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But what you don't see is the line of people outside the door, whose labour is worth less than $7.25 per hour, but who can't find (legal) work because of the mi

But what you don't see is the line of people outside the door, whose labour is worth less than $7.25 per hour, but who can't find (legal) work because of the minimum wage laws.

scarmig 14y ago
At some point, the overhead cost of managing people whose labor is worth less than $7.25/hour is the predominant cost in employing them--at which point, you might as well just hire the person doing the oversight to do their job, or replace their labor with capital. Minimum wage laws, at some level, prohibit useful employment. But every day the pool of people whose labor is effectively worthless--zero marginal product people, as Tyler Cowen calls them--is growing larger. Very few people, left or right, seem to want to confront this fact. Mostly because it's unpalatable: when horses' labor became uneconomic, we just turned them to glue. What do we do with people?
- krapp 14y ago
  Given the option to legally cut their lower-tier employees' wages to zero tomorrow, I wonder how many companies would do so, and still expect those people to show up for work? When horses' labor became uneconomic, we just turned them to glue. What do we do with people? Force companies to pay a living wage.
  - lhnn 14y ago
    So, when a person's job becomes outdone by technology or automation, we should force companies to pay them more? ?
    - robryan 14y ago
      Ideally provide them with a better safety net and the means for which to develop skills which would give then a value over the minimum wage.
    - krapp 14y ago
      Companies shouldn't be able to set wages at an arbitrary low. Because then companies could simply set them as low as possible, without any regard to the standard of living for the employees making those wages.
      - benaiah 14y ago
        But then any company willing to pay a decent price would instantly have their pick of anyone in the workforce. It's called supply and demand. If there's no demand for cheap laborers, the answer is not to make them more expensive to hire, or to force companies to pay them a minimum. That just exacerbates the problem - now they can't even work for wages they might be able to be worth. It's very difficult to get better at a job unless you're either working at it or have the resources to do it in your free time. Someone who can't get a minimum wage job probably doesn't have the resources to learn the skills to move up. I can personally attest that it's not just teenagers trying to find minimum wage jobs. I am a teenager, and I while I was looking for a summer job (I'm now employed as a software consultant) I was regularly (i.e., every single time) competing with people in their 20s or even, in some cases, older than that, who were simply unable to find work elsewhere.
        EricDeb 14y ago
        A minimum wage affords unskilled workers some amount of time to learn new skills or improve their lot in life. An unskilled worker who has to work 18 hours a day at $2 an hour to make ends meet will never be able to learn new skills and claw their way out of that hole. It's the same with unemployment benefits - it affords citizens time to learn new skills without worrying about what they will eat that night.
        chii 14y ago
        perhaps unemployment benefits should give food and other basic necessities in the form of vouchers, and force the benefit taker to take (gov't provided) classes that will reskill them. This way, they can either look for a real job to earn cash, instead of living on "vouchers/food tickets", or have to take classes to reskill/up-skill. They won't be battling for their next meal, but they also can't have leasure time.
  - scarmig 14y ago
    Trust me: I believe that people deserve an honest living. I believe people have the right to housing, warmth, good food, healthcare, and the ability to have plenty of autonomy and free time to do what they love and achieve self-fulfillment. I am not averse to governments passing laws to achieve this. But all organizations have a choice: I can either pay a worker $X or replace labor with capital for $Y, within the budgetary constraint $Z. If $Y < $X, they'll do that, or be outcompeted by organizations which do choose to do that. (If $Y and $X are both >$Z, well, that's when the organization closes up shop.) That's a real choice, and it's not easily legislated into oblivion.
    - krapp 14y ago
      That's a real choice, and it's not easily legislated into oblivion. I understand that, and I don't mean to demonize business by any means. A minimum wage might well stifle competition somewhat, but I think the lack of one would do more harm than good. Given the choice between harm to business and harm to people, I'll choose to harm business.
