What harm do minimum wages do? • Hacker News Board

Re: What harm do minimum wages do?

#131

Post by mdoms » Wed, Aug 19, 2020, 7:24 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…

Everyone I know who has lived on government assistance is most certainly price sensitive.

Re: What harm do minimum wages do?

#132

Post by bumby » Wed, Aug 19, 2020, 7:24 PM UTC

pratik661 wrote: post #75

dannyw wrote: post #16

Earlier quoted context omitted.

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.

Source? That is an extraordinarily broad statement to make. Central Banks' (the primary institutions behind monetary policy) primary goal is to promote a stable environment for commerce. This typically means maintaining a stable rate of inflation (2-4% for mature economies, 4-7% for frontier economies). This often requires performing a balancing act between managing unemployment and inflation. We have PLENTY of evide…

I agree with you in theory, but it seems naive to believe political appointees like a chairperson of central banks give zero consideration to the stock market when that market is fundamentally important to those who appoint them.

I hope they have that kind of integrity but I won’t be surprised if there’s a gap between theory and practice

Re: What harm do minimum wages do?

#133

Post by nickff » Wed, Aug 19, 2020, 7:24 PM UTC

david38 wrote: post #116

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…

Minimum wage, applied universally, absolutely validates worth of a worker. If the minimum wage is set too high to plant grapes for example, grapes will not be grown. $15/h too high to flip burgers? Ok, I guess we don’t need fast food. Oh wait. Except it somehow doesn’t put the corps out of business.

Most arguments against minimum wages are not concerned with the impact on businesses, they are concerned with the impact on low-skill workers, inexperienced workers, and unusual workers (i.e. individuals with restricted schedules, or issues communicating).

Re: What harm do minimum wages do?

#134

Post by dependenttypes » Wed, Aug 19, 2020, 7:24 PM UTC

bakuninsbart wrote: post #112

ccffpphh wrote: post #47

Earlier quoted context omitted.

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.

> The issue is that nobody is entitled to anything. That's an ideological statement. You may subscribe to it, but not everyone has to. Society is fundamentally based on the notion of shared rights and duties, what these rights and duties entail can be up for debate, but if you don't want to owe anyone, you will have to live a pretty lonely, primitive existance in Siberia or Alaska.

> a pretty lonely

Nowadays with the internet one does not need to be lonely even if they are away from society.

In addition others might decide to follow them.

> primitive existance in Siberia or Alaska.

This does not make much sense. Why would living somewhere else automatically give them any duties?

Anyway, I do not see the point of this argument. It is like saying to a gay person "if you don't want to be discriminated by anyone, you will have to live a pretty lonely, primitive existance in Siberia or Alaska."

Re: What harm do minimum wages do?

#135

Post by gjulianm » Wed, Aug 19, 2020, 7:25 PM UTC

missedthecue wrote: post #42

gjulianm wrote: post #27

Earlier quoted context omitted.

> 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 s…

> I can sell my labour to many different companies with a relatively low switching cost.

Well, I disagree on this. Maybe you specifically can do it, but housing prices, healthcare costs, transport cost, family charges, etc, can make the cost and risk of switching prohibitive. Not to mention that "just switching" doesn't mean prices will be better. Just have a look at the latest stats on working poor people to imagine whether those can easily switch jobs and get better education.

> 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.

So there's a high cost of entry? That's very much a non-perfect market. A free market doesn't just "respond to price signals", that's a very low threshold as you'll hardly find a market that doesn't respond in any way to price changes. A free market has to respond to them in an elastic way.

Re: What harm do minimum wages do?

#136

Post by ckocagil » Wed, Aug 19, 2020, 7:25 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.

If no one is entitled to anything why did humankind abolish slavery? Child workers? Indentured servitude?

Think about it. Indentured servitude is nothing but a contract between two people. By your ideology it should be of no one else's concern. Yet, it is considered slavery and is illegal. Why?

Because it turns out life isn't as simple as "you're not entitled to anything". This same sentence has been uttered by people throughout the ages who profited by the status quo until the commoners got their heads, literally or figuratively.

Every law we have, including the ones that allow you to have private property, private land and virtual property such as copyrights and patents are man-made and arbitrary.

Re: What harm do minimum wages do?

#137

Post by throwaway894345 » Wed, Aug 19, 2020, 7:25 PM UTC

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…

> even though crucially that value was created by the worker

Crucially the value wasn't created by the worker, but rather the worker played a part in the creation of that value. In a capitalist society, that worker's wage is determined based on the value of their contribution and the supply of workers with the requisite skill. In a Marxist society, it is set by the state, and it seems to be very hard for states to determine a price that is sustainable.

In my humble opinion, Marxism seems like a denial of basic economic realities--namely that the state can set the price of anything to whichever value they prefer and it won't have disastrous economic ramifications ("price is just an arbitrary number"). Maybe I'm creating a straw man, but I do notice a lot of Marxists who make arguments about what is fair and not what is economically sustainable as though economic sustainability is an invented problem that we can disregard. Perhaps this view isn't uniformly shared among Marxists, in which case my criticism is "too many Marxists are making these kinds of unconvincing arguments, and more convincing arguments would be centered around economic feasibility--we all agree that we want poor people to have more money, the question is 'how?'".

Re: What harm do minimum wages do?

#138

Post by wccrawford » Wed, Aug 19, 2020, 7:25 PM UTC

nobody9999 wrote: post #87

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…

>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 cities and states. The right policy for San Francisco isn't necessarily right for Birmingham. Your point is a valid one. At the same time, if you look at how these numbers actually play out in reality, $15/hour (assuming 40 hours/week -- certainly not a given an…

But it's okay to have a national minimum wage and also a state, county or city minimum wage that's higher than the national. That doesn't mean we shouldn't at least start with the national one. Individual areas can fight for their own raised minimum wage in their area. Everyone can fight for the national one, which would still be a big increase over what minimum wages are everywhere.

Re: What harm do minimum wages do?

#139

Post by pineaux » Wed, Aug 19, 2020, 7:26 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.

I dunno, it has never been tried right? What do you think would happen?

Re: What harm do minimum wages do?

#140

Post by supernova87a » Wed, Aug 19, 2020, 7:26 PM UTC

A most frustrating thing about many kinds of protectionist economic policies is that frequently the people who would benefit from the opposite policy aren't allowed to vote to count the value of it.

The people who would get hired if you didn't put this policy in place are the ones who don't get to vote against it.

The people who would be able to afford to live in a city that has rent control, don't get to vote against it.

It's not until you have some external shock that shows you how much this little island of protectionist policy has cost you that you realize what it did. And in the meantime you've favored and built up a system that is that much less resilient to whatever new problems you face.