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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#211

Post by mdoms »

cynicalkane wrote: post #184
mdoms wrote: post #164

Earlier quoted context omitted.

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.

A wealth measure will give a higher rating to someone who spends on assets than someone who spends on Fortnite skins. What it doesn't do is arbitrarily favor someone who lives in a HCOL area or in a country (sorry, the country) that forces individuals to spend their own money on things like health care.

Re: What harm do minimum wages do?

#212

Post by throwaway894345 »

AmpsterMan wrote: post #197
mywittyname wrote: post #159

Earlier quoted context omitted.

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.

This is a straw man argument. The issue at hand isn't "whether a free market is eminently desirable", but whether or not the relative ability for employers (or any buyer) to wait for a better price on a good or service renders a market unfree. My position is that a market in which one party (the employer in this specific case) can wait for another party (the worker) to come down to market price is entirely congruent with the definition of a free market.

Re: What harm do minimum wages do?

#213

Post by AlexandrB »

AnthonyMouse wrote: post #205
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…

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

This is ridiculous. If I assert that the sky is blue, I don't think I need to provide a list of sources. Under what possible circumstances does the average individual have more negotiating power or more information than a multinational organization with teams of lawyers, an HR department, and access to labour market research?

Edit: To add, when we talk about minimum wage jobs we're usually talking about low-skilled labor. Please explain how a ditch-digger can have negotiating leverage over the average road construction company?

Re: What harm do minimum wages do?

#214

Post by mdoms »

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.

Did this happen in response to minimum wage?

Re: What harm do minimum wages do?

#215

Post by mdoms »

_ah wrote: post #173
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.

Walmart eliminated all greeters last year.

Was there a corresponding increase in minimum wage?

Re: What harm do minimum wages do?

#216

Post by unfortun8 »

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…

Really, none at all? Because a labor market free of manipulation is the only way in which Adam Smith ever contextualizes the idea.

He even describes how the government should protect equality of condition for workers to avoid manipulative behaviors the of bourgeois class.

If seems the information filtering system worked.

Re: What harm do minimum wages do?

#217

Post by throwaway894345 »

fsckboy wrote: post #95
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…

> I'm not aware of any definition of "free market" which supposes that all players have equal leverage. bog standard microeconomics 101 uses as an assumption that no player can thru individual choices affect prices in the market, i.e. all players do have equal leverage, zero. "free market" has more than one usage, but economics's conclusions are valid only if the assumptions are met.

Fair enough; we're using 'leverage' differently. I didn't realize it had a formal economic definition. Never the less, my point stands: that employers can afford to wait for a given worker's labor prices to come down to the market price for their labor is affirmative evidence that the labor market is free whereas the OP considers this evidence that the labor market is unfree.

Re: What harm do minimum wages do?

#218

Post by TuringNYC »

AnthonyMouse wrote: post #205
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…

>> 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.

This works in a theoretical perfect competition in an economics textbook. In real life people have financial handcuffs (vesting periods, mandatory option execution/abandonment on job exit), school districts for children, underwater mortgages, 10% gross transaction fees on home sales/purchases.

Re: What harm do minimum wages do?

#219

Post by tastyfreeze »

gjulianm wrote: post #169
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…

> 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…

You mean price fixing and collusion that are already illegal?

Without price fixing and collusion the employers have to compete for labor. Competition that would as a result improve the compensation for employees.

Re: What harm do minimum wages do?

#220

Post by Sohcahtoa82 »

javert wrote: post #94
avianlyric wrote: post #61

Earlier quoted context omitted.

Free markets are also free of monopolies, and generally expect the actors how have good “information” about the market. This simply isn’t true for the labour market, ignoring the monopoly aspect for the moment, workers don’t have good market information. Worker pay is usually heavily obfuscated by employers so it’s almost impossible for an individual worker to accurately gauge how much they can demand. Addition worke…

The free market is very good at solving information asymmetries of the kind you are talking about. If it isn't being solved, it's probably because of regulation (regulatory capture). Or maybe it isn't a real problem. I'm going to guess in this case it's more the latter than the former.

I've always considered this a very naive idea of how a free market works. It ignores how irrational and short-sighted humans can be, not to mention that many consumers are price sensitive.

A free market will not solve climate change as long as coal and fossil fuels are inexpensive.

A free market prioritizes one thing: Profit. That is all. A free market only solves problems when it is profitable to do so. Yeah, charities exist, but they typically aren't big enough to solve the big problems on a big scale.

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