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Old 19th February 2013, 07:50 PM   #281
fdbrian
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Originally Posted by OnlyTellsTruths View Post
Does anyone have a chart of the price of 1 gallon of gasoline to minimum wage ratio over the course of time?
not a chart but in 1986, the minimum wage was $3.35 and I remember buying gas for 75 cents a gallon or less a lot.
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Old 20th February 2013, 03:50 PM   #282
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Originally Posted by WildCat View Post
Since when are employee needs the basis for employee pay? Does the financial analyst at the bank "need" more than the teller?
OK, I definitely see your point there. Demands are important, not needs. But surely needs are an important factor of demands, at least at the lower end of the scale.
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Old 20th February 2013, 08:06 PM   #283
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Originally Posted by TubbaBlubba View Post
I agree that it doesn't affect demand of labour. But it affects supply of labour. Suddenly there will be workers who are willing to work for less than whatever was the lowest rate labour was supplied at before because of the government subsidies (who may, for instance, be currently unemployed).
I'm still perplexed at why you would think this is as it assumes that labor is only concerned with achieving $x rather than wanting more than $x.

People don't accept pay cuts because they inherited money, won at blackjack or came into it in some other manner. And they don't accept pay cuts because of a subsidy, tax rebate etc either.

Aside from that, earned income credits have empirically been successful at lifting low income earners out of poverty, not just creating a substitution of who pays their wages.

Although I would advocate going farther with it and not tie it to work, rather replace existing redundant and ludicrously wasteful welfare schemes with a streamlined negative tax that can accomplish the same goals at much lower costs, it would just need to be phased out in a way that always encourages work. Earned income credits and welfare reforms that encourage work are smaller versions of the same idea,
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Old 21st February 2013, 09:30 AM   #284
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Originally Posted by respect View Post
I'm still perplexed at why you would think this is as it assumes that labor is only concerned with achieving $x rather than wanting more than $x.

People don't accept pay cuts because they inherited money, won at blackjack or came into it in some other manner. And they don't accept pay cuts because of a subsidy, tax rebate etc either.
Hmm, I think I'm starting to get it. The marginal value of each hour worked will actually decrease up to a point because you effectively only earn 50 cents on the dollar. So if anything the labour force might demand HIGHER salaries, because they get subsidized on the dollars they don't earn.
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Old 21st February 2013, 09:48 AM   #285
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Originally Posted by TubbaBlubba View Post
Hmm, I think I'm starting to get it. The marginal value of each hour worked will actually decrease up to a point because you effectively only earn 50 cents on the dollar. So if anything the labour force might demand HIGHER salaries, because they get subsidized on the dollars they don't earn.
I read that 5 times, and still can't make any sense out of it.
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Old 21st February 2013, 11:00 AM   #286
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Originally Posted by WildCat View Post
I read that 5 times, and still can't make any sense out of it.
If earning a dollar gives you only 50 cents more due to the government subsidy, then you'll want more dollars for the same amount of work.
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Old 21st February 2013, 11:12 AM   #287
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Originally Posted by TubbaBlubba View Post
If earning a dollar gives you only 50 cents more due to the government subsidy, then you'll want more dollars for the same amount of work.
Sorry, still not making any sense.

What happened to the other 50 cents, and what is this subsidy you're speaking about?
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Old 21st February 2013, 11:21 AM   #288
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Originally Posted by WildCat View Post
Sorry, still not making any sense.

What happened to the other 50 cents, and what is this subsidy you're speaking about?
If you earn 1 dollar more, the government will pay you 50 cents less, assuming a 50% negative income tax subsidy rate and that you're below the breakpoint.
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Old 21st February 2013, 11:24 AM   #289
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Originally Posted by TubbaBlubba View Post
If you earn 1 dollar more, the government will pay you 50 cents less, assuming a 50% negative income tax subsidy rate and that you're below the breakpoint.
I have no idea wat you're talking about. Is this a Swedish thing?
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Old 21st February 2013, 11:25 AM   #290
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Originally Posted by WildCat View Post
I have no idea wat you're talking about. Is this a Swedish thing?
We're discussing negative taxes as an alternative to welfare/minimum wage.
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Old 21st February 2013, 12:29 PM   #291
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Originally Posted by TubbaBlubba View Post
We're discussing negative taxes as an alternative to welfare/minimum wage.
Oh, I see. You appear to think that the value of any job must be at minimum equal to a living wage (however you are defining that)? It would be nice if that were true, but ultimately the value of a job is the value that employee provides to the company.

You still seem to be under the impression that employee "needs" determines the value of their labor?
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Old 21st February 2013, 12:47 PM   #292
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Originally Posted by WildCat View Post
Oh, I see. You appear to think that the value of any job must be at minimum equal to a living wage (however you are defining that)? It would be nice if that were true, but ultimately the value of a job is the value that employee provides to the company.

You still seem to be under the impression that employee "needs" determines the value of their labor?
That's the side of demand for labour, but there's the supply of labour side as well. Ultimately they must meet, and exactly where, and the resulting value created, result profits etc depends on many things in the market.

What I'm trying to understand is exactly how a government subsidy would affect the supply of labour. Initially I thought that it would push down wages and increase the supply - but this is clearly absurd as the subsidy will not cause employees to place less value on their work hours.

