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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#171

Post by tfehring »

throwaway894345 wrote: post #103
tfehring wrote: post #84

Earlier quoted context omitted.

So capital is entitled to a return but labor isn't? Why the distinction?

The parent said "no one is entitled to anything". I take that to mean "neither capital nor labor is entitled to a return". It's probably also useful to scope this conversation to a certain context: "in a free market, no one is entitled to anything". This is a sort of hypothetical scenario since there are no perfectly free markets, and a completely unregulated market is very likely not a desirable thing (evolutionary…

They didn't explicitly say that capital is entitled to a return, but the comment pretty clearly indicated an asymmetry between capital and labor. You could invert the wording to the following

> You aren't de facto entitled to receiving a return on any capital you may provide, regardless of whether that capital is put to productive use or not. A company exists because one or more people provided their labor in order to create a net positive system.

and the tone clearly changes from the original. I agree that neither capital nor labor is entitled to a return, but I don't think that's what the parent comment was suggesting.

Re: What harm do minimum wages do?

#172

Post by baddox »

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).

Perfect competition is definitely taught as a concept, mostly as a benchmark to measure real-world markets against, but I don’t think it’s literally an assumption of everything you learn in Econ 101.

Re: What harm do minimum wages do?

#173

Post by _ah »

mdoms wrote: post #157
_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.

Walmart eliminated all greeters last year.

Re: What harm do minimum wages do?

#174

Post by entropicdrifter »

sushshshsh wrote: post #160
david38 wrote: post #116

Earlier quoted context omitted.

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 somet…

Or you could make an automation tax and use it to fund UBI

Re: What harm do minimum wages do?

#175

Post by jlawson »

jmcgough wrote: post #93
ccffpphh wrote: post #47

Earlier quoted context omitted.

The issue is that nobody is entitled to anything. You aren't de facto entitled to receiving money for any services you may or may not provide, regardless of whether you're skilled or not, just because you exist. A company exists because one or more people risked wealth in order to create a net positive system - their existence is not as riskless as one would believe.

> A company exists because one or more people risked wealth in order to create a net positive system What about companies that exist solely as rent seekers? TurboTax is a net negative on society - congress has tried repeatedly to simply mail people a bill or refund, instead of the silly song and dance we go through now, but Intuit has lobbied aggressively to prevent this.

Only possible thanks to government policy wielded through regulatory capture. Not a free market outcome.

Re: What harm do minimum wages do?

#176

Post by nickff »

klmadfejno wrote: post #130
_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…

I don't think that's a reasonable point of view. Most minimum wage jobs are not productivity jobs, but jobs that need to get done by someone but require no special skills. That is, you can't easily define the value of the sanitation worker who keeps a restaurant clean enough to pass health standards. You just observe that there's enough people willing to do it that you can offer a low wage. What jobs are being made i…

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 low-cost, low-quality option, as it is adequate for your needs; but if there is a price floor, you will opt for a different, higher quality option.

Price floors mean that deals below the set price are illegal.

Re: What harm do minimum wages do?

#177

Post by jlawson »

nakedlunch wrote: post #152
tastyfreeze wrote: post #145

Earlier quoted context omitted.

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?

Since we have a social safety net, nobody needs to do such to 'avoid starvation' so the question makes no sense.

Re: What harm do minimum wages do?

#178

Post by OCASM »

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.

Destroys small businesses and consolidates big corps as monopolies.

Re: What harm do minimum wages do?

#179

Post by flyingfences »

nakedlunch wrote: post #152
tastyfreeze wrote: post #145

Earlier quoted context omitted.

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?

Is the alternative - a total absence of contracts offered to those people - a desirable feature in our society?

Re: What harm do minimum wages do?

#180

Post by _ah »

klmadfejno wrote: post #130
_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…

I don't think that's a reasonable point of view. Most minimum wage jobs are not productivity jobs, but jobs that need to get done by someone but require no special skills. That is, you can't easily define the value of the sanitation worker who keeps a restaurant clean enough to pass health standards. You just observe that there's enough people willing to do it that you can offer a low wage. What jobs are being made i…

Sanitation workers may be low-skill but they are high-value. I don't think this is a good example.

In contrast, a friend of mine recently hired the teenager next door with cash (for less than the local minimums) to do some manual yard labor. This job simply wasn't worth paying for at a higher cost; my friend would have left the work un-done. But in this case the value proposition at a lower price was acceptable and the neighbor was glad for the extra cash.

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