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> And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. What are the harms of a minimum

> And many modern economists endorse a minimum wage, as eugenicists did then, but with even less regard for the harm it causes. What are the harms of a minimum wage? Do you have any empirical sources to back that up?

AlexandrB 7y ago
I love how the parent stakes out several moral positions but tries to present them as objective truth or just “the way things are” with no evidence presented. Clever. In my experience, once you get past the basics, economics is largely about dressing up ideology in the trappings of science. More generously, economics seems to be most similar to philosophy with competing schools of thought that differ primarily in what assumptions and axioms they choose when modeling human behavior.
- p1necone 7y ago
  This seems to be a very common tactic with American right wingers (on the internet at least) - speak/write as if the actually controversial/differing parts of your belief are obviously true, and only go into detail on what logically follows from those axioms.
dantheman 7y ago
Minimum wage puts a floor on the amount of value necessary for someone to be employable. Many people, especially those just starting out can't produce that much value.
- adjkant 7y ago
  The irony of this comment is that it is exactly missing the morality in an economic situation, the claim being that if you are capable of work and are trying your best, you deserve to have enough pay to live off of. Minimum wage does not price people out of jobs, it puts a cap on the profit that a corporation can squeeze out of its workers. Employers who would be paying under it are simply not viable moral businesses, they would be businesses based off the exploitation of its workforce. Now we can have economic arguments about what is true here, but the purpose of minimum wage today is a moral one and that must be factored in.
  - AnthonyMouse 7y ago
    Here's a thought experiment for you. Think of college as a job. You go there, you do work, you get paid. The amount you get paid is negative because your productivity to the school is near zero and their cost of "employing" you requires them to have a lot of buildings and faculty etc. Yet people take on a lot of debt to be able to work as a student at a college, so they obviously perceive some value in it. Should we prohibit colleges as "simply not viable moral businesses"? Now suppose we have something which is halfway in between. The benefit to the institution is positive but small. You're doing productive work but it's only worth $4/hour. On the other hand, you're learning stuff and that's very valuable to you -- much more valuable than an $8/hour job where you're not learning anything. Should we prohibit this and not the school? Why?
    - adjkant 7y ago
      The argument you're making requires that you are making a significant personal investment in yourself at that $4 an hour job, which I have yet to find such an example of. I'd be happy to hear about some. Internships for lucrative fields where knowledge experience/investment pay off have no issues existing in economies with minimum wages as very clearly demonstrated by the fields of software engineering, businesses, and many other fields. Not to mention that most minimum wage laws make exceptions or reductions for internships, and people do unpaid internships often for things like PolySci students for political campaigns. So, yes, we should continue to support internships that invest in people and we already regularly make such considerations in minimum wage laws. $4 an hour jobs in a place where $8 an hour is the minimum wage is not an example of an internship where you are going to learn something valuable, though I am open to hearing about these jobs. The cost of an intern is often far less the pay and much more the hours of those senior to them who would be teaching. Minimum wage is not standing in the way there. Even if these jobs exist, what percentage of $4 jobs will those be? In reality this will be exploited by large corporations every time, pricing as low as the market will let them, irregardless of livability.
      - AnthonyMouse 7y ago
