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We talk a lot on HN about how easy it is to fool yourself into thinking that you have a real business. You might have the coolest product ever but if people ar

We talk a lot on HN about how easy it is to fool yourself into thinking that you have a real business. You might have the coolest product ever but if people aren't willing to pay your cost to produce then it doesn't matter - you don't have a business. Restaurants are exactly the same. You might make the best food in the world but if no one is willing to pay the price it costs then it doesn't matter - you don't have a real business. Minimum wage is an attempt to force the externalities of a business underpaying its employees back on to the business. The whole point is to push prices up so that the business is responsible for itself - otherwise it's easy to pay people a very low wage and let society make up the gap so that you don't have people living in abject poverty (this is what Walmart is accused of for example).

twoodfin 9y ago
Minimum wage is an attempt to force the externalities of a business underpaying its employees back on to the business. I hear this argument a lot but it doesn't make any sense to me. Costco and Walmart both move into town. Walmart hires 100 formerly unemployed residents at $10/hour. Costco runs a less labor-intensive operation and hires 20 at $20/hour. For the sake of argument, they both sell the same amount of goods. Why is Walmart being "subsidized" but Costco is not? Walmart's paying 2.5X the wages to folks who were previously relying 100% on the taxpayer.
- mexfff 9y ago
  It's not the case that people employed by Walmart were previously relying 100% on the taxpayer. Many of them may have been working for smaller retail outfits which treated their workers decently and went out of business because they couldn't compete on price with Walmart.
  - twoodfin 9y ago
    The point of my example (which has some mapping to the real world) is that Costco does successfully compete with Walmart and pays “decent” wages, but to a lot fewer people. Costco has put smaller retail outlets out of business, too.
    - maxerickson 9y ago
      Costco doesn't compete with Walmart. It is much more selective about where it places stores (each store needs to serve many more people) and it stocks a smaller number of mostly higher revenue items.
- maxerickson 9y ago
  The claim is that employees working for the wages Walmart pays still collect government benefits. Whether to impute those benefits to the store is a fair question, but the idea is that Walmart employees are literally collecting more government payments than the Costco employees.

twoodfin 9y ago

Minimum wage is an attempt to force the externalities of a business underpaying its employees back on to the business. I hear this argument a lot but it doesn't make any sense to me. Costco and Walmart both move into town. Walmart hires 100 formerly unemployed residents at $10/hour. Costco runs a less labor-intensive operation and hires 20 at $20/hour. For the sake of argument, they both sell the same amount of goods. Why is Walmart being "subsidized" but Costco is not? Walmart's paying 2.5X the wages to folks who were previously relying 100% on the taxpayer.

mexfff 9y ago
It's not the case that people employed by Walmart were previously relying 100% on the taxpayer. Many of them may have been working for smaller retail outfits which treated their workers decently and went out of business because they couldn't compete on price with Walmart.
- twoodfin 9y ago
  The point of my example (which has some mapping to the real world) is that Costco does successfully compete with Walmart and pays “decent” wages, but to a lot fewer people. Costco has put smaller retail outlets out of business, too.
  - maxerickson 9y ago
    Costco doesn't compete with Walmart. It is much more selective about where it places stores (each store needs to serve many more people) and it stocks a smaller number of mostly higher revenue items.
maxerickson 9y ago
The claim is that employees working for the wages Walmart pays still collect government benefits. Whether to impute those benefits to the store is a fair question, but the idea is that Walmart employees are literally collecting more government payments than the Costco employees.