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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#451

Post by lukevdp »

gamblor956 wrote: post #319
lukevdp wrote: post #293

Earlier quoted context omitted.

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

There is a difference between someone being worth $50/hour and another person willing to do whatever for just $5/hour. For example, rich kids can take unpaid internships because they don't have to worry about food or rent for the duration of internships. Poor kids can't usually afford to take jobs that don't pay.

I am not talking about the intrinsic worth of a human. I’m talking about the price of their labor. Someone’s labor being worth $50 or $5 is a function of supply and demand.

Re: What harm do minimum wages do?

#452

Post by rbanffy »

aidenn0 wrote: post #441
rbanffy wrote: post #432

Earlier quoted context omitted.

> 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.

I am willing to work as the CEO of Walmart for say $750k per year. The fact that I don't work there means that either: 1. Voting Walmart shareholders think that the having Doug McMillon for $24M/year is a better deal than having me for $750k/year 2. Voting Walmart shareholders are unaware that reasonably intelligent people with no executive experience are willing to work for a lot less than McMillon. 3. There are oth…

You also have to consider it's difficult to measure the exact economic value of an employee.

Re: What harm do minimum wages do?

#453

Post by bhupy »

pwinnski wrote: post #295
AnthonyMouse wrote: post #253

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. 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?

> Such as what?

UBI/NIT. Or more realistically, just expanding the EITC.

Re: What harm do minimum wages do?

#454

Post by dragonwriter »

jayd16 wrote: post #449
bgorman wrote: post #243

Earlier quoted context omitted.

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…

A livable minimum wage is the only way someone can move on. If you're working in an unskilled job, living paycheck to paycheck, how are you going to improve that situation?

> If you're working in an unskilled job, living paycheck to paycheck, how are you going to improve that situation?

One of the most common ways people move on to higher-paying jobs in the workforce is by skills (not necessarily in “skilled labor” sense, but even just basic work habits) earned and/or demonstrated through work in lower-paying (even unpaid, though less that since the crackdown on unpaid internships) jobs. Minimum wage jobs, even when minimum wage does not meet any criteria for “living wage”, are absolutely part of that.

Re: What harm do minimum wages do?

#455

Post by cogman10 »

Ekaros wrote: post #188
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…

That's not very good argument. As we are where we are now because our productivity has increased insanely since invention of agriculture... If burger flipping robot is more productive than human, we should replace all humans with such robots.

There's a lot of blind faith in "New jobs will appear as old ones are obsoleted".

That's certainly has been true, but I don't think it's absolutely always going to be true.

Further, what we've seen is that primarily low skill high wage jobs have been replaced with high skill jobs. This is evidenced by the fact that you simply can't make a good living off a high school degree.

Based off this

https://www.careerprofiles.info/careers-largest-employment.h...

How many of those jobs are in danger of being automated?

    Cashiers,
    food preparation,
    freight,
    Customer service representatives (I know, you're thinking no way, but a lot of effort is going into AI chatbots to cut down on CS requirements).
accounting (In fact, this is what I'm working on), order fillers, Truck drivers

What happens to the millions when those jobs are slowly eroded away? It's easy to cheat and say "Something else will probably come up" but I simply don't think that will continue to happen in the next 10->20 years.

There's only so much productivity we can utilize. What happens when we've saturated? Unemployment.

I don't think any nation is really well equipped at this point to handle large portions of their workforce being automated away.

Sure, the standard of living will go up for everyone with jobs. However, that will be less and less of the population as time goes on.

This is why programs like UBI and universal healthcare are important. Without them, things are going to be pretty bleak for a lot of people (even with them, and a constant population growth, things won't look good).

Re: What harm do minimum wages do?

#456

Post by afinlayson »

Without a minimum wage, some jobs would pay effectively zero.

You see that with waiters, who get paid below minimum wage, and are expected to make tips, the issue is if there's no customers because of a pandemic, they are now making no income.

Re: What harm do minimum wages do?

#457

Post by megablast »

missedthecue wrote: post #15
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…

A free market does not mean that both sides want something with equal desire. I need food to survive much more than Krogers needs my business to survive. This does not mean that grocery sales are not a free market. A free market means that the supply and demand of goods rely on price signals rather than a centralized planner. Labour is absolutely a free market. As wages in one particular area increase, people respond…

Sure, but you don’t need food from Kroger’s. You can get it from 100s of places.

Re: What harm do minimum wages do?

#458

Post by dragonwriter »

gjulianm wrote: post #275
bgorman wrote: post #243

Earlier quoted context omitted.

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…

> Non-livable wages just lock people into poverty.

No, non-livable income does that. Relying on wages to solve that relegates people to a permanent underclass if they ever experience more than brief unemployment.

Re: What harm do minimum wages do?

#459

Post by efxhoy »

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…

>> 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.

In the econ 101 textbook simplified free market that the author is refering to firms do not make any economic profit. If a firm in a free market is turning an economic profit more firms will enter that market, raising supply, lowering price and driving profits to zero.

Re: What harm do minimum wages do?

#460

Post by WalterBright »

karpierz wrote: post #393
WalterBright wrote: post #297

Earlier quoted context omitted.

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.

What are the requirements for a free market to work well? And how do you define working well?

> requirements for a free market to work well

Most generally, transactions can be freely negotiated by either party. I.e. no force or fraud. Contracts need to be enforceable. Individual liberties must be guaranteed.

> working well

Delivering on prosperity.

To clarify, imperfect information is not fraud.

Force in this context is something proactively applied, such as your signature will be on the contract or your brains. Force is not withholding something you have that the other party needs.

Charity, voluntarily helping others in need, etc., is perfectly in line with free market principles. Unions are perfectly in line, too, although laws bestowing monopoly powers on unions are not.

A free market does not have to be a perfect free market in order to deliver prosperity. Even small amounts of free markets can have outsized positive benefits, as the Soviet Union discovered when it allowed farmers to farm small plots, sell the produce, and pocket the proceeds.

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