        How would you expect to you hear of some when they're prohibited by law? Try it like this. Federal minimum wage comes out to around $15,000/year. This is in the same ballpark as college tuition -- which is generally regarded as costing a lot of money. If you go to an institution where you're a novice and it takes half your hours to learn the trade and the other half is productive but effectively unskilled work for the employer, you would expect these two to net to approximately zero, right? So why is it at all unexpected that it would frequently net to a number which is slightly positive but less than minimum wage? > Even if these jobs exist, what percentage of $4 job will be those? Probably the large majority of them, because otherwise why would anybody take those jobs? They wouldn't be paying enough to attract employees unless they were offering something else of value that existing jobs with higher compensation don't have. Corporations can't just offer to pay $0.25/hour and get a line of workers lining up at the door. They have to outbid other companies for labor. That's why most companies already pay more than minimum wage for most jobs. And it's why most of the jobs that would pay less than minimum wage are ones that offer the workers something else in its place -- education, more flexible hours, a shorter commute etc. Taking those options away makes peoples lives worse, not better.
pm 7y ago
Agreed, what harm does a minimum wage cause? We have a reasonable minimum wage in Australia (though I don't think it's been adjusted for inflation for a while) and it facilitates time for education, which in turn facilitates social mobility. On the other hand, you can have no minimum wage, and end up with a class of working poor who have no time to educate themselves, thus condemning them to a life of constant work with no hope of social mobility. I don't see how a minimum wage is harmful.
- logicchains 7y ago
  Australia has relatively high youth unemployement, a predicted effect of a high minimum wage: https://www.statista.com/statistics/811644/youth-unemployment-rate-in-australia/ https://www.statista.com/statistics/811644/youth-unemploymen.... Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. The hardest part is getting the first job, getting the foot in the door, and this is because a minimum wage prevents many entry-level jobs from existing, where the value the positions would generate is much less than the minimum wage, so it makes no sense to create the positions. >On the other hand, you can have no minimum wage, and end up with a class of working poor who have no time to educate themselves, thus condemning them to a life of constant work with no hope of social mobility. The minimum wage can also create cycles of poverty by pricing people out of work. Some portion of the people who are "least hireable" are unable to get jobs because nobody would pay them $15/hour, so their only option is living permanently on welfare, which has a demoralising effect, and is associated with poor outcomes for their children. Imagine for instance the stereotypical Frankston junkie.
  - pfranz 7y ago
    > Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. Those numbers don't look all that different from the US. Are people pursuing minimum wage jobs after graduating high school or university? Even high school graduates with no intention of pursuing higher schooling seem to pursue a vocation at something higher than minimum wage.
barry-cotter 7y ago
People whose labor is worth less than the minimum wage become unemployable. Being unemployed means you can’t acquire skills or experience and is bad for your mental health and social attachment. If you want to look at the literature you can start with Card and Krueger, which shows minimal effects for a small minimum wage discontinuity, I believe on the NJ/NY border. The Seattle minimum wage study showed a reduction in hours and benefits and reduced likelihood of new entrants to the labor market. It’s an exciting example of people looking really hard for ways to confirm their priors on both sides. Or you can look at Europe. Greater employment protections raise the price of employing someone leading to greater unemployment. Minimum wages do the same thing more explicitly. Businesses buy less of things that are more expensive.
- adjkant 7y ago
  > It’s an exciting example of people looking really hard for ways to confirm their priors on both sides. It seems like you're doing that here yourself: > The Seattle minimum wage study showed a reduction in hours and benefits and reduced likelihood of new entrants to the labor market. https://ritholtz.com/2018/10/seattle-studys-shocking-conclusion-minimum-wage-increases-benefits-workers/ https://ritholtz.com/2018/10/seattle-studys-shocking-conclus... Minimum wage may have some complexities to be played out and examined, but to go back to the parent, the net harm here seems to be minimal at best, if not helpful over harmful, quite unlike how most feel about eugenics. That comparison, while criticizing the moral compass of economists generally, is quite something.
  - mikemotherwell 7y ago
