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The big problem with the minimum wage is that, if higher than the market-clearing price, it takes away the lowest rung of the opportunity ladder for the least s

The big problem with the minimum wage is that, if higher than the market-clearing price, it takes away the lowest rung of the opportunity ladder for the least skilled.

ddingus 5y ago
That's not true. Fact is, labor costs money for the laborer to exist and show up for work. No matter what, that money is paid, or the labor does not exist and or show up for work. Your argument is one of merit, skill and market value. This is exactly the wrong way to look at things. If we start from the cost of labor, and it does have a cost as I put above, whether to fund the labor boils down to the value said labor has for others, and that value can be traded on accordingly. Fact is we need basic labors. Anyone can do them. There should be no shame in this work, and it should be valued as the massive time and effort savings to others that it really is. And automation holds few answers right now, and I would argue for a considerable time yet. People will be doing those labors. Question really is how much does it cost people, who hold other positions in life, to perform basic labors themselves? And the answer is expensive!! That difference in value can very easily fund labors then. It's a perfectly acceptable basis, and it means we value labor differently and it means we recognize that guy digging the ditch, or making our shit disappear, or any number of basic things has the same waking hours any of us do, same basic needs any of us do, and may have a family as any of us do. This idea of people being inherently worthless is very highly toxic and is doing a great harm to all of us. It's completely unacceptable given the quite obvious value even basic labors actually do have for us overall.
- bumby 5y ago
  This seems to conflate moral worth and economic worth. People can have equal inherent moral value at the same time that some jobs have inherently disproportionate economic value.
  - ddingus 5y ago
    I didn't make a moral argument. What I did do is make an economic one, and suggest how we value things change. A whole bunch of Economics is rooted in a few basies that we all just take as givens. We don't have to. I also didn't make an equal economic value argument, for that matter.
    - bumby 5y ago
      Sorry, maybe I misinterpreted your point. >"how much does it cost people, who hold other positions in life, to perform basic labors themselves? And the answer is expensive!!" What is the "expensive" assumption based on? Is it the opportunity cost? E.g., is the assumption that if I make $50/hr and I perform basic labor, I'm forgoing work that would otherwise be making money at that rate? Or is it that I don't have the skills for that basic labor and I would either have to get those skills or suffer the cost of doing the work unskillfully? If it's the former, I think there's enough friction in markets to erode that argument. E.g., I can't just decide to get another $50 through my skilled labor once I hire someone to shovel snow in my driveway for an hour. If the latter case were true, it would be skilled labor by definition and generally command higher wages. Or is there another basis for the expense of performing basic labor that I'm not considering from your point?
      - ddingus 5y ago
        Ok, say I can make $100 / hour or even $50, just for shits and giggles. Our lives break down into thirds. One to work, one to sleep, one to do what we will and can as people. If I must do those basic labors, they either consume my sleep or free time, and if not, carry an opportunity cost of $50 / hour. My time is very valuable, both in a labor to income sense, and personally, in that I have plans for my time that must be balanced against basic labors being done. Paying what it costs for laborers to exist and show up for work is a no brainer. Worth it to me, again based on my own costs. There is "expensive" We can always find cases where basic labors do not carry those costs, or are difficult to handle as a market. We do those ourselves. However, making our own food, making our own shit and garbage dissappear, moving things, clean ups and all manner of basic labors combine to allow many of us the time freedom to earn more, do more. The value in that is high enough to require enterprises fund their labor fully. This may mean their overall profit is less. It should be, they didn't earn it. They didn't fund the labor. We did! Failure to do that comes with other costs, both real in the sense of the massive subsidies that end up unearned profit (our money goes into their bank account, funding labor they profit from on top of margin on goods and services rendered), and opportunity in that we see lower demand and that impacts many others who could earn more and or fund their labor as well. Again, laborers have a cost to exist and show up for work, and when their labor does not pay enough for those things, someone else's labor does, or the labor does not exist and will not show up for work. So which is it? Who pays and why? How we value things can change those answers dramatically, which is the economic argument I made. One last thing, and that is ignoring the cost of people for them to exist and show up for work, doesn't make those costs go away, it just hides them, and we end up paying them in all sorts of other ways that are expensive. That's another way to look at this. When a business does not make enough to fund its operation it closes, or dies in other words. The same is true for people. So not fully funding labor is expensive to literally everyone else except for the people not fully funding the labor they require.
