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WWL>Topics>>12-5 9:10am Tommy, raise the minimum wage?

12-5 9:10am Tommy, raise the minimum wage?

Dec 5, 2013|

Tommy talks to Dr. Jose Bautista, a Professor of Economics at Xavier, about the effects of raising the minimum wage

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Automatically Generated Transcript (may not be 100% accurate)

Doctor Jose Batiste joins us right now our friend -- Economics profession division of business professor rather division of business at -- good morning dot com you -- You're playing -- and well yes I've ever -- that -- would be would be. Well thanks to taking the time. I -- you know where we start on this minimum wage. I think it was doing this are historically how did we wind up even handing a minimum wage and come -- -- talk about where it is right now when would people looking for. Well if you think about you know what what the minimum wages is. Is is. -- to be today it is a method to get people out of poverty you go back to when it was originally implemented by area. By president Roosevelt came in in the 1930s. And it was in 1936 the first minimum wage was 25 cents an hour. Now even in 1936. Money 25 cents an -- really -- -- bring anyway and of out of poverty that receive huge amount of property obviously were some rumors you know the -- it was -- the depression at that time. But the technically think that the minimum wage is what economists call -- lower rate. It's a price that's that just like any floor above where. It would naturally be. If the government didn't intervene. So. You know the government's sets you know what there's there's sitting today minimum wage now ten dollars ten dollars and cents. Because. Of the popular political beliefs. That in the absence of that. Workers agreement BP Gary hello. So little they'll be able to survive. And so therefore there -- today if it is incumbent upon the government. To provide any minimum. Level of income. Let's talk about the government and you mention that because. Now it's seen it seems as though it's accepted for Republicans or Democrats claim about I can't make claims about. How many jobs the government's created and it would seem the median real conservative would say it may be a libertarian. I only caught up on labels it's in our government should -- In the involved in this at all when it comes. Economy remains out of the government is a state. The way and it's I think two different sides of it went. The -- in terms of economic model. Issued some money explain that to me about government intervention and economic systems and how they work. And then from there will move on to the president saying that a lot of people work hard and deserved to be paid. A decent wage and I always thought if you go looking for raised its not about I needed at home it's because look this is what I bring -- the company. And this is why it would behoove you to pay me Mort is an essence I'm -- my own salary. We'll be economic reality. -- it goes back to let our -- our competitive. Economic system and the way it works is that. Obviously workers who supply labor would want to work at higher wages. Businesses who hire worker would would rather hire less. -- -- -- -- Somebody reached the balance between those in the economic model. Well he according to the party for the government you cannot because if you do their. What people would get paid is below what the what they need to what they need to survive. What's what's totally missing in that analysis. Is the issue of if labor mobility improved let -- again what economists call improve human capital. They desire not to say okay that is what I can this is all that they can -- right now. I but I AM I -- human being worth a whole lot more than that -- under the appropriate and air force and increase my productivity. And get something better. And I guess in terms of incentives or. Perhaps increase your qualifications -- you can do something better. Exactly exactly and that's what that's like again what economists call. Development of human capital greater greater education which provides a greater skilled. But again what's missing in what it would get people mired in in this. In a situation where you know there there -- relying only. The this guilt expectations. Seemed innocent becomes somewhat stagnated. Where he say okay. I that this entry level. OK this is where I am and this is where I'm going to be. Well you know a lot of people. Would take the argument -- Every -- starts somewhere. Every -- start somewhere but everyone has the ability to. -- upward to improve from somewhere. And you know that's that's the basic you know so basically the the argument. What what's really interesting is that. You know would be. I believe in DC they -- yesterday. Increase -- minimum wage to over ten dollars. And over ten dollars an hour which according to -- may take care less somebody's working at them. You know forty hours that we twelve months. So for weeks a month twelve months a year that will come up to an annual income of 191392. Dollars. Well the poverty level in 2012. For a family of four. Is 23050. Dollars. Now. Again you're raising the minimum wage arguing that you know you want to bring people out of poverty that -- -- barely -- getting him to. The poverty level. And the other thing you do when it would seem to meet doctor and and tell me if I'm off track here but it would seem like. By not giving them the incentive. To improve the skill set would you say human capital then you're kind of trapped in a minute that aren't you. Yes yes and and and and Andrew -- you know it's. You know be pared their lack of corporate America -- -- -- pegged. As well you know their idea. They're the captors so. You know laborer in the -- they want to keep labor -- them campaign and low wage well there -- a lot of companies you know throughout the country that. Are there are successful because what they do is they base maybe it's their compensation on the worker's productivity. And -- and as a result of that they move. Then they moved their employees up via the corporate chains. You know based on that may move there there workers of the corporate -- you know rather quickly. CNN and gone back to what the president said the other question I asked yet. Somehow people working hard like I don't I don't deny for a second and people that make hamburgers are. Fry French Fries and a field day or wait tables all -- although maybe and strain there with a -- situation. Or maybe even nargis labor's where we noted their digging holes sweet constraints. They work very hard but it's seems to me that when you start seeing so many deserves. More money because they have a family to feed and that throws everything out of kilter because. Ultimately it's gonna find its