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Without a minimum wage, the number of consumers for any good beyond basic food, clothing and shelter products would be drastically cut.

Unlikely. Very few employees in the US make exactly the minimum wage, which is why it's true that minor increases have close to no effect.

There are massive lobbying efforts by big business every time the minimum wage issue comes up for debate

True, for example WalMart lobbies in favor of minimum wage increases. Out of concern for low-income workers, or to raise business costs for their competitors? Hmm...

Unlikely. Very few employees in the US make exactly the minimum wage, which is why it's true that minor increases have close to no effect.

Keep in mind how many products are imported from third world countries that have poor labor standards & low wages. The current US lifestyle is heavily subsidized by this cheap labor. Additionally here in the US there is often abuse with illegal immigrants who make well below minimum wage & work in poor working conditions.

Intriguingly enough, without outsourced jobs from first-world countries, economic development in the third world would be even slower and labor standards poorer due to the lack of employer competition.

Are you implying a chicken and egg scenario whereby a third-world needs a first-world before it can become a first world? Going by that logic there should have never been a first world country in the first place. Who was the United States' United States?

Much of the third world is the way it is due to a history of instability, violence & repression, not necessarily a lack of well to do business men looking for an opportunity to avoid having to deal with pesky ideals such as labor regulation.

While it's great that Chinese have the option now of working 12+ hour plus days 6 days a week instead of going off & dying in a rice patty field, somehow I doubt philanthropic philosophy is the reason business goes to China.

"Who was the United States' United States?"

Great Britain.

This however is not applicable to every developing country, here in South America the majority of foreign companies are here because of the local market potential and not generally to produce here and send to another place in the globe, this happens mainly because of the existence of China and India that are more cost effective for this type of market than industries in South America.

4.9% of US pop. working at or below minimum wage is hardly insignificant.

http://www.bls.gov/cps/minwage2009.htm

They are all teenagers or part-timers.

You are misreading. It's 0.8% of the US population and 4.9% of hourly (i.e., nonsalaried) workers.

Ah, yes, thanks. Still, I doubt 3.6 mil workers is an economically ineffectual number.

I can't speak for the whole economy, but when I was making $4.75 and the minimum wage increased from $4.25 -> $4.75, it had an effect on my morale (when i saw no increase).

The minimum wage is a price floor, and like any price control, there's exactly two ways it can effect the economy: it can result in a shortage of labor or it can have absolutely no effect. At $7.25 it's closer to the "absolutely no effect" side of the spectrum--I've seen high turnover, low wage jobs priced above that due to market forces alone. There might be paid apprenticeships that are priced out of the market by the minimum wage, but that's speculative.

The entire rest of your post is frankly nonsense--it's clear you've never actually learned anything about economics, because most economists concede that the minimum wage doesn't really do much to help anyone, and if anything, only increases unemployment.

History doesn't back you up on this--the 19th century was a materially poorer time in the sense that less wealth was being created to begin with. While large numbers of immigrants lived in poverty, they voluntarily chose to live in those conditions because it was the best opportunity they had. If there was a minimum wage above and beyond the value their labor could legitimately produce, they wouldn't have had that opportunity and they would have been materially even worse off. More to the point, there is still a permanent underclass of immigrants living in poverty and earning less than the minimum wage in this country. When the relevant wage and immigration laws are enforced on that population, the net effect is that they're forced to live in the impoverished countries they voluntarily chose to escape from.

As for the rest of us, our recourse is to legitimately generate more wealth than the cost of our wages and benefits so that we remain profitably employed. The majority of the American population is doing this just fine without the government coming in and setting our wages for us.

Maybe a minimum wage policy has a wider remit than "the economy." Why bother with any regulations, or indeed employee rights at all? As for your arguments about immigrants - people may migrate to live "the American dream", but how many people's situations are actually improved?

Maybe a minimum wage policy has a wider remit than "the economy."

That doesn't make much sense to me. The consequences of a minimum wage law are purely economic, on the people as a whole and on the employers and employees affected by that law, as well as on the people who aren't employed due to that law.

Why bother with any regulations, or indeed employee rights at all?

Some regulations are helpful; some aren't. I'm just talking about the minimum wage.

As for your arguments about immigrants - people may migrate to live "the American dream", but how many people's situations are actually improved?

