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Minimum wage hurts most the very people it pretends to help: the least productive of us, who become unemployable legally. Business who can't raise their labor

• contravariant 7y ago
  Businesses that cannot turn a profit without paying their employees enough to cover basic expenses (leaving aside whether this is higher or lower than the current minimum wage) do not deserve to exist. Having those jobs automated away or passing the cost of living of the employees on to the customers are both reasonable alternatives.
  • nickpp 7y ago
    By your logic startups (and pretty much any new business) should not exist, since they turn no profit for years. And this is why Socialist economies are so crappy and need minimal wage laws: they kill their startups before they even exist and have no competition on the talent market. And then they wonder why they can't produce an Apple, Microsoft, Amazon or Google...
    • humanrebar 7y ago
      See also: low paying internships and apprenticeships where the experience and networking is part of the compensation. The problem with minimum wage laws is that they presume there are no other forms of compensation than wages.
      • thenewnewguy 7y ago
        The problem with this argument is that is presumes that other forms of compensation can be used to purchase food, healthcare, housing, etc. Also, unpaid internships are legal in the US (at least federally) if they are primarily for the benefit/training of the worker and that information is made available upfront.
        • humanrebar 7y ago
          No, it presumes that the people taking these jobs have access to those things through other means. Like parental support, spousal support, scholarships, student loans, fellowships, government programs, side gigs, etc.
  • hartator 7y ago
    What about an artist selling his art for less than the hourly minimum wage it cost him to make it? Should he get arrested?
  • jsjohnst 7y ago
    > passing the cost of living of the employees on to the customers I see this trope a lot, but the point I think it misses is the customers of these businesses are often enough the ones making minimum wage. So raising the business’s prices to pay the higher wages just ends up in a self defeating loop for all involved. If the solution to poverty was “just give the poor people money”, it would’ve been done already I believe. Sadly, societal problems are generally not easy to solve.
  • katzgrau 7y ago
    > do not deserve to exist It's an easy position take take when you're a well paid developer and money problems aren't a concern. I used to feel the same way, until I started my own business. I couldn't attract venture capital and I had to bootstrap the company. There was no way in hell I was using my house for a loan. Early on I relied on people who wanted to stay relevant, but needed flexibility, and were happy to take a lower hourly wage. For example, a stay at home parent whose SO earned the majority of the household income. My business contributes sincere value to a niche industry that otherwise doesn't get any attention or investment. It's been said by several in my industry that without my company, several hundred community news organizations would likely fail. Today, I can afford to pay a living wage. But now I understand that growing a real revenue generating business (without artificially inflating a company via investment) is difficult, and often requires low cost labor in order to get to the place where you can afford higher cost labor. Try it and you may not be as idealistic.
    • thenewnewguy 7y ago
      Does that mean you _would_ agree with this position if the qualifier "that has existed for more than X months" or "makes more than $X/year" was added?
    • TeMPOraL 7y ago
      That's a good point, and a nice bottom-up view. The other side, the "do not deserve to exist" position however seems also true. It's a top-down view, coming from empirical observation: under competitive pressure, businesses will end up abusing everything and everyone that they can get away with abusing. Your bottom-up view relies on your own moral character - you were able to find people willing to work for below-market rates while making it a win-win and non-abusive situation. Top-down view correctly notes that ethics don't scale under economic pressure - and I have a whole collection of second-hand anecdotes demonstrating that - things people I personally know experienced. My point being, I see both views as correct in principle. The hard challenge lies in reconciling them - letting good people craft better deals, while preventing malicious individuals from abusing their fellow human beings.
    • em-bee 7y ago
  • tenebrisalietum 7y ago
    Couple of counterpoints: - Let's say I'm a 16 year old adolescent who's doing well in school and wants to take a part-time/weekend job to gain experience in the job market. My basic expenses are covered (I live with my parents). Should a business get to pay me less just because of this fact? - I'm a wife of a rich man and have never had to work, but decided to try it because I'm bored. I know nothing but the finer things of life and my basic expenses are 10x what the middle class is. If a business has to cover basic expenses why are we not going to cover this claim of full expenses, what determines in a corruption-free manner whether a claim for a basic expense is valid, and what is an acceptable burden to a business owner to determine this? - Let's say I'm a jobless struggling adult, sharing a cramped living space with 4 others including 1 or 2 who are drug addicts. A job would really help me get out of this situation, but company X is only willing to pay minimum wage. It's better than what I have now which is nothing. How is having this job automated away a reasonable alternative for me - because you don't want this employer to give me a job in the first place because it doesn't cover my expenses. - Let's say I'm a customer of your business, and you decide to pass on the full cost of living of all employees to me. Your product jumps from $10 to $50. I'm not shopping there, your business closes, and your employees are now jobless. How does this help anybody?
