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>The minimum wage is an effort to increase the welfare of those whose skills are in excess supply. It's an inefficient one. We can do a better job at improving

>The minimum wage is an effort to increase the welfare of those whose skills are in excess supply. It's an inefficient one. We can do a better job at improving their welfare at a lower overall cost.` >The idea that removing the minimum wage would result in full employment is ridiculous. I'm not arguing that at all. >It would make businesses richer and subject millions of people to worse poverty. So combine abolishing the minimum wage with a complimentary policy that makes businesses poorer and alleviate the poverty of millions. A minimum wage is not the only way to make employers pay to alleviate the poverty of the working poor.

Frondo 9y ago
"It's an inefficient one. We can do a better job at improving their welfare at a lower overall cost." So show us anywhere in the Western world that does that; improves the welfare of the poor without a minimum wage. But show us with evidence from other countries that are currently employing the system, don't defer to untested and unproven "it could be so if..." claims, please.
- deleted 9y ago
  [deleted]
- ptr 9y ago
  Technically, Sweden doesn't have a minimum wage. Some unions negotiate salary centrally for their members though.
  - jpttsn 9y ago
    Centrally is an understatement. There is legislation that binds non-union members at non-union workplaces to union agreements.
    - kwhitefoot 9y ago
      It's essentially the same here in Norway and so far the system is working reasonably well. It does mean that my job as a software developer doesn't pay as well as it might in the US but on the other hand I have a lot more security; I can't be fired without cause, notice periods are six months after working for the company for ten years, etc., redundancy compensation is generally reasonable, and so on.
      - jpttsn 9y ago
        Compared to the US, I think there might be a shortage of truly affluent individuals. Are there angel investors in Norway, that can give a new startup a chance?
        kwhitefoot 9y ago
        As the population of Norway is less than 1/60th part of the US then there is bound to be a massive difference of course but they do exist and Norway does in fact have quite a few fairly well off people. There is even a Wikipedia page listing the top six. Norway is ranked 25th in the world in number of billionaires with 14 so in terms of billionaires per capita it beats the US by a fair margin. Of course, their total wealth is much less. Anyway, yes there are angel investors and companies that exist only to match them to those needing the money. Again, probably not on the scale you will find in Silicon Valley.
acover 9y ago
Is it inefficent? Why do you think that? The perfect is the enemy of the good. When you propose an alternate solution I'd like to see it in practice before throwing millions of people to the wolves.
- ThrustVectoring 9y ago
  >Is it inefficient? Why do you think that? Deadweight losses. A bored teenager that'd rather have $3 than an hour of his time sits at home. A retired person would rather tell stories to a bored teenager for an hour than have $3. The law says that it's illegal to make this trade, even though both parties are better off afterwards. There's other issues from messing with prices - shortages/surpluses, excesses or deficiencies of quality, search costs, and misallocation of resources. It really all boils down to the same thing, though. Prices provide feedback between what buyers want and what sellers provide. Mess with prices, and society starts lying to itself about what it wants or how hard getting it is. Do Not Mess With Prices. >When you propose an alternate solution I'd like to see it in practice before throwing millions of people to the wolves. We have an alternate solution, we just reserve it for people who somehow "deserve" to be treated humanely through virtue of being disabled or elderly. Everyone deserves to be treated humanely. Expand the current welfare system to everyone, eliminate the incentive distortions from means and needs-testing people, and pay for it through tax increases.
  - acover 9y ago
    Okay, you are a proponent of basic income. There are pilot programs happening. We'll see how that works out. The perfect is the enemy of the good. Are the inefficiencies you mentioned significant? I suggest you read the empirical studies section of the Wikipedia article. I think you can have an opinion but I don't think you can treat it as fact. Note: your example of the teenager seems ridiculous as people get paid under the table all the time. Edit: prices are always messed with. Inefficiencies are created and removed every day. A minimum wage is just a large union saying we want our share of the value we create. If you want to argue that they are messing with the efficiency of the economy or are shooting themselves in the foot then you should have damn good evidence.
  - 9y ago
deleted 9y ago
[deleted]
malandrew 9y ago
It's worse than inefficient. It's actively counter-productive, as it increases welfare at the expense of reducing the number of opportunities to benefit from that welfare. e.g. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2951110 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2951110
- acover 9y ago
  Do you have a source? Economists disagree about this issue. Lots of the people who are affected by the minimum wage support it. Remember, it's okay to not know something. Edit: thanks for the source. I don't think an analysis of the minimum wages affect on restaurant exits answers the question "Is the minimum wage good for those whose skills are in excess supply?". It may be bad for the number of restaurants but is it bad for restaurant workers?
  - malandrew 9y ago
    If the number of restaurants declines, so does the number of restaurant jobs. Those that still have a restaurant job are better off until they find themselves in the market again, at which time they will be competing with more people for fewer jobs. Effectively, you've just transferred income from some restaurant workers to other restaurant workers and eliminated the income for some restaurant owners who went out of business. Those restaurants that do survive also end up reducing the number of staff or shifts available to maintain their profit margin.
    - acover 9y ago
      No. You've transfered from customers/restaurant owners/unemployed to the workers. The unemployed get unemployment, which is a transfer from the workers. There are smarter people than us who are debating this. Maybe you shouldn't hold this opinion so strongly. Edit: Downvotes for what?
      - malandrew 9y ago
        > There are smarter people than us who are debating this. Maybe you shouldn't hold this opinion so strongly. An ad hominem is not an argument. If we're going with logical fallacies to make our case, I'm going to appeal to authority: I understand this pretty well as I used to work directly on macro-economic reports at the largest broker dealer in Latin America upon which many international institutional investors based their investment decisions. Unfortunately, the citizens of the country whose economy I covered (Brazil) didn't understand these economics issues (among many), which among the reasons why its economy has contracted over 3% for the past 2+ years. You're assuming that it's a strict wealth transfer where the size of the pie stays the same. It does not. The pie gets smaller when you reduce economic activity, which raising the minimum wage accomplishes as it eliminates jobs and puts businesses out of business. You can lie to yourself by using welfare to prop things up, but that doesn't work so well when the amount of taxes you collect to fund your welfare state drops as the economy shrinks. Eventually that gravy train runs out of steam.

