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What harm do minimum wages do?

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Re: What harm do minimum wages do?

#321

Post by dredmorbius »

WalterBright wrote: post #292
throwaway894345 wrote: post #217

Earlier quoted context omitted.

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.

The lockdowns are (incidentally, effectively) a case of collective action. It's not a case of one worker withdrawing from the market, but all workers.

Individually, with any positive level of unemployment, any one worker's nonparticipation is mooted by a ready waiting pool of available workers. Eventually the hold-out gets hungry. Or starves.

Blacklists operate similarly: businesses can afford the exclusion, the (unorganised) excluded cannot.

[I]n every part of Europe, twenty workmen serve under a master for one that is independent... What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen....

-- Adam Smith, Wealth of Nations, 1776

https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...

Re: What harm do minimum wages do?

#322

Post by jldugger »

fulafel wrote: post #125
jldugger wrote: post #18

Earlier quoted context omitted.

You probably know this but the opponents of raising the minimum wage fear that it will lead to inflation. The old adage "labor is 2/3rds the cost of everything."

Many countries effectively do this and it doesn't make inflation get out of habd.

States can and sometimes do set higher rates than the national minimum. And frankly, a national minimum wage doesn't make sense -- why should wages in low CoL areas like rural Alabama be the same as high CoL areas like NYC/SF?

Even state lines may be too coarse grained for minimum wage policies, Since there are many metro areas that cross state lines. On the other hand, economists have been able to treat these places as natural experiments with mixed success: when one state raises the minimum wage but the other does not, you can measure a variety of things, including regional inflation. But it's still difficult to disentangle causation and substitution effects, since the minimum wage directly affects only a small portion of society. The evidence on that front has been... shedding more heat than light. I'm not sure anyone's proved conclusively that inflation does or does not happen, or that unemployment does or does not happen.

Probably the most interesting study I've heard of is one looking at restaurants as a sort of model species for minimum wage jobs, the same way that biologists study fruit flys because they have short lifecycles. The supposed evidence there is that the type of restaurants change in response to wage increases: more self-bussing, less staff hired per dollar turnover. The people left get paid more, but fewer people employed overall. That said this was from a podcast discussion and I haven't reviewed the peer reviewed article personally.

Re: What harm do minimum wages do?

#323

Post by gamblor956 »

Aunche wrote: post #258
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.…

>That could theoretically increase unemployment in some industries with razor thin margins, but it's far from a given. It's not a given when you're talking about a small region like Seattle. However, increasing the minimum wage to the entire US would dramatically increase unemployment in the poorest areas. The minimum wage is why territories like American Samoa and Puerto Rico have the highest unemployment. Edit: cha…

Puerto Rico has structural issues related to endemic corruption that discourages business investment, and that is why companies generally avoid doing business there despite the very generous tax incentives for doing business in Puerto Rico.

PR's minimum wage has very little to do with it, except for being a convenient scapegoat.

Re: What harm do minimum wages do?

#324

Post by klodolph »

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…

The labor market ain't free. There's minimum wage, all these regulations around payroll and healthcare. Consider that 40 hours a week is standard... why is that standard? Is it because a majority independently arrived at that same conclusion? Or is it because of overtime laws? Consider the W2 vs 1099 employee, or the fact that you can't purchase healthcare at a competitive rate outside of employment, and employment isn't required to provide that below 30 hours/week.

Doesn't seem very free to me, sounds downright byzantine.

Re: What harm do minimum wages do?

#325

Post by DINKDINK »

abdullahkhalids wrote: post #60
ccffpphh wrote: post #47

Earlier quoted context omitted.

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.

Universal Declaration of Human Rights Article 3 Everyone has the right to life, liberty and the security of person. Article 22 Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dign…

Positive and Negative Rights or Coercion and Non-Coercion Rights

"Negative and positive rights are rights that oblige either inaction (negative rights) or action (positive rights). These obligations may be of either a legal or moral character. The notion of positive and negative rights may also be applied to liberty rights." https://en.wikipedia.org/wiki/Negative_and_positive_rights

Rights are either (1) liberties that are stipulated to not be infringed by the government (Saying "Dear Leader is a bad leader" is protected speech and taxes/government cannot be used to prosecute someone for saying it) or (2) The ability to demand services to be rendered by the government so one's desires are fulfilled (I demand the ability to take from you via taxes to pay police so that I can have protective forces / police to defend me saying "Dear Leader is a bad leader")