balance right as you were saying earlier and if people. Don't have the skill set they're gonna get it's that they can make more money and conversely you can't. Did tell a company to spend more money. Then the workers are -- is it to me it should all be based on what you contribute I did when somebody goes ask for a raise says. You know my washing machine broke and hungry a 100% that the kidneys races does that have any place in the conversation. No definitely. You know and and be in the there really difficult issue is. You know week. It there's no doubt that you know every ones not everyone comes to starting line of via. Of -- what's called you know what some people call directory some people you know again is some war. Economic tour school group called the competitive market. Not everyone comes to that you know we have the same. But -- games phils get with the same. Orientation. And so therefore every attempt should be need to even the playing field at the starting line. And boring and really the first guy in my family graduate from college when you are Ph.D. I know your daughters and I know what their what -- doing what they're capable of so. How do you how do you get everybody even then because. It naturally idea because my parents and meet a private school I think I an advantage that. Perhaps in kids it went to a bad public school not all of them. Didn't have in your daughters I would think would coming from an educated man would would have more guidance when it comes it going to college and so forth. But -- lot of households that doesn't exist if if people that flip hamburgers card and I mean that the -- of lead but if they have kids and don't know enough about college in education. -- you even all of this out and still be true to the economic principle. Well there's you know there's there's definitely there's definitely. Important that the game. Human capital B I mean objective of public policy. Making because that's the route of getting every way. Everyone to start that at the starting line. At the same place. You know even at the starting line it's after being the starting gun goes off. Then -- generate the expectation well you know. Somebody is somebody's -- faster than me. And getting ahead of me you know by like ten feet. Well you know somebody and -- somebody should provide me a motorcycle so there the American bright the motorcycle and catch up with him. Idea is is that from there aren't as we would go we we. Where we're successful society because people's productivity gets ahead and and he'll bite orders your daughters can be -- are going to be. -- -- order here -- assess this is going to be based on that and nothing else. You know and and I just won't be fair here and I think you have united had this conversation before the owner of flight canceled says almost half of his sewers are gonna close against 430 says 200 gonna close if they raise the minimum wage to ten dollars like the president wants. On the other people's -- at the cost of -- hamburgers gonna go up and I'm always given you the example are always give an example of a a woman has had a conversation very candid conversation with the leading Cleveland. It was -- in bed she said she was based in a hotel she is based on not commission but how how much he did if she made X amount of bed she made X amount of money. And anything in that. Well -- if she's Megan and essence minimum wage. Are we really subsidizing her are we subsidizing the fast food worker are we subsidizing the company. Where the industry. Again there are two sides again there's two sites to the two sides of the argument. One where you know that the pure economics side which says that you know businessman. You know and very. In very simple example businessman as you know thousand dollars -- appropriate -- For its work force if let's say they're people who are willing to. We're willing to work it's five dollars an hour that he has the ability to pay two to hire 200 workers. -- thousand dollars can contend for 200 workers now if he stole. That key has the pay all -- workers if -- that is exploiting its workers owned by only pain and five dollars an hour and that he must pay them ten dollars an hour. Then. There goes 10000. People in its work force there goes he has the fire under people all our. Double is double his budget which is going to be eating into its profits. And so therefore he here you're putting he would jeopardizing the livelihoods of the other -- as a business person on the other hand you have the workers broke wouldn't wanna you know with locals who would 100% increase in there. In their nominal income. But again. That has to -- what has to be taken -- account there is. Does that nominal increase that doubling of that anomaly income or whatever it is they think it's worth some 3040%. From 745. To to. 211 dollars whatever. Does that seem that the. Does that resulted in increase in purchasing power. And according to the Pew Research Center it has been in the increase in the minimum wage as it has not kept up for. Increase in purchasing power in in fact. It's looks five point 8% of its purchasing power. Due to inflation. Since that 2009. And I heard Angela yesterday talking about real estate and then that's even crazier when you look at inflation and won't punish aggression real quick and if you don't answered you don't have to. But when it comes to religion and I was having this conversation with my daughter the other night about religion and economics and if you Christian Jesus and and to sell that you haven't follow me or share everything with everybody. And I hate to makes economic so it's a religion but it seems to me that only works if everybody does. -- -- it lasted well let's get smelly and an area that it's that -- irrelevant questions. You know others her. Our business our economic system has been strongly criticized. As one that's based on greed and what is the second -- in at least ten. And very very prominent. -- Jason occasionally admit -- I believe he's. The father. Jan Perry the accused he has the pro votes that it's Fordham University has written that. It is not the accumulation. Will. That is that is problematic. It's what is done with it. It's done with its so if you accumulate wealth and as a result great you do it to provide for your family and your family becomes. You know useful and productive. Individuals and society and of course you know if you if you provided to help others again. Maybe accumulation of -- cannot be deemed as. It's as problematic -- games using the religious terms simple. Doctor appreciates -- fascinating every time we talked you know we'll. What have you on again we have not before then have a very Merry Christmas happy -- from -- Christmas in particular.

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