Should the US raise the federal minimum wage?

[DontSayBanana]

I feel like we've gotten into a semantic debate. Marty said tipping (by customers) subsidized restaurants. You replied that "It's only a subsidy if the restaurant receives additional money on top of what it gets from its customers." My point was that a tip, like a price increase, was beneficial to the restaurant whether they are technically subsidies or not.

Please explain what you mean by beneficial to the restaurant.  I had thought you meant the owner came out ahead.

And the owner does, namely in payroll taxes.  Especially with unreported direct tipping, those employers are significantly reducing their tax burden. 

Even with a theoretical business with reported tips distributed by the house from a tip pool and taxed completely as normal payroll, the business is still benefiting in that the business needs a much lower amount of cash on hand for payroll than a competing business that disallows tipping and pays its employees the same, on average, in the form of direct wages.

TL;DR: businesses with tips need less cash on hand and may have a lower tax burden than their wage competitors.

[Admiral Yi]

And the owner does, namely in payroll taxes.  Especially with unreported direct tipping, those employers are significantly reducing their tax burden. 

Even with a theoretical business with reported tips distributed by the house from a tip pool and taxed completely as normal payroll, the business is still benefiting in that the business needs a much lower amount of cash on hand for payroll than a competing business that disallows tipping and pays its employees the same, on average, in the form of direct wages.

TL;DR: businesses with tips need less cash on hand and may have a lower tax burden than their wage competitors.

The taxes point is a good one; the cash one not so much, since the owner is getting increased cash flow from the increased overall bill.  Plus he's getting the interest on the payroll that's he's holding for a week or two.

[Martinus]

I am not sure that "it is easier to evade taxes that way" is such a great selling point for a business model, unless you are a crook...

[Berkut]

Tipping is dumb for a variety of reasons.

That is subsidizes the business is not one of them though.

[grumbler]

Not quite.  I don't know the precise number but I do know it happens enough for the employment standards branch here to have launched an investigation to try to crack down on the practice.  So I think I will stick to my much more accurate response of all too often.

The employment standards branch in Vancouver has (secretly) launched an investigation to try to crack down on the practice of house taking a percentage of the tip pool in the US?  I'm calling bullshit.  If they are launching an investigation of Canadian houses, that's not relevant to this discussion.  I'll stick with an assertion that I'm sure that you have no idea but are too stubborn to admit it.

the fact of the matter is that it is against the Federal tax law for businesses to do this in the US.

The basic rule of tips is that they belong to employees, not the employer. Employees can't be required to give their tips or any part of them to the company, except as part of a valid tip pooling arrangement (see "Tip Pooling," below) -- and even then, the tip pool must be divided only among certain other employees. The employer can't be part of the pool.

the only exception is that employers can make employees pay the service fee on processing the fee portion of a credit card charge. http://www.nolo.com/legal-encyclopedia/tip-pooling-credits-service-employees-29804.html  maybe Vancouver should just adopt the relevant US law, and avoid having to investigate under employment standards rather than tax law.

[Sheilbh]

$12.50

Forward, Not Back.

[The Brain]

But... but... opposites?

[DontSayBanana]

Listened to an interesting (and by interesting, I mean terrifyingly detached from reality) interview with Diana Furchtgott-Roth on BBC World Service talking about how boosting the minimum wage is immoral as giving low-wage workers more than they're worth (she did use the word immoral- she also dropped the word "communism" in talking about the issue).

What I realized is that I'm sick of both sides of the argument.  The ultra-liberals fighting for a $15 minimum wage seem to be too naive to consider that there would be nothing stopping businesses from simply inflating prices to match- it's why I'm actually against a drastic hike in the minimum wage: without the willpower to couple it with price controls, it would basically just amount to artificial inflation.  On the other hand, the ultra-conservatives seem to have a bad case of mistaken priorities.

I'm starting to come to the viewpoint that the conservative argument is based on a fundamentally different idea of the role of government.  To my mind, the priorities of the government should be first to guarantee a safe and consist minimum standard of living for its citizens- that's not communism, that's just good government.  Once it's accomplished that, then it can turn its focus towards revenue and market-coddling.  Which is where I really break with the conservatives, and why they're making me angrier than the liberals at this point- the argument is steadily showing that the current wage conditions guarantee a minimum standard of living which is neither safe nor consistent- meanwhile, conservatives like Ms. Furchtgott-Roth are refusing to acknowledge the government's obligation to its citizens first, while calling people "immoral" for having the gall to insist they be prioritized over policies to improve market cash flow.

So that's my rant.

TL;DR: Conservatives are pissing me off by conflating "economy" and "society" and holding the stupid chimera up as some slam-dunk argument against raising the minimum wage.

[katmai]

mods, we have no mods here!

[jimmy olsen]

Do 32% of the population here really favor abolishing the minimum wage?

If so, state your case.

[Eddie Teach]

If so, state your case.

I think it boils down to "Got mine "

[Admiral Yi]

Do 32% of the population here really favor abolishing the minimum wage?

If so, state your case.

Maximizes employment.

[grumbler]

Do 32% of the population here really favor abolishing the minimum wage?

If so, state your case.

Maximizes employment.

Also maximizes the available choices for the worker.

[Ideologue]

The minwage sets a wage floor from which normal wages are negotiated.  If it were abolished, almost all of us here would make less.  Most people on Languish do not derive the majority of their income from investment income, and even investment income could conceivably fall in aggregate as wages and then demand collapsed.  Tax receipts would likely also fall, leading to the weaker government which is conservatives' ultimate goal.

Then you would have the freedom to live in a Third World version of America, which would be great.

[Admiral Yi]

How does your theory account for countries that have no minimum wage, such as Germany?

I prefer the standard economics explanation of labor markets, that employers will hire workers up to the point that their marginal product equals their wages.

This is another argument in favor of a state by state approach: if the residents of certain states think labor markets work differently than I describe, they should be free to put their beliefs to the test.