- gruez 5y ago
  > Fact is, labor costs money for the laborer to exist and show up for work. Humans aren't like ec2 servers that can be spun down when they're needed. The cost for that person is paid whether or not he's employed. I agree there's an additional cost to show up to work, but that's nowhere near the minimum wage in most places.
  - ddingus 5y ago
    The difference is an unemployed persons cost is not a subsidy for profit. And are you arguing we simply must pay the costs for people to exist? I agree given not existing is very highly undesirable. Employed people, getting a subsidy so their employer enjoys greater profit makes sense how? Should a for profit enterprise earn it? Why is our help required? If they really cannot afford their labor, they are not a viable business. Or, we all agree to not care, so we end all the fucking with people on assistance? Which is it? To be really clear, I'm OK either way here. What I am not OK with is so damn many people underpaid and struggling hard with assistance despite arguably too much labor otherwise.
    - gruez 5y ago
      > The difference is an unemployed persons cost is not a subsidy for profit. I don't get it. Subsidizing someone's living is okay, but subsidizing someone's living, and then that person deciding to earn a little more money is not okay because profit is involved? >And are you arguing we simply must pay the costs for people to exist? I agree given not existing is very highly undesirable. Yes? If you don't want them to starve, then obviously somebody as to pay the cost to keep those people afloat. >Employed people, getting a subsidy so their employer enjoys greater profit makes sense how? Should a for profit enterprise earn it? Why is our help required? Would society be better off if those "Employed people, getting a subsidy" were unemployed instead? They'll still get the subsidy. If anything, they'll get more subsidy because welfare tends to be means tested. If anything the "for profit enterprise" has a negative effect on the amount of subsidy that needs to be paid. > What I am not OK with is so damn many people underpaid and struggling hard with assistance Underpaid? Maybe they're being paid fairly given the market conditions, and that prevailing wage isn't enough to sustain someone's first world existence so some sort of subsidy has to make up the rest. > despite arguably too much labor otherwise. can you reword this? I'm not understanding what you mean by this.
zuminator 5y ago
Not really because piecework and off-the-books work exist. Plus in the USA there are entire classes of work for which the normal minimum wage does not apply. I also doubt that empirical evidence supports that assertion. How many people are really being priced out of work because they are only worth $6/hr, not $7.25/hr? In my experience people on the low end are either worth at least what you're paying them, or they're basically not worth hiring at all, at any wage point, because they disrupt others in the work environment, cause accidents, are not amenable to working in groups nor amenable to working alone, report to work too unreliably to make effective use of, or whatever issue they have that makes them count among the ranks of the "least skilled." Sure, your argument holds given some value of MW, $20/hr? $25/hr? But in real world practice I think the number of people harmed by living out of their car or in shelters @ $7.25/hr vastly exceeds the number of people who but for the minimum wage would easily find relaxing side work at $2/hr sweeping gutters. And in theory the MW could be tailored to mitigate any adverse impact. It could be restricted to employers grossing over $1 million/yr or in excess of 10 employees. It could be augmented with an earned income tax credit, which has been done to considerable success. There could be a separate under-21 MW. Etc. In practice, though, movement seems to be going in the other direction: about half of US states have minimum wages higher than the Federal level, even places like Florida and Missouri which are not liberal strongholds.
ianai 5y ago
When the minimum wage increases and labor participation also increases the minimum wage price was below the market clearing value.
andrewjl 5y ago
Does it do that if unemployment insurance and retraining programs are made available alongside it?

