7 ms·

> But it will do little if anything to help the unnecessariat. A higher minimum wage will most likely hurt the unnecessariat. One way to think of a $15 minimum

> But it will do little if anything to help the unnecessariat. A higher minimum wage will most likely hurt the unnecessariat. One way to think of a $15 minimum wage is a prohibition on anyone who's labor is worth less than $15/hr from working. Not only will it make the current unecessariat's situation worse, it will likely expand it's ranks.

mwcampbell 10y ago
Makes me wonder if we should eliminate the minimum wage altogether.
- labster 10y ago
  We should. And replace it with universal basic income. Also: GP makes an excellent point, which I should have thought of myself.
  - dredmorbius 10y ago
    Replacing minimum wage with UBI shifts employment subsidies to the same firms which are now pressing their workers to apply for welfare benefits whilst pocketing massive profits, including the wealthiest family in the US, the Waltons, of WalMart. Another model is UBI and government as employer of last resort (or a equivalent strong labour movement). If there is an employer who can absorb all applicants at a minimum wage, then the market floor is pushed up. Remember, a living wage is the minimum all-in cost of labour. If you're operating a business which cannot afford to pay a worker what they need to survive, you're not operating a business, you're operating a charity supported by your workforce (or social welfare systems). If you can and fail to, you're simply pocketing profits from the public purse. This is straight-up Adam Smith: "A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation." https://ello.co/dredmorbius/post/29ecw4nrl7ap2fu4chnjsw https://ello.co/dredmorbius/post/29ecw4nrl7ap2fu4chnjsw
    - sokoloff 10y ago
      > If you're operating a business which cannot afford to pay a worker what they need to survive, you're not operating a business, you're operating a charity supported by your workforce (or social welfare systems). Likewise, if you are a working-age individual who is only capable of creating value at a rate less the minimum wage, you aren't looking for a job, you're looking for charity dressed up like a job. (That's fine as a social policy, but when that charity is expected to come private sources, it's a very unstable employer/employee relationship. The minute affordable automation comes along or the business revenues take a dip, such charity cases will be the first to be let go or have their hours cut, because they're fundamentally unprofitable in the normal condition.)
      - dredmorbius 10y ago
        I'd strongly suggest reading Smith on that. I'd also inquire as to: 1. Who or what the economy is supposed to be for, anyway. 2. What the situation is when it's not trivially possible to create increased value through exploitation of labour. That speaks to some problems with the production function. 3. The possibility of positive externalities and/or public goods (also of negative externalities and rent-seeking). 4. The relationships between wealth and political or negotiating power. I'll give you a hint on that last. "Wealth, as Mr Hobbes says, is power." Smith again.
        sokoloff 10y ago
        I have, years ago in college (Econ concentration and some justice/ethics courses to go with engineering major). I am speaking on a micro-scale. Individual people with low skills and no capital. It's not at all clear to me that minimum wage laws and social safety nets with sharp claw-backs or cliffs (where money earned doesn't help at all or not much) help this class as a whole. Sure, minimum wage laws probably prop up many in the class who have jobs but harms those in the class who don't. For me, I've run two small businesses and now am a happy employee. It's amazingly aggravating to deal with having employees and it's perfectly proper to me that my employer makes more profit on my labor than I take home. They should: they take all the risk that I'm a lemon employee and provide the structure whereby I can concentrate on where I can add vale and all the stuff I couldn't care less about (HR, Finance, Legal structure, IP, etc) they handle. If I start a third company, it probably won't have any low-skill workers at all, certainly not if there's a min wage law that makes it uneconomical to hire them. On a micro scale, I'm deciding what's best for my company, not for the economy or for society. Edit: I should also clarify that in my GP post that I was referring to the payment of minimum wage at a rate higher than the value creation as a form of "charity", not that all low-skilled work (paid at free market wages) is charity. One of the appealing aspects of most UBI proposals is the "U" in that they don't scale back benefits as punishment for gainful employment.
jjoonathan 10y ago
Elasticity in the US labor market is much closer to 0 than -1. Not only has this been studied, it's been studied enough that we can do pretty solid meta-studies to find bias is the studies: http://cepr.net/blogs/cepr-blog/studying-the-studies-on-the-minimum-wage http://cepr.net/blogs/cepr-blog/studying-the-studies-on-the-... I wouldn't advocate a jump straight to a $15 minimum wage because for sufficiently large MW jumps the elasticity has to start heading for -1 (and beyond -- that's just the break even point) and we only have good information for small changes. But for small changes the evidence is unambiguous. The traditional narrative taught in Econ 101 is an oversimplification. It's not hard to figure out why: markets set the actual price of labor between the producer price (minimum people will work for) and consumer price (value to the employer) based on bargaining power. If employers are winning at the bargaining power game, wages will be close to the minimum. If employees are winning, wages will be close to the maximum. Only those earning wages already close to the maximum will be affected by a minimum wage increase. Since the unskilled labor market is flooded, approximately everyone is on the "minimum" side of the spectrum. Both theory and evidence say that small MW increases are boons to laborers under these conditions. As machines advance and begin push humans out of the market, the maximum side of the spectrum will begin to drift downwards and impinge on all the people crunched up against the minimum side, squeezing them out of the market and into "unnecessariat" status. Minimum wage will become an ineffective tool at that point, just as you say. But we aren't there yet.
- todd8 10y ago
  > Not only has this been studied, it's been studied enough that we can do pretty solid meta-studies to find bias is the studies. The cited blog is by the CEPR, a leftist/progressive think-tank, this doesn't make their conclusion wrong, however, my reading of the graph present on the blog looks more like there is a negative elasticity, with respect to the demand for labor at higher wages, indicated by the meta-study. The graph looks like it might be as large as -0.1, suggesting that doubling of the minimum wage could have a noticeable negative impact on employment. Not all studies show that happening, but a greater number do.
conjectures 10y ago
Ludicrous. This is the same kind of simplistic ideological fantasy as to think we're always on the RHS of the Laffer curve.