That question is for them to answer. If they don't find their conditions improved, they're free to return home. (Obviously, I'm setting aside cases of human trafficking and so forth--that's an entirely separate issue, and I think we both agree that human trafficking is wrong.)

    Through the '90s, it didn't matter how good a
    machinist you were - if you lived in the Detroit
    area, your employment prospects were poor, just
    because of the glut caused by hemorrhaging auto
    industry.

In that setting you have to do one or more of retrain, move somewhere else, start your own business. Except the presence of a minimum wage makes two of those three more difficult than it would otherwise be.

    there is no economic evidence whatsoever that the
    presence of a $7.25 minimum wage has had a measurable
    impact on employment.

That's hardly surprising, as you can't reliably measure any economic effect in a complex economic system because there's no mechanism for getting a control.

But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.

What you had to say about history of minimum wage in America is interesting, I'll read up on that.

>In that setting you have to do one or more of retrain, move somewhere else, start your own business. Except the presence of a minimum wage makes two of those three more difficult than it would otherwise be.

Without savings, how do you pay for retraining? Without savings, how do you pay for relocation? Without savings, how do you start a new venture of your own? Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings? Without a minimum wage, wages for the lowest skill jobs get driven down to starvation wages. At those rates, its very difficult for people to accumulate enough capital to make the necessary improvements to their situation.

>But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.

Right, and while we're at it, we can move the top tax rate right down to 5%. The extra money freed up will generate so much economic activity that government will end up making money in the long run.

Without savings, how do you pay for retraining?

One common method is to work for free for a short time, until you gain the skills necessary to perform a new job.

Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings?

By reducing consumption.

Where I live, the GDP per capita is about 40x lower than the US. The top 5% tends to have a standard of living comparable to the bottom 5% of the US. The savings rate is 20%, compared to +/- 2-3% in the US.

One common method is to work for free for a short time, until you gain the skills necessary to perform a new job.

Luckily food, shelter & transport is free too.

Where I live, the GDP per capita is about 40x lower than the US.

Where exactly do you live & what is the quality of life for those at the bottom?

I live in India. The quality of life at the bottom here in India is terrible, but that's irrelevant. I'm comparing the US poor to India's top 10% (lets not even discuss India's middle class).

The average poor household in the US has 2 rooms per person, a car or two, air conditioning, and all sorts of consumer goods.

http://www.census.gov/prod/2008pubs/h150-07.pdf

I recently visited a family in Bandra (one of the poshest suburbs of Mumbai). They had 0.75 rooms/person, no AC, an inconsistent and undrinkable water supply, no car and a single bathroom about half the size of any in the US (i.e., no separated shower stall). My understanding is that this is fairly typical for their strata.

They are in the top 5% (roughly) of India. If Indians can save 20% of their income, so can Americans.

Your description of "poor" sounds more like "Working Class" or "Lower Middle Class" in the USA. Often these lifestyles are supplied due to easy credit.

Sheltered poverty in the USA means studio apartment, no a/c, no car, no laundry facilities on site, dangerous neighborhood, little to no public transport.

You also have dirt poor poverty which people commonly refer to as "trailer trash", where you have communities of poor people living in trailers wasting away their lives with poor choices & poverty.

Then you have the destitute poor which are those that live on city streets, eat a charity kitchens & often have drug or mental health problems.

I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance. Often the US poor don't have money to save because they bought an A/C, fixed their car, had to see a doctor or payback a loan they took out the week before to make ends meet. That or they live with subsidized housing & utilities and are given a tiny amount of welfare/food stamps which is lucky to last to the end of the month.

My definition of poor is the US government standard definition. My description is merely a factual description of people meeting the government's definition, according to the census. 75% of the poor do have a car (25% have two or more), 66% have 2 rooms per person, and just over half have AC.

Go read the census article I linked to.

If you wish to claim the government's definition of "poor" is overly broad and includes huge numbers of people who are actually middle class, I agree with you. But that simply means there are far fewer poor people in the US than we currently believe.

I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance.

No, it's due to wealth, plain and simple. Take away government assistance and virtually all Americans still have more than $1200/year to live on.

a tiny amount of welfare/food stamps which is lucky to last to the end of the month.

If that were true, poor Americans would not be fat.

75% of the poor do have a car (25% have two or more), 66% have 2 rooms per person, and just over half have AC.

