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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#581

Post by fctorial »

AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

> having to live off food stamps as is common for wallmart workers for example is just horrendous.

Why is using food stamps horrendous?

Re: What harm do minimum wages do?

#582

Post by DoreenMichele »

fctorial wrote: post #581
AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

> having to live off food stamps as is common for wallmart workers for example is just horrendous. Why is using food stamps horrendous?

I think the point is "The pay is so bad, you qualify for welfare while working."

Re: What harm do minimum wages do?

#583

Post by neilparikh »

lsiebert wrote: post #442
macspoofing wrote: post #364

Earlier quoted context omitted.

The only arguments for minimum wage that I've ever seen, are those that claim that under certain conditions minimum wage may not be noticeably detrimental. What you never see is the minimum wage actually make a lick of difference to any metric that matters (like unemployment rate, or poverty rates, or income rates, or whatever else). Never. And I'm serious about this. Have you ever seen a region that adopted minimum…

Wait, your contention is that paying poor people more doesn't effect poverty rates, and you are asking other people for citations, not citing something of your own? You might find this CBO report useful. https://www.cbo.gov/publication/55410

Minimum wage doesn't mean "paying poor people more". That's a extreme simplification.

Minimum wage means "All employees you hire must be paid at least $X/hour". Note that if this means that employers decide to fire all employees below that wage (or not hire them), the average amount of money going to poor people would be less than before. Maybe employers fire some, and raises the wage for others, and it's wash. Maybe they do raise the wage for everyone below the minimum, and poor people do end up earning more.

I'm not claiming knowledge of which of these cases will happen. My point is that we shouldn't simplify complex situations to simple descriptions and argue against strawman arguements.

Another way of putting it: if it really was the case that minimum wage means "paying poor people more", why don't we just set minimum wage to $20/hour? $30/hour? $50/hr? Surely that would give even more money to poor people, and poverty rates would be reduced even further! (Because there are tradeoffs involved, and we need to balance them carefully.)

Re: What harm do minimum wages do?

#584

Post by Polylactic_acid »

scatters wrote: post #399
kennywinker wrote: post #221

Earlier quoted context omitted.

This is confusing. If you save, you have more wealth. If you have more wealth, you are more resilient to hardships (economic, health, etc.) - a population of people with large savings accounts and low debt seems obviously better than a population that makes a ton of money but lives close to the wire or carries large debts

Resilience is unnecessary in countries with a safety net. Are individuals in those countries who make the rational decision to save less somehow worse off than those who have to carry a large savings buffer to guard against misfortune?

>Resilience is unnecessary in countries with a safety net

Not entirely. Having a safety net might be the difference between having a home/food and being on the street but having savings and a safety net allows you to live your previous comfortable life while not working. If you have a healthy savings then you can afford to willingly leave your current job and have some time to yourself while you look for a better job.

Re: What harm do minimum wages do?

#585

Post by zanny »

Retric wrote: post #506
bravo22 wrote: post #502

Earlier quoted context omitted.

Which is why instead of mispricing labour through minimum wage you can have a negative income tax which makes up the difference. The nice thing is that it will apply to everyone -- working or not, sick or not, on mat leave or not, can't work because of covid or not. You top-up people's income and that's paid for through taxes. You take the benefit of efficiency and productivity from the entire economy and return it t…

Having a negative income tax is reasonable without removing minimum wage as they deal with different things. Removing the minimum wage is effectively a subsidy for companies and industry’s that would then pay below the old minimum wage. Considering how often people in the US make below minimum wage even when it’s illegal, it seems like a bad idea. Instead even higher minimum wages can be used to drive automation.

I don't think a minimum wage is ethically justified in a minimum standard of living society unless that value in progress through automation is justified.

The arguments for minimum wage are always to insure it provides a livable wage, but economists generally rightly dislike it for limiting labor opportunities to ones above that wage threshold.

In the absence of a minimum standard of living you rightly should cling to minimum wage laws like the lifeboats they are for the working poor. Once participation is voluntary forfeiting minimum wages seems like a very promising bargaining chip against capital to get a negative income tax / UBI actually put into law.