      - jlgreco 14y ago
        Do the people actually benefit in that situation? When a business closes up shop, do other businesses naturally expand their labor force in a linear manner to provide new jobs for the ones that were lost? Ideally the competing businesses will easily expand of course, since they have less competition after their competitor dropped out, but is that expansion linear? I suppose for some types of jobs it may be. If a coffee shop closes, and it's competitor opens another branch to soak up the extra demand, the additional coffee shop will probably use approximately the same number of employees as the old one fired. But can the same be said of, say, factories? What if the second factory, while filling the same demand as the first, was more successful because it used more effective automation?
        krapp 14y ago
        That is a fair point. But what's the benefit in lower wages across the board, to the workers making them and to the economy? Perhaps the answer (at least in the US) would be to reduce the cost of reeducation to facilitate transition, and socialize healthcare? Lower wages might not be so bad where healthcare and education don't represent potential lifetime burdens for people. But then the tax burden for that would fall disproportionately on the poor wouldn't it? And also, there might just not be jobs at all to replace the ones lost. I don't know.
  - gwright 14y ago
    > Force companies to pay a living wage. So what is a living wage for a teenager living at home? What is a living wage for a college student going to school full time but still supported by their parents? What is a living wage for a retired grandparent that wants to 'stay young'? How about for a spouse who just wants to be out of the house because the other member of the marriage brings home sufficient disposable income? The notion that there is a single administratively selectable price point that is the 'minimum' wage for any and all job situations is a fallacy.
    - scarmig 14y ago
      Some countries--Germany from what I understand, for instance--have sector and job class-specific minimum wages, which seems so eminently sane that it's impossible in the USA.
      - bmmayer1 14y ago
        There is no minimum wage in Germany.
        lostlogin 14y ago
        Could you expand on that please? Surely there is some kind of protection against 20 hour shifts for $20? How are workers protected?
        bmmayer1 14y ago
        Many industries have strong union presences that negotiate wages. But there is only a statutory minimum wage for 5-6 different jobs--painters, mailmen, etc. But in general, the best protection against low wages is the high mobility that low wage jobs offer.
      - scarmig 14y ago
        No direct statutory universal minimum wage. But sector-by-sector minimum wages are set by collective bargaining agreements. In Germany in particular, 70% of the labor force are covered by them. I admit to not knowing the full details of how it works in Germany--not many good sources on the Internet immediately apparent, so I'd be plenty eager to hear if I'm misunderstanding how it works.
  - parsnips 14y ago
    Let them eat cake!
    - jussij 14y ago
      +1 Those that don't learn from history are destined to repeat it
  - natrius 14y ago
    You can force a living wage, but you can't force companies to hire people at that wage. I mean, you can, but most people would find that pretty extreme.
  - markshead 14y ago
    >Force companies to pay a living wage. Who determines what a "living wage" is? Does it include having cable? Internet? A car? But beyond that, why do you want to put up any barriers to what jobs companies can hire workers for? Lets say you own a company that employees 20 people and it sits on one acre of land. You need to get someone to mow the grass. You can hire company to come in for $80 per week to mow for you. They have big expensive lawnmowers and can do it very quickly. Or you can hire Joe to mow it using an older push mower you have. Joe isn't super fast and it will take him 10 hours. So you decide the value is $8 per hour in order to be on par with the company that will do it. I wouldn't want the government to come in and make laws that make it better for you to hire the big company than Joe. I wouldn't want them to make it harder for you to justify taking a chance on hiring Joe and giving him a shot at a job just because someone doesn't think that $8 per hour is a living wage. If Joe works for you for a year and has good track record, who knows. Maybe he will prove dependable enough that you can find other things for him to do. Maybe some of those things will be worth paying him more. Or maybe he can get a higher paying job working for the big lawn-mowing company based on his track record with you.
    - chii 14y ago
      The situation is more complex that that, because the mowing company uses a great big machine, and they constantly try to improve it. Say it now only takes $40 to mow instead of $80 due to efficiency increases and whatnots. Do you now fire joe and hire the mowing company? or do you instead choose to pay hin $4 an hour? Ovbiously joe can't increase his speed of mowing beyond a certain limit - he is human after all. The real underlying question is - if the value that joe provides can be instead provided via a cheaper source, then the business _should_ use that cheaper source, joe's life shouldnt and won't come into consideration. This method of thinking seems incompatible with the concepts of compassion and empathy, but it seems this is the way the real world works...
- markshead 14y ago
  Many people learn their skills on the job. Setting an artificial lower limit of what they are allowed to work for prevents some people from starting to climb a ladder toward higher skills and higher wages. Regarding just hiring the person managing the labor to do the work: Don't forget that one person can manage multiple people.
