employment, you'll note a net decrease of 1,100 jobs in those two sectors. At best, growth in these types of positions across the province has been flat.
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If it is flat or there is a minor decrease in the short term but the remaining employees have seen their earnings increase, as long as the economy can continue to grow as a result of the subsequent boost in consumer spending by not only minimum wage earners but also the employees who received an increase in pay to remain above minimum wage minimum wage earners should come out ahead in the long run.
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No, not at all. Reducing staffing is simply one option of dealing with an increase in the cost of labour. Other options include absorbing the increase if they have the margin to do so, cutting costs elsewhere, or raising prices to consumers.
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Thanks for clarifying your position. As for the options available for dealing with the increases, I’d be interested to know whether you think the food service industry would be better able to handle paying their staff higher wages if they changed their business model from one that has their staff rely on tips to one where the prices on the menu are higher but tipping isn’t expected.
Not sure where you're getting this from. Firms pay employees a wage based on a number of factors: the skill level of their employees, the number of people in the market holding that skill, and the demand for that particular skill.
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Do you believe greed ever plays a factor?