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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#61

Post by avianlyric »

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…

Free markets are also free of monopolies, and generally expect the actors how have good “information” about the market.

This simply isn’t true for the labour market, ignoring the monopoly aspect for the moment, workers don’t have good market information.

Worker pay is usually heavily obfuscated by employers so it’s almost impossible for an individual worker to accurately gauge how much they can demand.

Addition workers have very limited time and resources to spend on gather information on the labour market. How are they supposed to discover better paying jobs, or better industries without constantly job hunting?

Compare this to companies who in comparison have a huge amount data. At a minimum they know the wages of all their employees, they also have the resources to be constantly surveying the labour market and adjusting to it.

All of this compounds to produce a heavily skewed labour market, that skews in the favour of employers.

Re: What harm do minimum wages do?

#62

Post by LoSboccacc »

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…

> Workers can't usually live too much without finding a job.

> Companies will always push for lower wages wherever they can

but it's not just megacorp tho.

minimum wage will lower employment from small business significantly; i.e. small shop owner will get by with one less garcon to pay the other one more.

and if you think that can be resolved just by ample unemployment benefits, look no further than the Dublin heroin epidemic.

maybe two tier of minimum hourly wage + progressive hour cap could work: x$/month minimum wage for part time capped at 20 hour/week, x+50%/month for full time workers.

but it's a thorny issue where in the fight between drones and megacorp it's easy to incur in collateral damage around the middle.

Re: What harm do minimum wages do?

#63

Post by clairity »

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'm generally in favor of state-level control of such things, but i'd be remiss not to point out that that's a great way to further entrench inequality across america.

i mean, if $15/hour is a little more than subsistence level in rural north dakota or the hills of west virginia, so be it. maybe it means they can buy a laptop for the kids, but it won't be mansions and teslas everywhere.

current labor markets are profoundly unfair, and a little imperfect leveling of the field is fine, while we work on fixing the decades of extractive policies that got us here in the first place.

Re: What harm do minimum wages do?

#64

Post by AnotherGoodName »

grandmczeb wrote: post #52
AnotherGoodName wrote: post #29

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…

Wealth is very hard to accurately measure and is impacted a lot by demographics (e.g. age distribution). Consumption is a better measure of how people actually live. https://en.wikipedia.org/wiki/List_of_countries_by_household...

I disagree simply because expenditures are completely different for more socialist countries. Eg. Total healthcare expenditure per capita is well below the USA in Australia. Less than half in fact. https://onthewards.org/the-inside-scoop-part-one-a-compariso...

So that's $4500 a year more the average US citizen has in total expenditure that isn't some type of luxury good or indicator of a better life. It's just survival.

I mean Australia beats the USA by any quality of life index out there. https://en.wikipedia.org/wiki/Where-to-be-born_Index

Re: What harm do minimum wages do?

#65

Post by sudosysgen »

colinmhayes wrote: post #39
oivey wrote: post #31

Earlier quoted context omitted.

It’s also obviously untrue given the fact that wages in the US have stagnated while productivity has continued to grow. That’s despite a floor on wages.

No it's not obviously untrue. Productivity growth has been driven by capital, not labor.

What produces capital?

Re: What harm do minimum wages do?

#66

Post by adrr »

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.

Rate that allows the employee to live without government assistance like food stamps and Medicaid. Otherwise the government is just subsidizing the company.

Re: What harm do minimum wages do?

#67

Post by cmrdporcupine »

abvdasker wrote: post #59
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 Marxist perspective is that the employer is incentivized to pay as little as possible to extract the maximum amount of value from the person's labor, realizing the difference as profit (even though crucially that value was created by the worker). An example of this would be software engineers at companies like Apple and Google, whose labor has been shown to produce several times the value of their compensation. U…

I think it's more correct to say that the Marxist (well, labour theory of value) perspective is not that the employer is incentivized as such, but they _have_ to. That the capitalist market _requires_ it or it doesn't work, business won't survive. It's intrinsic to the profit / wage-labour model, even if you switch to something like cooperatives or state ownership.

The theory is that surplus value (which can become profit, or be reinvested, etc) exists only through paying the worker less (on aggregate) than the aggregate amount that the worker provides through their labour.

The mainstream economics answer to this is to say that the labour theory of value is bunk and that prices are defined purely by market forces. But this kind of misses the bigger picture of what Marx was getting at rather by getting lost in the weeds about price definitions and really is a critique of Ricardo more than Marx.

Despite using the term "exploitation" which has moral overtones in English, Marx really isn't casting a moral judgement here. It's a technical description. But he does believe that this phenomenon leads to structural inequality and injustice and that the only resolution is some other kind of property ownership or method of production. Though he was famously vague on what that alternative would be, and people far less intelligent than him were left to fill in the blanks with some rather awful alternatives.

Re: What harm do minimum wages do?

#68

Post by p49k »

ccffpphh wrote: post #47
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.

Companies aren't inherently "entitled to" anything either, including "personhood," avoidance of personal liability of shareholders for company actions, patents and trademark protection for inventions, rights to use public infrastructure, etc. You can't pretend like society hasn't granted corporations their own reasonable entitlements while arguing that workers shouldn't have their own.

Re: What harm do minimum wages do?

#69

Post by gridlockd »

CoolGuySteve wrote: post #54
gridlockd wrote: post #38

Earlier quoted context omitted.

How much empirical data do you need to convince yourself that jumping out of a window with an umbrella is unsafe? Everybody can understand that employing people at a loss is unsustainable and that the goal of employers is to make a profit. I think there's plenty of empirical data for that, the rest just follows logically. Of course there's bound to be a narrow range where you can move some profits into wages and you…

> How much empirical data do you need to convince yourself that jumping out of a window with an umbrella is unsafe? A non-zero amount, at least: https://www.youtube.com/watch?v=FBN3xfGrx_U

Maybe he was just holding it wrong.

Re: What harm do minimum wages do?

#70

Post by pchristensen »

ghayes wrote: post #41
eloff wrote: post #14

Earlier quoted context omitted.

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.

Moving 3 counties means basically every employee has to be relocate or be replaced. If a business is willing and able to make that choice, they are a) not attached to their current location, and b) probably willing to consider farther moves for further cost reductions.
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