4 ms·

People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor. Take for instance

by bko 1y ago

People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor. Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers. Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have? No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something. But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.

zukzuk 1y ago
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
- BurningFrog 1y ago
  The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science. When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe. Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
  - UltraSane 1y ago
    History has already shown that the free market will reduce wages to the point of slavery and destitution. Minimum wage laws are very important to counter the psychopathic greed of many company management. Labor isn't just another good, it is actual human beings whose wages greatly affect their quality of life. Your rant about in-groups is odd.
    - cowcity 1y ago
      [dead]
    - TheOtherHobbes 1y ago
      The predictable end game of unregulated free markets is the opposite of freedom for 99.99% of the population. There's a curious authoritarian tinge to these "free market" argument. "Free markets are powerful, therefore if I support free markets I am a powerful insider." It usually takes an encounter with a major economic reverse - like being bankrupted by healthcare - for proponents to realise that the free market doesn't care about them either, no matter what they believe.
  - itsmek 1y ago
    This comment is weirdly heavy on lecture and light on substance. I'm going to ignore the second two paragraphs and just stick to the first. The person you're replying to says that labor is different because it has more complex costs to society aka an externality. Your rebuttal, as far as I can tell, is "nuh uh". I can think of a very simple externality - low paid workers are supported by the rest of us via social programs. Goods that require similar support from the rest of us (cigarettes for example) should also be regulated because it breaks the economic magic that makes efficient decisions and allocations. We have known about these basic (literally econ 101) flaws for almost as long as we've studied markets. I am open to being convinced by either you or OP but your argument is failing to do so.
    - BurningFrog 1y ago
      My claim is just that wages are prices which arise from the same supply vs demand dynamic as any other price. This important truth is sadly very controversial, which I think is really damaging to society. Of course, I can't prove that from scratch in a HN comment. What I can do is point out that in the science studying this, it is an uncontroversial fact. I didn't substantiate that, which made it less convincing, but here is an Economics textbook saying the same thing: https://pressbooks.oer.hawaii.edu/principlesofmicroeconomics/chapter/4-1-demand-and-supply-at-work-in-labor-markets/ https://pressbooks.oer.hawaii.edu/principlesofmicroeconomics... I know, you can think of an externality. Trust me, Economists can also think of externalities, far more than you or me. In general, they just add interesting nuance to the supply/demand model. They don't completely invalidate it. But I can't easily demonstrate that, so I suspect I have not changed your mind.
- navi0 1y ago
  Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr? (Btw, the American healthcare system is about as far away from a free market as it gets. Don’t think that example supports your point.)
  - itsmek 1y ago
    Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong? If your question is why is minimum wage a good policy, you could start here for a summary of the arguments and evidence: https://en.wikipedia.org/wiki/Minimum_wage https://en.wikipedia.org/wiki/Minimum_wage
    - navi0 1y ago
      It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work. I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0]. Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country. In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits). [0] https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_California https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_Califo... [1] https://en.wikipedia.org/wiki/Chinese_Exclusion_Act https://en.wikipedia.org/wiki/Chinese_Exclusion_Act
- solatic 1y ago
  Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's). Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
  - fredophile 1y ago
    I don't disagree with you and think that UBI and universal health care are better alternatives. However, there is a much easier path forward to getting higher minimum wages and we shouldn't stop making incremental changes just because there is a potentially better solution that we will probably never implement.
- int_19h 1y ago
  Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest. The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
- vidarh 1y ago
  Interestingly, minimum wage seems to be more likely in places with weak unions. In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead. E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
- HPsquared 1y ago
  Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
  - Amezarak 1y ago
    People forced to move because of low wages is a societal negative. High population churn disrupts communities, worsens local governance, and causes atomization.
    - kaashif 1y ago
      Suppose a town forms around a coal or gold mine. Then the mines dry up, or demand for what they're mining dries up. There are no jobs and no reason for people to live there any more. If this community ceases to exist, is it a societal negative? And further, will a high minimum wage speed up or slow down the decline of this community?
- TulliusCicero 1y ago
  > viable alternatives are scant. Not really? Other countries do industry-wide union agreements that apply to the whole sector, seems to work well enough for them.
deleted 1y ago
[deleted]
benreesman 1y ago
Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened. We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you". Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently. So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
unethical_ban 1y ago
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
bruhlikereally 1y ago
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
- gonzobonzo 1y ago
  > You’re comparing human beings working to survive to used vehicles. You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work." The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
  - pietrrrek 1y ago
    > The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. Your statement makes it seem as if these populations are of equal size, but in reality the vast majority works to survive. An item should not have a minimum price as it is just an item, meanwhile every person is, well, a person, and should be able to sustain themselves.
    - gonzobonzo 1y ago
      People sell something to survive (their labor, their goods, etc.). It doesn't mean that every single transaction they make is for the sake of survival, or that external actors are a better judge of what their prices must be. In college I would often make some extra spending money by partaking in social science experiments. I didn't really care if the compensation was below minimum wage - I had time, it was easy enough, and it was easy to opt in when I could. I wasn't doing it for survival, but for a bit of extra spending cash. If someone forced them to significantly increase wages, I might have benefited, but it's far more likely that they would done fewer experiments with a more select group and I would have been worse off. If someone is on the edge, and it's only a minimum wage job that they have open for them, California's minimum wage could help them if they're one of the lucky ones who benefit from it, or could hurt them if they were one of the people hurt by the loss of 18,000 jobs it caused (per the linked report). A policy that leads to fewer jobs that pay more tends to just increase inequality.
CPLX 1y ago
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X". These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual. We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on. To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle. We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
UltraSane 1y ago
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
marcosdumay 1y ago
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
bawolff 1y ago
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better. We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.

by bko 1y ago

zukzuk 1y ago

The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.