  - bjourne 14y ago
    Surely you must be joking right? How on earth would someone earning < minimum wage try to start climbing the corporate ladder? If you clean toilets you don't learn any valuable skills, you won't someday be promoted to manager of the cleaning staff and you can't walk in to your boss and demand a higher salary because you're now an expert at cleaning toilets.
    - jlgreco 14y ago
      The churn rate at, for example, fast food joints is high enough that you can secure (piss poor, initially) promotions by simply not being a teenager that only works there for 3 months. By no means is it easy, but very modest "climbing" is very common in the fast food sector. Skill has nothing to do with low-level promotions, it is all about reliability. The guy yelling at the toilet scrubber doesn't have his job because he is particularly skilled at yelling at toilet scrubbers.
    - Domenic_S 14y ago
      The impact is evident in apprenticeships. We've got a lot of laws about them that makes them tough to run, and a small shop won't usually do it for fear of being crushed by the Labor Dep't. But consider, if a HS dropout could learn how to wrench on a car for $2/hour, maybe they could get a full auto tech position (at a living wage) later on, without the crushing debt of trade school.
    - markshead 14y ago
      Yes, someone who starts out cleaning does learn skills. They can become better at cleaning than the average person. They will know how to clean really bad messes without getting grossed out by it. They will know how to dispose of the stuff they clean. They will know how to clean efficiently and without wasting time. They will know what type of cleaning supplies to use. That may not make them a manager, but there are jobs that pay higher than minimum wage that require the ability to clean as a skill. Often those jobs come with new skills to be learned. And yes, someone who has some degree of management potential could definitely start out cleaning toilets for minimum wage and work their way up to managing the cleaning staff somewhere.
- mdkess 14y ago
  Do you really think that there are that many zero marginal product people? Or do you think that it's mostly people who are unwilling or don't have the education background to do work with utility? I feel like a lot of minimum wage is a big negative feedback loop - if you are making $7 an hour, you have to work a lot of hours to put food on the table. And these are generally manual jobs, or at least involve a lot of standing, and so you are exhausted by the end of the day. Plus - with poverty being so endemic, chances are nobody around you has an education either, so you can't see first hand that education really gets you anything. And, with a lack of money, you either have no credit or (more likely) bad credit. So how do you get out of that trap? When your parents are struggling to make ends meet like this, what do you do as a kid? You start working night shifts in high school instead of studying for the SATs. If you took people in this trap who were willing, and subsidized them for two years to go to community college, I feel like you'd have a huge increase in productivity, especially across generations. And it wouldn't even be that expensive, especially if you factored in increased tax revenue. Or heck, as a lesser goal, make it a goal to enable people making under $X/hour to get their GED. Maybe this is way too idealistic. I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.
  - Domenic_S 14y ago
    > I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent. But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++; > you can't see first hand that education really gets you anything. I don't see that education really does get you anything except a stifled sense of creativity, decreased curiosity, and crushing debt. See: the current college-grad crisis. "Education" in a modern, western sense is a red herring. Being a lifelong learner, being always curious, and having the desire to do something useful with your life -- if you have these qualities you'll do just fine.
- rayiner 14y ago
  Minimum guaranteed income. Let the people whose labor has zero marginal value opt out of the work force, which has the incidental effect of reducing labor competition for people just above the margin.
  - Domenic_S 14y ago
    I want to run an experiment: build a town that's equal in all ways: everyone has the same house, the same car, the same clothes, the same bank all provided for them. Give them a monthly stipend. Give them all the same job doing anything (breaking rocks, whatever). I would love to see what the wealth distribution looks like after a year.
    - rayiner 14y ago
      I agree we should run that experiment, but until then abandon the pretense that our society is really meritocratic.
    - BrianEatWorld 14y ago
      I never played but could you be talking about Minecraft?
      - nickzoic 14y ago
        Nothing says "disposable income" like a diamond hoe.