    Is that article accurate? My understanding was that Seattle commissioned a multi-year study, and then when the results didn't go their way, quickly rushed a study out the door that said what they wanted. I got this from Marginal Revolution, and I can't find the article, but here is the actual study https://evans.uw.edu/policy-impact/minimum-wage-study https://evans.uw.edu/policy-impact/minimum-wage-study and here is an MR article summarising the report: https://marginalrevolution.com/marginalrevolution/2017/06/seattle-minimum-wage-study.html https://marginalrevolution.com/marginalrevolution/2017/06/se... The first two points from MR: > – The numbers of hours worked by low-wage workers fell by 3.5 million hours per quarter. This was reflected both in thousands of job losses and reductions in hours worked by those who retained their jobs. > – The losses were so dramatic that this increase “reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis.”
4773ueudjj 7y ago
This line of online questioning is the lazy dismissal of the 21st century. This comment has a positive score and even a child that agrees with it and yet it's akin to asking any theorist "do you have sources for that?" in response to them saying something wildly uncontroversial within their domain. It adds nothing to the discussion and only shows that the respondent is so wildly out of touch with the relevant mainstream that they're not worth answering because the challenge is going to be one of persuading them rather than informing them. Minimum wage is a widely studied issue with well documented pros and cons. It's weaknesses, when addressed in isolation, are so well understood that most discussion at a high level on the topic is not whether it has pros/cons but what instruments it should be combined with to mitigate its cons (the mainstream answer is usually tax breaks of various kinds, often targeting the employee and not the employer.) Would you ask a Gender Studies professor to defend the assertion that the feminine gender construct is typically defined by its submissive traits or would you ask how these observations are used to make observations and proposals about the real world? Would you ask a mathematician their sources when they begin to explain linear algebra or would you ask questions that help to understand their perspective on the matter? Hacker News supposedly has a rule against shallow comments and yet for some reason knee jerk requests for sources with no additional substance to drive the dialogue forward are considered 'reasonable'.
- p1necone 7y ago
  The parent said unequivocally that minimum wage is a bad idea (and compared it to eugenics of all things), not that it has cons that need to be mitigated. This is not an uncontroversial opinion, even among economists.
  - 4773ueudjj 7y ago
    It is though. Most economists will advocate a mix of minimum wage and EITC (Earned income tax credit). Few will say that minimum wage by itself is a good thing and those that do will typically qualify it by saying that it's a good thing if you're only concerned with optimizing particular metrics, the persuit of which will likely have unintended consequences if chased with tunnel vision.
bhupy 7y ago
I think most people agree that minimum amount of money should be a basic right of every working person, but a minimum wage isn't the only way of accomplishing this — a guaranteed basic income or a negative income tax are superior alternatives to accomplishing the same goal. The US already has the Earned Income Tax Credit. When you institute minimum wages (wage floors), businesses pass on those costs to the customer, resulting in inflated prices. Imagine a pizza maker's market value is (say) $5/hour. They are able to produce (for simplicity's sake) 5 pizza's per hour, or $1/pizza. Including other operating costs + 3-5% profit margin (that's the average for most restaurants), let's say that the pizza sells for $5. Thus the pizza maker can expect to earn $40/day, on the market. Suppose the "livable minimum wage" should be $15/hour, or $120/day. There are 2 ways to guarantee this: A) The government deposits an extra $80 to the worker, allowing them to make $120 that day. They can buy a pizza for $5, which is about 4% of their daily wage. B) The government mandates a minimum wage of $15/hour, which means that the labor portion of the pizza cost goes up from $1 to $3 per pizza. The pizza now sells for $7 so that the shop doesn't go out of business. The worker makes $120/day, and can buy a pizza for $7, which is about 6% of their daily wage. Notice that in (B), the worker is actually worse off, even though they have the same amount of money in their pocket. The worker has to pay a higher percentage of their pay to afford to eat, but this $2 extra means absolutely nothing to a billionaire, it's pennies to a rich person. This is functionally a regressive tax. In scenario (A), the worker is better off, and the welfare system that sustains it can be funded through progressive taxes, which targets rich people. We as a society (rightly) demand a minimum standard of living for everyone, and we collectively pay for that one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. Paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.

