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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#411

Post by Aunche »

dragonwriter wrote: post #266
Aunche wrote: post #258

Earlier quoted context omitted.

>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…

> The minimum wage is why territories like Guam and Puerto Rico have the highest unemployment. But...they don't, even though Guam, unlike several states, has a higher minimum wage than the Federal level. https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr...

I must have been thinking about another territory rather than Guam. It looks like unemployment was counted before the pandemic for the US territories and after the pandemic for states.

Re: What harm do minimum wages do?

#412

Post by nobody9999 »

jefftk wrote: post #195
nobody9999 wrote: post #87

Earlier quoted context omitted.

>The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost cities and states. The right policy for San Francisco isn't necessarily right for Birmingham. Your point is a valid one. At the same time, if you look at how these numbers actually play out in reality, $15/hour (assuming 40 hours/week -- certainly not a given an…

> Figure in the 12%[0] Federal income tax You're forgetting the standard deduction: $12k for an individual. This brings taxable income to $18k. Per https://www.irs.gov/pub/irs-pdf/i1040tt.pdf that puts tax at $1,929, so $30k becomes $28k after Federal income tax and not $26k.

>You're forgetting the standard deduction: $12k for an individual. This brings taxable income to $18k. Per https://www.irs.gov/pub/irs-pdf/i1040tt.pdf that puts tax at $1,929, so $30k becomes $28k after Federal income tax and not $26k.

A fair point. I'd point out (again) that many folks earning minimum wage don't get 40 hours/week. What's more, once you add in health care costs, not to mention any children or other dependents, that extra ~$175/month won't go too far.

Re: What harm do minimum wages do?

#413

Post by missedthecue »

gjulianm wrote: post #135
missedthecue wrote: post #42

Earlier quoted context omitted.

Yes, but you can buy from anywhere other than Krogers and the cost of switching is almost negligible. A job is very, very different in that regard. It doesn't matter who I buy from, I need food much more than any retailer needs my business. I can sell my labour to many different companies with a relatively low switching cost. The average time people between jobs is lower than it has ever been. Learning the relevant s…

> I can sell my labour to many different companies with a relatively low switching cost. Well, I disagree on this. Maybe you specifically can do it, but housing prices, healthcare costs, transport cost, family charges, etc, can make the cost and risk of switching prohibitive. Not to mention that "just switching" doesn't mean prices will be better. Just have a look at the latest stats on working poor people to imagine…

Free market is not the same thing as a perfectly competitive market

Re: What harm do minimum wages do?

#414

Post by gjulianm »

cactus2093 wrote: post #257
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 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 assuming everything else you've said is true, that's quite the leap to make. And also quite the oversimplification. There are lots of regulations and subsidies that have been tried where the unintended consequences end up negat…

Of course actual policy is difficult, and complex. UBI or guaranteed income would seem to be the better way to give workers more leverage, but for that one needs to accept that we indeed need to give workers more leverage. You'll see in this thread a lot of people arguing that less regulation will somehow lead to better wages, when in reality that will only increase the power imbalance between workers and businesses and push wages lower.

Re: What harm do minimum wages do?

#415

Post by dragonwriter »

lokar wrote: post #287

The anti-min-wage / free market argument ignores a key fact: as a society we have decided we won't let people starve to death. So, if someone can't make ends meet, we will (via taxes) support them, at least to some extent. This support factors into the wage negotiation, allowing the employer to force a lower wage (absent a state imposed min). Absent state sate welfare style support many low wage (min and sub-min) job…

> Absent state welfare style support many low wage (min and sub-min) jobs would simply not work, people could not feed themselves, and they would not accept the jobs.

Given the choice between nothing and less than adequate pay, they would accept the jobs to buy a little more time to find something better before starving.

They wouldn't be sustainable, but without public welfare people are going to grasp at what straws they have, not turn away something when they have nothing.

Re: What harm do minimum wages do?

#416

Post by munk-a »

whatshisface wrote: post #362
dnautics wrote: post #312

Earlier quoted context omitted.

there is this pervasive assumption in economic theory that if two things have the same price they have the same value in some global sense. To make an obvious example: If you are allergic to peanuts, then the value of a peanut to you is quite extremely different to the value of that same peanut to someone else. This is unaffected by the price of the peanut.

If I'm allergic to peanuts and the price of peanuts is $100/pound, the value of a pound of peanuts to me is still $100... because I can sell them and buy something I'm not allergic to.

There are a lot of assumptions required to have that statement be sensical including a lack of transaction fees (including, just, effort - you're assuming the time it takes for you to arrange the purchase and resale is without value) and extreme price stability. 100$ worth of peanuts isn't worthless to someone with a peanut allergy but it is certainly worth less than it is to someone without since to the person with an allergy the only value of peanuts is as a bartering currency.

Re: What harm do minimum wages do?

#417

Post by aidenn0 »

Stupulous wrote: post #280
entropicdrifter wrote: post #174

Earlier quoted context omitted.

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.

That ignores productivity gains. When automation makes things cheaper, it lowers the living wage.

Re: What harm do minimum wages do?

#418

Post by littlestymaar »

dredmorbius wrote: post #356
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.

Keep in mind that "free market" and "perfect competition", whilst commonly used interchangably, are in fact distinct terms. Few standard economic texts even mention "free market" whilst "perfect competition" is a standard microeconomic term (along with monopoly/monopsony and oligopoly/oligopsony), referring almost entirely to marginal value analysis, price/quantity behaviours, allocations of producer/consumer surplus…

> Keep in mind that "free market" and "perfect competition", whilst commonly used interchangably, are in fact distinct terms.

But the author used a “textbook” result that is only true in case of perfect competition, so he must be talking about perfect competition right?

Re: What harm do minimum wages do?

#419

Post by dlp211 »

wdn wrote: post #407
Broken_Hippo wrote: post #313

Earlier quoted context omitted.

Unlike, say, buying a game, most folks can't just decide not to work. If you need to eat, pay rent, child support, need health insurance, or a slew of other things - you can't say no. You must work. Period. The safety net isn't good enough not to take that minimum wage job, especially if you are a childless adult. The only real thing keeping you from being paid less is minimum wage, and that's there because companies…

No one is saying you shouldn't work at a job where you think it is unfair compensate to your skill sets. What I am saying is this, if I think I worth $50/hr and the only offer I got after 2 months of searching is $10/hour. If I desperately need some income, I will take the job and continue my job search. $10/hr is still better than $0. Next job offer may be $30/hr. Then the next one may be $50 or $60. No one is forci…

I challenge you to poke your finger through the massive hole in your argument. I'll give you a hint, it has to do with the resource utilization that you can never buy more of.

Re: What harm do minimum wages do?

#420

Post by RockIslandLine »

ccffpphh wrote: post #311
p49k wrote: post #68

Earlier quoted context omitted.

Companies aren't inherently "entitled to" anything either, including "personhood," avoidance of personal liability of shareholders for company actions, patents and trademark protection for inventions, rights to use public infrastructure, etc. You can't pretend like society hasn't granted corporations their own reasonable entitlements while arguing that workers shouldn't have their own.

That's true. Companies are just collections of people. They are not entitled to anything either. I don't think they should have any entitlements. No entitlement is "reasonable" if none are owed to anyone or anything to begin with.

"Companies are just collections of people."

False. Corporations are golems, not people at all.

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