4 ms·

How much would the low earners win or lose if the minimum wage laws would be strongly enforced? My estimate is that they'd lose close to 100%. Who would hire s

How much would the low earners win or lose if the minimum wage laws would be strongly enforced? My estimate is that they'd lose close to 100%. Who would hire somebody for 15$/h if the worker is able to only produce 9$/h? If the law is the only factor to decide the minimum wage, why not setting it to 50$/h, or even 100$/h? Are the politicians and the policy makers really so evil that they like seing workers people struggle at 10-15$/h?

BinaryIdiot 9y ago
> Who would hire somebody for 15$/h if the worker is able to only produce 9$/h? There are very, very few places where the minimum wage is $15/hr. As of 2016 the federal government requires a minimum wage of at least $7.25 with only 29 states having an amount above that [1] [1] https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...
- tudorconstantin 9y ago
  Yeah, but the principle is the same: what happens when the worker is not able to produce to the level of the minimum wage? be than 15$/h, or 7.25$/h. Would you pay somebody 7.25$/h if they're able to only produce 5$/h?
  - ryandamm 9y ago
    The dynamics are considerably more complicated when you consider massive public policy decisions that affect the labor market, like changing the minimum wage. When you're pricing widgets, you can look at marginal value add and have it make sense. When you're talking about the floor of the labor market, you're really talking about economy-wide effects. The main knock-on effect of raising the minimum wage should be inflation; most labor costs (at least those that get built into consumer prices) are in some way linked to the minimum wage (either explicitly, or because of implicit pay scales). So yeah, there are considerations. But it's not that kind of mechanical, subtract-marginal-value-of-employee kind of considerations. Unfortunately, economies are big and complex and require sophisticated models (they can be simple -- but they should be sophisticated).
  - michaelmrose 9y ago
    If the state provides benefits they have to put a floor on wages in to avoid subsidizing scumbags. People will work for less than it takes to live if the government pays the difference. Honestly if you can't make more than 15 dollars off one hour of someone's labor you might need to go out of business. Given how little 15 is anymore almost anyones labor is worth 15.
    - ams6110 9y ago
      > Given how little 15 is anymore almost anyones labor is worth 15 Not in a competitive market when your competitor is paying $10.00. He then has $5 * total_employee_hours less overhead than you do.
      - michaelmrose 9y ago
        Well if we raise the federal minimum that wont be true will it. I mean that a business ought to be able to turn an average persons labour into significantly more than $15 even if they just use them to prepare non gourmet food.
ryandamm 9y ago
Rather than rebut this in detail, let me just suggest that you study economics before spouting off. It's fun to speculate about numbers, but there is real research and real models to describe these dynamics. I'm not an economist... but at least I know that about myself.
- tudorconstantin 9y ago
  Rather than attacking random people on the internet insinuating that they're economical illiterates, you yourself admitting to not being an economist, please try and rebut this in detail.
  - ryandamm 9y ago
    Here, let me Google it for you: http://www.frbsf.org/economic-research/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/ http://www.frbsf.org/economic-research/publications/economic... I'm glad you "guess" it's nearly 100%. This article (the top Google hit for "effects of minimum wage on employment") suggests it's in the realm of 10% (though it's probably smaller) based on simple linear models of price elasticity. A 10% drop in employment is not nothing! It could absolutely matter! But that's the foundation for a debate, not some made- up numbers. My main point is that it's foolish to 'guess' and start applying numbers... it's tempting to make a point that's grounded in political philosophy, and slap a coat of speculative, pseudo-quantitative paint on it so it sounds more considered. To your other point, about not wasting time on internet comments, I will respectfully concede.
    - tudorconstantin 9y ago
      And what's the income reduction (in %) for those unlucky 10 percenters who end up jobless?
      - mrow84 9y ago
        As we're all comfortable with numbers plucked out of the ether, let's use yours: 1. The group of low-wage workers produce on average $9/hr. 2. A minimum wage of $15/hr is introduced. 3. The income of 10% of the group falls to $0/hr because they lose their jobs, a fall of $9/hr * 0.1 = $0.9/hr on average. 4. The income of 90% of the group rises to the new minimum wage of $15/hr, an increase of $(15 - 9 = 6)/hr * 0.9 = $5.4/hr on average. 5. The net change in income is $(5.4 - 0.9 = 4.5)/hr on average. So with all these contrived numbers the introduction of the minimum wage raised low-wage worker pay by $4.5/hr on average. Is that bad for low-wage workers? Of course, really, we should just take ryandamm's advice here [0] and stop trying to provide our arguments with the air of rigour by throwing some made up numbers around. [0] https://news.ycombinator.com/item?id=14381189 https://news.ycombinator.com/item?id=14381189