    - spc476 14y ago
      I recently wrote a very simple economic simulator. Given X actors, each starting with $Y (for a total money supply of $(X * Y)). For each "tick," two actors are selected, a buyer and a seller. The buyer gives the seller a random amount of money (if the buyer didn't have that said amount, no transaction happened). That's it. No skill. No talent. No fraud. Just random transactions between a fixed number of actors and money. Even after a few hundred transactions an interesting pattern emerged---a power law distribution of money, with the average amount of money per actor less than the starting amount of money (generally, about 66% of the starting amount). The results were similar regardless of the number of actors, the amount of starting money, and the amount per transaction (even a fixed amount exchanged per transaction would result in a similar result). I think the result would the same for your hypothetical town.
_delirium 14y ago
That's the idealized assumption in a simple supply/demand, all-else-equal model, but there's actually little empirical evidence that minimum wages, at least at the level contemplated in the U.S., actually do have an impact on unemployment in the world world, except on part-time work by teenagers. So economists' consensus has weakened on that from what it was if you had polled them 30-40 years ago. One among many possible positive effects of higher minimum wages is to shift the threshold at which it becomes profitable to upgrade low-tech processes to computerized ones, which can modernize sectors of the economy, and create some highly paid jobs [1]. Another positive effect is to redistribute more money to people in the remaining low-end jobs. But economies are complex and full of feedback loops, so those aren't really well established either. [1] As an AI researcher, of course, this benefits me: humans undercutting us is one of our top problems with deploying research in the real world.
- magila 14y ago
  Well yeah, that's because most people who are making minimum wage are... teenagers working part-time. At its current level the US minimum wage has very little impact on anything, positive or negative. Very few jobs are worth so little, and most of them are being worked by immigrants who get paid under-the-table anyways.
  - sukuriant 14y ago
    Knowing a few people that make or have made approximately minimum wage for the time I've known them, and seeing the age of people working at various low-end jobs, I would like to see some statistics to compare to your statement to my anecdotal evidence.
    - specialist 14y ago
      I'd also like to see underemployment / multiple job stats too. All this talk about minimum wage, haven't seen mention of living wage.
  - slurgfest 14y ago
    The number of jobs worked by immigrants paid under the table is not 'very few'.
jiggy2011 14y ago
I struggle to think of a task that needs to be done by a human being that wouldn't be worth at least that. Even hiring someone who was unskilled to do basic chores around my house would be freeing time up for me either to work at a higher rate (thus profit?) or gives me valuable relaxation time.
- wnight 14y ago
  You're making a mistake by confusing effort and difficulty with value. There are uncountably many human-requiring tasks that don't improve the world at all. For instance, "count all 'pretty' things and divide the number by two". While silly this work still takes effort and you'd have a hard time finding someone to put out that effort without you paying them. You don't benefit in this scenario though because the work is silly. There is no value in having it done. This is further complicated by subjective value. Even if we had identical homes in identical states we wouldn't identically value the same incremental improvement from having them cleaned. This is especially true across income levels. If you set a minimum wage you ensure everyone working in that industry makes that wage in the same way that if you execute everyone over six-feet tall you ensure that nobody bumps their head. While you personally may even end up paying a bit more for a cleaner, poorer people who can't afford that would simply stop hiring cleaners. Their ex-cleaners make nothing but have conveniently been removed from the statistics so everything seems to be better. And now everyone's house is dirty.
nhaehnle 14y ago
To add to the excellent points made by the sibling comments, here's another reason why this logic doesn't necessarily apply: Consider that, as the wage at the bottom end decreases, the supply of labor may actually increase, because people with low income may be looking for a second (or third) job, trying to work more hours to make up for their low income. In other words, the standard textbook picture of how supply and demand work need not apply to labor. When that happens, the market for labor may never clear despite falling wages. And then everybody loses - even capitalists would lose, because low wages means low income means low spending means low revenue for firms means low profits for capitalists.
goodcanadian 14y ago
I used to believe in the law of supply and demand when applied to labour. Since coming to Australia, where the minimum wage is $14 and change (it varies by region . . . I am not an expert), however, my opinion has changed somewhat. Fast food is a bit more expensive, though not as much as you might expect. The difference, however, is that the minimum wage teenagers are generally working their asses off and earning their pay. At an equivalent place in the U.S. or Canada, the places seem to have 3 or 4 people standing around scratching themselves for every one that is sort of working. I can't offer any deep analysis, but perhaps, with higher wages, employers are more careful with their hiring decisions and with their use of labour (or perhaps, they can simply attract better workers). Perhaps, also, the workers value their jobs more as the jobs are literally worth more.
