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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#191

Post by dmitriid »

jlawson wrote: post #175
jmcgough wrote: post #93

Earlier quoted context omitted.

> 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.

Only possible thanks to government policy wielded through regulatory capture. Not a free market outcome.

Ok then. What would taxes look like in a "free market" where "no one is entitled to anything"?

Re: What harm do minimum wages do?

#192

Post by AnthonyMouse »

jusssi wrote: post #163
seiferteric wrote: post #83

Earlier quoted context omitted.

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.

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

Because that's how newcomers gain market share.

> 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.

But then the high margins are still there, so the dynamic that attracts new entrants is still there.

The markets that maintain high margins are the ones with barriers to entry. Which, of course, we try to avoid as a matter of policy, so any policy that relies on their existence is quite problematic.

Re: What harm do minimum wages do?

#193

Post by OCASM »

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?

Is starvation preferable to getting a low wage job?

You start somewhere. Minimum wage laws just reduce the amount of opportunities low skill workers can choose from.

Re: What harm do minimum wages do?

#194

Post by flyingfences »

eesmith wrote: post #122
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…

Indeed we should - demand the repeal of Taft–Hartley Act and other laws which have nerfed collective bargaining power far from any "natural" point. Jurisdictional strikes, wildcat strikes, solidarity or political strikes, secondary boycotts, secondary and mass picketing, closed shops, and monetary donations by unions to federal political campaigns are all part of the freedom to negotiate the terms of our employment,…

I can't tell if you're saying that sarcastically, but I do agree unironically.

Re: What harm do minimum wages do?

#195

Post by jefftk »

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…

> Figure in the 12%[0] Federal income tax

You're forgetting the standard deduction: $12k for an individual. This brings taxable income to $18k. Per https://www.irs.gov/pub/irs-pdf/i1040tt.pdf that puts tax at $1,929, so $30k becomes $28k after Federal income tax and not $26k.

Re: What harm do minimum wages do?

#196

Post by EduardoBautista »

clairity wrote: post #63
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 prof…

I am wondering if this would convince many people to move to areas with lower cost of living.

Re: What harm do minimum wages do?

#197

Post by AmpsterMan »

mywittyname wrote: post #159
brokensegue wrote: post #114

Earlier quoted context omitted.

ec101 often assumes perfect competition. google defines that as. >the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers. so everyone has equal leverage (zero).

Assuming a perfectly spherical cow...

That's kinda the point. We define what a spherical cow is to be able to compare the real world against it. The problem for economists is that lay persons take that spherical cow to be truth and base whole ideological systems on those spherical cow.

Re: What harm do minimum wages do?

#198

Post by gjulianm »

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…

> 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.

As a counterpoint, where do we put the threshold then? I could argue that if I could pay employees in breadcrumbs, I could create a new company that would be profitable and I would increase employment!

In this issue, either you're driven by empirical data of the exact effect of minimum wage on social welfare (which is impossible to achieve without actually doing those changes) or you're driven by ideology. Mine is that someone with a full time job should at least be able to live a decent life, specially in our current society where we clearly have the capacity to do so.

Re: What harm do minimum wages do?

#199

Post by kennywinker »

flyingfences wrote: post #182
mdoms wrote: post #157

Earlier quoted context omitted.

> 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.

minimum wage in the usa has been largely static or declining since 1968, if you control for inflation (1). Given that, it seems like the thing driving the mcdonalds cashier job losses are not minimum wage laws, but rather technology and probably the economic pressure to maximize shareholder value caused by the stock market.

(1) https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...)

Re: What harm do minimum wages do?

#200

Post by colinmhayes »

Fargren wrote: post #72
colinmhayes wrote: post #39

Earlier quoted context omitted.

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

If I dig one hole a day with my hands and ten holes a day with a shovel, I still dug the nine extra holes even if I don't own the shovel.

Not really sure what you're saying as this is an example of my point. The growth was caused mostly by the shovel, and partly by the worker learning to use the shovel. Wages have grown to show that.
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