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I think you misunderstand the position of experts who believe a minimum wage is not “optimal”. It’s never been easier to discover and apply for new jobs. That

by zaroth 7y ago

I think you misunderstand the position of experts who believe a minimum wage is not “optimal”. It’s never been easier to discover and apply for new jobs. That is to say, the transaction costs of changing jobs has never been lower. In a competitive market with low transaction costs of changing jobs, an employee will achieve their highest wage on the open market based on their skill set. Based on this theory a minimum wage sets a minimum skill level or value proposition a worker must present in order to be entitled to employment. Anyone who performs below that level is denied a job by the Federal minimum value proposition law. The higher the minimum value proposition of a worker, the higher functioning / more productive individual workers must be, and the fewer people need to be employed. So the theory is that a minimum value regulation directly hurts the people who are capable of providing the least value. Is it the best thing for society for the least productive workers to be legally unemployable? Of course this glosses over all the inefficiencies and particularly the power imbalances that exist most dramatically at the jobs with the least skilled workers. Companies are profitable because they can pay their employees dramatically less than the value that they produce for the company. Usually that value is a result of the infrastructure and intellectual property of the company multiplying the productivity of the worker to create the added value. But sometimes it’s simply on the backs of the workers being underpaid for the value they are personally creating. Personally I think the minimum wage is low enough at this point where the overhead for just having the employee dominates the total cost of payroll. If there’s a cost saving to be had, it’s in lowering that overhead, not lowering payroll. This typically is achieved through reducing employment regulations in general, of which minimum wage/value is just one of hundreds or perhaps thousands.

justizin 7y ago
> That is to say, the transaction costs of changing jobs has never been lower. i'm just going to venture a guess, but i suspect you have never worked as a dishwasher. this sort of overly academic language is tone deaf to the reality of working for minimum wage.
- dsfyu404ed 7y ago
  Not the person you're replying but I've worked as a dishwasher and what he/she says about ease of switching jobs is spot on. I did a lot of other menial jobs too before I got a degree. Construction laborer was my favorite but janitor wasn't bad. Unless you have a really interesting criminal record it's super easy to bounce between menial jobs. Go on Craigslist, fire off a "resume" (in quotes because it's more of a work history than anything else) to anything that looks tolerable and roll with whatever replies you get back. There was one time I told a boss to shove it on one day and showed up to a different job the next but that was the exception not the rule. I suspect if anything it's easier now. The economy was not as strong back when I was working those jobs. Edit: I can write an email with proper grammar, show up on time and can pass a drug test which I know now are two of the major pain points for minimum wage employers so I guess I was privileged in that regard.
  - derekp7 7y ago
    I recall seeing an interview (many years ago) of some random store manager, on one of those TV news magazine shows. His biggest complaint was that anyone he hired just randomly would not show up, or come in a couple hours late. Being reliable is something that gives you a huge legg up on the competition.
JaimeThompson 7y ago
>In a competitive market with low transaction costs of changing jobs Ignoring reality makes it easy to solve all sorts of problem. It simply isn't the case that, for most people, changing jobs is a low cost transaction once you take into account the costs (all of them not just monetary) of changing jobs. If minimum wage had simply kept pace with inflation it would be > 20 dollars per hour today. Edit - the 20 dollar amount may not be correct. I need to verify where I got it from so please research it yourself.
- derekp7 7y ago
  > If minimum wage had simply kept pace with inflation it would be > 20 dollars per hour today. I just plugged in 1970's minimum wage (1.45) into an inflation calculator (I tried the first several links in Google), and it shows 9.38 in 2018. Of course, inflation varies based on different items in a basket of goods, and there are a number of things we have now that didn't exist in 1970 (cable / satellite TV, internet, cell phones, mobile internet, Netflix). On the flip side, you no longer pay an outrageous per minute fee for long distance.
  - JaimeThompson 7y ago
    I honestly have no idea what site I got my numbers from but the image I have in my notes shows > 20 USD I don't know what site I used to get that. Will research.
- zaroth 7y ago
  Seems I’m being judged harshly for that comment. What I’m saying is that the theory is that if you have a competitive market and low transaction costs for switching, then... The term “transaction costs” is a reflection of the total cost to the employee, including time spent searching, applying, interviewing, potential lost wages if the new start date doesn’t match the end date, even time value for filling out the W-9. All of it. There’s a lot that can be done on the regulatory side to reduce these costs. The really big one is probably health insurance switching costs, particularly if deductibles are getting reset mid-year. So my conclusion is the most effective and economically efficient way to improve the conditions for low skilled workers is to reduce overhead costs and reduce transaction costs for switching jobs as much as possible. Dialing up the legal minimum value proposition of a worker in theory does not help, and can only possibly hurt low skilled employees, if the labor market is competitive and job switching costs are zero (that is to say, in an idealized—not real-world—model).

