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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#681

Post by tprice7 »

efxhoy wrote: post #459
aidenn0 wrote: post #401

Earlier quoted context omitted.

>> 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…

This is correct, but it doesn't address a fundamental misunderstanding of the parent comment. The prediction that wages = MPL alone does not predict a lack of profit, since the marginal product of labour is generally less than the average product of labour due to the law of diminishing returns. (I would agree though that "the value of what he produces" is an ambiguous phrase and seems closer to APL than MPL).

It is true regardless that the theory predicts an economic profit of zero, but to see why it's necessary to consider the rental cost of capital. Also, since many firms own rather than rent capital, they often have a positive accounting profit even though economic profit is zero (economic profit is less since it takes into account opportunity cost: if you are using your own capital then you can't rent it out to someone else).

Re: What harm do minimum wages do?

#682

Post by rjbwork »

baron816 wrote: post #106

If society decides that people should have a minimum income/minimum quality of life, then the burden of providing that minimum should fall on society as a whole. I don’t think it’s right (or efficient) to place that burden on a certain set of firms or industries that are providing jobs for low skilled workers. We would be much better off with a negative income tax plus universal health care.

We definitely would, but generally those who argue against a minimum wage also argue against that.

Friedman withstanding in the case of the negative income tax.

Re: What harm do minimum wages do?

#683

Post by imtringued »

jandrese wrote: post #296
trentnix wrote: post #289

Earlier quoted context omitted.

Illegal immigration is a side effect of minimum wage. And minimum wage puts unskilled Americans (or Americans whose skills aren't valuable because of a changing market) at an unfair disadvantage in their attempts to obtain employment and acquire new skills. Sorry if that wasn't clear in my post.

So why not provide a legal path to immigration instead of abolishing the minimum wage then?

Someone immigrating to the US for a job paying $10 per hour cannot become a legal immigrant. The minimum wage creates an opportunity that only illegal immigrants can take advantage of.

Re: What harm do minimum wages do?

#684

Post by imtringued »

jandrese wrote: post #352
trentnix wrote: post #309

Earlier quoted context omitted.

Illegal immigration and immigration in general is its own rabbit hole. You shouldn't assume from my post whether I'm for or against illegal immigration (or any type of immigration) because it doesn't really matter one way or the other to the points I'm trying to make. Economically speaking, granting legal status to unskilled illegals results in a combination of undesirable side effects: - it increases the price of th…

This is where you lose me. The jobs still need to be done. Some companies might just fold up and die, but most would be just as happy passing on the higher costs to customers, and said good or service still needs to be produced so the companies that survive will take over for the ones that folded. Economists have this weird idea that all fast food would close because the people working there clearly aren't worth $15/…

The customers of McDonalds are other poor people. The margins are already slim. If you raise prices to cover the minimum wage those poor customers won't eat at McDonalds.

Re: What harm do minimum wages do?

#685

Post by imtringued »

rjbwork wrote: post #682
baron816 wrote: post #106

If society decides that people should have a minimum income/minimum quality of life, then the burden of providing that minimum should fall on society as a whole. I don’t think it’s right (or efficient) to place that burden on a certain set of firms or industries that are providing jobs for low skilled workers. We would be much better off with a negative income tax plus universal health care.

We definitely would, but generally those who argue against a minimum wage also argue against that. Friedman withstanding in the case of the negative income tax.

I argue against minimum wages because people who like minimum wages don't like job guarantees. It's just hypocrisy.

Why does everyone talk about the stupid minimum wage? It's just a number invented by government. It does nothing.

A job guarantee works fine without minimum wages. Minimum wages don't work without a job guarantee so the minimum wage always loses.

Re: What harm do minimum wages do?

#686

Post by imtringued »

aussir wrote: post #117

If you raise the price of cigarettes through taxes, less people buy cigs. Same for gambling, driving, flying, etc. If you raise the price of labor through minimum wage, you fix poverty. Opposed to literally everything else plus evidence.

Minimum wage doesn't guarantee you get any wage at all. It's a toothless tiger and can't fix poverty. Offer a job guarantee and then we'll talk.

Re: What harm do minimum wages do?

#687

Post by imtringued »

fulafel wrote: post #110
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 doesn't appear to be consensus like that - but not because lack of trying: https://www.anderson.ucla.edu/faculty-and-research/anderson-...

Minimum wages don't work because it doesn't help people who can't get a minimum wage job. A job guarantee is a better alternative.

Re: What harm do minimum wages do?

#688

Post by [deleted] »

fulafel wrote: post #110
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 doesn't appear to be consensus like that - but not because lack of trying: https://www.anderson.ucla.edu/faculty-and-research/anderson-...

[deleted]

Re: What harm do minimum wages do?

#689

Post by 11235813213455 »

I'm against it, because it promotes consumerism, which is the root of environmental problems, the most likely number 1 issue of the current and next decades

People should have minimal essential/vital needs rather: home, water, electricity, (organic) food, healthcare.

I spend less than 50€/month on food, because I forage it (even if I live in a city) (figs, oranges, medlars, persimmons, grapes, ..), and I buy some vegetables at a local producer and some rice at supermarket, and I'm pretty much full with this

We need high-scale changes, less cars, less consumerism, less pollution, less useless activities, more (public) fruit trees and vegetables

Re: What harm do minimum wages do?

#690

Post by reallydontask »

prostoalex wrote: post #17
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.…

> someone worth $50/hr can be paid $5/hr if anyone can do the job What business sectors enjoy consistent 90% gross margins?

Enterprise software vendors?
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