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> And if they had kept up since 1949, minimum wage would be $4.22 an hour. Two can play the game of cherrypicking troughs and peaks. This is just wrong: the ar

> And if they had kept up since 1949, minimum wage would be $4.22 an hour. Two can play the game of cherrypicking troughs and peaks. This is just wrong: the article is not talking about inflation; it is talking about indexing the minimum wage to productivity. Eyeballing the graph from the original article (and projecting productivity back to 1949), if indexed to productivity, then minimum wage would be at ~$15. Your subsequent criticisms have more merit, but the article addresses them as well. You may disagree with the article's arguments, but you should at least acknowledge them. > It would be claimed that the productivity of minimum wage workers has not kept pace with average productivity growth, so that it would not be feasible for minimum wage workers to earn pay that rises in step with average productivity growth. > There is some truth to this claim, but only at a superficial level. The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place.

pldr1234 6y ago
Trickle down economics has created one of the greatest rifts in wealth equality in history. Yet people like the GP still champion the concept and its variants. I earn fantastically at work, but any vote I make will always be against the political party that spouts the same nonsense.
- andrewjl 6y ago
  "Trickle down economics" did not cause that, a massive regulatory complex that protects incumbent monopolies did. An extensive rollback of regulatory complexity or a small business safe harbor exemption from everything but the critical health & safety pieces along with a Henry George land tax would solve our impasse. These are, sadly, not very popular policies. The most durable way to build middle class wealth is entrepreneurship. And not the SV kind. Family-owned business have something very few publicly traded ones do... long time horizons. We've destroyed the ability for the middle class to do that outside a select coterie of sectors.
  - hannasanarion 6y ago
    There are a lot of reasons small businesses are dead, and regulation is not one of them. The US regulatory structure is extremely friendly to small businesses. Small businesses are rare because the government has abdicated its antitrust responsibilities, ignoring companies that use anticompetitive practices like labor violations and price fixing that lock competitors out of the market. Small businesses are also rare because of zoning codes and infrastructure policies that promote the use of cars. It used to be that commercial spaces and housing were evenly mixed, now businesses often need to be a mile or more away from anywhere people live, thus needing to be able to support very large customer bases, and the locations need enough land to fit empty parking lots big enough to support double or triple the actual capacity of the building itself, creating enormous artificial up-front capital costs for business ownership.
    - nickpp 6y ago
      > US regulatory structure is extremely friendly to small businesses Try cutting hair in Florida if you think so.
    - andrewjl 6y ago
      > and regulation is not one of them. > Small businesses are also rare because of zoning codes and infrastructure policies that promote the use of cars Zoning codes and infrastructure policies are a form of regulation. > government has abdicated its antitrust responsibilities I agree with this part. A minimal regulatory regime along with a strong antitrust regime is pretty much ideal IMO. > The US regulatory structure is extremely friendly to small businesses. You can also see the quantity of regulations on this tracker. [1] I don't think you can describe this amount of regulatory complexity as "friendly" to small businesses. [1] https://www.quantgov.org/federal-us-tracker https://www.quantgov.org/federal-us-tracker
      - hannasanarion 6y ago
        Quantity of regulations is not the same as regulatory burden, and it's not like every single businness in the whole country needs to keep track of every single one. In the food service industry, the most common type of small business, there are only 2400 federal regulations, and most of them concern common sense things, like "wipe tables after customers use them" and "cook chicken to 180°" and "don't let rats live under the oven". Take every type of food served in the US, every appliance, tool, utensil, or technique used by any commercial kitchen, and 2400 seems like a laughably small number of regulations.
fastball 6y ago
> The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place. Could you expand on this a bit?
- tylerhou 6y ago
  I'm not the original author of the article, but I try my best: the article argues that public policy has affected wages, in many case negatively for lower paid workers. For example, free trade has undoubtedly lowered the cost of commodities for Americans, but at the same time has also cost manufacturing jobs. From a monetary perspective, there is no contention that America as a whole is richer because of free trade. But where has that wealth gone? Not much to the now-jobless manufacturing workers. The economics profession deserves some blame. When evaluating a policy, economists often ask whether there society would reap a net benefit in "utility." But chiefly, economists often ignore questions about distribution -- which groups should benefit from policy? One reason might be because answers to distribution questions could be seen as "political" -- if you think labor should receive compensation for lost wages due to free trade, then people will question whether "leftist" politics biased your thinking. Indeed, economics has a special name for changes that benefit society on net at the expense of another group of people -- a "Kaldor-Hicks improvement." A change is a Kaldor-Hicks improvement if the people made better off could, in theory, fully compensate those made worse off and still come out ahead. In practice, that compensation usually never happens. Uwe Reinhardt, who was an economics professor at Princeton, writes an absurd satirization of policies justified by the Kaldor-Hicks criterion: > To highlight the tenuous ethical foundation of Kaldor's criterion, one might call it the unrequited-punch-in-the-nose criterion of social welfare. Suppose, for example, that I feel very aggressive today and therefore would like to punch you in the nose. An honest referee (an economist) asks me what 1 would be willing to pay for that privilege. Suppose the maximum I'd be willing to pay were $1,000. Next, the honest referee asks you how much you would have to be paid to receive that punch in the nose without hitting me back. Because you are strapped for cash, you might accept the punch for $600. The referee (our economist) is ecstatic, for (s)he perceives here the opportunity to enhance social welfare. Consequently, the deal is struck, you kindly present your precious nose, I punch, you bleed and hold out your hand in anticipation of my payment of $1,000. Alas, I walk away happily, along with my $1,000, which I refuse to surrender. Not to worry. The honest referee (our economist) will soothe you with the expert assurance that, according to Nicholas Kaldor, and in principle, we just have witnessed a major enhancement in social welfare, to the tune of $400, even though the expected $1,000 bribe is not actually paid. It is to be hoped that you have enough respect for the referee to accept this verdict gracefully, and you probably will, if you accept the benefit-cost analyses typically sold by economists to policy makers. > Although this illustration may seem beastly and absurd, it can easily be adapted, with only minor modifications, to the context of environmental pollution, to health care or to many other situations in which public policy bestows benefits upon one group of people at the expense of others. One is struck by how readily and how uncritically many economists apply the Kaldorian criterion to their analyses of such policies -- particularly younger economists, many of whom no longer seem to explore very carefully the philosophical and ethical underpinnings of their profession and instead concentrate on mere analytic technique. [1] (The whole paper is worth reading.) So this is what the author might be criticising -- that policies have been evaluated mostly with consideration to whether society as a "whole" would benefit, with not much thought about who exactly benefits. Add to that the marginal utility of money -- that poorer people see a greater increase in happiness per dollar than the richer people -- and you could argue that those policies have caused a group of people, namely menial laborers, to experience significantly increased hardship than those nearer to the top of the economic ladder. The author's goal, then is to justify the "compensation" portion of a Kaldor-Hicks improvement -- according to them, wealth, wages, and healthcare should be redistributed to these workers who were made worse off -- at the benefit of everyone else. [1] https://www.jstor.org/stable/40239382?seq=1 https://www.jstor.org/stable/40239382?seq=1

