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What harm do minimum wages do?

economist.com

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Re: What harm do minimum wages do?

#51

Post by ianai »

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.

Yes. In one of my grad Econ classes an entire lecture was devoted to deriving individual pay based on marginal input and aggregate utility functions. The prof ended the derivation with a laugh then discussed all the obvious places wage does not equal marginal societal benefit. Ie school teachers vs entertainers.

The takeaway is that Econ theory only explains what it’s capable of explaining. The real market clearly has a lot more going on than purely rational actors exchanging goods and services.

Re: What harm do minimum wages do?

#52

Post by grandmczeb »

AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

Wealth is very hard to accurately measure and is impacted a lot by demographics (e.g. age distribution). Consumption is a better measure of how people actually live.

https://en.wikipedia.org/wiki/List_of_countries_by_household...

Re: What harm do minimum wages do?

#53

Post by throwaway2048 »

ccffpphh wrote: post #47
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…

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.

I think we as a society can do better than whinging about how "entitled" people are for wanting to work for livable wages.

Re: What harm do minimum wages do?

#54

Post by CoolGuySteve »

gridlockd wrote: post #38
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.

How much empirical data do you need to convince yourself that jumping out of a window with an umbrella is unsafe? Everybody can understand that employing people at a loss is unsustainable and that the goal of employers is to make a profit. I think there's plenty of empirical data for that, the rest just follows logically. Of course there's bound to be a narrow range where you can move some profits into wages and you…

> How much empirical data do you need to convince yourself that jumping out of a window with an umbrella is unsafe?

A non-zero amount, at least:

https://www.youtube.com/watch?v=FBN3xfGrx_U

Re: What harm do minimum wages do?

#56

Post by [deleted] »

AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

[deleted]

Re: What harm do minimum wages do?

#57

Post by scatters »

AnotherGoodName wrote: post #29

Look i get that USA has a lot of billionaires and the GDP per capita looks great for the USA but I want US citizens to please take a look at median wealth per adult and see how far you have to scroll down to find the USA: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... This is a great way to rule out outliers. My home country Australia has 3X the median wealth per adult of the USA. This is similar to…

Median wealth says absolutely nothing except how many homeowners you have and to what extent the housing market is out of control.

The metric that actually reflects people's lives is consumption adjusted for purchasing power. Disposable income (again, adjusted for purchasing power) is useful as well.

Re: What harm do minimum wages do?

#58

Post by e12e »

colinmhayes wrote: post #39
oivey wrote: post #31

Earlier quoted context omitted.

It’s also obviously untrue given the fact that wages in the US have stagnated while productivity has continued to grow. That’s despite a floor on wages.

No it's not obviously untrue. Productivity growth has been driven by capital, not labor.

> Productivity growth has been driven by capital, not labor.

What does capital produce?

Re: What harm do minimum wages do?

#59

Post by abvdasker »

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…

The Marxist perspective is that the employer is incentivized to pay as little as possible to extract the maximum amount of value from the person's labor, realizing the difference as profit (even though crucially that value was created by the worker). An example of this would be software engineers at companies like Apple and Google, whose labor has been shown to produce several times the value of their compensation. Unions and worker cooperatives are meant to counterbalance these forces by giving workers more negotiating power in the case of the former, or aligning the profit motive with employee compensation for the latter.

Re: What harm do minimum wages do?

#60

Post by abdullahkhalids »

ccffpphh wrote: post #47
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…

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.

Universal Declaration of Human Rights

Article 3

Everyone has the right to life, liberty and the security of person.

Article 22

Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

Article 23

1. Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. 2. Everyone, without any discrimination, has the right to equal pay for equal work. 3. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. 4. Everyone has the right to form and to join trade unions for the protection of his interests.

------------

You can either give people unemployment (wage without work)[as per 22 or 23(3)] by taxing the companies you mention, or you can make the companies to give money directly to the people in return for work. There is no third way. You can't deprive people of a dignified life by ignoring them.

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