More low wage jobs or fewer better paying ones?

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I'm genuinely stymied on the question of what is better for the economy as a whole, more people employed at lower wages or fewer people making more money?

It came up because I was studying some legislation in my home state regarding our restaurant industry and what are called "off-sets", conditions that allow employers to pay below minimum wage. In Washington, we have no off-sets at all for restaurants; no tip credit, no training wage, no under 16 pay, and our minimum wage is above $9/hr.
What that means statistically is that the average Washington restaurant employs 3 less people than comparable establishments in other states that do have off-sets, and that's causing me to question my longstanding opposition to them.
I'd always viewed off-sets, particularly tip credit, as a subsidy for the restaurant industry and unfair to the workers, but 3 jobs per restaurant multiplied over the whole state is a lot of potentially employed people that are not being hired.
Now personally I'd prefer to be employed and making decent money, but I'd still prefer being employed and making less money to being unemployed altogether, making it a much less clear choice for me.

To the polls!

I am not sure really don't really think about it but hey ill vote.

Unsure. It's a very tricky question, that.

I am undecided. More high paying jobs is a good thing, but a lot of the money that is made is put away and not spent. Lower income workers spend more of their income proportionally. It depends really on what direction you want to put the economy. I think most economic policies have their uses when used in the right context

I voted other.

Job creation isn't what capitalism is about, capitalism is about wealth creation.

If you invent a machine that can create cotton clothes 50 times faster than a professional seamstress can, there are two choices.

A: Destroy the machine so that the seamstresses do not suffer unemployment.
B: Replace all the seamstresses with machines and pay a much better wage to the machine operator to produce more garments at a lower cost.

If your society adopts plan B, the net wealth of society goes up as more 'stuff' is being produced for less effort. Ideally your society should provide a strong welfare net that provides retraining for the unemployed seamstresses and food/rent so that people don't end up dying in the name of progress for a few.

When employers decide to start using cheap labour instead of automating processes it is a bad sign that the wealth creation process has broken down.

I don't think it matters realistically either way, as similar problems will crop up if you have too many people unemployed or underemployed.

In the grand scheme of things they both produce a very similar result, namely than neither (un or under) will have a sufficient amount to live off and the social issues that will result from that will be the very similar, if not the same.

Economically it would be a similar story.

Last edited by Kjas on 11 Apr 2012, 2:03 am, edited 1 time in total.

Correction DC, capitalism is about wealth domination. "More for me and less for him."

From the time of Adam Smith to Henry Ford it wasn't.

Roll on the Regan/Thatcher era and the socially destructive greed is good philosophy and things changed markedly.

You definitely want more jobs. A high minimum wage or the policy you posted about only chop off the bottom of the employment ladder, you lock a large amount of people out of the workforce. You don't want people to sustain themselves at these entry level positions, you want people to enter the workforce and advance themselves professionally and as people and you deny a lot people that right when you do these things. The worst thing about this is the people working these jobs are generally young people just starting out in the workforce. Never even have a chance.

there isnt a large enough ammount of jobs to progress into,,

you cannot promote everyone and unless you automate something you never will be.

If your definition of "the economy as a whole" is total output or Gross National Product, then clearly the solution is maximal substitution of capital for labour, with the need for fewer people (who know how to run the machines) making more money than people in a more labour-intensive setting.

If your definition of "the economy as a whole" is maximum welfare for most people, then there may be arguments over what to do with people whose labour is no longer necessary.

Quantity > Quality

Your dichotomy, like all dichotomies, is false.

Regardless, two people earning $40k/yr have a larger impact on the economy than one person earning $80k/yr, so your rhetorical nonsense is easily answered.

Not so. Over the years the capitalist system has raised the standard of living of the mass of the population. The increment is not divided fairly, but there is an overall increment for all. Compare the very poor in the U.S. to the very poor in Bangladash. Or Somalia, or Uganda or Haitii. Got it? Our poor are much better or than their poor. And the poor of the U.S. today are much better off than the immigrant poor in NYC back in 1880 or 1890. A downward trickle raises all. \

You are just annoyed that the poor are relatively worse off than the rich. Well, that will AlWAYS be the case. Most people will not do as will as the minimal few who are in the right place at the right time. Life is so damned unfair. Get used to it.

ruveyn

regardless, unchecked capitalism is as hazardous as unchecked socialism, and there have been so many attacks on our checks over the last 40 years.

You'd really have to know a lot of particulars to determine which state of affairs is "better" for the economy - particularly how many "good paying jobs" there'd be versus how many more "poor paying jobs" there'd be, how much the "good paying jobs" actually pay (though, from your description, the poor paying jobs would be below $9/hr whereas the good paying jobs would be ≥ $9/hr), what the respective parties marginal propensities to consume and save are, etc.

I would note, though, that microeconomist Alan Krueger has argued that modest minimum wage increases don't result in mass layoffs in a monopsonistically competitive job market. There's also some multiple equilibria models for labour markets that show minimum wage laws might sometimes be beneficial.

http://ideas.repec.org/p/cpr/ceprdp/3977.html