pldr1234 6y ago

Trickle down economics has created one of the greatest rifts in wealth equality in history. Yet people like the GP still champion the concept and its variants. I earn fantastically at work, but any vote I make will always be against the political party that spouts the same nonsense.

andrewjl 6y ago
"Trickle down economics" did not cause that, a massive regulatory complex that protects incumbent monopolies did. An extensive rollback of regulatory complexity or a small business safe harbor exemption from everything but the critical health & safety pieces along with a Henry George land tax would solve our impasse. These are, sadly, not very popular policies. The most durable way to build middle class wealth is entrepreneurship. And not the SV kind. Family-owned business have something very few publicly traded ones do... long time horizons. We've destroyed the ability for the middle class to do that outside a select coterie of sectors.
- hannasanarion 6y ago
  There are a lot of reasons small businesses are dead, and regulation is not one of them. The US regulatory structure is extremely friendly to small businesses. Small businesses are rare because the government has abdicated its antitrust responsibilities, ignoring companies that use anticompetitive practices like labor violations and price fixing that lock competitors out of the market. Small businesses are also rare because of zoning codes and infrastructure policies that promote the use of cars. It used to be that commercial spaces and housing were evenly mixed, now businesses often need to be a mile or more away from anywhere people live, thus needing to be able to support very large customer bases, and the locations need enough land to fit empty parking lots big enough to support double or triple the actual capacity of the building itself, creating enormous artificial up-front capital costs for business ownership.
  - nickpp 6y ago
    > US regulatory structure is extremely friendly to small businesses Try cutting hair in Florida if you think so.
  - andrewjl 6y ago
    > and regulation is not one of them. > Small businesses are also rare because of zoning codes and infrastructure policies that promote the use of cars Zoning codes and infrastructure policies are a form of regulation. > government has abdicated its antitrust responsibilities I agree with this part. A minimal regulatory regime along with a strong antitrust regime is pretty much ideal IMO. > The US regulatory structure is extremely friendly to small businesses. You can also see the quantity of regulations on this tracker. [1] I don't think you can describe this amount of regulatory complexity as "friendly" to small businesses. [1] https://www.quantgov.org/federal-us-tracker https://www.quantgov.org/federal-us-tracker
    - hannasanarion 6y ago
      Quantity of regulations is not the same as regulatory burden, and it's not like every single businness in the whole country needs to keep track of every single one. In the food service industry, the most common type of small business, there are only 2400 federal regulations, and most of them concern common sense things, like "wipe tables after customers use them" and "cook chicken to 180°" and "don't let rats live under the oven". Take every type of food served in the US, every appliance, tool, utensil, or technique used by any commercial kitchen, and 2400 seems like a laughably small number of regulations.

