What harm do minimum wages do? • Hacker News Board

Re: What harm do minimum wages do?

#91

Post by JoeAltmaier » Wed, Aug 19, 2020, 7:06 PM UTC

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.

...and because workers show up to make it run, and because everybody pays taxes for the roads and electricity, and on and on.

We could have a dog-eat-dog society like Mad Max or something. Or we could set simple rules and live a decent life. Its kind of what Democracy is about.

Re: What harm do minimum wages do?

#92

Post by adrr » Wed, Aug 19, 2020, 7:06 PM UTC

endtime wrote: post #80

adrr wrote: post #66

Earlier quoted context omitted.

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

To "live" at what standard of living? A smartphone? A recent one? What standard of medical care? What about entertainment? What if someone wants only to eat organic, fair trade food? When you pay for yourself, you're price sensitive and try to choose what makes sense for you. When you're not price sensitive, you run into a major incentive problem. If your life is funded by taxpayers, you have no reason not to argue t…

There’s obviously income thresholds for Medicaid, food stamps and other services. ACA clearly defines standard of medical care. Not sure what your asking because the government has already figured this out base on data.

Re: What harm do minimum wages do?

#93

Post by jmcgough » Wed, Aug 19, 2020, 7:07 PM UTC

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.

> A company exists because one or more people risked wealth in order to create a net positive system

What about companies that exist solely as rent seekers? TurboTax is a net negative on society - congress has tried repeatedly to simply mail people a bill or refund, instead of the silly song and dance we go through now, but Intuit has lobbied aggressively to prevent this.

Re: What harm do minimum wages do?

#94

Post by javert » Wed, Aug 19, 2020, 7:07 PM UTC

avianlyric wrote: post #61

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…

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 worke…

The free market is very good at solving information asymmetries of the kind you are talking about. If it isn't being solved, it's probably because of regulation (regulatory capture). Or maybe it isn't a real problem.

I'm going to guess in this case it's more the latter than the former.

Re: What harm do minimum wages do?

#95

Post by fsckboy » Wed, Aug 19, 2020, 7:09 PM UTC

throwaway894345 wrote: post #85

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 lot of economic arguments forget these ideas. The labor market is not a free market: 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. Workers can't usually live too much without finding a job. I'm generally in favor of stronger job protections and so on, but I'm not aware of any definition of "free…

> I'm not aware of any definition of "free market" which supposes that all players have equal leverage.

bog standard microeconomics 101 uses as an assumption that no player can thru individual choices affect prices in the market, i.e. all players do have equal leverage, zero.

"free market" has more than one usage, but economics's conclusions are valid only if the assumptions are met.

Re: What harm do minimum wages do?

#96

Post by coliveira » Wed, Aug 19, 2020, 7:09 PM UTC

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…

This is one example that shows how economy is skewed against workers. If salaries rise because there is a shortage of workers, this should be accepted as normal. Instead, it is seem as a cataclysm for the economy that should be avoided because, of course, this shrinks the profit margin for companies. The monetary policy is designed to maintain the power of companies over labor.

Re: What harm do minimum wages do?

#97

Post by kube-system » Wed, Aug 19, 2020, 7:09 PM UTC

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.

Naturally? Maybe not, but many societies have decided to form governments in which their citizens are ascribed those entitlements.

Re: What harm do minimum wages do?

#98

Post by _ah » Wed, Aug 19, 2020, 7:09 PM UTC

The direct effect of the minimum wage is to make certain low-productivity jobs illegal. Consider that for a moment: a person with limited skills and/or needs is simply prohibited from doing low-productivity work regardless of desire.

The counter-argument is that many workers do not have a choice; they will always accept wages vs nothing, but have no power or ability to negotiate.

With a minimum wage we've made the decision as a society that, in order to prevent worker exploitation, we will also eliminate certain classes of work. Some of this work does vanish entirely, while some of it reappears in the shadow economy through untracked cash payments or self-employment.

As with all policy decisions there's a messy balance here and we're arguing mostly over where the line falls. I do wish there was a cleaner way to protect against monopsony (higher minimum wages) while also providing good opportunities for low-skill workers (those who are very young, very old, have physical or mental impairments, etc).

Re: What harm do minimum wages do?

#99

Post by monocasa » Wed, Aug 19, 2020, 7:10 PM UTC

LoSboccacc wrote: post #62

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 heroi…

Who are these mom and pops that are hiring extraneous workers? If they can get rid of a position, they probably already have.

Re: What harm do minimum wages do?

#100

Post by seiferteric » Wed, Aug 19, 2020, 7:10 PM UTC

I know that in economics it is difficult to do proper studies hence the "dismal science", but my understanding is that most economists agree that minimum wages don't work right? So why is it still pushed? Shouldn't we "listen to the experts"? Besides there are other tools like the EITC.