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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#151

Post by mdoms »

LoSboccacc wrote: post #62
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…

> Workers can't usually live too much without finding a job. > Companies will always push for lower wages wherever they can but it's not just megacorp tho. minimum wage will lower employment from small business significantly; i.e. small shop owner will get by with one less garcon to pay the other one more. and if you think that can be resolved just by ample unemployment benefits, look no further than the Dublin heroi…

> minimum wage will lower employment from small business significantly

Can you show some data that demonstrates this? Because, despite all of the wailing and gnashing of teeth (and flawed economic theory), in my country this has never been shown to be an actual effect after minimum wages go up.

Re: What harm do minimum wages do?

#152

Post by nakedlunch »

tastyfreeze wrote: post #145
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…

It is not the role of government to set prices of labor or products. If a company wants to pay less than market rate for labor they will find themselves without employees. By letting the market dictate the price of labor, wages certainly fall from the artifically high price now. But, that is the result of people willingly entering a contract for the lower pay. People choosing to work for some money instead of no mone…

Is the freedom to accept a contract for poverty wages to avoid starvation a desirable feature in our society?

Re: What harm do minimum wages do?

#153

Post by wtallis »

throwaway894345 wrote: post #85
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 lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiation, they have more information and, most important of all, they can deal with a job opening not being covered most of the time. Workers can't usually live too much without finding a job. I'm generally in favor of stronger job protections and so on, but I'm not aware of any definition of "free…

If you're having a rational conversation with reasonable people, sure. But there are plenty of people who will insist that anything making a market less free is harmful, a bad idea and bad public policy. If you try to reconcile that, you may infer that they seem to be working with an unusually constrained definition of "free market", but that's usually not the most straightforward explanation.

Re: What harm do minimum wages do?

#154

Post by prostoalex »

adrr wrote: post #66
prostoalex wrote: post #28

Earlier quoted context omitted.

> That's why minimum wage laws and workers rights are important. How do you translate that into numbers? If $15/hr is better than $14/hr, wouldn’t $150/hr be 10x better, and if so, what’s wrong with a comfortable $1,500/hr? I think that’s where economists start to differ.

Rate that allows the employee to live without government assistance like food stamps and Medicaid. Otherwise the government is just subsidizing the company.

Thanks, that seems to be the most rational approach and can be tied to a specific formula.

I wonder why states/municipalities don't just leave it at that - a specific consumption basket whose cost is recalculated annually, vs having recurrent loud debates about it with some arbitrary round numbers.

Re: What harm do minimum wages do?

#155

Post by fragsworth »

sparker72678 wrote: post #2

I know research is hard, and these issues are fraught with complexities and challenges in acquiring data, but it still boggles my mind just how many macro economic theories don't have strong empirical data to support them.

It is basically impossible to produce real empirical evidence in economics. You can look at data/correlations, and try to reason about cause and effect. But real empirical evidence requires you use the scientific method to test hypotheses (ideally done in a double-blind way), which is impossible for economists to do even if we had a national desire to do it, because the test itself would impact reality for its participants too much. It's similar to the "observer effect" in physics, but on a massive scale.

At best, I think you can create mathematical simulations built on certain assumptions about reality. Those simulations depend on how well the assumptions model reality, and very easy to miss an important detail.

Re: What harm do minimum wages do?

#156

Post by MisterBastahrd »

The people who argue hardest against minimum wages are those who would never expect to be paid a minimum wage for their services. Our "essential workers" are usually some of our lowest paid workers. If a UBI is ever implemented, I would suggest that these people get those funds first

Re: What harm do minimum wages do?

#157

Post by mdoms »

_ah wrote: post #98

The direct effect of the minimum wage is to make certain low-productivity jobs illegal . Consider that for a moment: a person with limited skills and/or needs is simply prohibited from doing low-productivity work regardless of desire. The counter-argument is that many workers do not have a choice; they will always accept wages vs nothing, but have no power or ability to negotiate. With a minimum wage we've made the d…

> The direct effect of the minimum wage is to make certain low-productivity jobs illegal. Consider that for a moment: a person with limited skills and/or needs is simply prohibited from doing low-productivity work regardless of desire.

Has this ever been shown to be the case? Use real data or case studies.

Re: What harm do minimum wages do?

#158

Post by snarf21 »

pchristensen wrote: post #6

(can't read the article, but I've read and thought a lot about it) I'm on the fence about the net cost/benefit of localized minimum wages. I think that a federal minimum wage (or at least, a high one), and to some extent, state minimum wages, are a bad idea. The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost citi…

It is a very tough problem. Trying to do it all locally also pits town against each other. I think the thing is that this kind of minimum wage isn't a living wage so having it as a floor is not awful. I also think we have better tools to help the poor than minimum wage.

I've also tried to think a little about this from the spend > consume > work > spend cycle. Minimum wage isn't a factor in SV tech jobs. The places that employ people at the minimum also tend to service those same people. Rich people don't shop at Wal-Mart (largely) so we are only adding costs to goods that poor people want. So wages go up but if prices go up the same or more, the poor have lost buying power. I think EITC is a much more targeted and effectively way to help the poor but it needs expanded.

Re: What harm do minimum wages do?

#159

Post by mywittyname »

brokensegue wrote: post #114
throwaway894345 wrote: post #85

Earlier quoted context omitted.

> A lot of economic arguments forget these ideas. The labor market is not a free market: companies have more power in negotiation, they have more information and, most important of all, they can deal with a job opening not being covered most of the time. Workers can't usually live too much without finding a job. I'm generally in favor of stronger job protections and so on, but I'm not aware of any definition of "free…

ec101 often assumes perfect competition. google defines that as. >the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers. so everyone has equal leverage (zero).

Assuming a perfectly spherical cow...

Re: What harm do minimum wages do?

#160

Post by sushshshsh »

david38 wrote: post #116
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…

Minimum wage, applied universally, absolutely validates worth of a worker. If the minimum wage is set too high to plant grapes for example, grapes will not be grown. $15/h too high to flip burgers? Ok, I guess we don’t need fast food. Oh wait. Except it somehow doesn’t put the corps out of business.

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 something else will suffer as a result, and I would argue it would involve price, efficiency, quality, and compliance...

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