Frondo 9y ago

"It's an inefficient one. We can do a better job at improving their welfare at a lower overall cost." So show us anywhere in the Western world that does that; improves the welfare of the poor without a minimum wage. But show us with evidence from other countries that are currently employing the system, don't defer to untested and unproven "it could be so if..." claims, please.

deleted 9y ago
[deleted]
ptr 9y ago
Technically, Sweden doesn't have a minimum wage. Some unions negotiate salary centrally for their members though.
- jpttsn 9y ago
  Centrally is an understatement. There is legislation that binds non-union members at non-union workplaces to union agreements.
  - kwhitefoot 9y ago
    It's essentially the same here in Norway and so far the system is working reasonably well. It does mean that my job as a software developer doesn't pay as well as it might in the US but on the other hand I have a lot more security; I can't be fired without cause, notice periods are six months after working for the company for ten years, etc., redundancy compensation is generally reasonable, and so on.
    - jpttsn 9y ago
      Compared to the US, I think there might be a shortage of truly affluent individuals. Are there angel investors in Norway, that can give a new startup a chance?
      - kwhitefoot 9y ago
        As the population of Norway is less than 1/60th part of the US then there is bound to be a massive difference of course but they do exist and Norway does in fact have quite a few fairly well off people. There is even a Wikipedia page listing the top six. Norway is ranked 25th in the world in number of billionaires with 14 so in terms of billionaires per capita it beats the US by a fair margin. Of course, their total wealth is much less. Anyway, yes there are angel investors and companies that exist only to match them to those needing the money. Again, probably not on the scale you will find in Silicon Valley.

acover 9y ago

Is it inefficent? Why do you think that? The perfect is the enemy of the good. When you propose an alternate solution I'd like to see it in practice before throwing millions of people to the wolves.