The big problem with the minimum wage is that, if higher than the market-clearing price, it takes away the lowest rung of the opportunity ladder for the least skilled.

ddingus 5y ago

That's not true. Fact is, labor costs money for the laborer to exist and show up for work. No matter what, that money is paid, or the labor does not exist and or show up for work. Your argument is one of merit, skill and market value. This is exactly the wrong way to look at things. If we start from the cost of labor, and it does have a cost as I put above, whether to fund the labor boils down to the value said labor has for others, and that value can be traded on accordingly. Fact is we need basic labors. Anyone can do them. There should be no shame in this work, and it should be valued as the massive time and effort savings to others that it really is. And automation holds few answers right now, and I would argue for a considerable time yet. People will be doing those labors. Question really is how much does it cost people, who hold other positions in life, to perform basic labors themselves? And the answer is expensive!! That difference in value can very easily fund labors then. It's a perfectly acceptable basis, and it means we value labor differently and it means we recognize that guy digging the ditch, or making our shit disappear, or any number of basic things has the same waking hours any of us do, same basic needs any of us do, and may have a family as any of us do. This idea of people being inherently worthless is very highly toxic and is doing a great harm to all of us. It's completely unacceptable given the quite obvious value even basic labors actually do have for us overall.

bumby 5y ago
This seems to conflate moral worth and economic worth. People can have equal inherent moral value at the same time that some jobs have inherently disproportionate economic value.
- ddingus 5y ago
  I didn't make a moral argument. What I did do is make an economic one, and suggest how we value things change. A whole bunch of Economics is rooted in a few basies that we all just take as givens. We don't have to. I also didn't make an equal economic value argument, for that matter.
  - bumby 5y ago
    Sorry, maybe I misinterpreted your point. >"how much does it cost people, who hold other positions in life, to perform basic labors themselves? And the answer is expensive!!" What is the "expensive" assumption based on? Is it the opportunity cost? E.g., is the assumption that if I make $50/hr and I perform basic labor, I'm forgoing work that would otherwise be making money at that rate? Or is it that I don't have the skills for that basic labor and I would either have to get those skills or suffer the cost of doing the work unskillfully? If it's the former, I think there's enough friction in markets to erode that argument. E.g., I can't just decide to get another $50 through my skilled labor once I hire someone to shovel snow in my driveway for an hour. If the latter case were true, it would be skilled labor by definition and generally command higher wages. Or is there another basis for the expense of performing basic labor that I'm not considering from your point?
    - ddingus 5y ago
      Ok, say I can make $100 / hour or even $50, just for shits and giggles. Our lives break down into thirds. One to work, one to sleep, one to do what we will and can as people. If I must do those basic labors, they either consume my sleep or free time, and if not, carry an opportunity cost of $50 / hour. My time is very valuable, both in a labor to income sense, and personally, in that I have plans for my time that must be balanced against basic labors being done. Paying what it costs for laborers to exist and show up for work is a no brainer. Worth it to me, again based on my own costs. There is "expensive" We can always find cases where basic labors do not carry those costs, or are difficult to handle as a market. We do those ourselves. However, making our own food, making our own shit and garbage dissappear, moving things, clean ups and all manner of basic labors combine to allow many of us the time freedom to earn more, do more. The value in that is high enough to require enterprises fund their labor fully. This may mean their overall profit is less. It should be, they didn't earn it. They didn't fund the labor. We did! Failure to do that comes with other costs, both real in the sense of the massive subsidies that end up unearned profit (our money goes into their bank account, funding labor they profit from on top of margin on goods and services rendered), and opportunity in that we see lower demand and that impacts many others who could earn more and or fund their labor as well. Again, laborers have a cost to exist and show up for work, and when their labor does not pay enough for those things, someone else's labor does, or the labor does not exist and will not show up for work. So which is it? Who pays and why? How we value things can change those answers dramatically, which is the economic argument I made. One last thing, and that is ignoring the cost of people for them to exist and show up for work, doesn't make those costs go away, it just hides them, and we end up paying them in all sorts of other ways that are expensive. That's another way to look at this. When a business does not make enough to fund its operation it closes, or dies in other words. The same is true for people. So not fully funding labor is expensive to literally everyone else except for the people not fully funding the labor they require.
gruez 5y ago
> Fact is, labor costs money for the laborer to exist and show up for work. Humans aren't like ec2 servers that can be spun down when they're needed. The cost for that person is paid whether or not he's employed. I agree there's an additional cost to show up to work, but that's nowhere near the minimum wage in most places.
- ddingus 5y ago
  The difference is an unemployed persons cost is not a subsidy for profit. And are you arguing we simply must pay the costs for people to exist? I agree given not existing is very highly undesirable. Employed people, getting a subsidy so their employer enjoys greater profit makes sense how? Should a for profit enterprise earn it? Why is our help required? If they really cannot afford their labor, they are not a viable business. Or, we all agree to not care, so we end all the fucking with people on assistance? Which is it? To be really clear, I'm OK either way here. What I am not OK with is so damn many people underpaid and struggling hard with assistance despite arguably too much labor otherwise.
  - gruez 5y ago
    > The difference is an unemployed persons cost is not a subsidy for profit. I don't get it. Subsidizing someone's living is okay, but subsidizing someone's living, and then that person deciding to earn a little more money is not okay because profit is involved? >And are you arguing we simply must pay the costs for people to exist? I agree given not existing is very highly undesirable. Yes? If you don't want them to starve, then obviously somebody as to pay the cost to keep those people afloat. >Employed people, getting a subsidy so their employer enjoys greater profit makes sense how? Should a for profit enterprise earn it? Why is our help required? Would society be better off if those "Employed people, getting a subsidy" were unemployed instead? They'll still get the subsidy. If anything, they'll get more subsidy because welfare tends to be means tested. If anything the "for profit enterprise" has a negative effect on the amount of subsidy that needs to be paid. > What I am not OK with is so damn many people underpaid and struggling hard with assistance Underpaid? Maybe they're being paid fairly given the market conditions, and that prevailing wage isn't enough to sustain someone's first world existence so some sort of subsidy has to make up the rest. > despite arguably too much labor otherwise. can you reword this? I'm not understanding what you mean by this.

