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Minimum wage just outlaws all jobs that are worth less than $6 per hour. Suppose the unemployment rate is 5%, if minimum wage were raised, unemployment would i

Minimum wage just outlaws all jobs that are worth less than $6 per hour. Suppose the unemployment rate is 5%, if minimum wage were raised, unemployment would increase. If it were lowered, unemployment would decrease. There is a widespread misperception that businesses naively overpay employees for work that is actually worth less than minimum wage. This is not the case, which is why there is litter on sidewalks and beaches (for example) and why there has been a rise in the use of robotics (mechanical car washes, street sweepers, assembly line robots, grain harvesters, etc.) Maybe in the short term some workers were overpaid, but it is generally very brief and does nothing to equip those overpaid workers for the future since industry is striving to correct the inefficiency and develop a robot, etc. I think the point you are missing is that it's not just about the wage someone is paid, it's also about the training the job provides. Minimum wage prevents people unable to add $6/hour of value from having a job at all, which makes them helpless wards of the state. Great accomplishment.

jacquesm 16y ago
http://news.ycombinator.com/item?id=1644264 http://news.ycombinator.com/item?id=1644264
pbhjpbhj 16y ago
You're assuming that those working for $2 an hour were being paid fairly and that what they were doing wasn't worth $6. Also I've read at least 2 studies showing that min wage in the US didn't decrease employment but did increase earnings (ie people weren't sacked nor even underemployed because min wage increased).
thaumaturgy 16y ago
> ...if minimum wage were raised, unemployment would increase. If it were lowered, unemployment would decrease. And yet, there are so many stories from wait staff about how important tips are to their ability to survive. Lowering unemployment at the expense of a much larger group's ability to survive is not a good idea IMO.
- deleted 16y ago
  [deleted]
- grandalf 16y ago
  Waitstaff are often paid below minimum and only "caught up" to minimum if their tips failed to exceed it, so not sure what exactly you mean. I'm not arguing that people shouldn't be able to earn a living wage, I just don't think minimum wage laws help the situation.
krschultz 16y ago
You keep making this point over and over, but I don't think you understand the reality of the situation from a business owners perspective. I'll talk from the perspective of someone who has both earned minimum wage at McDonalds and designed manufacturing robots to replace people. When I was working for minimum wage, I worked my ass off. We'd retunely serve >$1,000 an hour in business with 10 employees making minimum wage. 10x7 = $70. There is plenty of overhead but when your payroll expense is less than 1/10th of your revenue, would lowering the minimum wage really do much? In our case the limiting factor on how many people were working was literally how many jobs there were. Add in some more poeple, what do they do? Nothing. So all the minimum wage does is set a floor on what they paid us. I was horribly overqualified, so was everyone else, anyone who walks in the door can handle the job, so they would just pay the cheapest people to do that job required by law. Now fast forward to when I had graduated college and was designing robots, I was working on a system for a production line where the parts cost >$50,000 each. The person it was moving aside (they weren't actually fired) made >$40,000 a year. Much more than minimum wage. The reason for the replacement was that the robot could do it more precisesly and thus waste fewer compononets. The value was not the cost of labor, but the ability of the robot to do something better than what a human can do. The robot cost a lot of money, hundreds of thousands of dollars, and the person it was replacing only made about 1/5th of that. This was a relatively long pay off project just looking at labor vs robot costs. The real savings was in reducing wasted procduct. So the robot was replacing high skilled labor that was far above minimum wage anyway. If your argument ever relies on McDonalds replacing people with robots, you're just wrong. Robots are not that cheap and people are not that expensive. Minimum wage is peanuts already, lowering it won't add more workers. Would you really replace the person handing cups out of the window for $5 an hour? What kind of robot would you need with the articulation to pick up a cop, hand it out the window and find the person sitting in their car. Would it really be worth the tens of thousands of dollars to replace a $7 an hour worker? Hell no! That's why we don't have robots at McDonalds. But if the minimum wage was $2 an hour, the guy at the window would be making $2 an hour, and there wouldn't be 2 workers just becuase the minimum wage was that much lower, becuase you only need one guy at the window handing out cups no matter what he costs. Another example: my uncle owns a gas station in New Jersey, he is required to have paid pump attendants 24/7 by law. He pays them miminimum wage. This barely even factors into his bottom line at all, he believes it lowers the insurance more than it costs him in wages. Yet he has to do it by law, and he has to pay them by law. If minimum wage was lower, he would just hire exactly the same number of people and pay them less. There is no extra work for the extra people. There is no reason for him to pay any more becuase there is no skill required for the job. It is relatively simple and established economics, but more importantly it is something that you can feel as a business owner (if you are one). For a lot of this stuff there is a set number of people you need to get the job done and price of labor does nothing but affect how much profit you have. Lower prices of labor doesn't change how many people you need at a restaurent or a gas station. There is a minimum and maximum number of people that is effective regardless of cost. Thus minimum wage is helping those people in no skill jobs to have a realistic wage instead of just a race to the bottom.

