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You might not lose your job, but you may see your hours reduced or you might not get the opportunity in the first place. Technically the employment numbers don'

by pg_bot 7y ago

You might not lose your job, but you may see your hours reduced or you might not get the opportunity in the first place. Technically the employment numbers don't change, but you shouldn't think of of minimum wage employees like salaried employees. Minimum wage earners can lose fractional percentages of their jobs unlike salaried employees. Most proponents of raising the minimum wage cite the Card & Krueger paper which has aged quite poorly. It turns out that chain fast food restaurants are a poor proxy for the minimum wage labor market. If you want to know the most up to date data backed perspective on the minimum wage, look to the Seattle minimum wage study.[0][1] In short, the benefits of raising the minimum wage go to experienced workers at the expense of inexperienced workers. We know that price controls don't work. Having a minimum wage limits the freedom to negotiate the value of your labor at a rate that you'd be willing to take. Instead of a wage that they are willing to accept you force them to have a wage of zero. I don't believe there are any situations where people are better off when a third party eliminates economic opportunities for them. The national minimum wage should be zero, as is the case in countries like Iceland, Norway, Sweden, Finland, Denmark, and Singapore. You could also argue that the minimum wage is unconstitutional considering the history of supreme court decisions on the issue.[2] [0]: https://evans.uw.edu/sites/default/files/webform/w25812_summary_final.pdf https://evans.uw.edu/sites/default/files/webform/w25812_summ... [1]: https://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-wage/ https://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum... [2]: https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_nine https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_...

Lavery 7y ago
The countries you cite are able to have a minimum wage of zero because it's coupled with a robust social safety net (sometimes along with other backstops--Norway, for instance, is heavily unionized). This pairing is important, and is absent in the US.
- pg_bot 7y ago
  There are about 40 countries without a minimum wage. I cherry picked countries that most people on HN would recognize since I'm assuming people would not know much about the economies of Tuvalu, Tonga, or Rwanda.
  - aflag 7y ago
    Not sure what your point is anymore. Are those examples of countries without social welfare and no minimum wage? That seems to strengthen the point above your comment.
- akvadrako 7y ago
  They are unrelated; countries need a social safety net regardless of what the minimum wage is. You might even argue that the higher you make min wage, the more important social services are, because you have taken away the ability of low-skilled workers to support themselves.
  - fwip 7y ago
    On the contrary, places with a robust social service net don't need as strong labor protections, as they're able to decline to sell their labor.
    - akvadrako 7y ago
      You’re right - in that direction they are related. Since a safety net is always needed, there is just no good reason to have minimum wage.
thomasz 7y ago
Countries with a social-democratic (Sweden, Norway) or conservative-corporatist (Germany) welfare state traditionally do not have minimum wage laws, because relatively strong unions and a somewhat robust social safety net have the same effect - you won't find someone willing to work for less than social security benefits which creates a lower bound. As soon as these states move towards a more liberal welfare model (USA, UK) , they have been forced to offset the worst excesses of the labor market with mandatory minimum wage laws. I think the last was Germany, which recently introduced mandatory minimum wage in 2017.
- varjag 7y ago
  Norway have selective regulation, mandatory minimum wages in certain trades and low income occupations.
  - microcolonel 7y ago
    > minimum wages in certain trades My understanding is that these come from private agreements, not legislation. Are you saying that there are a handful of industries where there is actual legislation?
    - varjag 7y ago
      No. You can't say legally employ a cleaner for less than their occupation minimum wage. They don't have to negotiate for it or be in a union, either. https://www.arbeidstilsynet.no/en/working-conditions/pay-and-minimum-rates-of-pay/minimum-wage/ https://www.arbeidstilsynet.no/en/working-conditions/pay-and...
      - microcolonel 7y ago
        Collective bargaining agreements are private agreements, aren't they? I meant that the legislature and regulators me not decide the wages; and your reference seems to directly indicate that.
take_a_breath 7y ago
Your fundamental assumption is that labor economics works like an economics 101 course. It doesn’t, that’s why it has it‘s own field of study. As an example, free markets depend on equal information and workers don’t have the same information as employers, so their ability to negotiate isn’t nearly as robust as you imply. Also, many companies enjoy a monopsony on local labor which distorts the traditional relationship between supply and demand. Those are just two examples. It isn’t inherently negative if your hourly wage is increased but number of hours decreased. Doesn’t that give you more economic freedom? You can use that extra time for leisure or fill it with other hourly work. You might even make the same on fewer hours, which sounds like a win for low wage workers. I’m not sure why you are redirecting to another study on minimum wage while also trying to “debunk” the Card & Krueger study instead of commenting on the substance or data in this article. Do you disagree with the headline or any of the analysis presented within?
- pg_bot 7y ago
  While no system works exactly like models do, there is nothing magical about the economics of labor. Free markets do not depend on equal information. Almost every single market has some level of asymmetric information, and yet markets function. Plus it's not like a lot of information is hidden by minimum wage employers, almost every single job description will include expected wages in the description. It's fairly easy to map a skill set to wage earning potential. The ability to negotiate is mostly affected by the ability of a company to find substitute labor. Almost no companies in the first world are monopsonies, this is just flat wrong. Almost all real world monopsonies are based on government procurement. The classic example being government purchasing of military equipment due to civilian bans on ownership. (the government is the only one who can buy a fighter jet) My economic freedom is dependent on the decisions I can make, not the amount of money in my pocket. By raising the minimum wage you are removing the ability to sell my labor at a rate lower than the minimum wage. This limits my economic freedom. The real affects of a minimum wage increase are not uniform. As stated above, more experienced minimum wage workers benefit to the detriment of less experienced minimum wage workers. Some people will benefit, but the data shows that most people will be worse off in terms of take home pay. This article is garbage. The conclusion it comes to is not based on any relevant data contained within the article and has not made any persuasive argument to back up their claims. There is no analysis in the article, just stating a bunch of facts and hoping that people don't understand correlation and causation. The reason why I point to Card & Kruger is due to the fact that every single justification for the raising of the minimum wage is hinged on the validity of that paper. The paper is wrong and it's causing our most vulnerable populations to live in poverty.
dlp211 7y ago
Those same researchers went back and added a ton more nuance to their findings: They Said Seattle’s Higher Base Pay Would Hurt Workers. Why Did They Flip? https://nyti.ms/2AmgaNr https://nyti.ms/2AmgaNr Broken in to 3 groups, high hour min wage, low hour min wage, and new entrants, both the high and low hour workers were better off and it's inconclusive how new entrants were affected, though there was a flattening of hiring new entrants. There was also a lot of push back on the original paper which failed to account for a lot of cofounding factors.
lazyasciiart 7y ago
> you force them to have a wage of zero This is false, and it is misusing the language to make your point stronger. A wage is what you get in return for working. A wage of 0 is work with no payment. Minimum wage does not allow that.
jayd16 7y ago
> I don't believe there are any situations where people are better off when a third party eliminates economic opportunities for them. This is just hyperbolic. This would throw out all labor laws, safety laws, worker protections, unemployment benefits, and child labor laws.
cosmodisk 7y ago
To compare the US model with any of those countries is laughable at best. First of all, most,if not all, of them made long term investments in their people in terms of education, which took decades before they could reap the benefits.The economies transformed into service and high end manufacturing. Secondly, they do have very strong welfare systems,that take care of pretty much everything. Public healthcare is free( through taxation) or inexpensive. These factors create society,where people aren't desperate to lose jobs because they won't be able to go to hospital or buy food. That's why they don't and won't work for a fraction of what it costs to at least exist in those countries.