I think I'd rather see UBI / NIT and have progress towards the singularity slowed for lack of a high minimum wage to pressure automation than the status quo of extreme unhappiness and poverty (and the corresponding social unrest, drug abuse, crime, mental illness, physical ailment, etc). Of course if we can have our cake and eat it too that would be great... I'm just saying to leave the minimum wage on the bargaining table, insuring survival seems like the more important goal.

Re: What harm do minimum wages do?

#586

Post by neilparikh »

stan_rogers wrote: post #524
macspoofing wrote: post #467

Earlier quoted context omitted.

>your contention is that paying poor people more doesn't effect poverty rates No. That is not my contention at all. Do you want try again without straw manning the argument?

Yes, that is your contention exactly.

The only way you can claim that their argument is that is if you believe that the minimum wage simply means "paying poor people more", and nothing more, which is an absurd simplification, and ignores a lot of nuance (ex. employers don't have to pay the minimum wage, they can simply fire the employee [0]).

If it's really the case that minimum wage means paying poor people more, surely we could just set the minimum wage at $30/hr and pay poor people even more.

I'm not even opposed to the minimum wage myself. I just don't think it's good to simplify a complex situation, and then use that to strawman someone's legitimate point (that it is not a given that minimum wages will reduces poverty rate).

[0] - Another example is that minimum wages vary across jurisdictions, and employers are able to arbitrage that fairly effectively for many jobs.

Re: What harm do minimum wages do?

#587

Post by zanny »

nojokes wrote: post #510
bravo22 wrote: post #502

Earlier quoted context omitted.

Which is why instead of mispricing labour through minimum wage you can have a negative income tax which makes up the difference. The nice thing is that it will apply to everyone -- working or not, sick or not, on mat leave or not, can't work because of covid or not. You top-up people's income and that's paid for through taxes. You take the benefit of efficiency and productivity from the entire economy and return it t…

I do not think it would help workers. What is more likely to play out is that assuming that when currently minimum pay for a hour is $10 and tax 0% then with negative tax X and no minimum the pay would become $10 / (1-X/100). The worker will get the same (hopefully) and the company will pay less.

Getting paid less is a fine outcome assuming the NIT fulfills its purpose of guaranteeing a minimum standard of living.

It means the worker has voluntarily participated in selling their labor, even if its for a lower price than they would have made before, and they would always have the option to stop doing it and do something - anything - else.

If the NIT is insufficient to provide the necessities of life than its institution failed in its primary objective, albeit I would still argue any NIT is better than none because it raises the poverty floor some amount above zero.

Re: What harm do minimum wages do?

#588

Post by miffy900 »

fctorial wrote: post #581
AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

> having to live off food stamps as is common for wallmart workers for example is just horrendous. Why is using food stamps horrendous?

I live in Aus also, and there are people here who work full-time and still need to avail themselves of local charities, for food boxes and such, but the relative size of that demographic seems to be smaller here compared to the US.

Re: What harm do minimum wages do?

#589

Post by grandmczeb »

markmark wrote: post #526
grandmczeb wrote: post #52

Earlier quoted context omitted.

Wealth is very hard to accurately measure and is impacted a lot by demographics (e.g. age distribution). Consumption is a better measure of how people actually live. https://en.wikipedia.org/wiki/List_of_countries_by_household...

We would need to see median consumption, rather than per capita, to compare to the wealth figures above. The US rates very highly in wealth per capita as well.

The consumption distribution is a lot more flat than income or wealth (~5x difference in consumption for bottom quintile vs top quintile compared to ~20x in income). You can see consumption broken down by income here[1]. One thing I’d point out is that the bottom quintile in the US has a higher consumption than the Australian average, although the Wikipedia numbers don’t quite measure the same thing so it’s not perfectly comparable. Also note this uses 2018 dollars rather than 2011 dollars.

[1] https://www.bls.gov/cex/2018/combined/decile.pdf

Re: What harm do minimum wages do?

#590

Post by AnotherGoodName »

fctorial wrote: post #581
AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

> having to live off food stamps as is common for wallmart workers for example is just horrendous. Why is using food stamps horrendous?

It's a clear indicator that the wage is below survival levels.
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