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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#271

Post by saas_sam »

anigbrowl wrote: post #246
_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…

No they're not. Employers are prohibited from paying them below a certain amount. No employee can be or ever has been prosecuted/sued for accepting sub-minimum wage. I realize you're trying to say minimum wages limit economic opportunity for ad-hoc and casual labor that the poorest rely on. But you've fatally damaged your argument by presenting it in an untruthful way.

Can you locate for the audience where the poster you are responding to said anything to the effect of "employees can be prosecuted/sued for accepting sub-minimum wage"? I read his/her post a few times and do not see where that was stated. On the contrary, I see where he or she said that certain _jobs_ were illegal. Your point about who gets prosecuted or sued comes across as a total non-sequitur, at least to this reader! A very anti-charitable one at that with an aftertaste of moral grandstanding.

Re: What harm do minimum wages do?

#272

Post by jandrese »

AnthonyMouse wrote: post #183
nemothekid wrote: post #129

Earlier quoted context omitted.

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.

In economics this is called a barrier to entry. Industries with lower barriers of entry are more competitive (see: restaurants) and have lower margins. Industries high high barriers to entry tend to gravitate towards monopolies. For industries with the highest barriers to entry (like tap water) markets don't work and we have to use heavy handed regulation to avoid letting the industry completely screw over the populace (see: water barons).

Of course it is pretty weird to think of a social network as a utility.

Re: What harm do minimum wages do?

#273

Post by abstractbarista »

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.

Back-breaking farm work is done largely by humans who are present in the country illegally.

Re: What harm do minimum wages do?

#274

Post by modeless »

AnotherGoodName wrote: post #127
grandmczeb wrote: post #104

Earlier quoted context omitted.

If you add American's median household healthcare expenditure (~$8,200) to Australia's consumption, America's consumption is still 20% higher. > I mean Australia beats the USA by any quality of life index out there. I don't think it's worth it to get into an argument about which country is "better", except to say a lot of indexes are designed to advocate for the creator's goals rather than as a useful comparison. E.g…

>If you add American's median household healthcare expenditure (~$8,200) to Australia's consumption, America's consumption is still 20% higher. Yes but the point is that's one example. I'm not going to got through the full list but i can't think of one USA government provided service that's better quality or requires less private intervention compared to social democracies like Australia and it shows up in so many in…

Online tax filing is free for everyone under the median income. Private toll roads may or may not be "more" common but they are certainly rare. Average internet speeds are twice Australia's. https://www.fastmetrics.com/internet-connection-speed-by-cou...

Re: What harm do minimum wages do?

#275

Post by gjulianm »

bgorman wrote: post #243
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…

Your chain of causality is actually completely wrong. At 15 dollars an hour only a few companies can hire unskilled workers. At 1 dollar an hour many people can pay workers that amount, so there is more competition out there for wages. The idea that there is a monopolistic employer in the US labor market is laughable. Even for monopolistic industries like telecom there are multiple options. Minimum wage jobs should n…

> Your chain of causality is actually completely wrong. At 15 dollars an hour only a few companies can hire unskilled workers. At 1 dollar an hour many people can pay workers that amount, so there is more competition out there for wages.

That theory is good if there's a surplus of job offers, something that doesn't happen outside of very specific sectors.

Moreover, your argument assumes that changing jobs is easy and risk-free, when in reality it's not, specially for unskilled workers.

> Minimum wage jobs should not be expected to be a long term viable career choice.

Why not? Of course it's not the optimal career choice, but why wouldn't one be able to live off a full-time job?

> Minimum wage jobs are a way for people to get their first experience, and then move one once they have gained valuable skills.

Yeah, the "serving fast food" skill that is so demanded in the current job market.

> workers need to be able to get paid 15 dollars an hour without needing to relocate or learn new skills

If you don't get paid a livable wage, you can't save for moving and/or changing jobs, and it will be far harder to pay and/or have time for further education.

Non-livable wages just lock people into poverty. When the alternative is losing your house, or your healthcare, or starving, people will be forced to make non-optimal long-term decisions because it's their only option.

Re: What harm do minimum wages do?

#276

Post by TheCoelacanth »

prostoalex wrote: post #28
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…

> 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.

If eating a hamburger is better than starving, wouldn't eating 10 hamburgers be 10x better?

Re: What harm do minimum wages do?

#277

Post by mdoms »

fragsworth wrote: post #260
mdoms wrote: post #214

Earlier quoted context omitted.

Did this happen in response to minimum wage?

Yes, because if there were no minimum wage, they would simply pay employees less and forget about the touchscreens.

So these touch screens are not being introduced in countries with low or no minimum wage?

Re: What harm do minimum wages do?

#278

Post by cik2e »

strbean wrote: post #11
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 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…

There's a lot of very understandable confusion in this thread about the directionality of the unemployment-inflation tradeoff. It's not that increased employment causes inflation, but rather the idea is that inflation will increase if central banks try to get there by printing money. So the frequently used statement of "increased employment will cause inflation" should only be considered in the context of monetary policy. But the phrasing is unfortunate because it implies the wrong causality.

https://en.wikipedia.org/wiki/Full_employment#The_NAIRU

Re: What harm do minimum wages do?

#279

Post by mdoms »

fragsworth wrote: post #252
mdoms wrote: post #215

Earlier quoted context omitted.

Was there a corresponding increase in minimum wage?

No, but I don't think that makes the point any less relevant.

Well either the greeters became more expensive or their utility dropped, if we're taking a simplistic market-based approach. So which is it?

Re: What harm do minimum wages do?

#280

Post by Stupulous »

entropicdrifter wrote: post #174
sushshshsh wrote: post #160

Earlier quoted context omitted.

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…

Or you could make an automation tax and use it to fund UBI

You could only use it to help fund UBI, unless UBI is significantly less than minimum wage. If the price of buying the robot and running it plus automation tax exceeds what you would spend on employing people at minimum wage, businesses would just keep employing people.
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