BurningFrog 1y ago
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science. When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe. Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
- UltraSane 1y ago
  History has already shown that the free market will reduce wages to the point of slavery and destitution. Minimum wage laws are very important to counter the psychopathic greed of many company management. Labor isn't just another good, it is actual human beings whose wages greatly affect their quality of life. Your rant about in-groups is odd.
  - cowcity 1y ago
    [dead]
  - TheOtherHobbes 1y ago
    The predictable end game of unregulated free markets is the opposite of freedom for 99.99% of the population. There's a curious authoritarian tinge to these "free market" argument. "Free markets are powerful, therefore if I support free markets I am a powerful insider." It usually takes an encounter with a major economic reverse - like being bankrupted by healthcare - for proponents to realise that the free market doesn't care about them either, no matter what they believe.
- itsmek 1y ago
  This comment is weirdly heavy on lecture and light on substance. I'm going to ignore the second two paragraphs and just stick to the first. The person you're replying to says that labor is different because it has more complex costs to society aka an externality. Your rebuttal, as far as I can tell, is "nuh uh". I can think of a very simple externality - low paid workers are supported by the rest of us via social programs. Goods that require similar support from the rest of us (cigarettes for example) should also be regulated because it breaks the economic magic that makes efficient decisions and allocations. We have known about these basic (literally econ 101) flaws for almost as long as we've studied markets. I am open to being convinced by either you or OP but your argument is failing to do so.
  - BurningFrog 1y ago
    My claim is just that wages are prices which arise from the same supply vs demand dynamic as any other price. This important truth is sadly very controversial, which I think is really damaging to society. Of course, I can't prove that from scratch in a HN comment. What I can do is point out that in the science studying this, it is an uncontroversial fact. I didn't substantiate that, which made it less convincing, but here is an Economics textbook saying the same thing: https://pressbooks.oer.hawaii.edu/principlesofmicroeconomics/chapter/4-1-demand-and-supply-at-work-in-labor-markets/ https://pressbooks.oer.hawaii.edu/principlesofmicroeconomics... I know, you can think of an externality. Trust me, Economists can also think of externalities, far more than you or me. In general, they just add interesting nuance to the supply/demand model. They don't completely invalidate it. But I can't easily demonstrate that, so I suspect I have not changed your mind.
navi0 1y ago
Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr? (Btw, the American healthcare system is about as far away from a free market as it gets. Don’t think that example supports your point.)
- itsmek 1y ago
  Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong? If your question is why is minimum wage a good policy, you could start here for a summary of the arguments and evidence: https://en.wikipedia.org/wiki/Minimum_wage https://en.wikipedia.org/wiki/Minimum_wage
  - navi0 1y ago
    It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work. I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0]. Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country. In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits). [0] https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_California https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_Califo... [1] https://en.wikipedia.org/wiki/Chinese_Exclusion_Act https://en.wikipedia.org/wiki/Chinese_Exclusion_Act
solatic 1y ago
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's). Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
- fredophile 1y ago
  I don't disagree with you and think that UBI and universal health care are better alternatives. However, there is a much easier path forward to getting higher minimum wages and we shouldn't stop making incremental changes just because there is a potentially better solution that we will probably never implement.
int_19h 1y ago
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest. The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
vidarh 1y ago
Interestingly, minimum wage seems to be more likely in places with weak unions. In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead. E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
HPsquared 1y ago
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
- Amezarak 1y ago
  People forced to move because of low wages is a societal negative. High population churn disrupts communities, worsens local governance, and causes atomization.
  - kaashif 1y ago
    Suppose a town forms around a coal or gold mine. Then the mines dry up, or demand for what they're mining dries up. There are no jobs and no reason for people to live there any more. If this community ceases to exist, is it a societal negative? And further, will a high minimum wage speed up or slow down the decline of this community?
TulliusCicero 1y ago
> viable alternatives are scant. Not really? Other countries do industry-wide union agreements that apply to the whole sector, seems to work well enough for them.

deleted 1y ago

[deleted]

benreesman 1y ago

Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened. We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you". Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently. So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.

unethical_ban 1y ago

It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.

bruhlikereally 1y ago

Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.

gonzobonzo 1y ago
> You’re comparing human beings working to survive to used vehicles. You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work." The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
- pietrrrek 1y ago
  > The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. Your statement makes it seem as if these populations are of equal size, but in reality the vast majority works to survive. An item should not have a minimum price as it is just an item, meanwhile every person is, well, a person, and should be able to sustain themselves.
  - gonzobonzo 1y ago
    People sell something to survive (their labor, their goods, etc.). It doesn't mean that every single transaction they make is for the sake of survival, or that external actors are a better judge of what their prices must be. In college I would often make some extra spending money by partaking in social science experiments. I didn't really care if the compensation was below minimum wage - I had time, it was easy enough, and it was easy to opt in when I could. I wasn't doing it for survival, but for a bit of extra spending cash. If someone forced them to significantly increase wages, I might have benefited, but it's far more likely that they would done fewer experiments with a more select group and I would have been worse off. If someone is on the edge, and it's only a minimum wage job that they have open for them, California's minimum wage could help them if they're one of the lucky ones who benefit from it, or could hurt them if they were one of the people hurt by the loss of 18,000 jobs it caused (per the linked report). A policy that leads to fewer jobs that pay more tends to just increase inequality.

CPLX 1y ago

We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X". These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual. We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on. To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle. We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.

UltraSane 1y ago

Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.

marcosdumay 1y ago

Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.

bawolff 1y ago

That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better. We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.