What harm do minimum wages do? • Hacker News Board

Re: What harm do minimum wages do?

#41

Post by ghayes » Wed, Aug 19, 2020, 6:37 PM UTC

eloff wrote: post #14

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.

My only fear is that wouldn't businesses constantly relocate to new areas with lower minimum wages? If the area you're located in goes from $5 to $8 (possibly due to your factory), why not relocate three counties over to an area that's still at $5? A national standard mitigates this issue.

Re: What harm do minimum wages do?

#42

Post by missedthecue » Wed, Aug 19, 2020, 6:38 PM UTC

gjulianm wrote: post #27

missedthecue wrote: post #15

Earlier quoted context omitted.

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. Le…

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.

It doesn't matter who I buy from, I need food much more than any retailer needs my business. I can sell my labour to many different companies with a relatively low switching cost. The average time people between jobs is lower than it has ever been.

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.

If the price of steel increased, building new mines to extract iron ore would cost great sums of money as well. It is not easy for all mining companies to do this. It doesn't mean that the market is not relying on price signals to coordinate the production of goods.

Re: What harm do minimum wages do?

#43

Post by edoceo » Wed, Aug 19, 2020, 6:38 PM UTC

deegles wrote: post #32

missedthecue wrote: post #15

Earlier quoted context omitted.

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…

> people respond to that price signal by learning the relevant skills and working in that field and getting greater salaries Many people stay in jobs they don't like or that don't pay enough because they need the healthcare or don't have the resources (including time) to learn new skills and move to a higher paying job. So the fact that people can't freely respond to price signals means that it is not a free market.

Y'all might be using different meanings for the word "free".

As for being stuck in a job for health or skill reasons, those are choices, crappy choices but still free choices.

Universal Healthcare would, IMO, do more for the worker than a nominal pay-rise. The link between employment and healthcare is an abomination.

Re: What harm do minimum wages do?

#44

Post by missedthecue » Wed, Aug 19, 2020, 6:39 PM UTC

hirundo wrote: post #30

missedthecue wrote: post #15

Earlier quoted context omitted.

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?

You're right that price controls obfuscate the mechanism on which pricing signals work, but it's not central planning.

Re: What harm do minimum wages do?

#45

Post by alex_young » Wed, Aug 19, 2020, 6:39 PM UTC

jldugger wrote: post #18

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."

Sure, and there is some logic there, but isn’t the somewhat random real wage a problem? Whatever we select, it seems healthy to index it right?

Re: What harm do minimum wages do?

#46

Post by yarrel » Wed, Aug 19, 2020, 6:39 PM UTC

prostoalex wrote: post #28

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.

How much should workers pay their employers for being able to work, since working is a benefit? We can differ reasonably about how much, surely.

A minimum wage is not set in a vacuum, and high numbers that ignore this fact do not illustrate anything useful.

Re: What harm do minimum wages do?

#47

Post by ccffpphh » Wed, Aug 19, 2020, 6:39 PM UTC

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…

The issue is that nobody is entitled to anything. You aren't de facto entitled to receiving money for any services you may or may not provide, regardless of whether you're skilled or not, just because you exist. A company exists because one or more people risked wealth in order to create a net positive system - their existence is not as riskless as one would believe.

Re: What harm do minimum wages do?

#48

Post by pchristensen » Wed, Aug 19, 2020, 6:40 PM UTC

crooked-v wrote: post #22

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.

Not defending Wal-Mart's labor practices, but there are probably very, very many companies where they have the single largest collection of workers who $INSERT_CONDITION_HERE.

Re: What harm do minimum wages do?

#49

Post by bitdotdash » Wed, Aug 19, 2020, 6:41 PM UTC

prostoalex wrote: post #28

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.

Slippery slope / Straw-man fallacy. One is to do with tying the minimum wage to a livable wage. The other is just large numbers for the sake of trying to win an argument. No one is arguing for $150/hr. The argument is simply that you aught not to be able to run a business and extract a profit if the cost to do so is employing people at such a low wage that they require governmental handouts just to pay rent and eat food. Given that, imaginary large numbers like $150/hr or $1500/hr do not come into play and thus do not need to be considered.

Re: What harm do minimum wages do?

#50

Post by yarrel » Wed, Aug 19, 2020, 6:41 PM UTC

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…

And what happens when those signals are distorted?

Remove the state and there are still many things that can go wrong with a market. Price signals become a way of laundering this fact past a certain point.