by zaroth 7y ago

justizin 7y ago

> That is to say, the transaction costs of changing jobs has never been lower. i'm just going to venture a guess, but i suspect you have never worked as a dishwasher. this sort of overly academic language is tone deaf to the reality of working for minimum wage.

dsfyu404ed 7y ago
Not the person you're replying but I've worked as a dishwasher and what he/she says about ease of switching jobs is spot on. I did a lot of other menial jobs too before I got a degree. Construction laborer was my favorite but janitor wasn't bad. Unless you have a really interesting criminal record it's super easy to bounce between menial jobs. Go on Craigslist, fire off a "resume" (in quotes because it's more of a work history than anything else) to anything that looks tolerable and roll with whatever replies you get back. There was one time I told a boss to shove it on one day and showed up to a different job the next but that was the exception not the rule. I suspect if anything it's easier now. The economy was not as strong back when I was working those jobs. Edit: I can write an email with proper grammar, show up on time and can pass a drug test which I know now are two of the major pain points for minimum wage employers so I guess I was privileged in that regard.
- derekp7 7y ago
  I recall seeing an interview (many years ago) of some random store manager, on one of those TV news magazine shows. His biggest complaint was that anyone he hired just randomly would not show up, or come in a couple hours late. Being reliable is something that gives you a huge legg up on the competition.

JaimeThompson 7y ago

>In a competitive market with low transaction costs of changing jobs Ignoring reality makes it easy to solve all sorts of problem. It simply isn't the case that, for most people, changing jobs is a low cost transaction once you take into account the costs (all of them not just monetary) of changing jobs. If minimum wage had simply kept pace with inflation it would be > 20 dollars per hour today. Edit - the 20 dollar amount may not be correct. I need to verify where I got it from so please research it yourself.

derekp7 7y ago
> If minimum wage had simply kept pace with inflation it would be > 20 dollars per hour today. I just plugged in 1970's minimum wage (1.45) into an inflation calculator (I tried the first several links in Google), and it shows 9.38 in 2018. Of course, inflation varies based on different items in a basket of goods, and there are a number of things we have now that didn't exist in 1970 (cable / satellite TV, internet, cell phones, mobile internet, Netflix). On the flip side, you no longer pay an outrageous per minute fee for long distance.
- JaimeThompson 7y ago
  I honestly have no idea what site I got my numbers from but the image I have in my notes shows > 20 USD I don't know what site I used to get that. Will research.
zaroth 7y ago
Seems I’m being judged harshly for that comment. What I’m saying is that the theory is that if you have a competitive market and low transaction costs for switching, then... The term “transaction costs” is a reflection of the total cost to the employee, including time spent searching, applying, interviewing, potential lost wages if the new start date doesn’t match the end date, even time value for filling out the W-9. All of it. There’s a lot that can be done on the regulatory side to reduce these costs. The really big one is probably health insurance switching costs, particularly if deductibles are getting reset mid-year. So my conclusion is the most effective and economically efficient way to improve the conditions for low skilled workers is to reduce overhead costs and reduce transaction costs for switching jobs as much as possible. Dialing up the legal minimum value proposition of a worker in theory does not help, and can only possibly hurt low skilled employees, if the labor market is competitive and job switching costs are zero (that is to say, in an idealized—not real-world—model).