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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#641

Post by aidenn0 »

rbanffy wrote: post #452
aidenn0 wrote: post #441

Earlier quoted context omitted.

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.

Of course it is. That's why I used words like "intentionally" and "believe"

Re: What harm do minimum wages do?

#642

Post by fulafel »

cynicalkane wrote: post #184
mdoms wrote: post #164

Earlier quoted context omitted.

Yikes. Measuring wellbeing by consumption is a VERY American perspective.

Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much of society's goods and services one ends up using. More simply, if you save then spend, wealth-based measures will rate you as better off than a person with higher income who just spends. That doesn't make sense.

> Measuring wellbeing by consumption is the standard economic perspective

Behavioural economics has long focused on more sensible sets of metrics.

Re: What harm do minimum wages do?

#643

Post by temp_supply »

Something the article hints at but should be looked at are concrete examples of minimum wage removing entire job sectors.

For instance, almost all low skilled manufacturing and textile jobs have left the US for mainly Asian countries as a direct result of minimum wage. It's not like those companies want to pay shipping costs of getting products across the globe, but the minimum wage makes it more profitable to do so.

Another example is automated grocery store scanners. Grocery stores lose a ton of money from people gaming the system of automated checkout machines. But even with those losess, it's still profitable for a grocery store to install a machine than hire a worker.

Without a minimum wage, those jobs would still exist in the US and provide an opportunity for low skilled workers to enter the job market.

Re: What harm do minimum wages do?

#644

Post by alasdair_ »

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…

> 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.

The textbooks are talking about economic profit, not absolute profit.

In very in-precise terms, it’s the expected profit for the given amount of risk, which to massively oversimplify can be represented by beta.

Re: What harm do minimum wages do?

#645

Post by arp242 »

gruez wrote: post #610
arp242 wrote: post #566

Earlier quoted context omitted.

I feel the biggest problem with economics is that it's very infused with ideology, which makes it even harder to say what's true or not. There's a lot of what I would call "arm-chair economics" – entire government policies are based on nothing more than conjectures, guesses, and ideological preferences of so-called "economists". Okay, maybe guesses and conjecture is the best we have to go on, but at least be honest a…

>I feel the biggest problem with economics is that it's very infused with ideology, which makes it even harder to say what's true or not. There's a lot of what I would call "arm-chair economics" – entire government policies are based on nothing more than conjectures, guesses, and ideological preferences of so-called "economists". Is it any better in fields other than math and the natural sciences? For medicine and nu…

Both are bad.

Nutrition is really complex and hard, and we learn more every day. But for the most part, it's not like complete bullshit is invented whole-cloth on a piece of napkin. It slowly builds and expands on prior knowledge; as far as I know it's not really "constantly backtracking".

Re: What harm do minimum wages do?

#646

Post by alasdair_ »

FabHK wrote: post #594
tclancy wrote: post #565

Earlier quoted context omitted.

Is that how CAPM works?

No, the Capital Asset Pricing Model has nothing to do with this discussion. It takes the payoff distribution of capital assets as exogenously given (and known), then makes assumptions about investors' utility functions to find the price they're willing to pay for these assets, then employs an equilibrium argument and some neat maths to arrive at a linear relationship between the expected excess return of an asset and…

The concept of beta (and non-diversifiable risk in general) is related to the concept of “economic profit”.

They may not be directly related but to claim the CAPM “has nothing to do with this discussion” of economic profit is a bit strong.

Re: What harm do minimum wages do?

#647

Post by alasdair_ »

bumby wrote: post #625
FabHK wrote: post #594

Earlier quoted context omitted.

No, the Capital Asset Pricing Model has nothing to do with this discussion. It takes the payoff distribution of capital assets as exogenously given (and known), then makes assumptions about investors' utility functions to find the price they're willing to pay for these assets, then employs an equilibrium argument and some neat maths to arrive at a linear relationship between the expected excess return of an asset and…

Any suggestions on where one can learn more, particularly with the mathematics involved?

Wikipedia is honestly pretty good.

Re: What harm do minimum wages do?

#648

Post by vladTheInhaler »

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?

As evident from their replies elsewhere in the thread, working well means that they personally are well-compensated.

Re: What harm do minimum wages do?

#649

Post by martin_bech »

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…

We dont have a minimum wage here in Denmark, yet fastfood workers get: 18usd an hour, 5 weeks paid vacation, maternity leave, pto for childs 1st sick day, 8% on top of sallary towards personal pension plan.

Re: What harm do minimum wages do?

#650

Post by dmitriid »

OCASM wrote: post #531
dmitriid wrote: post #306

Earlier quoted context omitted.

What is this ideal world, I want to live in it. Reality and all of history tells us that doesn't work at scale.

The US used to have very little taxation. It worked fine then. Ever increasing government reach wasn't always the norm.

When was this "very little taxation that worked"?
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