AlexandrB 7y ago

I love how the parent stakes out several moral positions but tries to present them as objective truth or just “the way things are” with no evidence presented. Clever. In my experience, once you get past the basics, economics is largely about dressing up ideology in the trappings of science. More generously, economics seems to be most similar to philosophy with competing schools of thought that differ primarily in what assumptions and axioms they choose when modeling human behavior.

p1necone 7y ago
This seems to be a very common tactic with American right wingers (on the internet at least) - speak/write as if the actually controversial/differing parts of your belief are obviously true, and only go into detail on what logically follows from those axioms.

dantheman 7y ago

Minimum wage puts a floor on the amount of value necessary for someone to be employable. Many people, especially those just starting out can't produce that much value.

adjkant 7y ago
The irony of this comment is that it is exactly missing the morality in an economic situation, the claim being that if you are capable of work and are trying your best, you deserve to have enough pay to live off of. Minimum wage does not price people out of jobs, it puts a cap on the profit that a corporation can squeeze out of its workers. Employers who would be paying under it are simply not viable moral businesses, they would be businesses based off the exploitation of its workforce. Now we can have economic arguments about what is true here, but the purpose of minimum wage today is a moral one and that must be factored in.
- AnthonyMouse 7y ago
  Here's a thought experiment for you. Think of college as a job. You go there, you do work, you get paid. The amount you get paid is negative because your productivity to the school is near zero and their cost of "employing" you requires them to have a lot of buildings and faculty etc. Yet people take on a lot of debt to be able to work as a student at a college, so they obviously perceive some value in it. Should we prohibit colleges as "simply not viable moral businesses"? Now suppose we have something which is halfway in between. The benefit to the institution is positive but small. You're doing productive work but it's only worth $4/hour. On the other hand, you're learning stuff and that's very valuable to you -- much more valuable than an $8/hour job where you're not learning anything. Should we prohibit this and not the school? Why?
  - adjkant 7y ago
    The argument you're making requires that you are making a significant personal investment in yourself at that $4 an hour job, which I have yet to find such an example of. I'd be happy to hear about some. Internships for lucrative fields where knowledge experience/investment pay off have no issues existing in economies with minimum wages as very clearly demonstrated by the fields of software engineering, businesses, and many other fields. Not to mention that most minimum wage laws make exceptions or reductions for internships, and people do unpaid internships often for things like PolySci students for political campaigns. So, yes, we should continue to support internships that invest in people and we already regularly make such considerations in minimum wage laws. $4 an hour jobs in a place where $8 an hour is the minimum wage is not an example of an internship where you are going to learn something valuable, though I am open to hearing about these jobs. The cost of an intern is often far less the pay and much more the hours of those senior to them who would be teaching. Minimum wage is not standing in the way there. Even if these jobs exist, what percentage of $4 jobs will those be? In reality this will be exploited by large corporations every time, pricing as low as the market will let them, irregardless of livability.
    - AnthonyMouse 7y ago
      How would you expect to you hear of some when they're prohibited by law? Try it like this. Federal minimum wage comes out to around $15,000/year. This is in the same ballpark as college tuition -- which is generally regarded as costing a lot of money. If you go to an institution where you're a novice and it takes half your hours to learn the trade and the other half is productive but effectively unskilled work for the employer, you would expect these two to net to approximately zero, right? So why is it at all unexpected that it would frequently net to a number which is slightly positive but less than minimum wage? > Even if these jobs exist, what percentage of $4 job will be those? Probably the large majority of them, because otherwise why would anybody take those jobs? They wouldn't be paying enough to attract employees unless they were offering something else of value that existing jobs with higher compensation don't have. Corporations can't just offer to pay $0.25/hour and get a line of workers lining up at the door. They have to outbid other companies for labor. That's why most companies already pay more than minimum wage for most jobs. And it's why most of the jobs that would pay less than minimum wage are ones that offer the workers something else in its place -- education, more flexible hours, a shorter commute etc. Taking those options away makes peoples lives worse, not better.

pm 7y ago

Agreed, what harm does a minimum wage cause? We have a reasonable minimum wage in Australia (though I don't think it's been adjusted for inflation for a while) and it facilitates time for education, which in turn facilitates social mobility. On the other hand, you can have no minimum wage, and end up with a class of working poor who have no time to educate themselves, thus condemning them to a life of constant work with no hope of social mobility. I don't see how a minimum wage is harmful.

logicchains 7y ago
Australia has relatively high youth unemployement, a predicted effect of a high minimum wage: https://www.statista.com/statistics/811644/youth-unemployment-rate-in-australia/ https://www.statista.com/statistics/811644/youth-unemploymen.... Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. The hardest part is getting the first job, getting the foot in the door, and this is because a minimum wage prevents many entry-level jobs from existing, where the value the positions would generate is much less than the minimum wage, so it makes no sense to create the positions. >On the other hand, you can have no minimum wage, and end up with a class of working poor who have no time to educate themselves, thus condemning them to a life of constant work with no hope of social mobility. The minimum wage can also create cycles of poverty by pricing people out of work. Some portion of the people who are "least hireable" are unable to get jobs because nobody would pay them $15/hour, so their only option is living permanently on welfare, which has a demoralising effect, and is associated with poor outcomes for their children. Imagine for instance the stereotypical Frankston junkie.
- pfranz 7y ago
  > Having difficulty finding work after graduating high school or university is a common complaint among Australian youth, in my experience. Those numbers don't look all that different from the US. Are people pursuing minimum wage jobs after graduating high school or university? Even high school graduates with no intention of pursuing higher schooling seem to pursue a vocation at something higher than minimum wage.

barry-cotter 7y ago

People whose labor is worth less than the minimum wage become unemployable. Being unemployed means you can’t acquire skills or experience and is bad for your mental health and social attachment. If you want to look at the literature you can start with Card and Krueger, which shows minimal effects for a small minimum wage discontinuity, I believe on the NJ/NY border. The Seattle minimum wage study showed a reduction in hours and benefits and reduced likelihood of new entrants to the labor market. It’s an exciting example of people looking really hard for ways to confirm their priors on both sides. Or you can look at Europe. Greater employment protections raise the price of employing someone leading to greater unemployment. Minimum wages do the same thing more explicitly. Businesses buy less of things that are more expensive.