jacquesm 16y ago

http://news.ycombinator.com/item?id=1644264 http://news.ycombinator.com/item?id=1644264

pbhjpbhj 16y ago

You're assuming that those working for $2 an hour were being paid fairly and that what they were doing wasn't worth $6. Also I've read at least 2 studies showing that min wage in the US didn't decrease employment but did increase earnings (ie people weren't sacked nor even underemployed because min wage increased).

thaumaturgy 16y ago

> ...if minimum wage were raised, unemployment would increase. If it were lowered, unemployment would decrease. And yet, there are so many stories from wait staff about how important tips are to their ability to survive. Lowering unemployment at the expense of a much larger group's ability to survive is not a good idea IMO.

deleted 16y ago
[deleted]
grandalf 16y ago
Waitstaff are often paid below minimum and only "caught up" to minimum if their tips failed to exceed it, so not sure what exactly you mean. I'm not arguing that people shouldn't be able to earn a living wage, I just don't think minimum wage laws help the situation.

krschultz 16y ago

You keep making this point over and over, but I don't think you understand the reality of the situation from a business owners perspective. I'll talk from the perspective of someone who has both earned minimum wage at McDonalds and designed manufacturing robots to replace people. When I was working for minimum wage, I worked my ass off. We'd retunely serve >$1,000 an hour in business with 10 employees making minimum wage. 10x7 = $70. There is plenty of overhead but when your payroll expense is less than 1/10th of your revenue, would lowering the minimum wage really do much? In our case the limiting factor on how many people were working was literally how many jobs there were. Add in some more poeple, what do they do? Nothing. So all the minimum wage does is set a floor on what they paid us. I was horribly overqualified, so was everyone else, anyone who walks in the door can handle the job, so they would just pay the cheapest people to do that job required by law. Now fast forward to when I had graduated college and was designing robots, I was working on a system for a production line where the parts cost >$50,000 each. The person it was moving aside (they weren't actually fired) made >$40,000 a year. Much more than minimum wage. The reason for the replacement was that the robot could do it more precisesly and thus waste fewer compononets. The value was not the cost of labor, but the ability of the robot to do something better than what a human can do. The robot cost a lot of money, hundreds of thousands of dollars, and the person it was replacing only made about 1/5th of that. This was a relatively long pay off project just looking at labor vs robot costs. The real savings was in reducing wasted procduct. So the robot was replacing high skilled labor that was far above minimum wage anyway. If your argument ever relies on McDonalds replacing people with robots, you're just wrong. Robots are not that cheap and people are not that expensive. Minimum wage is peanuts already, lowering it won't add more workers. Would you really replace the person handing cups out of the window for $5 an hour? What kind of robot would you need with the articulation to pick up a cop, hand it out the window and find the person sitting in their car. Would it really be worth the tens of thousands of dollars to replace a $7 an hour worker? Hell no! That's why we don't have robots at McDonalds. But if the minimum wage was $2 an hour, the guy at the window would be making $2 an hour, and there wouldn't be 2 workers just becuase the minimum wage was that much lower, becuase you only need one guy at the window handing out cups no matter what he costs. Another example: my uncle owns a gas station in New Jersey, he is required to have paid pump attendants 24/7 by law. He pays them miminimum wage. This barely even factors into his bottom line at all, he believes it lowers the insurance more than it costs him in wages. Yet he has to do it by law, and he has to pay them by law. If minimum wage was lower, he would just hire exactly the same number of people and pay them less. There is no extra work for the extra people. There is no reason for him to pay any more becuase there is no skill required for the job. It is relatively simple and established economics, but more importantly it is something that you can feel as a business owner (if you are one). For a lot of this stuff there is a set number of people you need to get the job done and price of labor does nothing but affect how much profit you have. Lower prices of labor doesn't change how many people you need at a restaurent or a gas station. There is a minimum and maximum number of people that is effective regardless of cost. Thus minimum wage is helping those people in no skill jobs to have a realistic wage instead of just a race to the bottom.