- NamTaf 14y ago
  It's actually $15.96 an hour / $606.40 a week for an adult employee (with younger people earning proportionally less)[1]. Also, it's worth noting that now the first $18,200 of income (58% if you earn minimum wage for 52 weeks) is tax-free - that is, tax will be withheld on the basis of your estimated yearly income but then returned to you at mid-year when you file your tax return. The tax rate above the tax-free threshold is then 19% [2]. So if you earned absolute minimum wage for 52 weeks a year, you'd net a total of $28,999.57 - essentially, $29,000 after tax. This does not include any further tax breaks you may receive for being a low-income earner. There's then various social safety nets if you are minimum wage and supporting a dependent (child, disabled family member, etc.) which stack on top of that and/or give tax breaks, but I'm not really familiar with them so can't elaborate much further there. [1] http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx http://www.fairwork.gov.au/pay/national-minimum-wage/pages/d... [2] http://www.ato.gov.au/individuals/content.aspx?doc=/content/12333.htm http://www.ato.gov.au/individuals/content.aspx?doc=/content/...
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mhb 14y ago
They should contact Phil Greenspun: http://blogs.law.harvard.edu/philg/2012/12/12/what-do-the-high-wages-of-house-cleaners-and-nannies-say-about-the-reliability-of-economists/ http://blogs.law.harvard.edu/philg/2012/12/12/what-do-the-hi...

But what you don't see is the line of people outside the door, whose labour is worth less than $7.25 per hour, but who can't find (legal) work because of the minimum wage laws.

scarmig 14y ago

At some point, the overhead cost of managing people whose labor is worth less than $7.25/hour is the predominant cost in employing them--at which point, you might as well just hire the person doing the oversight to do their job, or replace their labor with capital. Minimum wage laws, at some level, prohibit useful employment. But every day the pool of people whose labor is effectively worthless--zero marginal product people, as Tyler Cowen calls them--is growing larger. Very few people, left or right, seem to want to confront this fact. Mostly because it's unpalatable: when horses' labor became uneconomic, we just turned them to glue. What do we do with people?

krapp 14y ago
Given the option to legally cut their lower-tier employees' wages to zero tomorrow, I wonder how many companies would do so, and still expect those people to show up for work? When horses' labor became uneconomic, we just turned them to glue. What do we do with people? Force companies to pay a living wage.
- lhnn 14y ago
  So, when a person's job becomes outdone by technology or automation, we should force companies to pay them more? ?
  - robryan 14y ago
    Ideally provide them with a better safety net and the means for which to develop skills which would give then a value over the minimum wage.
  - krapp 14y ago
    Companies shouldn't be able to set wages at an arbitrary low. Because then companies could simply set them as low as possible, without any regard to the standard of living for the employees making those wages.
    - benaiah 14y ago
      But then any company willing to pay a decent price would instantly have their pick of anyone in the workforce. It's called supply and demand. If there's no demand for cheap laborers, the answer is not to make them more expensive to hire, or to force companies to pay them a minimum. That just exacerbates the problem - now they can't even work for wages they might be able to be worth. It's very difficult to get better at a job unless you're either working at it or have the resources to do it in your free time. Someone who can't get a minimum wage job probably doesn't have the resources to learn the skills to move up. I can personally attest that it's not just teenagers trying to find minimum wage jobs. I am a teenager, and I while I was looking for a summer job (I'm now employed as a software consultant) I was regularly (i.e., every single time) competing with people in their 20s or even, in some cases, older than that, who were simply unable to find work elsewhere.
      - EricDeb 14y ago
        A minimum wage affords unskilled workers some amount of time to learn new skills or improve their lot in life. An unskilled worker who has to work 18 hours a day at $2 an hour to make ends meet will never be able to learn new skills and claw their way out of that hole. It's the same with unemployment benefits - it affords citizens time to learn new skills without worrying about what they will eat that night.
        chii 14y ago
        perhaps unemployment benefits should give food and other basic necessities in the form of vouchers, and force the benefit taker to take (gov't provided) classes that will reskill them. This way, they can either look for a real job to earn cash, instead of living on "vouchers/food tickets", or have to take classes to reskill/up-skill. They won't be battling for their next meal, but they also can't have leasure time.