adjkant 7y ago
> It’s an exciting example of people looking really hard for ways to confirm their priors on both sides. It seems like you're doing that here yourself: > The Seattle minimum wage study showed a reduction in hours and benefits and reduced likelihood of new entrants to the labor market. https://ritholtz.com/2018/10/seattle-studys-shocking-conclusion-minimum-wage-increases-benefits-workers/ https://ritholtz.com/2018/10/seattle-studys-shocking-conclus... Minimum wage may have some complexities to be played out and examined, but to go back to the parent, the net harm here seems to be minimal at best, if not helpful over harmful, quite unlike how most feel about eugenics. That comparison, while criticizing the moral compass of economists generally, is quite something.
- mikemotherwell 7y ago
  Is that article accurate? My understanding was that Seattle commissioned a multi-year study, and then when the results didn't go their way, quickly rushed a study out the door that said what they wanted. I got this from Marginal Revolution, and I can't find the article, but here is the actual study https://evans.uw.edu/policy-impact/minimum-wage-study https://evans.uw.edu/policy-impact/minimum-wage-study and here is an MR article summarising the report: https://marginalrevolution.com/marginalrevolution/2017/06/seattle-minimum-wage-study.html https://marginalrevolution.com/marginalrevolution/2017/06/se... The first two points from MR: > – The numbers of hours worked by low-wage workers fell by 3.5 million hours per quarter. This was reflected both in thousands of job losses and reductions in hours worked by those who retained their jobs. > – The losses were so dramatic that this increase “reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis.”

4773ueudjj 7y ago

This line of online questioning is the lazy dismissal of the 21st century. This comment has a positive score and even a child that agrees with it and yet it's akin to asking any theorist "do you have sources for that?" in response to them saying something wildly uncontroversial within their domain. It adds nothing to the discussion and only shows that the respondent is so wildly out of touch with the relevant mainstream that they're not worth answering because the challenge is going to be one of persuading them rather than informing them. Minimum wage is a widely studied issue with well documented pros and cons. It's weaknesses, when addressed in isolation, are so well understood that most discussion at a high level on the topic is not whether it has pros/cons but what instruments it should be combined with to mitigate its cons (the mainstream answer is usually tax breaks of various kinds, often targeting the employee and not the employer.) Would you ask a Gender Studies professor to defend the assertion that the feminine gender construct is typically defined by its submissive traits or would you ask how these observations are used to make observations and proposals about the real world? Would you ask a mathematician their sources when they begin to explain linear algebra or would you ask questions that help to understand their perspective on the matter? Hacker News supposedly has a rule against shallow comments and yet for some reason knee jerk requests for sources with no additional substance to drive the dialogue forward are considered 'reasonable'.

p1necone 7y ago
The parent said unequivocally that minimum wage is a bad idea (and compared it to eugenics of all things), not that it has cons that need to be mitigated. This is not an uncontroversial opinion, even among economists.
- 4773ueudjj 7y ago
  It is though. Most economists will advocate a mix of minimum wage and EITC (Earned income tax credit). Few will say that minimum wage by itself is a good thing and those that do will typically qualify it by saying that it's a good thing if you're only concerned with optimizing particular metrics, the persuit of which will likely have unintended consequences if chased with tunnel vision.

bhupy 7y ago

I think most people agree that minimum amount of money should be a basic right of every working person, but a minimum wage isn't the only way of accomplishing this — a guaranteed basic income or a negative income tax are superior alternatives to accomplishing the same goal. The US already has the Earned Income Tax Credit. When you institute minimum wages (wage floors), businesses pass on those costs to the customer, resulting in inflated prices. Imagine a pizza maker's market value is (say) $5/hour. They are able to produce (for simplicity's sake) 5 pizza's per hour, or $1/pizza. Including other operating costs + 3-5% profit margin (that's the average for most restaurants), let's say that the pizza sells for $5. Thus the pizza maker can expect to earn $40/day, on the market. Suppose the "livable minimum wage" should be $15/hour, or $120/day. There are 2 ways to guarantee this: A) The government deposits an extra $80 to the worker, allowing them to make $120 that day. They can buy a pizza for $5, which is about 4% of their daily wage. B) The government mandates a minimum wage of $15/hour, which means that the labor portion of the pizza cost goes up from $1 to $3 per pizza. The pizza now sells for $7 so that the shop doesn't go out of business. The worker makes $120/day, and can buy a pizza for $7, which is about 6% of their daily wage. Notice that in (B), the worker is actually worse off, even though they have the same amount of money in their pocket. The worker has to pay a higher percentage of their pay to afford to eat, but this $2 extra means absolutely nothing to a billionaire, it's pennies to a rich person. This is functionally a regressive tax. In scenario (A), the worker is better off, and the welfare system that sustains it can be funded through progressive taxes, which targets rich people. We as a society (rightly) demand a minimum standard of living for everyone, and we collectively pay for that one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. Paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.