mwcampbell 10y ago

Makes me wonder if we should eliminate the minimum wage altogether.

labster 10y ago
We should. And replace it with universal basic income. Also: GP makes an excellent point, which I should have thought of myself.
- dredmorbius 10y ago
  Replacing minimum wage with UBI shifts employment subsidies to the same firms which are now pressing their workers to apply for welfare benefits whilst pocketing massive profits, including the wealthiest family in the US, the Waltons, of WalMart. Another model is UBI and government as employer of last resort (or a equivalent strong labour movement). If there is an employer who can absorb all applicants at a minimum wage, then the market floor is pushed up. Remember, a living wage is the minimum all-in cost of labour. If you're operating a business which cannot afford to pay a worker what they need to survive, you're not operating a business, you're operating a charity supported by your workforce (or social welfare systems). If you can and fail to, you're simply pocketing profits from the public purse. This is straight-up Adam Smith: "A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation." https://ello.co/dredmorbius/post/29ecw4nrl7ap2fu4chnjsw https://ello.co/dredmorbius/post/29ecw4nrl7ap2fu4chnjsw
  - sokoloff 10y ago
    > If you're operating a business which cannot afford to pay a worker what they need to survive, you're not operating a business, you're operating a charity supported by your workforce (or social welfare systems). Likewise, if you are a working-age individual who is only capable of creating value at a rate less the minimum wage, you aren't looking for a job, you're looking for charity dressed up like a job. (That's fine as a social policy, but when that charity is expected to come private sources, it's a very unstable employer/employee relationship. The minute affordable automation comes along or the business revenues take a dip, such charity cases will be the first to be let go or have their hours cut, because they're fundamentally unprofitable in the normal condition.)
    - dredmorbius 10y ago
      I'd strongly suggest reading Smith on that. I'd also inquire as to: 1. Who or what the economy is supposed to be for, anyway. 2. What the situation is when it's not trivially possible to create increased value through exploitation of labour. That speaks to some problems with the production function. 3. The possibility of positive externalities and/or public goods (also of negative externalities and rent-seeking). 4. The relationships between wealth and political or negotiating power. I'll give you a hint on that last. "Wealth, as Mr Hobbes says, is power." Smith again.
      - sokoloff 10y ago
        I have, years ago in college (Econ concentration and some justice/ethics courses to go with engineering major). I am speaking on a micro-scale. Individual people with low skills and no capital. It's not at all clear to me that minimum wage laws and social safety nets with sharp claw-backs or cliffs (where money earned doesn't help at all or not much) help this class as a whole. Sure, minimum wage laws probably prop up many in the class who have jobs but harms those in the class who don't. For me, I've run two small businesses and now am a happy employee. It's amazingly aggravating to deal with having employees and it's perfectly proper to me that my employer makes more profit on my labor than I take home. They should: they take all the risk that I'm a lemon employee and provide the structure whereby I can concentrate on where I can add vale and all the stuff I couldn't care less about (HR, Finance, Legal structure, IP, etc) they handle. If I start a third company, it probably won't have any low-skill workers at all, certainly not if there's a min wage law that makes it uneconomical to hire them. On a micro scale, I'm deciding what's best for my company, not for the economy or for society. Edit: I should also clarify that in my GP post that I was referring to the payment of minimum wage at a rate higher than the value creation as a form of "charity", not that all low-skilled work (paid at free market wages) is charity. One of the appealing aspects of most UBI proposals is the "U" in that they don't scale back benefits as punishment for gainful employment.

jjoonathan 10y ago

Elasticity in the US labor market is much closer to 0 than -1. Not only has this been studied, it's been studied enough that we can do pretty solid meta-studies to find bias is the studies: http://cepr.net/blogs/cepr-blog/studying-the-studies-on-the-minimum-wage http://cepr.net/blogs/cepr-blog/studying-the-studies-on-the-... I wouldn't advocate a jump straight to a $15 minimum wage because for sufficiently large MW jumps the elasticity has to start heading for -1 (and beyond -- that's just the break even point) and we only have good information for small changes. But for small changes the evidence is unambiguous. The traditional narrative taught in Econ 101 is an oversimplification. It's not hard to figure out why: markets set the actual price of labor between the producer price (minimum people will work for) and consumer price (value to the employer) based on bargaining power. If employers are winning at the bargaining power game, wages will be close to the minimum. If employees are winning, wages will be close to the maximum. Only those earning wages already close to the maximum will be affected by a minimum wage increase. Since the unskilled labor market is flooded, approximately everyone is on the "minimum" side of the spectrum. Both theory and evidence say that small MW increases are boons to laborers under these conditions. As machines advance and begin push humans out of the market, the maximum side of the spectrum will begin to drift downwards and impinge on all the people crunched up against the minimum side, squeezing them out of the market and into "unnecessariat" status. Minimum wage will become an ineffective tool at that point, just as you say. But we aren't there yet.

todd8 10y ago
> Not only has this been studied, it's been studied enough that we can do pretty solid meta-studies to find bias is the studies. The cited blog is by the CEPR, a leftist/progressive think-tank, this doesn't make their conclusion wrong, however, my reading of the graph present on the blog looks more like there is a negative elasticity, with respect to the demand for labor at higher wages, indicated by the meta-study. The graph looks like it might be as large as -0.1, suggesting that doubling of the minimum wage could have a noticeable negative impact on employment. Not all studies show that happening, but a greater number do.

conjectures 10y ago

Ludicrous. This is the same kind of simplistic ideological fantasy as to think we're always on the RHS of the Laffer curve.