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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#11

Post by strbean »

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

> companies have more power in negotiation, they have more information and, most important of all, they can deal with a job opening not being covered most of the time

This will be the case as long as we have monetary policy based on the idea that "100% employment is the apocalypse".

It seems like it is accepted as fact that 100% employment would lead to hyperinflation, despite the fact that this has never occurred. It is a totally untested theory that is suspiciously convenient for employers and shitty for workers.

Re: What harm do minimum wages do?

#12

Post by hpoe »

One thing I found was interesting

> The effects of a wage floor can also be felt outside low-pay sectors. A preliminary study in 2019 of the impact of Germany’s minimum wage found it led to more reallocation of workers from smaller, lower-paying firms to larger, higher-paying ones.

Is it possible that although the change in overall employment was muted smaller shops were closed up and their work simply transferred to larger ones better able to expend the capital?

Re: What harm do minimum wages do?

#14

Post by eloff »

pchristensen wrote: post #6

(can't read the article, but I've read and thought a lot about it) I'm on the fence about the net cost/benefit of localized minimum wages. I think that a federal minimum wage (or at least, a high one), and to some extent, state minimum wages, are a bad idea. The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost citi…

I think you're very right that this is policy best done locally, because cost of living varies wildly even in the same state.

Re: What harm do minimum wages do?

#15

Post by missedthecue »

gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

A free market does not mean that both sides want something with equal desire. I need food to survive much more than Krogers needs my business to survive. This does not mean that grocery sales are not a free market.

A free market means that the supply and demand of goods rely on price signals rather than a centralized planner. Labour is absolutely a free market. As wages in one particular area increase, people respond to that price signal by learning the relevant skills and working in that field and getting greater salaries. It's also why Amazon (and essentially no business) pay $7.25 an hour, even though they legally could.

Re: What harm do minimum wages do?

#16

Post by dannyw »

strbean wrote: post #11
gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

> companies have more power in negotiation, they have more information and, most important of all, they can deal with a job opening not being covered most of the time This will be the case as long as we have monetary policy based on the idea that "100% employment is the apocalypse". It seems like it is accepted as fact that 100% employment would lead to hyperinflation, despite the fact that this has never occurred. I…

Monetary policy is to benefit the owners; not the workers. 100% employment will drive wage growth as demand exceeds supply. That’s not good for the stock market.

Re: What harm do minimum wages do?

#17

Post by prostoalex »

danenania wrote: post #10
gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

Right, many minimum wage opponents focus on the scenario where someone is worth e.g. $14/hr to a business, and rightly point out that this person won't be hired with a $15/hr min wage. BUT without a minimum wage, someone worth $50/hr can be paid $5/hr if anyone can do the job. It strikes me that this situation is far more common than the first scenario, and minimum wage opponents tend to ignore it in their arguments.…

> someone worth $50/hr can be paid $5/hr if anyone can do the job

What business sectors enjoy consistent 90% gross margins?

Re: What harm do minimum wages do?

#18

Post by jldugger »

alex_young wrote: post #13

Why don't we index the minimum wage to inflation? The 1968 minimum, in todays dollars, is over a third higher than our federal minimum wage today. [0] [0] https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...

You probably know this but the opponents of raising the minimum wage fear that it will lead to inflation. The old adage "labor is 2/3rds the cost of everything."

Re: What harm do minimum wages do?

#19

Post by [deleted] »

bcrosby95 wrote: post #9
gjulianm wrote: post #4

> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > Just as a monopolist can set prices higher than would be the case in a competitive market, a monopsonist can set prices artificially lower. A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiatio…

Also, do textbooks actually say that? Because it seems trivially false: if a worker is actually paid that, then there's no money left for investors.

[deleted]

Re: What harm do minimum wages do?

#20

Post by crooked-v »

pchristensen wrote: post #6

(can't read the article, but I've read and thought a lot about it) I'm on the fence about the net cost/benefit of localized minimum wages. I think that a federal minimum wage (or at least, a high one), and to some extent, state minimum wages, are a bad idea. The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost citi…

> It seems to me that the right policy to increased pay for low wage jobs would be to set the minimum wage so a full time job at that rate puts you at some multiple of the metropolitan/micropolitan area poverty line.

I would be in support of that in the abstract, with the caveat that various business lobbying would immediately push for abstruse redefinitions of 'poverty' as used in the law.

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