- scarmig 14y ago
  Trust me: I believe that people deserve an honest living. I believe people have the right to housing, warmth, good food, healthcare, and the ability to have plenty of autonomy and free time to do what they love and achieve self-fulfillment. I am not averse to governments passing laws to achieve this. But all organizations have a choice: I can either pay a worker $X or replace labor with capital for $Y, within the budgetary constraint $Z. If $Y < $X, they'll do that, or be outcompeted by organizations which do choose to do that. (If $Y and $X are both >$Z, well, that's when the organization closes up shop.) That's a real choice, and it's not easily legislated into oblivion.
  - krapp 14y ago
    That's a real choice, and it's not easily legislated into oblivion. I understand that, and I don't mean to demonize business by any means. A minimum wage might well stifle competition somewhat, but I think the lack of one would do more harm than good. Given the choice between harm to business and harm to people, I'll choose to harm business.
    - jlgreco 14y ago
      Do the people actually benefit in that situation? When a business closes up shop, do other businesses naturally expand their labor force in a linear manner to provide new jobs for the ones that were lost? Ideally the competing businesses will easily expand of course, since they have less competition after their competitor dropped out, but is that expansion linear? I suppose for some types of jobs it may be. If a coffee shop closes, and it's competitor opens another branch to soak up the extra demand, the additional coffee shop will probably use approximately the same number of employees as the old one fired. But can the same be said of, say, factories? What if the second factory, while filling the same demand as the first, was more successful because it used more effective automation?
      - krapp 14y ago
        That is a fair point. But what's the benefit in lower wages across the board, to the workers making them and to the economy? Perhaps the answer (at least in the US) would be to reduce the cost of reeducation to facilitate transition, and socialize healthcare? Lower wages might not be so bad where healthcare and education don't represent potential lifetime burdens for people. But then the tax burden for that would fall disproportionately on the poor wouldn't it? And also, there might just not be jobs at all to replace the ones lost. I don't know.
- gwright 14y ago
  > Force companies to pay a living wage. So what is a living wage for a teenager living at home? What is a living wage for a college student going to school full time but still supported by their parents? What is a living wage for a retired grandparent that wants to 'stay young'? How about for a spouse who just wants to be out of the house because the other member of the marriage brings home sufficient disposable income? The notion that there is a single administratively selectable price point that is the 'minimum' wage for any and all job situations is a fallacy.
  - scarmig 14y ago
    Some countries--Germany from what I understand, for instance--have sector and job class-specific minimum wages, which seems so eminently sane that it's impossible in the USA.
    - bmmayer1 14y ago
      There is no minimum wage in Germany.
      - lostlogin 14y ago
        Could you expand on that please? Surely there is some kind of protection against 20 hour shifts for $20? How are workers protected?
        bmmayer1 14y ago
        Many industries have strong union presences that negotiate wages. But there is only a statutory minimum wage for 5-6 different jobs--painters, mailmen, etc. But in general, the best protection against low wages is the high mobility that low wage jobs offer.
    - scarmig 14y ago
      No direct statutory universal minimum wage. But sector-by-sector minimum wages are set by collective bargaining agreements. In Germany in particular, 70% of the labor force are covered by them. I admit to not knowing the full details of how it works in Germany--not many good sources on the Internet immediately apparent, so I'd be plenty eager to hear if I'm misunderstanding how it works.
- parsnips 14y ago
  Let them eat cake!
  - jussij 14y ago
    +1 Those that don't learn from history are destined to repeat it
- natrius 14y ago
  You can force a living wage, but you can't force companies to hire people at that wage. I mean, you can, but most people would find that pretty extreme.
- markshead 14y ago
  >Force companies to pay a living wage. Who determines what a "living wage" is? Does it include having cable? Internet? A car? But beyond that, why do you want to put up any barriers to what jobs companies can hire workers for? Lets say you own a company that employees 20 people and it sits on one acre of land. You need to get someone to mow the grass. You can hire company to come in for $80 per week to mow for you. They have big expensive lawnmowers and can do it very quickly. Or you can hire Joe to mow it using an older push mower you have. Joe isn't super fast and it will take him 10 hours. So you decide the value is $8 per hour in order to be on par with the company that will do it. I wouldn't want the government to come in and make laws that make it better for you to hire the big company than Joe. I wouldn't want them to make it harder for you to justify taking a chance on hiring Joe and giving him a shot at a job just because someone doesn't think that $8 per hour is a living wage. If Joe works for you for a year and has good track record, who knows. Maybe he will prove dependable enough that you can find other things for him to do. Maybe some of those things will be worth paying him more. Or maybe he can get a higher paying job working for the big lawn-mowing company based on his track record with you.
