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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#161

Post by [deleted] »

seiferteric wrote: post #83
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.…

If a company can hire someone worth $50/hr for only $5/hr and therefore make huge profits/margins, couldn't another company easily come along and undercut them? I don't think a scenario like that could exist very long.

[deleted]

Re: What harm do minimum wages do?

#162

Post by leetcrew »

danenania wrote: post #107
prostoalex wrote: post #36

Earlier quoted context omitted.

What formula then is used in calculating “someone worth $50/hr“? Does it omit or include those costs?

It's not always easy to quantify. Consider people like janitors or security guards. They may be absolutely critical to the business running even though they don't produce revenue directly. Even if minimum wage was set to $100/hr for these jobs, it would still be worth it for many companies to hire them, since producing any revenue could be contingent on having people in those positions. At the same time, they are ver…

$100/hr is considerably more than I make as a software engineer. if my employer was required to pay a janitor $100/hr, they would fire them and have all the junior engineers spend the last hour of their day cleaning. having someone clean the building is essential for any business with a physical presence, but it's only worth hiring a person specifically to clean if they can be paid less than your core employees or if they can do it much more efficiently. this is why restaurants typically do not employ janitors.

Re: What harm do minimum wages do?

#163

Post by jusssi »

seiferteric wrote: post #83
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.…

If a company can hire someone worth $50/hr for only $5/hr and therefore make huge profits/margins, couldn't another company easily come along and undercut them? I don't think a scenario like that could exist very long.

If the other company can also do the same, why would they piss into their own cereal by reducing their profit?

And if the other company is a newcomer looking to gain market share by undercutting, they'll likely find themselves strongarmed or bought out of the market.

Re: What harm do minimum wages do?

#164

Post by mdoms »

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...

Yikes. Measuring wellbeing by consumption is a VERY American perspective.

Re: What harm do minimum wages do?

#165

Post by marshmellman »

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...

Or a high minimum wage is a way to have employers cover the government’s welfare costs?

Who really should front the bill for low earners to live above poverty, and why?

Re: What harm do minimum wages do?

#166

Post by rconti »

calkuta wrote: post #79

What I find important to remember about minimum wage is that it constitutes a restriction on the freedom of workers to negotiate for their labor. The existence of a meaningful minimum wage implies that there are people in the society who desire to negotiate for lower compensation (because they are more motivated to get the job for whatever reason), but they are disallowed from doing so. It might be our opinion that i…

I tend to find the libertarian argument appealing, as well, but you're making a whole lot of assumptions.

I think your worst unchecked/unstated assumption is that "unemployed people are all looking for a job below the minimum wage but are unable to find one". That's simply untrue. "Unemployment" in the US is defined as people who are actively searching for a job (not merely those who do not HAVE a job), but there is no requirement that they accept any job at any (legal) wage.

Presumably, the vast majority of unemployed people, even in good times, would not accept work $1 below the minimum wage, even though they are actively searching.

IOW: You are assuming that the entire reason these folks are unemployed is because they are not allowed to contract their labor for a lower wage.

Re: What harm do minimum wages do?

#167

Post by mywittyname »

geogra4 wrote: post #37
bcrosby95 wrote: post #9

Earlier quoted context omitted.

Also, do textbooks actually say that? Because it seems trivially false: if a worker is actually paid that, then there's no money left for investors.

Maybe some textbooks? But like - when a software engineer is billed out by a contracting company at 250/hr and only is paid 50/hr it's pretty obvious that the wealth created is not what the worker is paid. It's been a long time since I took microeconomics in college but even the most charitable analysis of that is basically that the worker gives up the other 200/hr for stability and benefits.

And support. That $200 goes to paying accountants, sales staff, executive, marketing, custodians, etc. All of which help keep that $250/hr paycheck rolling in and getting distributed.

When I was working solo, I could not bill out remotely close to what I can as part of a firm. Not to mention that I had to find a cheap accountant, pay for office space myself, etc.

Re: What harm do minimum wages do?

#168

Post by bumby »

danenania wrote: post #107
prostoalex wrote: post #36

Earlier quoted context omitted.

What formula then is used in calculating “someone worth $50/hr“? Does it omit or include those costs?

It's not always easy to quantify. Consider people like janitors or security guards. They may be absolutely critical to the business running even though they don't produce revenue directly. Even if minimum wage was set to $100/hr for these jobs, it would still be worth it for many companies to hire them, since producing any revenue could be contingent on having people in those positions. At the same time, they are ver…

Another example that has come to mind lately is how do you quantify non-production skilled or intellectual labor?

The value of maintenance, safety, quality are often only only apparent after being cut

Re: What harm do minimum wages do?

#169

Post by gjulianm »

tastyfreeze wrote: post #145
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…

It is not the role of government to set prices of labor or products. If a company wants to pay less than market rate for labor they will find themselves without employees. By letting the market dictate the price of labor, wages certainly fall from the artifically high price now. But, that is the result of people willingly entering a contract for the lower pay. People choosing to work for some money instead of no mone…

> If a company wants to pay less than market rate for labor they will find themselves without employees.

What if multiple companies in an area do that? What incentive does a entering company have to increase wages if employees will take jobs at lower wages nevertheless because they need to eat?

> But, that is the result of people willingly entering a contract for the lower pay.

This viewpoint ignores that people need to work in order to eat. It's not exactly willing if your alternatives are "accept this contract or starve".

Re: What harm do minimum wages do?

#170

Post by mdoms »

seiferteric wrote: post #100

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.

There's "economics" and then there's real world effects. Take some time to study what actually happens in countries with a living wage.
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