fastball 6y ago

> The productivity of any individual worker is determined not just by their skills and technology, but also by the institutional structure we put in place. Could you expand on this a bit?

tylerhou 6y ago
I'm not the original author of the article, but I try my best: the article argues that public policy has affected wages, in many case negatively for lower paid workers. For example, free trade has undoubtedly lowered the cost of commodities for Americans, but at the same time has also cost manufacturing jobs. From a monetary perspective, there is no contention that America as a whole is richer because of free trade. But where has that wealth gone? Not much to the now-jobless manufacturing workers. The economics profession deserves some blame. When evaluating a policy, economists often ask whether there society would reap a net benefit in "utility." But chiefly, economists often ignore questions about distribution -- which groups should benefit from policy? One reason might be because answers to distribution questions could be seen as "political" -- if you think labor should receive compensation for lost wages due to free trade, then people will question whether "leftist" politics biased your thinking. Indeed, economics has a special name for changes that benefit society on net at the expense of another group of people -- a "Kaldor-Hicks improvement." A change is a Kaldor-Hicks improvement if the people made better off could, in theory, fully compensate those made worse off and still come out ahead. In practice, that compensation usually never happens. Uwe Reinhardt, who was an economics professor at Princeton, writes an absurd satirization of policies justified by the Kaldor-Hicks criterion: > To highlight the tenuous ethical foundation of Kaldor's criterion, one might call it the unrequited-punch-in-the-nose criterion of social welfare. Suppose, for example, that I feel very aggressive today and therefore would like to punch you in the nose. An honest referee (an economist) asks me what 1 would be willing to pay for that privilege. Suppose the maximum I'd be willing to pay were $1,000. Next, the honest referee asks you how much you would have to be paid to receive that punch in the nose without hitting me back. Because you are strapped for cash, you might accept the punch for $600. The referee (our economist) is ecstatic, for (s)he perceives here the opportunity to enhance social welfare. Consequently, the deal is struck, you kindly present your precious nose, I punch, you bleed and hold out your hand in anticipation of my payment of $1,000. Alas, I walk away happily, along with my $1,000, which I refuse to surrender. Not to worry. The honest referee (our economist) will soothe you with the expert assurance that, according to Nicholas Kaldor, and in principle, we just have witnessed a major enhancement in social welfare, to the tune of $400, even though the expected $1,000 bribe is not actually paid. It is to be hoped that you have enough respect for the referee to accept this verdict gracefully, and you probably will, if you accept the benefit-cost analyses typically sold by economists to policy makers. > Although this illustration may seem beastly and absurd, it can easily be adapted, with only minor modifications, to the context of environmental pollution, to health care or to many other situations in which public policy bestows benefits upon one group of people at the expense of others. One is struck by how readily and how uncritically many economists apply the Kaldorian criterion to their analyses of such policies -- particularly younger economists, many of whom no longer seem to explore very carefully the philosophical and ethical underpinnings of their profession and instead concentrate on mere analytic technique. [1] (The whole paper is worth reading.) So this is what the author might be criticising -- that policies have been evaluated mostly with consideration to whether society as a "whole" would benefit, with not much thought about who exactly benefits. Add to that the marginal utility of money -- that poorer people see a greater increase in happiness per dollar than the richer people -- and you could argue that those policies have caused a group of people, namely menial laborers, to experience significantly increased hardship than those nearer to the top of the economic ladder. The author's goal, then is to justify the "compensation" portion of a Kaldor-Hicks improvement -- according to them, wealth, wages, and healthcare should be redistributed to these workers who were made worse off -- at the benefit of everyone else. [1] https://www.jstor.org/stable/40239382?seq=1 https://www.jstor.org/stable/40239382?seq=1