Bennett Hypothesis: Financial Aid Increases Tuition

[sanantone]

85% of minimum wage workers are between the ages of 16-24 who live with someone who is above the poverty level; such as a relative.  Of the remaining 15% of minimum wage earners that are head of households earners, they are stuck in the welfare trap.  Welfare is very difficult to get off of once you are on due to the lack of incentives to get off.  I mean why work 40 hours a week at slightly higher wages when you can work 10 hours a week and receive subsidies at equal or greater value than those slightly higher wages.  So those in the 15% tier will mostly find it more advantageous to remain there and usually do.  

For every minimum wage increase of 10%, 1-2% of those workers become unemployed.  The cost of goods for those workers also increases at a more significant rate than the benefit of the wage increase.  Minimum wage increases always hurt minimum wage workers because it prices low-skilled workers out of the market and they are replaced with those who have skills that justify the wage.  Of those who are unemployed, they then have to choose to work in unpaid internships to gain the skills necessary to justify $15 an hour.  Yep, those $15 wage increases have now forced low skilled workers to work for free or choose welfare.  

When you are low skilled and have a very little work history, the only thing that is attractive to employers is the fact that you are willing to work for low wages - such as those interns I just described.  Once you become more productive your wage reflects that, but you have to gain experience before that occurs.  When you take away the option that someone is willing to work for low wages and you flood the market with imported low skilled workers, you are hurting the 16-24-year-old age group by delaying the necessary skills they need to move up to the next wage tier.  

Minimum wage increases, subsidies, grants, and any other government program do not have a win-win effect on the economy.  By taking away something from someone else that they normally wouldn't agree to in the free market, you are creating a win-lose effect which has overall negative consequences on the economy.  The secondary effect is that money could have been spent on win-win transactions benefiting two parties, not just one.

As the government tries to interfere with the free market, the free market will replace those workers with technology, because it is only natural to bypass regulation when it interferes with the natural balance of the free market.  

Free markets are the fairest system of all, and consumers judge a businesses value by awarding it with profits or penalizing it with losses.  Crappy businesses go out of business while good ones continue to provide value.  Unfortunately, governments aren't held by those standards because they operate on budgets - not profits.  When government programs eventually begin to fail, they are replaced with larger budgets funded through tax increases and printing money (win-lose effect).

Weren't you just blaming illegal immigrants for depressing wages? It's not like illegal immigrants are taking our white collar or even pink collar jobs. Illegal immigrants mostly take blue collar jobs that pay well under $15 an hour. You don't want a minimum wage increase, but you're blaming illegal immigrants for stagnant wages? You're contradicting yourself.

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Yes! The community colleges that the conservatives here love so much are one of the largest socialist institutions in the U.S. They are cheap because they are heavily subsidized by states, cities, and counties.

As a fiscal conservative, I think that I DO want some of my tax dollars going to things like public schools, both K-12, and college.  Just because I think the government needs to be smart with MY money doesn't mean I don't want it to go towards important things.  BUT, what I've noticed with CC's is that a lot more of my money goes to no-frills things, like buildings, teachers, admin, etc.  NOT stadiums and arenas, granite countertops in the dorms, tenured teachers who end up not actually teaching any classes, etc.  Janet Napolitano, head of the UC system, gets to live in a multi-million dollar  home that the UC system pays $10k/mo for, gets $570k a year, gets $1000/mo for a car, and was paid $140k for relocation expenses. And presided over a $175M slush fund that the state auditors found last year, with no repercussions.  There is SO much waste and abuse in the CSU/UC systems, it's ridiculous.  Not so (as much) in the CC system.

Also, not sure what it's like in other states, but here in CA, our CC districts are very local.  Only 1-4 or so schools per district, and a lot of what gets taught is decided locally.  There's much more direct control by locals about what the money is spent on, what classes are taught, where new satellite campuses should be located, etc.  They are able to serve the communities in a much more robust way than the CSU/UC schools ever could.

Just because someone is fiscally conservative doesn't mean we're evil and that we hate people.  I actually love people, and wish that there was less waste and abuse so that my tax dollars could actually make a difference in our world, rather than being squandered by politicians and the government.  Even if you aren't a fiscal conservative (which all taxpayers should be), you should really care that the government isn't wasting your money too, so that it goes to things which YOU think is important.

So, you admit that you support socialism. Our public schools are socialist institutions.

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Data comes directly from my econ course.  

Work experience is like a credit report.  If you have a long and proven credit history, the lender will view as low risk and offer you better terms.  On the other hand, if you have nothing on your credit report, the lender looks at you as high risk, and the terms are less advantageous.  Much like the person with limited credit history, the employer looks at a worker with no work experience as high risk and employers do not want to give high-risk employees premium rates due to the potential loss they may incur on their investment.  So, because that candidate is high-risk, they negotiate a salary of $7 an hour with the opportunity to earn more after they have improved their work skills and shown a track record.  When the government comes in and raises those wages to $15, which is above and beyond the free market rate, the employer considers that wage too risky and will bypass the person with limited work history and will keep the position open for someone with a more reliable history. The secondary effects are that the younger person will have to wait longer to develop a proven track record which means an opportunity lost and more time in mommy's basement.  

Let's look at babysitting. You need a babysitter for 4 hours:

Candidate A is 16 years old but has no history of babysitting, but has watched her siblings before, she’s pleasant and you want to give a good young person a job.
Candidate B is 35 years old and has a 10-year history raising children and working in early childhood education with a Ph.D. in Awesome, and also is a delightful person.

By law, you have to pay whoever you hire at least $15 an hour, and both find that wage attractive.  Who do you employ? The law requires you to pay either candidate $15. Logic says choose B, the more qualified candidate who poses a lower risk of burning your house down.

Would you consider hiring candidate A if there wasn’t a $15 minimum wage? Does candidate A become more attractive if they are willing to do this job at $5 an hour?  You want to give candidate A a chance, but you can’t justify paying someone without experience that much money when someone else at the same rate is more qualified.   The minimum wage law has priced candidate A out of a job, although candidate A is willing to take less, the government won’t allow it.  

That is precisely why we see high youth unemployment in Europe.  Europe has high minimum wage laws, and nobody wants to waste their time and money on someone who may turn out to be a lousy candidate. The risk to reward is too high, but it does open up opportunities for $0 an hour internships.

Candidate A might also be priced out by cheap illegal labor, this happens a lot in California.

Some European countries have high youth unemployment rates. Those countries are either financially struggling as a whole or have large populations of legal immigrants with little to no marketable skills; there are also language barrier and discrimination issues. Some European countries with high minimum wages have lower youth unemployment rates than the U.S. does. Also, in the U.S., the super high youth unemployment rates are mostly among blacks and Hispanics, so there are more variables at play than just the minimum wage.

Your "logic" is not always the logic that employers use. Many people are passed over for jobs because they are "overqualified." Companies don't like turnover, so they often avoid hiring people who can easily find a better job. I had two small town police departments tell me that I was too intelligent and too educated to risk hiring. This guy wasn't hired because his IQ was too high.

https://abcnews.go.com/US/court-oks-barr...y?id=95836

If I had children, would I hire someone with a PhD to babysit them? Probably not. I would be wondering why someone with a PhD would be applying for a babysitting job. There's usually some history of dysfunction that led to the downfall. It reminds me of the parole officer with a JD; he was disbarred in multiple states and kicked out of the military.