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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#651

Post by mrweasel »

mdoms wrote: post #170
seiferteric wrote: post #100

I know that in economics it is difficult to do proper studies hence the "dismal science", but my understanding is that most economists agree that minimum wages don't work right? So why is it still pushed? Shouldn't we "listen to the experts"? Besides there are other tools like the EITC.

There's "economics" and then there's real world effects. Take some time to study what actually happens in countries with a living wage.

Or study what happen in countries without a minimum wage, like Denmark. The argument isn’t that you shouldn’t pay a living wage.

In Denmark there’s no minimum wage, yet people are paid well. The wages are agreed upon by the employeers organisations and the unions. It does set a minimum wage per industry, but the important part is that it’s not set by politicians who have no idea what the real world looks like in each industry.

A universal minimum wage risks being to low for one industry, while being to high for another. It makes more sense to do collective agreements per industry, and by having the unions act on behalf of the employees you ensure sufficielt leverage against the employers.

Re: What harm do minimum wages do?

#652

Post by donw »

prewett wrote: post #638
donw wrote: post #634

Earlier quoted context omitted.

I know boxing is the "Sweet Science", and a quick search seems to indicate that "Gay Science"[1] comes from Nietzsche, and seems to refer to... poetry or song? A better translation from the original German is probably "Joyful Science", though. Not sure if that's where the parent was going, but I learned something new today. [1] https://en.wikipedia.org/wiki/The_Gay_Science

"Gay" originally meant "happy", and while "happy" and "joyful" are different, they are at least reasonably close. Wasn't Nietzsche nihilist, though? Seems like it would be hard to be joyful if your science leads to nihilism.

There are a lot of flavors of nihilism, so I'm not sure that having a pessimistic worldview precludes joyfulness.

I'd call myself a realist -- and I think there's a lot of overlap with nihilism there, in that I try and see the world "as it is", and not "how I wish it was".

The world is a messy, ugly, dark place. It really is, and it's kind of amazing how people go out of their way to pretend that either that darkness doesn't exist, or that it's somebody else's job to keep it at bay.

There is a light in our world, though -- it's us, if we choose to be.

And so, regardless of the futility in the grand scheme of things, I invest effort to find joy in all that I can, and bring that sense of joyfulness to those around me, because it makes my corner of the world just a little brighter.

Re: What harm do minimum wages do?

#653

Post by nickff »

FabHK wrote: post #611
nickff wrote: post #176

Earlier quoted context omitted.

Many of the people employed at very low wages have attributes which mean that they are not worth hiring at higher costs. Factors such as lack of job history, attendance issues/unreliability, language issues, etc. mean that the employer will opt for a more 'attractive' candidate if there is a price floor. As an example, if you are looking for a bottle of wine to accompany your Tuesday night dinner, you might opt for a…

> Many of the people employed at very low wages have attributes which mean that they are not worth hiring at higher costs. The whole article was about how that doesn't seem to be the case, empirically. When the minimum wage rises, the effect on employment is minimal, and people on minimum wage get paid more (they're not fired).

The data is in aggregate; I am talking about the impact on individuals.

Re: What harm do minimum wages do?

#654

Post by bjelkeman-again »

martin_bech wrote: post #649
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.

We have something similar in Sweden. Instead we have well established unions and negotiations that set salaries that even companies that aren’t formally part of the negotiation process follow. These are called collective agreements.

“In Sweden about 90 per cent of all employees are covered by collective agreements, in the private sector 83 per cent (2017). Collective agreements usually contain provisions concerning minimum wages. Sweden does not have statutory regulation of minimum wages or legislation on extension of collective agreements to unorganized employers.”

https://en.wikipedia.org/wiki/Collective_agreement#Sweden

Re: What harm do minimum wages do?

#655

Post by tprice7 »

bcrosby95 wrote: post #9
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…

Also, do textbooks actually say that? Because it seems trivially false: if a worker is actually paid that, then there's no money left for investors.