    • thenewnewguy 7y ago
      Are the first 2 points even made seriously? Obviously they aren't advocating for businesses to compensate people for exactly their specific 'basic expenses', they clearly intend to mean basic expenses for low to middle class in general, not based on the person. Also, it always seems weird that whenever a minimum wage discussion comes up people jump in with these obviously contrived what if scenarios. How about we care about the real people that can barely/cannot afford food/housing/etc because businesses don't pay enough, rather than these situations with made up people.
      • dantheman 7y ago
        The number of teenagers having jobs has plummeted over time as minimum wage has increased. Teenagers don't often have the skills / work ethic / experience needed to provide more value than they cost and so the job is eliminated. We are removing the bottom rung of the ladder. This is not a contrived example.
• bachmeier 7y ago
  Just FYI, the argument for a minimum wage is that the market for workers is not a competitive market, allowing firms to pay low wages and putting the difference between the competitive wage and market wage into profit. Kind of funny that you'd refer to Silicon Valley as an example. Aside from having no practical implications (you can't snap your fingers and make markets act the way you want) they had one of the most famous cases of employers colluding to drive down wages.
  • nickpp 7y ago
    And even then they managed to get wages to a few times larger than in the rest of the country. I rest my case...
    • salawat 7y ago
      Your case isn't rested at all given most businesses in the United States aren't in a position to do business globally without heavily escalated logistical or infrastructural cost expansion due to physical goods or services (body in seat) as their product. Whereas Silicon Valley companies often only have to ensure that their information processing infrastructure expand to meet the capability to track/handle transactional load in order to have global consumer bases to pull from, thus allowing that several times higher wage financially. The digital expansion scales far easier than the physical. Those wages therefore aren't some quirk of the unregulated free market. That was physics. More income sources = more income extraction = higher geographic pool to fuel competitive salary while earning a profit. Yet you still have to answer for wage suppressive collusion. Despite having everything going right for them, they still colluded.
    • jyounker 7y ago
      Those of us subject to the wage competition in silicon valley make wages many times higher than the minimum wage. We're talking an order of magnitude more money. Competition in silicon valley does shit all for the people on the lower end of the wage scale in the bay area.
• Faark 7y ago
  You conveniently forgot the "use existing profits that would have gone to owner to instead cover costs", something that seems to actually happen in combination with the others instead of the usually doomsday prediction before introduction / increase of minimum wages. I understand slower progress would mean less conflict. But I'm also fine with robots, since accelerated progress means I'll experience more of it in the time I have left.
  • nickpp 7y ago
    OK, I'll add it here: - decrease owner's profits to the point she will rather close the business and get a low-stress job as middle manager in some multinational corporation As it happens, I am looking forward to robots too but I doubt they will help the least-productive members of our society too much...
• pacala 7y ago
  Minimum wage laws are part of the larger system, not an isolated black/white switch. What if people out of employment also get some financial support to retrain / kick out their addictions / cure a sickness. A minimum wage law would push a number of people out of employment, but the additional support systems would increase their chances to come back at a higher wage level. We do this all the time at a personal level, by deferring employment and using the time [and hefty sums of money] to go to school. The end result may well be diverting resources from the most productive centers of society to the most needing sections thereof. Worse, it will be afflicted by corruption, only a fraction of the diverted money will end up on the most needing people plate. What level of wasteful spending we are comfortable with?
• jyounker 7y ago
  > Minimum wage hurts most the very people it pretends to help: the least productive of us, who become unemployable legally. How do you explain that the countries with the highest minimum wages also seem to have plentiful jobs and high performing economies? It seems that with your logic the should have large unemployed underclasses, but that doesn't seem to be the case.
  • outlace 7y ago
    Probably because already rich countries can afford to have high minimum wages in the first place. But many European countries with high minimum wages either by government fiat or because of strong unions have unemployment rates 2 or 3 times higher than the U.S. (e.g. Spain, Italy, Portugal, Sweden, France).
• geofft 7y ago
  I should have been clearer: I'm not taking a position on whether that argument for minimum wage is accurate. I don't know enough. If it's not, then minimum wage also falls in the second category - of problems that should be solved by saying "Society will provide for the least profitable workers among us," not "You shouldn't be legally unemployable, but being legally underemployable is your own problem."
• rrrrrrrrrrrryan 7y ago
  A fourth possibility: wage distribution flattens. Few policies split economists as equally as the minimum wage, and I'm not necessarily advocating for it, but it's a little bit telling that you don't even consider that business might successfully adjust their compensation structures.