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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#201

Post by throwaway894345 »

brokensegue wrote: post #114
throwaway894345 wrote: post #85

Earlier quoted context omitted.

> 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…

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).

I think this is a difference without a distinction. I was using "leverage" in a non-standard way (I didn't realize it already had a formal economic definition). The parent cited the relative ability for some employers to wait for lower labor prices to be evidence of an unfree market--such a definition of 'free market' seems like it would preclude differences in wealth (and thus runway to await better market prices) between any two players in a market.

Re: What harm do minimum wages do?

#202

Post by novok »

aNoob7000 wrote: post #126
pratik661 wrote: post #75

Earlier quoted context omitted.

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…

The Federal Reserve has been trying to get inflation above 2% consistently for over 10 years. What are the chances that they get that even now with rates at zero? Also, I would disagree with you about the Federal Reserve not targeting the stock market or other assets. Anytime in the past couple of years that the stock market in the USA has dropped roughly 10-15%, the Federal Reserve has jumped in dropped rates. They…

If you really want to up inflation, go towards a %100 employment target :p

Re: What harm do minimum wages do?

#203

Post by hankchinaski »

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…

high regulation and subsidies effectively make ‘doing business‘ a nightmare. the real question is: who are the value creators? how can you reward everyone appropriately based on how much value they create and how much risk they incur whilst keeping an healthy base level (minimum wage) for those who don’t? i think the answer is in the middle. too much regulation is harmful for businesses which are ultimately the risk takers and the value creators in our economies

Re: What harm do minimum wages do?

#204

Post by [deleted] »

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.

[deleted]

Re: What harm do minimum wages do?

#205

Post by AnthonyMouse »

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

You're just asserting this without any argument or evidence.

> 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.

Workers don't specifically need a job at that company. Even if they need a job, they can go work somewhere else. And if that isn't the case, you have bigger problems than minimum wage.

> The only way to counter that push is by giving more power to the worker, and in low-skilled fields with lots of available workers, you need to do that through regulations and subsidies.

Even if you want to do this, it still makes minimum wage a ridiculous policy, because it harms the same workers it's purporting to help. The ones who work for companies that can absorb the cost get more, but the others lose their jobs. When there are policies that do only one and not the other (e.g. UBI), there can be no justification for the one that does the bad thing in exchange for no relative advantage.

Re: What harm do minimum wages do?

#206

Post by unfortun8 »

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…

Irony is Adam Smith only brings up markets in terms of a free labor market.

Labor must be free to move among opportunities. Fearing that extreme division of labor would make a person a limited thinking tune easily swayed by corrupt political intentions.

Amazing how 200+ years ago, and even more if you lump Plato & Aristotle’s awareness of human behavior, how true much of their concerns still apply. It’s almost as if humans haven’t evolved much socially, we haven’t escaped the same theme. We’ve merely improved the world around us.

Re: What harm do minimum wages do?

#207

Post by dragonwriter »

adrr wrote: post #66
prostoalex wrote: post #28

Earlier quoted context omitted.

> 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.

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

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

No, the government is subsidizing the worker, and in a system of means-tested aid doing so less than it would be without the job.

If you can't employ people at wages that don't get them fully off public aid, then people can't get the jobs that let them build the skills to be employable at decent wages. Your plan is a recipe for (1) killing businesses and tax revenue that support public assistance, and (2) killing people's ability to move up and off of public assistance, so that for any given minimum standard of living we’ll need more public funds to reach it but have less available.

It's much better to tax capital returns and use the proceeds to support the un- and under-employed (whether permanent or transitional) then it is to block the onramps to people becoming employable at wages that are livable.

And that's even ignoring that Medicaid and other public assistance usually aren't based solely on individual income but household circumstance, so that the required minimum wage by that standard would be dependent on household circumstances, which is problematic.

Re: What harm do minimum wages do?

#208

Post by dasil003 »

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…

The role of government is to set the rules of the game to provide for the livelihood of all citizens. Free markets bring certain efficiencies but they are not a priori good and virtuous. If they bring the best outcome for society as a whole then we should lean into them, if not then we should consider regulation of some form.

Increasing income inequality should be very alarming to everyone. The bottom 90% because they're getting screwed, and the top 10% because the perfection of conservative talking points and scapegoating of minorities and immigrants will not address the truth on the ground: nostalgia for post-war prosperity will not bring the jobs back. Policy in today's interconnected world is complex and almost entirely driven by expert lobbyists representing special interests who donate to both political parties to guarantee their influence. It's going to get worse and worse until either the 1% see their own danger or the pitchforks come out.

Re: What harm do minimum wages do?

#209

Post by kennywinker »

MuffinFlavored wrote: post #71
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…

> But i believe we should start doing this for US companies as well. We can "call out" whatever you want. People vote with their dollar. Target, Walmart, cheap resellers on AliExpress/Amazon are "winning" every day because the most important thing most consumers care about is rock bottom price. I don't think "calling out" will do much other than virtue signal.

Here's the trick. If choice has been eliminated, i.e. walmart has replaced your local shop, you can no longer vote with your dollar - pressuring the companies (via "calling-out") to give you options becomes the only choice available.

That said, there are a ton of areas where we still have choice. In those cases, people do need to become more aware of the impact of their purchasing decisions - but in those cases I agree with you: making different decisions is the actual required action.

Re: What harm do minimum wages do?

#210

Post by GedByrne »

dannyw wrote: post #16
strbean wrote: post #11

Earlier quoted context omitted.

> 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…

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.

Not necessarily. In this case the business seeks an alternative to workers such automation or simply going without.
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