by pg_bot 7y ago

Lavery 7y ago

The countries you cite are able to have a minimum wage of zero because it's coupled with a robust social safety net (sometimes along with other backstops--Norway, for instance, is heavily unionized). This pairing is important, and is absent in the US.

pg_bot 7y ago
There are about 40 countries without a minimum wage. I cherry picked countries that most people on HN would recognize since I'm assuming people would not know much about the economies of Tuvalu, Tonga, or Rwanda.
- aflag 7y ago
  Not sure what your point is anymore. Are those examples of countries without social welfare and no minimum wage? That seems to strengthen the point above your comment.
akvadrako 7y ago
They are unrelated; countries need a social safety net regardless of what the minimum wage is. You might even argue that the higher you make min wage, the more important social services are, because you have taken away the ability of low-skilled workers to support themselves.
- fwip 7y ago
  On the contrary, places with a robust social service net don't need as strong labor protections, as they're able to decline to sell their labor.
  - akvadrako 7y ago
    You’re right - in that direction they are related. Since a safety net is always needed, there is just no good reason to have minimum wage.

thomasz 7y ago

Countries with a social-democratic (Sweden, Norway) or conservative-corporatist (Germany) welfare state traditionally do not have minimum wage laws, because relatively strong unions and a somewhat robust social safety net have the same effect - you won't find someone willing to work for less than social security benefits which creates a lower bound. As soon as these states move towards a more liberal welfare model (USA, UK) , they have been forced to offset the worst excesses of the labor market with mandatory minimum wage laws. I think the last was Germany, which recently introduced mandatory minimum wage in 2017.