I'm sure the theory falls short of describing reality in all sorts of ways but it does not imply there is no profit, that is a misunderstanding that astonishingly few people are pointing out given the amount of discussion it has generated. The revenue generated per worker is their average output, which is higher than the marginal output due to the law of diminishing returns (so yes, you could say that The Economist is being misleading here since "the value of what he produces" is ambiguous and arguably should refer to the average output rather than marginal output).

Re: What harm do minimum wages do?

#656

Post by gorgoiler »

burfog wrote: post #511
frogpelt wrote: post #445

Earlier quoted context omitted.

I'm guessing poor kids usually don't have jobs at all. Only about 40% of poor people 18-64 even have jobs.

The minimum wage workers around here are of two types: 1. teenage children of the upper middle class or higher 2. poor adults with a history of bad decisions It's kind of a weird mix. Where are the children of the poor? You'd think they might want money much more than the children of better-off families do. Surgeons, business owners, passenger jet pilots, software developers, and corporate executives all send their t…

Where are the children of the poor?

The ice cream parlor in Sausalito is run by (and frequented by) the children (and parents) of one class?

The Denny’s in Excelsior by that of another?

Re: What harm do minimum wages do?

#657

Post by [deleted] »

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…

[deleted]

Re: What harm do minimum wages do?

#658

Post by michaelmrose »

zanny wrote: post #585
Retric wrote: post #506

Earlier quoted context omitted.

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 t…

We have no shortage of resteraunts even when servers, dishwashers, and cooks are all paid $15 an hour.

Arguably most competent endeavors are capable of paying minimum wage.

Cratering the truly incompent is a service to the market and reallocates resources to more capable players and retaining a minimum wage fosters automation and forces capital to give a larger share to labor. Either is desirable. I understand the concerns you have about automation. They are potential not fate.

> I don't think a minimum wage is ethically justified in a minimum standard of living society

The owner class does not make decisions based on what is ethical they act to secure their own benefits everyone might consider doing the same.

> 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.

In a democracy we ought to be able to vote our own interests as soon as enough people see the merit of the idea. Fuck negotiations. If democracy remains in truth eventually inequality will make selling this idea a trivial sale beforehand its unlikely to come to pass here in the US.

Re: What harm do minimum wages do?

#659

Post by indigo945 »

prewett wrote: post #638
donw wrote: post #634

Earlier quoted context omitted.

I know boxing is the "Sweet Science", and a quick search seems to indicate that "Gay Science"[1] comes from Nietzsche, and seems to refer to... poetry or song? A better translation from the original German is probably "Joyful Science", though. Not sure if that's where the parent was going, but I learned something new today. [1] https://en.wikipedia.org/wiki/The_Gay_Science

"Gay" originally meant "happy", and while "happy" and "joyful" are different, they are at least reasonably close. Wasn't Nietzsche nihilist, though? Seems like it would be hard to be joyful if your science leads to nihilism.

Calling Nietzsche a nihilist is a complete misrepresentation of him. He wrote on nihilism a lot, but only to criticize it. Nietzsche believed holding a nihilist viewpoint to mean that one, in short, has failed at life.

It's more accurate to call Nietzsche an existentialist, as long as one keeps in mind that this term can refer to a wide spectrum of different moral and ontological ideas.

Re: What harm do minimum wages do?

#660

Post by michaelmrose »

bravo22 wrote: post #612
madeofpalk wrote: post #512

Earlier quoted context omitted.

I’m not all that educated on negative tax rate - what’s to prevent companies from just setting wages to obscenely low, knowing the government will just pick up the bill and pay out the difference?

The government doesn't foot the bill. People and businesses do. We pay taxes. Government has no money. The transfer payment is taken from the entire economy through a tax. A slice off the top. If a business has higher profits it would also pay larger portion of that transfer to low income persons. A key feature is indexing the maximum amount i.e. what a person with 0 income would receive to typical cost of living at…

>A key feature is indexing the maximum amount i.e. what a person with 0 income would receive to typical cost of living at state or country level. This way it auto adjusts.

If you pick a value too low it does not actually keep someone alive, fed, and housed.

If you pay enough to live half the shitty jobs everyone hates become not worth doing.

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