Firstly AHS has a disclaimer that it overestimates poverty levels. This can inflate who falls into the "below poverty levels". Also the AHS is counting totals, yes someone may have A/C but that doesn't mean they have a car or 2 rooms per person. Someone could have two rooms & a car that breaks down often, but no A/C. Someone could have all 3 and someone else could have 0. Also the AHS mentions that 11% of those below poverty don't have safe drinking water & 20% live in a neighborhood with serious crime.

Also rooms per person & A/C & a car may not illustrate quality of life. You could look at Brazil having a rooms per person ratio which is much better than India, but your life would still suck if you lived in the slums.

Let's just say that being poor in the US poor isn't a picnic. But I don't think that India is a picnic either. The poor in each country faces a different set of problems. Just because the US poor have more money than the poor in India doesn't mean they don't still face serious problems. Like the saying goes "More money, more problems".

No, it's due to wealth, plain and simple.

Is the US just magically wealthy? Where is wealth derived from? How does a country like India become wealthy?

Take away government assistance and virtually all Americans still have more than $1200/year to live on.

...and cost of living in the USA is exactly the same as in India?

I agree that the government overestimates poverty levels. It's a much smaller problem in the US than most people believe.

Rooms per person, A/C and car may not illustrate quality of life, but they are consumption. If the Indian upper middle class can reduce consumption and live without such luxuries in order to save 20% of income, so can the US poor.

Air conditioning & a used car are actually rather low in cost compared to housing, shelter & food in the USA. Also alternatives are not always cheaper. A bus pass can be $90/mn compared to $50/mn for insurance & $50/mn for gas with a car. Air conditioning is often built-in or is a $100 initial outlay.

Also again comparing the US to India is not an exact science.

http://www.mckinsey.com/mgi/mginews/bigspenders.asp The next two groups—seekers, earning between 200,000 and 500,000 rupees ($4,376- $10,941), and strivers, with incomes of between 500,000 and 1 million rupees ($10,941-$21,882)—will become India's huge new middle class. While their incomes would place them below the poverty line in the United States, things are much cheaper in India. When the local -cost of living- is taken into account, the income of the seekers and strivers looks more like -$23,000 to $118,000-, which is middle class by most developed-country standards.

Perhaps not having clean drinking water makes other aspects of life cheaper in India. Does clean drinking water matter? Yes. But maybe not having clean drinking water is the trade off you make for being able to save 20% of your income?

Also there are very few places here in the US that are going to let you work for free to learn about the system works & then either hire you on or give you skills that are transferable elsewhere. Employers do not like desperation & want people who have qualification that match what they're looking for. They'd rather pay someone who knows what they're doing than waste their time on someone who's desperate for a job & is actually going to cost them money while that person subtracts from others while learning things.

> By reducing consumption.

If you're making minimum wage, there's not much consumption to be lowered. Rent, transport, and food will eat it all up (and then some).

> If you're making minimum wage, there's not much consumption to be lowered. Rent, transport, and food will eat it all up (and then some).

Rent, transportation, and food are consumption. If they're eating up everything and then some, find a way to lower them. Move in with your parents if you have to, or share a place with friends. Learn to love rice, beans, and potatoes. Walk or take the bus. There are lots of options.

(This isn't abstract theory; I'm presently living on not much more than minimum wage, and I have a wife and kid.)

If you're making minimum wage, chances are you're already riding the bus, eating rice, beans, and potatoes. Chances are also pretty good that your parents and friends are in a similar financial situation.

How many minimum wage earners have a MS degree like you?

> If you're making minimum wage, chances are you're already riding the bus, eating rice, beans, and potatoes.

This is true of very few of the minimum wage and less earners I've been friends with over the years. (I apologize, I don't have broader statistics than "people I know".)

It's amazing how little money you can get by on if you're willing to really cut back. I don't think it takes an MS degree to figure out how.

That only works in an absolutely frictionless labor market. Meanwhile, in the real world, there are many sources of friction.

Yes there is friction, but how does that effect whether internships are a good idea? By far the biggest source of friction in technology hiring is the lemon problem[1], and internships actually help get around that by providing references. You could credibly argue that unpaid internships are a good idea only in highly frictional labor markets.

As to location, well, if there aren't any jobs in your industry locally there won't be any internships either, so that's a distinction without a difference in this discussion.

[1]http://www.joelonsoftware.com/items/2005/01/27.html