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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#291

Post by klmadfejno »

nickff wrote: post #176
klmadfejno wrote: post #130

Earlier quoted context omitted.

I don't think that's a reasonable point of view. Most minimum wage jobs are not productivity jobs, but jobs that need to get done by someone but require no special skills. That is, you can't easily define the value of the sanitation worker who keeps a restaurant clean enough to pass health standards. You just observe that there's enough people willing to do it that you can offer a low wage. What jobs are being made i…

Many of the people employed at very low wages have attributes which mean that they are not worth hiring at higher costs. Factors such as lack of job history, attendance issues/unreliability, language issues, etc. mean that the employer will opt for a more 'attractive' candidate if there is a price floor. As an example, if you are looking for a bottle of wine to accompany your Tuesday night dinner, you might opt for a…

> any of the people employed at very low wages have attributes which mean that they are not worth hiring at higher costs.

Unless the job needs to be done, which is generally the case among minimum wage workers. That was my point. You need cleaning staff, and retail workers, and what not. You still hire them even if they cost more. People don't have intrinsic prices. It's not like an old person costs exactly $4.32 an hour and therefore is unable to find work if the minimum wage is $7.25.

Re: What harm do minimum wages do?

#292

Post by WalterBright »

throwaway894345 wrote: post #217
fsckboy wrote: post #95

Earlier quoted context omitted.

> 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.

> employers can afford to wait for a given worker's labor prices to come down to the market price for their labor

That seriously underestimates the cost of a business being idle. Ample evidence for that is the devastation wreaked on businesses from the recent lockdowns.

Re: What harm do minimum wages do?

#293

Post by lukevdp »

danenania wrote: post #10
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…

Right, many minimum wage opponents focus on the scenario where someone is worth e.g. $14/hr to a business, and rightly point out that this person won't be hired with a $15/hr min wage. BUT without a minimum wage, someone worth $50/hr can be paid $5/hr if anyone can do the job. It strikes me that this situation is far more common than the first scenario, and minimum wage opponents tend to ignore it in their arguments.…

Someone is not worth $50/hr if someone else is willing to do the same job with equal capability for $5/hr.

Re: What harm do minimum wages do?

#294

Post by wdn »

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 labor market is a free market. If you don't agree the employer offer is fair, you don't have to accept. When you find a better offer, you go to the better offer.

As for minimum wage, it is hurting the unskilled workers, like high school students, college students who are looking for experience. If you are stuck in a minimum wage job, then this is what the market is paying for your skill set. If you think you worth more, then proof it, don't blame the system.

When I was in high school, I was working in an unpaid internship to get some experiences. I don't know if there is any unpaid internship now or if it is even legal now.

Re: What harm do minimum wages do?

#295

Post by pwinnski »

AnthonyMouse wrote: post #253
pwinnski wrote: post #225

Earlier quoted context omitted.

Yes, there are some circumstances in which labor ends up more concentrated after a minimum wage hike, but other circumstances in which that is not the case. The article at hand does a decent job summarizing the different observations people have made.

> Yes, there are some circumstances in which labor ends up more concentrated after a minimum wage hike, but other circumstances in which that is not the case. But that's what I'm saying. Minimum wage is ridiculous because there are alternative policies that don't do the bad thing at all, not even sometimes.

Alternative policies that don't involve people being woefully underpaid? Such as what?

Re: What harm do minimum wages do?

#296

Post by jandrese »

trentnix wrote: post #289
jandrese wrote: post #284

Earlier quoted context omitted.

I'm not sure how your first three paragraphs support the fourth. Illegal immigration drives down wages so we shouldn't have a minimum wage?

Illegal immigration is a side effect of minimum wage. And minimum wage puts unskilled Americans (or Americans whose skills aren't valuable because of a changing market) at an unfair disadvantage in their attempts to obtain employment and acquire new skills. Sorry if that wasn't clear in my post.

So why not provide a legal path to immigration instead of abolishing the minimum wage then?

Re: What harm do minimum wages do?

#297

Post by WalterBright »

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).

A lot of people seem to think that free markets require perfect information and perfect competition.

These requirements are not remotely necessary for free markets to work and work well.

Re: What harm do minimum wages do?

#298

Post by klmadfejno »

_ah wrote: post #180
klmadfejno wrote: post #130

Earlier quoted context omitted.

I don't think that's a reasonable point of view. Most minimum wage jobs are not productivity jobs, but jobs that need to get done by someone but require no special skills. That is, you can't easily define the value of the sanitation worker who keeps a restaurant clean enough to pass health standards. You just observe that there's enough people willing to do it that you can offer a low wage. What jobs are being made i…

Sanitation workers may be low-skill but they are high-value. I don't think this is a good example. In contrast, a friend of mine recently hired the teenager next door with cash (for less than the local minimums) to do some manual yard labor. This job simply wasn't worth paying for at a higher cost; my friend would have left the work un-done. But in this case the value proposition at a lower price was acceptable and t…

Well sanitation workers make up a fairly large fraction of the minimum wage workers so that's a representative group of people for the matter at hand.

You're not wrong that unnecessary private exchanges like that might be lost, but those are unnecessary, not that noteworthy in terms of economic scale, and generally aren't relevant to minimum wage laws anyway. My point is precisely that most of the labor that is priced at minimum wage is not like the example you describe.

Re: What harm do minimum wages do?

#299

Post by anoraca »

wdn wrote: post #294
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 labor market is a free market. If you don't agree the employer offer is fair, you don't have to accept. When you find a better offer, you go to the better offer. As for minimum wage, it is hurting the unskilled workers, like high school students, college students who are looking for experience. If you are stuck in a minimum wage job, then this is what the market is paying for your skill set. If you think you wort…

Unpaid internships are definitely still a thing, and they are yet another way that privileged people have an advantage in society. Not many people can afford to work for free unless they have family wealth to support them, or are willing to go into large amounts of debt. Unpaid internships should probably be illegal to make things more fair.

Re: What harm do minimum wages do?

#300

Post by CJefferson »

seiferteric wrote: post #83
danenania wrote: post #10

Earlier quoted context omitted.

Right, many minimum wage opponents focus on the scenario where someone is worth e.g. $14/hr to a business, and rightly point out that this person won't be hired with a $15/hr min wage. BUT without a minimum wage, someone worth $50/hr can be paid $5/hr if anyone can do the job. It strikes me that this situation is far more common than the first scenario, and minimum wage opponents tend to ignore it in their arguments.…

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.

Between all the patents, it would be basically impossible to start a new mobile phone company from scratch which made its own chips, for example.
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