ThrustVectoring 9y ago
>Is it inefficient? Why do you think that? Deadweight losses. A bored teenager that'd rather have $3 than an hour of his time sits at home. A retired person would rather tell stories to a bored teenager for an hour than have $3. The law says that it's illegal to make this trade, even though both parties are better off afterwards. There's other issues from messing with prices - shortages/surpluses, excesses or deficiencies of quality, search costs, and misallocation of resources. It really all boils down to the same thing, though. Prices provide feedback between what buyers want and what sellers provide. Mess with prices, and society starts lying to itself about what it wants or how hard getting it is. Do Not Mess With Prices. >When you propose an alternate solution I'd like to see it in practice before throwing millions of people to the wolves. We have an alternate solution, we just reserve it for people who somehow "deserve" to be treated humanely through virtue of being disabled or elderly. Everyone deserves to be treated humanely. Expand the current welfare system to everyone, eliminate the incentive distortions from means and needs-testing people, and pay for it through tax increases.
- acover 9y ago
  Okay, you are a proponent of basic income. There are pilot programs happening. We'll see how that works out. The perfect is the enemy of the good. Are the inefficiencies you mentioned significant? I suggest you read the empirical studies section of the Wikipedia article. I think you can have an opinion but I don't think you can treat it as fact. Note: your example of the teenager seems ridiculous as people get paid under the table all the time. Edit: prices are always messed with. Inefficiencies are created and removed every day. A minimum wage is just a large union saying we want our share of the value we create. If you want to argue that they are messing with the efficiency of the economy or are shooting themselves in the foot then you should have damn good evidence.
- 9y ago

deleted 9y ago

[deleted]

malandrew 9y ago

It's worse than inefficient. It's actively counter-productive, as it increases welfare at the expense of reducing the number of opportunities to benefit from that welfare. e.g. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2951110 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2951110

acover 9y ago
Do you have a source? Economists disagree about this issue. Lots of the people who are affected by the minimum wage support it. Remember, it's okay to not know something. Edit: thanks for the source. I don't think an analysis of the minimum wages affect on restaurant exits answers the question "Is the minimum wage good for those whose skills are in excess supply?". It may be bad for the number of restaurants but is it bad for restaurant workers?
- malandrew 9y ago
  If the number of restaurants declines, so does the number of restaurant jobs. Those that still have a restaurant job are better off until they find themselves in the market again, at which time they will be competing with more people for fewer jobs. Effectively, you've just transferred income from some restaurant workers to other restaurant workers and eliminated the income for some restaurant owners who went out of business. Those restaurants that do survive also end up reducing the number of staff or shifts available to maintain their profit margin.
  - acover 9y ago
    No. You've transfered from customers/restaurant owners/unemployed to the workers. The unemployed get unemployment, which is a transfer from the workers. There are smarter people than us who are debating this. Maybe you shouldn't hold this opinion so strongly. Edit: Downvotes for what?
    - malandrew 9y ago
      > There are smarter people than us who are debating this. Maybe you shouldn't hold this opinion so strongly. An ad hominem is not an argument. If we're going with logical fallacies to make our case, I'm going to appeal to authority: I understand this pretty well as I used to work directly on macro-economic reports at the largest broker dealer in Latin America upon which many international institutional investors based their investment decisions. Unfortunately, the citizens of the country whose economy I covered (Brazil) didn't understand these economics issues (among many), which among the reasons why its economy has contracted over 3% for the past 2+ years. You're assuming that it's a strict wealth transfer where the size of the pie stays the same. It does not. The pie gets smaller when you reduce economic activity, which raising the minimum wage accomplishes as it eliminates jobs and puts businesses out of business. You can lie to yourself by using welfare to prop things up, but that doesn't work so well when the amount of taxes you collect to fund your welfare state drops as the economy shrinks. Eventually that gravy train runs out of steam.