What harm do minimum wages do? • Hacker News Board

Re: What harm do minimum wages do?

#181

Post by gjulianm » Wed, Aug 19, 2020, 7:51 PM UTC

throwawaysea wrote: post #40

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…

You're redefining what a 'free market' means. If one side has a greater need or desire, that is still within the bounds of what a free market is. The market creates incentives and disincentives to fulfill different market demands, by creating an incentive to supply what's in demand (by paying more) and a disincentive to supply what we don't need more of (by paying less).

Not a greater need or desire, but a fundamental need. It's an important distinction. In a perfect market, if the only offers to buy a product are too low, you will stop production and close the company because you can't make a profit. In the labor market, if the salaries are too low, people will still take the jobs because low income is better than zero income.

Re: What harm do minimum wages do?

#182

Post by flyingfences » Wed, Aug 19, 2020, 7:51 PM UTC

mdoms wrote: post #157

_ah wrote: post #98

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 d…

> 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. Has this ever been shown to be the case? Use real data or case studies.

McDonalds locations now have replaced most of their cashiers with touchscreens.

Re: What harm do minimum wages do?

#183

Post by AnthonyMouse » Wed, Aug 19, 2020, 7:51 PM UTC

nemothekid wrote: post #129

prostoalex wrote: post #17

Earlier quoted context omitted.

> someone worth $50/hr can be paid $5/hr if anyone can do the job What business sectors enjoy consistent 90% gross margins?

I know you were trying to make a broader point, but Facebook has been flirting with 90% gross margins for more than 5 years.

But then you have to ask, how can they do that? And the answer is, of course, the network effect of their social network. The value derives predominantly from that and not what the employees are doing -- if they did the same work for someone else who doesn't control a popular social network, it wouldn't create the same returns.

Re: What harm do minimum wages do?

#184

Post by cynicalkane » Wed, Aug 19, 2020, 7:52 PM UTC

mdoms wrote: post #164

grandmczeb wrote: post #52

Earlier quoted context omitted.

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.

Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much of society's goods and services one ends up using.

More simply, if you save then spend, wealth-based measures will rate you as better off than a person with higher income who just spends. That doesn't make sense.

Re: What harm do minimum wages do?

#185

Post by [deleted] » Wed, Aug 19, 2020, 7:52 PM UTC

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…

[deleted]

Re: What harm do minimum wages do?

#186

Post by changoplatanero » Wed, Aug 19, 2020, 7:53 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 firms in the market are competing against each other and that's what drives up the wages. it's not so much about the relative power between the employee and the employer

Re: What harm do minimum wages do?

#187

Post by dmitriid » Wed, Aug 19, 2020, 7:53 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…

> To "live" at what standard of living?

Decent.

Roosevelt:

""" In my Inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.

By business I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.

"""

> A smartphone?

Yes

> A recent one?

Define "recent". One that has internet connectivity, allows you to install apps that are increasingly required today (banks, school, mail, auth etc.)

> What standard of medical care?

All of it except cosmetic. A.k.a. universal healthcare.

> What about entertainment?

What about it? Define entertainment. Let's do this way more broadly: how about vacations, sick leaves and parental leave?

> What if someone wants only to eat organic, fair trade food?

Yes. The poor cannot escape bad eating habits because (especially in the US) more often than not they have no access to healthy food, and healthy food is much more expensive than current government assistance can cover.

Re: What harm do minimum wages do?

#188

Post by Ekaros » Wed, Aug 19, 2020, 7:54 PM UTC

sushshshsh wrote: post #160

david38 wrote: post #116

Earlier quoted context omitted.

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.

We are already seeing Flippy the burger flipping robot taking over jobs originally meant for humans. The technology for Flippy is only getting cheaper and better, the quality of human labor is already at its most optimal point and is only getting more expensive due to laws passed. Now, you could make Flippy the robot illegal, and maybe x number of businesses would eat the cost of the more expensive workers. But somet…

That's not very good argument. As we are where we are now because our productivity has increased insanely since invention of agriculture...

If burger flipping robot is more productive than human, we should replace all humans with such robots.

Re: What harm do minimum wages do?

#189

Post by AmpsterMan » Wed, Aug 19, 2020, 7:54 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…

Free Market used colloquially is very broad and usually means free from government intervention.

Free market in the microeconomic context is a market in which no one entity can significantly move the prices of a product but deciding how much to supply, therefore they don't have price setting power.

A second condition is relative ease of entering and exiting a market for competitors.

Coase's theorem is a good place to look for when thinking about power dynamics in a free market. Essentially, perfect information is a requirement when it comes to optimal decisions. Absent that, some party will be able to absorb some surplus, one essence "getting a better deal"

Re: What harm do minimum wages do?

#190

Post by tastyfreeze » Wed, Aug 19, 2020, 7:55 PM UTC

nakedlunch wrote: post #152

tastyfreeze wrote: post #145

Earlier quoted context omitted.

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…

Is the freedom to accept a contract for poverty wages to avoid starvation a desirable feature in our society?

If labor costs less products as a result cost less. How do you reconcile your view with the success of Singapore? A country with no minimum wage and a comparatively free market. There is income disparity in every time and every place. The question to ask is do the rules of the game allow anybody to succeed. Minimum wage is a rule that says some people just don't get to play.