9 ms·

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 mi

by 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.
    - fredophile 1y ago
      I'm not the poster you replied to but I appreciate your clarification. However, I still don't understand your argument. I don't think anyone has argued that supply and demand don't apply to the labour market. However, it seems that you do agree that there are externalities if workers are paid extremely low wages. Is your argument that the government shouldn't put in laws to mitigate or prevent those externalities? Are you saying that minimum wage laws don't actually address the externalities and should be removed? Are you trying to promote other solutions to solving those externalities? If so, what are they? Is there some other point you're trying to make that I'm completely missing?
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.

by zukzuk 1y ago

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.
  - fredophile 1y ago
    I'm not the poster you replied to but I appreciate your clarification. However, I still don't understand your argument. I don't think anyone has argued that supply and demand don't apply to the labour market. However, it seems that you do agree that there are externalities if workers are paid extremely low wages. Is your argument that the government shouldn't put in laws to mitigate or prevent those externalities? Are you saying that minimum wage laws don't actually address the externalities and should be removed? Are you trying to promote other solutions to solving those externalities? If so, what are they? Is there some other point you're trying to make that I'm completely missing?

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.