zuminator 5y ago

Not really because piecework and off-the-books work exist. Plus in the USA there are entire classes of work for which the normal minimum wage does not apply. I also doubt that empirical evidence supports that assertion. How many people are really being priced out of work because they are only worth $6/hr, not $7.25/hr? In my experience people on the low end are either worth at least what you're paying them, or they're basically not worth hiring at all, at any wage point, because they disrupt others in the work environment, cause accidents, are not amenable to working in groups nor amenable to working alone, report to work too unreliably to make effective use of, or whatever issue they have that makes them count among the ranks of the "least skilled." Sure, your argument holds given some value of MW, $20/hr? $25/hr? But in real world practice I think the number of people harmed by living out of their car or in shelters @ $7.25/hr vastly exceeds the number of people who but for the minimum wage would easily find relaxing side work at $2/hr sweeping gutters. And in theory the MW could be tailored to mitigate any adverse impact. It could be restricted to employers grossing over $1 million/yr or in excess of 10 employees. It could be augmented with an earned income tax credit, which has been done to considerable success. There could be a separate under-21 MW. Etc. In practice, though, movement seems to be going in the other direction: about half of US states have minimum wages higher than the Federal level, even places like Florida and Missouri which are not liberal strongholds.

ianai 5y ago

When the minimum wage increases and labor participation also increases the minimum wage price was below the market clearing value.

andrewjl 5y ago

Does it do that if unemployment insurance and retraining programs are made available alongside it?