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Why do you think minimum wage laws exist? It's because at one point in our nation's history, businesses implicitly colluded to set wages low. They have more pow

Why do you think minimum wage laws exist? It's because at one point in our nation's history, businesses implicitly colluded to set wages low. They have more power in wage negotiations than workers do, because there are generally people who can afford to do unskilled labor for very small amounts. Businesses got greedy and took that too far, offering people wages far beyond a minimum standard of living. So in response, the people voted to set a minimum that would prevent corporations from being outright exploitative. The same thing could happen today. Google engineers will always be paid a lot of money, but the average McDonalds workers could see their income fall way below the national average cost of living. Whether the minimum should be $5/$10/$15 is up for debate, but without businesses would have an unfair amount of bargaining power.

pgtruesdell 11y ago
Collusion to suppress wages is already illegal. All you're saying is that you don't have any faith in the government to prevent collusion. Which is a whole separate issue.
- Retra 11y ago
  You can revoke laws. In fact, this whole discussion is basically about revoking minimum wage laws. How useless of an argument would it be to say "paying less than minimum wage is already illegal, so we can revoke the anti-collusion laws?"
- wavefunction 11y ago
  Or maybe the poster doesn't have any faith in businesses to do the decent thing by their workers. Which is a whole separate issue.
- zanny 11y ago
  The other problem is that today we have labor gluts, particularly of the unskilled variety. Automation reduces the need for workers, those workers become economic outcasts with no influence to have their needs satisfied by capitalism, and the ownership class does not create demand for more unskilled labor - they want founders and professionals who can grow their wealth, that is what they demand. If you drop the minimum wage you do not need collusion to see real wages for jobs drop insanely low, ironically because those who can live off other income will work them when there is no other easy way to earn additional income - IE, those with wealth will work for less because their life does not depend on that income providing their base needs, which already are in many places more than what the minimum wage offers already (ie, living wage).
  - yummyfajitas 11y ago
    We don't have labor gluts at all. In the US working mothers struggle to find child care for their children, houses go uncleaned, and productive people drive themselves to work. That's a situation of labor scarcity, not a labor glut.
    - cperciva 11y ago
      No, we have a labour glut (unemployed people) and a jobs glut (work not being done) at the same time. In other words, a market failure -- caused in part because for work which is valued at less than minimum wage, the market can only function by evading minimum wage laws.
    - makomk 11y ago
      Well, childcare, house-cleaning and car driving have potential costs far in excess of the cost of wages - if someone steals your stuff or damages your furnishings whilst cleaning your house, or crashes when they're driving you to work, or injures your kids, that can be hugely expensive. Also, getting someone else to drive you to work is really inefficient - it means that two people are stuck in a car being unproductive for the entire drive rather than one, plus the driver probably has to drive back afterwards.
    - zanny 11y ago
      If you offered sufficiently high wages to do those jobs, you would find plenty of people willing to do them. A labor glut does not necessitate me being able to ask for someone to mow my lawn for one cent and having someone volunteer. You have a labor glut when the availability of living wage work declines below the working population who need to earn such a living.
      - yummyfajitas 11y ago
        That's fine - the point is that people aren't obsolete and work is available. People are just unwilling to do the work. That's not an argument in favor of a basic income - a basic income just increases the incentives for laziness and makes the labor scarcity worse. (10% or so in the Canadian experiments.)
twoodfin 11y ago
Why isn't this same story true with, say, the price of bread or gasoline?
gozur88 11y ago
>Why do you think minimum wage laws exist? Minimum wage laws make no sense economically, but they make a lot of sense politically. That's why minimum wage laws exist.
atemerev 11y ago
The average McDonalds worker will very soon be a robot. Already everywhere in Europe, there are order-taking kiosks in McDonalds, each one replacing at least two workers. Fast, convenient, never demanding a raise, never joining a union. Pure win. The good news is that society already survived this kind of economic transition, no less dramatic: moving from manual labor to automated manufacturing. The bad news is this transition required a world war and temporary export of working class in China (the latter won't happen this time). There are almost no unemployed at wartime.

pgtruesdell 11y ago

Collusion to suppress wages is already illegal. All you're saying is that you don't have any faith in the government to prevent collusion. Which is a whole separate issue.

Retra 11y ago
You can revoke laws. In fact, this whole discussion is basically about revoking minimum wage laws. How useless of an argument would it be to say "paying less than minimum wage is already illegal, so we can revoke the anti-collusion laws?"
wavefunction 11y ago
Or maybe the poster doesn't have any faith in businesses to do the decent thing by their workers. Which is a whole separate issue.
zanny 11y ago
The other problem is that today we have labor gluts, particularly of the unskilled variety. Automation reduces the need for workers, those workers become economic outcasts with no influence to have their needs satisfied by capitalism, and the ownership class does not create demand for more unskilled labor - they want founders and professionals who can grow their wealth, that is what they demand. If you drop the minimum wage you do not need collusion to see real wages for jobs drop insanely low, ironically because those who can live off other income will work them when there is no other easy way to earn additional income - IE, those with wealth will work for less because their life does not depend on that income providing their base needs, which already are in many places more than what the minimum wage offers already (ie, living wage).
- yummyfajitas 11y ago
  We don't have labor gluts at all. In the US working mothers struggle to find child care for their children, houses go uncleaned, and productive people drive themselves to work. That's a situation of labor scarcity, not a labor glut.
  - cperciva 11y ago
    No, we have a labour glut (unemployed people) and a jobs glut (work not being done) at the same time. In other words, a market failure -- caused in part because for work which is valued at less than minimum wage, the market can only function by evading minimum wage laws.
  - makomk 11y ago
    Well, childcare, house-cleaning and car driving have potential costs far in excess of the cost of wages - if someone steals your stuff or damages your furnishings whilst cleaning your house, or crashes when they're driving you to work, or injures your kids, that can be hugely expensive. Also, getting someone else to drive you to work is really inefficient - it means that two people are stuck in a car being unproductive for the entire drive rather than one, plus the driver probably has to drive back afterwards.
  - zanny 11y ago
    If you offered sufficiently high wages to do those jobs, you would find plenty of people willing to do them. A labor glut does not necessitate me being able to ask for someone to mow my lawn for one cent and having someone volunteer. You have a labor glut when the availability of living wage work declines below the working population who need to earn such a living.
    - yummyfajitas 11y ago
      That's fine - the point is that people aren't obsolete and work is available. People are just unwilling to do the work. That's not an argument in favor of a basic income - a basic income just increases the incentives for laziness and makes the labor scarcity worse. (10% or so in the Canadian experiments.)

twoodfin 11y ago

Why isn't this same story true with, say, the price of bread or gasoline?

gozur88 11y ago

>Why do you think minimum wage laws exist? Minimum wage laws make no sense economically, but they make a lot of sense politically. That's why minimum wage laws exist.

atemerev 11y ago

The average McDonalds worker will very soon be a robot. Already everywhere in Europe, there are order-taking kiosks in McDonalds, each one replacing at least two workers. Fast, convenient, never demanding a raise, never joining a union. Pure win. The good news is that society already survived this kind of economic transition, no less dramatic: moving from manual labor to automated manufacturing. The bad news is this transition required a world war and temporary export of working class in China (the latter won't happen this time). There are almost no unemployed at wartime.