BinaryIdiot 9y ago

> Who would hire somebody for 15$/h if the worker is able to only produce 9$/h? There are very, very few places where the minimum wage is $15/hr. As of 2016 the federal government requires a minimum wage of at least $7.25 with only 29 states having an amount above that [1] [1] https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...

tudorconstantin 9y ago
Yeah, but the principle is the same: what happens when the worker is not able to produce to the level of the minimum wage? be than 15$/h, or 7.25$/h. Would you pay somebody 7.25$/h if they're able to only produce 5$/h?
- ryandamm 9y ago
  The dynamics are considerably more complicated when you consider massive public policy decisions that affect the labor market, like changing the minimum wage. When you're pricing widgets, you can look at marginal value add and have it make sense. When you're talking about the floor of the labor market, you're really talking about economy-wide effects. The main knock-on effect of raising the minimum wage should be inflation; most labor costs (at least those that get built into consumer prices) are in some way linked to the minimum wage (either explicitly, or because of implicit pay scales). So yeah, there are considerations. But it's not that kind of mechanical, subtract-marginal-value-of-employee kind of considerations. Unfortunately, economies are big and complex and require sophisticated models (they can be simple -- but they should be sophisticated).
- michaelmrose 9y ago
  If the state provides benefits they have to put a floor on wages in to avoid subsidizing scumbags. People will work for less than it takes to live if the government pays the difference. Honestly if you can't make more than 15 dollars off one hour of someone's labor you might need to go out of business. Given how little 15 is anymore almost anyones labor is worth 15.
  - ams6110 9y ago
    > Given how little 15 is anymore almost anyones labor is worth 15 Not in a competitive market when your competitor is paying $10.00. He then has $5 * total_employee_hours less overhead than you do.
    - michaelmrose 9y ago
      Well if we raise the federal minimum that wont be true will it. I mean that a business ought to be able to turn an average persons labour into significantly more than $15 even if they just use them to prepare non gourmet food.

ryandamm 9y ago

Rather than rebut this in detail, let me just suggest that you study economics before spouting off. It's fun to speculate about numbers, but there is real research and real models to describe these dynamics. I'm not an economist... but at least I know that about myself.

tudorconstantin 9y ago
Rather than attacking random people on the internet insinuating that they're economical illiterates, you yourself admitting to not being an economist, please try and rebut this in detail.
- ryandamm 9y ago
  Here, let me Google it for you: http://www.frbsf.org/economic-research/publications/economic-letter/2015/december/effects-of-minimum-wage-on-employment/ http://www.frbsf.org/economic-research/publications/economic... I'm glad you "guess" it's nearly 100%. This article (the top Google hit for "effects of minimum wage on employment") suggests it's in the realm of 10% (though it's probably smaller) based on simple linear models of price elasticity. A 10% drop in employment is not nothing! It could absolutely matter! But that's the foundation for a debate, not some made- up numbers. My main point is that it's foolish to 'guess' and start applying numbers... it's tempting to make a point that's grounded in political philosophy, and slap a coat of speculative, pseudo-quantitative paint on it so it sounds more considered. To your other point, about not wasting time on internet comments, I will respectfully concede.
  - tudorconstantin 9y ago
    And what's the income reduction (in %) for those unlucky 10 percenters who end up jobless?
    - mrow84 9y ago
      As we're all comfortable with numbers plucked out of the ether, let's use yours: 1. The group of low-wage workers produce on average $9/hr. 2. A minimum wage of $15/hr is introduced. 3. The income of 10% of the group falls to $0/hr because they lose their jobs, a fall of $9/hr * 0.1 = $0.9/hr on average. 4. The income of 90% of the group rises to the new minimum wage of $15/hr, an increase of $(15 - 9 = 6)/hr * 0.9 = $5.4/hr on average. 5. The net change in income is $(5.4 - 0.9 = 4.5)/hr on average. So with all these contrived numbers the introduction of the minimum wage raised low-wage worker pay by $4.5/hr on average. Is that bad for low-wage workers? Of course, really, we should just take ryandamm's advice here [0] and stop trying to provide our arguments with the air of rigour by throwing some made up numbers around. [0] https://news.ycombinator.com/item?id=14381189 https://news.ycombinator.com/item?id=14381189