4 ms·

>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 tha

>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).
opo 7y ago
The first federal minimum wage was .25 in 1938. An inflation calculator shows that would be $4.54 in 2019. Based on that, I would have to conclude the minimum wage has more than kept up with the inflation rate. https://bebusinessed.com/history/history-of-minimum-wage/ https://bebusinessed.com/history/history-of-minimum-wage/ https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/

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).

opo 7y ago

The first federal minimum wage was .25 in 1938. An inflation calculator shows that would be $4.54 in 2019. Based on that, I would have to conclude the minimum wage has more than kept up with the inflation rate. https://bebusinessed.com/history/history-of-minimum-wage/ https://bebusinessed.com/history/history-of-minimum-wage/ https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/