varjag 7y ago
Norway have selective regulation, mandatory minimum wages in certain trades and low income occupations.
- microcolonel 7y ago
  > minimum wages in certain trades My understanding is that these come from private agreements, not legislation. Are you saying that there are a handful of industries where there is actual legislation?
  - varjag 7y ago
    No. You can't say legally employ a cleaner for less than their occupation minimum wage. They don't have to negotiate for it or be in a union, either. https://www.arbeidstilsynet.no/en/working-conditions/pay-and-minimum-rates-of-pay/minimum-wage/ https://www.arbeidstilsynet.no/en/working-conditions/pay-and...
    - microcolonel 7y ago
      Collective bargaining agreements are private agreements, aren't they? I meant that the legislature and regulators me not decide the wages; and your reference seems to directly indicate that.

take_a_breath 7y ago

Your fundamental assumption is that labor economics works like an economics 101 course. It doesn’t, that’s why it has it‘s own field of study. As an example, free markets depend on equal information and workers don’t have the same information as employers, so their ability to negotiate isn’t nearly as robust as you imply. Also, many companies enjoy a monopsony on local labor which distorts the traditional relationship between supply and demand. Those are just two examples. It isn’t inherently negative if your hourly wage is increased but number of hours decreased. Doesn’t that give you more economic freedom? You can use that extra time for leisure or fill it with other hourly work. You might even make the same on fewer hours, which sounds like a win for low wage workers. I’m not sure why you are redirecting to another study on minimum wage while also trying to “debunk” the Card & Krueger study instead of commenting on the substance or data in this article. Do you disagree with the headline or any of the analysis presented within?

pg_bot 7y ago
While no system works exactly like models do, there is nothing magical about the economics of labor. Free markets do not depend on equal information. Almost every single market has some level of asymmetric information, and yet markets function. Plus it's not like a lot of information is hidden by minimum wage employers, almost every single job description will include expected wages in the description. It's fairly easy to map a skill set to wage earning potential. The ability to negotiate is mostly affected by the ability of a company to find substitute labor. Almost no companies in the first world are monopsonies, this is just flat wrong. Almost all real world monopsonies are based on government procurement. The classic example being government purchasing of military equipment due to civilian bans on ownership. (the government is the only one who can buy a fighter jet) My economic freedom is dependent on the decisions I can make, not the amount of money in my pocket. By raising the minimum wage you are removing the ability to sell my labor at a rate lower than the minimum wage. This limits my economic freedom. The real affects of a minimum wage increase are not uniform. As stated above, more experienced minimum wage workers benefit to the detriment of less experienced minimum wage workers. Some people will benefit, but the data shows that most people will be worse off in terms of take home pay. This article is garbage. The conclusion it comes to is not based on any relevant data contained within the article and has not made any persuasive argument to back up their claims. There is no analysis in the article, just stating a bunch of facts and hoping that people don't understand correlation and causation. The reason why I point to Card & Kruger is due to the fact that every single justification for the raising of the minimum wage is hinged on the validity of that paper. The paper is wrong and it's causing our most vulnerable populations to live in poverty.

dlp211 7y ago

Those same researchers went back and added a ton more nuance to their findings: They Said Seattle’s Higher Base Pay Would Hurt Workers. Why Did They Flip? https://nyti.ms/2AmgaNr https://nyti.ms/2AmgaNr Broken in to 3 groups, high hour min wage, low hour min wage, and new entrants, both the high and low hour workers were better off and it's inconclusive how new entrants were affected, though there was a flattening of hiring new entrants. There was also a lot of push back on the original paper which failed to account for a lot of cofounding factors.

lazyasciiart 7y ago

> you force them to have a wage of zero This is false, and it is misusing the language to make your point stronger. A wage is what you get in return for working. A wage of 0 is work with no payment. Minimum wage does not allow that.

jayd16 7y ago

> I don't believe there are any situations where people are better off when a third party eliminates economic opportunities for them. This is just hyperbolic. This would throw out all labor laws, safety laws, worker protections, unemployment benefits, and child labor laws.

cosmodisk 7y ago

To compare the US model with any of those countries is laughable at best. First of all, most,if not all, of them made long term investments in their people in terms of education, which took decades before they could reap the benefits.The economies transformed into service and high end manufacturing. Secondly, they do have very strong welfare systems,that take care of pretty much everything. Public healthcare is free( through taxation) or inexpensive. These factors create society,where people aren't desperate to lose jobs because they won't be able to go to hospital or buy food. That's why they don't and won't work for a fraction of what it costs to at least exist in those countries.