Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What harm do minimum wages do?

economist.com

Post reply on HN
Print view View original

431–440 of 776 posts

Re: What harm do minimum wages do?

#431

Post by Press2forEN »

bakuninsbart wrote: post #112
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.

> 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.

> Society is fundamentally based on the notion of shared rights and duties

This statement is equally ideological. Proximity to others imparts no responsibility outside what individuals choose to take on for themselves.

You may subscribe to it, but not everyone has to. Most of our social unrest today can be laid at the feet of those who insist otherwise.

Re: What harm do minimum wages do?

#432

Post by rbanffy »

aidenn0 wrote: post #401
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…

>> 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. This sentence is just wrong. First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit. Textbooks actually say that a worker will be paid no more than the marginal product of labor, and if labor is in short sup…

> First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit.

That's true for a single employee, but you don't need to make a profit out of every single employee.

If you do, your CEO will be extremely underpaid in relation to the rest of the market.

Re: What harm do minimum wages do?

#433

Post by gjulianm »

tastyfreeze wrote: post #376
gjulianm wrote: post #254

Earlier quoted context omitted.

It's not price fixing nor collusion. It's just the incentives companies have to lower wages. Look at this example: a number of companies in an area are paying a livable wage at time T for low-skilled workers. Now, time goes on and inflation kicks in. Those wages, which did not grow, are not livable now. Workers, however, can't complain too much because they will be fired, and bad income is better than no income (not…

That sounds like blaming a broken money supply for lower wages. They are making the same wages. The inflation of money supply makes their dollar worth less. Two separate issues. I would prefer to examine one issue on its own. The company has no say in the money supply. Their money is worth less as well. Do you expect a company to pay more when they are earning the same amount and employee production stays the same? T…

The example is not about inflation, it's just a method to show how without any specific action, companies don't have incentives to raise wages. But in fact, it's a real example because it's what has been happening in the US for a while, inflation increasing, company profits increasing but profits stagnating.

Anyways, the point is that companies will tend to push for lower wages, always. It's just how capitalism works, it pushes for maximizing profits. If there are more workers than jobs (which is the case almost everywhere) you can't say that competition will push companies to increase wages, because there will be no competition, and workers can't just stay home if there are no satisfying jobs.

Re: What harm do minimum wages do?

#434

Post by jsanford9292 »

What a useless article. No real conclusion and no new information.

Raising the minimum wage CAN have negative effects. This is obvious. If you raise the minimum wage to $10,000 per hour, what happens? Hamburgers cost $1,000 each and nobody buys them. Restaurants become insolvent and they close. Bad outcome.

I believe no minimum wage CAN also have negative effects but those effects are less clear to me. Maybe workers get taken advantage of by companies? But is a minimum wage the best way to fix this? Would love to hear other thoughts on what specifically a minimum wage fixes compared to having no minimum wage.

Re: What harm do minimum wages do?

#435

Post by RockIslandLine »

OCASM wrote: post #255
bitdotdash wrote: post #49

Earlier quoted context omitted.

Slippery slope / Straw-man fallacy. One is to do with tying the minimum wage to a livable wage. The other is just large numbers for the sake of trying to win an argument. No one is arguing for $150/hr. The argument is simply that you aught not to be able to run a business and extract a profit if the cost to do so is employing people at such a low wage that they require governmental handouts just to pay rent and eat f…

They don't need the handouts. They could for example live in communal spaces and share resources. What exactly is "livable" anyways? Millions of people live every day with only a couple of dollars a day.

"Millions of people live every day with only a couple of dollars a day."

Not in the USA they don't. There is no possible way that an individual could pay for food, clothing, and shelter on that income.

Re: What harm do minimum wages do?

#436

Post by Romanulus »

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…

Have you considered the converse of very larger companies that have a stranglehold on their market (like Walmart, perhaps) pushing for a higher minimum wage to stifle smaller businesses in the same domain?

It seems like a viable tactic, though I will admit I have not looked into it much myself.

Re: What harm do minimum wages do?

#437

Post by aidenn0 »

_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…

You make low-productivity jobs illegal while also raising the wages for low-skill high-productivity jobs. Worker productivity in the US has gone through the roof while real wages have stagnated. Combined with the (at least pre-pandemic) low unemployment rates, it seems likely that most minimum wage workers are in jobs that would not be eliminated by raising the minimum wage.

Re: What harm do minimum wages do?

#438

Post by chc »

gwright wrote: post #402
chc wrote: post #340

Earlier quoted context omitted.

The parent was comparing the value a worker brings to the company against the worker's compensation. To illustrate how the worth of a transaction can be different from the cost: If I offer to give you a $50 bill in exchange for a $5 bill, is that bill not worth $50 just because I lost on the deal?

I would certainly value that piece of paper at $50 but apparently you value it at something less than $5 because you are willing to accept $5 for it. I haven't a clue as to why you would value it at less than $5, perhaps you get some entertainment value in giving away money? This doesn't seem like a particularly helpful illustration.

You arrived at the conclusion that something can be worth more than you paid for it, which is the point I was trying to illustrate (because the person I was replying to assumed that the lowest price you can pay = worth). So it seems like the illustration did its job to me.

Re: What harm do minimum wages do?

#439

Post by jayd16 »

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.

>couldn't another company easily come along and undercut them?

Not necessarily. A lot of factors might give one company an exclusive position. Another coal mine can't just open up. There might be a large barrier to entry into the market or it might just take time for a competitor to surface.

Re: What harm do minimum wages do?

#440

Post by socialdemocrat »

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.

A lot of the analysis and conclusions economists make are based on these kinds of assumptions. That is how they concluded in the past that minimum wage was a bad thing or many of them was against labour unions.

Although Adam Smith grasped this better than many modern economists and was hence a strong supporter of Labour Unions.

Of course Smith had not gotten his brain poisoned by excessive reliance on overly mathematical models of the economy.

Post reply on HN