However, up to the breaking point where the taxes stop taking effect, every extra marginal dollar earned will only bring 50 cents worth of value to the employee, as the government will subsidize 50 cents less. This should have some, however small, effect causing the labour force to actually value their labour hours higher. This of course is the case with any welfare.
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Old 21st February 2013, 01:14 PM   #293
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Originally Posted by TubbaBlubba View Post
That's the side of demand for labour, but there's the supply of labour side as well. Ultimately they must meet, and exactly where, and the resulting value created, result profits etc depends on many things in the market.

What I'm trying to understand is exactly how a government subsidy would affect the supply of labour. Initially I thought that it would push down wages and increase the supply - but this is clearly absurd as the subsidy will not cause employees to place less value on their work hours.

However, up to the breaking point where the taxes stop taking effect, every extra marginal dollar earned will only bring 50 cents worth of value to the employee, as the government will subsidize 50 cents less. This should have some, however small, effect causing the labour force to actually value their labour hours higher. This of course is the case with any welfare.
Where are you getting fifty percent from? Can I assume you Googled up video of Milton Friedman explaining the idea? Fifty percent doesn't have to be the number, it is just very useful for illustrative purposes as it makes the math extremely easy. IIRC, the US Earned Income Tax Credit is phased out at 10-16% (it has been a long time since I looked at that, the exact numbers may be slightly different) depending on various factors. And at this level of income most people will see a significant incentive to earn more.
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Old 21st February 2013, 01:21 PM   #294
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Originally Posted by WildCat View Post
I have no idea wat you're talking about. Is this a Swedish thing?
He is talking about the phase out of schemes like the American Earned Income Tax Credit. Empirically they have been much more successful at reducing poverty than market distorting schemes like minimum wage laws that have a tendency to create poor to poor wealth transfers.

Last edited by respect; 21st February 2013 at 01:22 PM.
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Old 21st February 2013, 01:21 PM   #295
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Originally Posted by respect View Post
Where are you getting fifty percent from? Can I assume you Googled up video of Milton Friedman explaining the idea? Fifty percent doesn't have to be the number, it is just very useful for illustrative purposes as it makes the math extremely easy. IIRC, the US Earned Income Tax Credit is phased out at 10-16% (it has been a long time since I looked at that, the exact numbers may be slightly different) depending on various factors. And at this level of income most people will see a significant incentive to earn more.
Yeah, it was just an example I got off a webpage explaining the idea.

And, as I look closer at it, there really doesn't seem to be any problem with it that doesn't already exist with standard welfare.
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Old 21st February 2013, 01:24 PM   #296
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Originally Posted by TubbaBlubba View Post
Yeah, it was just an example I got off a webpage explaining the idea.

And, as I look closer at it, there really doesn't seem to be any problem with it that doesn't already exist with standard welfare.
But it cuts the cost significantly of administering welfare. If a country actually adopted it they could pay more welfare at less taxpayer expense if they chose to do so.
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Old 21st February 2013, 01:39 PM   #297
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Originally Posted by respect View Post
But it cuts the cost significantly of administering welfare. If a country actually adopted it they could pay more welfare at less taxpayer expense if they chose to do so.
Works for me. But it seems to be a recurring problem that the "best" kinds of taxes tend to be politically infeasible to implement.
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Old 23rd February 2013, 10:25 PM   #298
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Has the President posted a justification for setting the national minimum wage at $9 hr? Anyone who proposes something that will interfere with the market bears the burden of proof of showing that the interference will actually work.
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Old 23rd February 2013, 11:22 PM   #299
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Originally Posted by fdbrian View Post
Originally Posted by OnlyTellsTruths View Post
Does anyone have a chart of the price of 1 gallon of gasoline to minimum wage ratio over the course of time?
not a chart but in 1986, the minimum wage was $3.35 and I remember buying gas for 75 cents a gallon or less a lot.

I assume no one else could find a chart either (I looked too).

Has the minimum wage to a gallon of gasoline ratio every been this high? I don't remember a gallon of gasoline ever being more than half of the minimum wage.

Except perhaps during that crisis in the 70s...

Right now 1 gallon of gasoline is $4 and minimum wage is $7.25.
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Old 24th February 2013, 12:12 AM   #300
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Originally Posted by respect View Post
Although I would advocate going farther with it and not tie it to work, rather replace existing redundant and ludicrously wasteful welfare schemes with a streamlined negative tax that can accomplish the same goals at much lower costs...
Now we are on the same wave length.

Originally Posted by respect View Post
...it would just need to be phased out in a way that always encourages work. Earned income credits and welfare reforms that encourage work are smaller versions of the same idea,
I guess not
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Old 24th February 2013, 01:11 PM   #301
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The minimum wage shouldn't be raised because real estate and rents haven't increased.
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Old 24th February 2013, 02:23 PM   #302
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Originally Posted by Astrodude View Post
The minimum wage shouldn't be raised because real estate and rents haven't increased.
You believe this means that the cost of living hasn't increased as well?
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Old 1st March 2013, 11:29 AM   #303
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Originally Posted by psionl0 View Post
Now we are on the same wave length.


I guess not
I'm a bit confused by this, you would be for streamlining welfare but against having the system encourage working?
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