Organizing political unions around negative rights (1) is socially scalable and recursible: "who among us agrees we will never kill our fellow man? of those in the subset, who will agree to never assault someone unless if and only if the person who is to be assaulted, has already assaulted someone" (2) is not socially scalable "Who agrees we should coerce person/group x if some of you feel person/group y wants what person/group x has"

If you think it's possible to write laws the subsidize the well-being of the destitute, Please let me know who I should sue for landing on a desert island and starving to death. Reality isn't fortunate nor charitable -- consensual, opt-in unions can be.

Re: What harm do minimum wages do?

#326

Post by frenchyatwork »

dependenttypes wrote: post #134
bakuninsbart wrote: post #112

Earlier quoted context omitted.

> The issue is that nobody is entitled to anything. That's an ideological statement. You may subscribe to it, but not everyone has to. Society is fundamentally based on the notion of shared rights and duties, what these rights and duties entail can be up for debate, but if you don't want to owe anyone, you will have to live a pretty lonely, primitive existance in Siberia or Alaska.

> a pretty lonely Nowadays with the internet one does not need to be lonely even if they are away from society. In addition others might decide to follow them. > primitive existance in Siberia or Alaska. This does not make much sense. Why would living somewhere else automatically give them any duties? Anyway, I do not see the point of this argument. It is like saying to a gay person "if you don't want to be discrimin…

> Nowadays with the internet one does not need to be lonely even if they are away from society.

How are you going to pay for the internet? If you want to operate with state currency, you need to abide by the rules of the state. Render unto Caesar ...

Edit: I suppose you could try doing it with bitcoin. Best of luck if you try!

Re: What harm do minimum wages do?

#328

Post by jsmith99 »

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…

2% is the Fed's inflation target.

Re: What harm do minimum wages do?

#329

Post by Broken_Hippo »

OCASM wrote: post #178
david38 wrote: post #116

Earlier quoted context omitted.

Minimum wage, applied universally, absolutely validates worth of a worker. If the minimum wage is set too high to plant grapes for example, grapes will not be grown. $15/h too high to flip burgers? Ok, I guess we don’t need fast food. Oh wait. Except it somehow doesn’t put the corps out of business.

Destroys small businesses and consolidates big corps as monopolies.

If you cannot pay your workers a decent amount, perhaps you should not have your small business. Working for a small business shouldn't mean sacrificing your ability to buy food. Offer something better than the large places.

Re: What harm do minimum wages do?

#330

Post by macspoofing »

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…

Where are you getting all this stuff from? It's like you're only reading communist blogs where they engage in creating fictitious straw-men of every aspect of a market-based economy. This is not how the world works.

>The labor market is not a free market: companies have more power in negotiation

That's not what a free market means. And I don't know how you can say companies have more power in negotiation. They post their rates, and people apply or they don't. There are millions of alternative jobs. If I sell my car, I post the price and if I don't like the offer, I don't take it. Are you claiming that this is not an aspect of the free market?

A friend of mine is a shift supervisor at a food supplier. He uses a staffing agency to augment their full-time workforce during busy seasons. The company he works for pays above minimum wage (and so does the staffing agency even after commission). If he calls in 10 people, maybe 6 will come in and 2 will leave mid-shift (and those 10 are those that accepted the job). If he calls people in on Saturday, those ratios are even worse. He offers full-time positions to agency workers he likes and gets denied often because those workers may actually prefer the flexibility of agency work (e.g. they can choose to work this week, but not next week).

There are wages that people will just not work for. Even if minimum wage laws were lifted, people aren't going to go work at MacDonald's for $1/hr. Talk to any small business owner and hear what they have to say about that. And you also see this will undocumented labour (i.e. where minimum wage regulations are ignored). Those laborers may be getting less than minimum wage (but even that isn't a sure thing, when factoring in the type of job - skilled or unskilled - and lack of taxes), but they certainly aren't getting paid pennies either.

>Workers can't usually live too much without finding a job.

Sure they can. What are you talking about? Tens of millions of people, for all kinds of reasons, either choose not to work, or choose to work part-time.

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