4 ms·

Well, any way you slice it - through unionization or through legislation - a $24/hour minimum wage is just going to mean massive unemployment, not 3x more money

Well, any way you slice it - through unionization or through legislation - a $24/hour minimum wage is just going to mean massive unemployment, not 3x more money in everybody's paycheck.

shadowgovt 6y ago
I think it depends. If the CEO can make more money selling 200 million whatever than 100 million whatever, they're still going to hire enough to make 200 million, even if they're taking home less than they would in the hypothetical world where they were making 200 million whatever and their bottom-tier employees were on government subsidized housing. But in the longer term, I think you raise a great point---it's a huge incentive for the CEO to figure out how to automate making 200 million whatever so that they can pay $0. Which is good for the economy in general (automation means more free human time), but societies have to adapt to a lack of labor-intensive jobs to go around. They already need to be adapting to that, because we're already in the middle of the automation revolution.
tomtheelder 6y ago
I don't think this is cut and dry whatsosever, and in fact I strongly disagree. This is a hotly debated subject. What you suggest aligns with what classical economics predicts, but real world evidence doesn't necessarily back that up. Personally I don't think it would cause any significant unemployment as long as you don't do it all at once. Based on my own research, the evidence doesn't support minimum wage hikes increasing unemployment, except possibly in the very short term. The logic is basically that because the marginal propensity to consume is so high for low income workers any increase in the minimum wage creates large spikes in demand. No one wants to fire their workforce in the face of increasing demand. Prices go up some then stabilize. Companies bring in more absolute $s, and employ a similar (or even possibly a larger) workforce. It ends up being a redistribution without meaningful negative consequences. The obvious question becomes "why not keep raising it even more then?" and then answer is basically that at some point the MPC drops too low and you stop getting the positive effects, at which point you'd presumably start driving unemployment. That's obviously an oversimplification, but so is the simple logic that large changes in minimum wage spike unemployment.

Well, any way you slice it - through unionization or through legislation - a $24/hour minimum wage is just going to mean massive unemployment, not 3x more money in everybody's paycheck.

shadowgovt 6y ago

I think it depends. If the CEO can make more money selling 200 million whatever than 100 million whatever, they're still going to hire enough to make 200 million, even if they're taking home less than they would in the hypothetical world where they were making 200 million whatever and their bottom-tier employees were on government subsidized housing. But in the longer term, I think you raise a great point---it's a huge incentive for the CEO to figure out how to automate making 200 million whatever so that they can pay $0. Which is good for the economy in general (automation means more free human time), but societies have to adapt to a lack of labor-intensive jobs to go around. They already need to be adapting to that, because we're already in the middle of the automation revolution.

tomtheelder 6y ago

I don't think this is cut and dry whatsosever, and in fact I strongly disagree. This is a hotly debated subject. What you suggest aligns with what classical economics predicts, but real world evidence doesn't necessarily back that up. Personally I don't think it would cause any significant unemployment as long as you don't do it all at once. Based on my own research, the evidence doesn't support minimum wage hikes increasing unemployment, except possibly in the very short term. The logic is basically that because the marginal propensity to consume is so high for low income workers any increase in the minimum wage creates large spikes in demand. No one wants to fire their workforce in the face of increasing demand. Prices go up some then stabilize. Companies bring in more absolute $s, and employ a similar (or even possibly a larger) workforce. It ends up being a redistribution without meaningful negative consequences. The obvious question becomes "why not keep raising it even more then?" and then answer is basically that at some point the MPC drops too low and you stop getting the positive effects, at which point you'd presumably start driving unemployment. That's obviously an oversimplification, but so is the simple logic that large changes in minimum wage spike unemployment.