Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What harm do minimum wages do?

economist.com

Post reply on HN
Print view View original

21–30 of 776 posts

Re: What harm do minimum wages do?

#21

Post by danenania »

prostoalex wrote: post #17
danenania wrote: post #10

Earlier quoted context omitted.

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?

That's not the right question to ask, since many other costs besides labor figure into gross margins.

Re: What harm do minimum wages do?

#22

Post by crooked-v »

sthnblllII wrote: post #7

The only politically feasible alternative is increased welfare spending, which means a low minimum wage is just a way to have taxpayers cover employers’ labor costs. https://www.realclearpolitics.com/video/2014/02/13/ron_unz_h...

See, for example, how Wal-Mart has the single largest collection of workers who get food stamps in the US.

Re: What harm do minimum wages do?

#23

Post by deegles »

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…

I think it makes sense to get rid of a minimum wage requirement after universal healthcare and a basic income is implemented. Capitalists whine that the free market should be allowed to play itself out, but conveniently forget that labor is not a free market as is mentioned above.

Re: What harm do minimum wages do?

#26

Post by Analemma_ »

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…

I don't enough to say whether 100% employment is good or not, but I do know that this:

> It seems like it is accepted as fact that 100% employment would lead to hyperinflation

is a strawman. The argument is that 100% employment will cause an undesirably high inflation, but serious economists almost never talk about hyperinflation. (It tends to be a boogeyman used by deficit hawks and the like, since it almost never happens except in cases of war or truly disastrous policy).

Re: What harm do minimum wages do?

#27

Post by gjulianm »

missedthecue wrote: post #15
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…

> I need food to survive much more than Krogers needs my business to survive

Yes, but you can buy from anywhere other than Krogers and the cost of switching is almost negligible. A job is very, very different in that regard.

Responding to your edit:

> 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.

Learning the relevant skills costs time and money. If your wage is too low, you won't be able to learn new skills. And moving and changing jobs is not that easy for most people.

Re: What harm do minimum wages do?

#28

Post by prostoalex »

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…

> That's why minimum wage laws and workers rights are important.

How do you translate that into numbers? If $15/hr is better than $14/hr, wouldn’t $150/hr be 10x better, and if so, what’s wrong with a comfortable $1,500/hr?

I think that’s where economists start to differ.

Re: What harm do minimum wages do?

#29

Post by AnotherGoodName »

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to the median wealth difference between the USA and China for reference. It shows to be honest having lived in both countries. Specifically it shows in the conditions that minimum wage earners in the USA face, eg. having to live off food stamps as is common for wallmart workers for example is just horrendous. eg. https://www.kiro7.com/news/local/report-amazon-walmart-worke...

Australians usually call out companies that make things in sweatshops where pay is below the poverty line. Specifically clothing in Asia. But i believe we should start doing this for US companies as well. Sure the US minimum wage is higher than say Bangladesh but since the cost of living in the US is higher too so it doesn't change the fact that things manufactured at minimum wage in the US are coming from companies that pay wages below the poverty line.

Re: What harm do minimum wages do?

#30

Post by hirundo »

missedthecue wrote: post #15
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…

> Labour is absolutely a free market.

In what sense is a market with price controls absolutely a free market?

Post reply on HN