  - chii 14y ago
    The situation is more complex that that, because the mowing company uses a great big machine, and they constantly try to improve it. Say it now only takes $40 to mow instead of $80 due to efficiency increases and whatnots. Do you now fire joe and hire the mowing company? or do you instead choose to pay hin $4 an hour? Ovbiously joe can't increase his speed of mowing beyond a certain limit - he is human after all. The real underlying question is - if the value that joe provides can be instead provided via a cheaper source, then the business _should_ use that cheaper source, joe's life shouldnt and won't come into consideration. This method of thinking seems incompatible with the concepts of compassion and empathy, but it seems this is the way the real world works...
markshead 14y ago
Many people learn their skills on the job. Setting an artificial lower limit of what they are allowed to work for prevents some people from starting to climb a ladder toward higher skills and higher wages. Regarding just hiring the person managing the labor to do the work: Don't forget that one person can manage multiple people.
- bjourne 14y ago
  Surely you must be joking right? How on earth would someone earning < minimum wage try to start climbing the corporate ladder? If you clean toilets you don't learn any valuable skills, you won't someday be promoted to manager of the cleaning staff and you can't walk in to your boss and demand a higher salary because you're now an expert at cleaning toilets.
  - jlgreco 14y ago
    The churn rate at, for example, fast food joints is high enough that you can secure (piss poor, initially) promotions by simply not being a teenager that only works there for 3 months. By no means is it easy, but very modest "climbing" is very common in the fast food sector. Skill has nothing to do with low-level promotions, it is all about reliability. The guy yelling at the toilet scrubber doesn't have his job because he is particularly skilled at yelling at toilet scrubbers.
  - Domenic_S 14y ago
    The impact is evident in apprenticeships. We've got a lot of laws about them that makes them tough to run, and a small shop won't usually do it for fear of being crushed by the Labor Dep't. But consider, if a HS dropout could learn how to wrench on a car for $2/hour, maybe they could get a full auto tech position (at a living wage) later on, without the crushing debt of trade school.
  - markshead 14y ago
    Yes, someone who starts out cleaning does learn skills. They can become better at cleaning than the average person. They will know how to clean really bad messes without getting grossed out by it. They will know how to dispose of the stuff they clean. They will know how to clean efficiently and without wasting time. They will know what type of cleaning supplies to use. That may not make them a manager, but there are jobs that pay higher than minimum wage that require the ability to clean as a skill. Often those jobs come with new skills to be learned. And yes, someone who has some degree of management potential could definitely start out cleaning toilets for minimum wage and work their way up to managing the cleaning staff somewhere.
mdkess 14y ago
Do you really think that there are that many zero marginal product people? Or do you think that it's mostly people who are unwilling or don't have the education background to do work with utility? I feel like a lot of minimum wage is a big negative feedback loop - if you are making $7 an hour, you have to work a lot of hours to put food on the table. And these are generally manual jobs, or at least involve a lot of standing, and so you are exhausted by the end of the day. Plus - with poverty being so endemic, chances are nobody around you has an education either, so you can't see first hand that education really gets you anything. And, with a lack of money, you either have no credit or (more likely) bad credit. So how do you get out of that trap? When your parents are struggling to make ends meet like this, what do you do as a kid? You start working night shifts in high school instead of studying for the SATs. If you took people in this trap who were willing, and subsidized them for two years to go to community college, I feel like you'd have a huge increase in productivity, especially across generations. And it wouldn't even be that expensive, especially if you factored in increased tax revenue. Or heck, as a lesser goal, make it a goal to enable people making under $X/hour to get their GED. Maybe this is way too idealistic. I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.
- Domenic_S 14y ago
  > I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent. But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++; > you can't see first hand that education really gets you anything. I don't see that education really does get you anything except a stifled sense of creativity, decreased curiosity, and crushing debt. See: the current college-grad crisis. "Education" in a modern, western sense is a red herring. Being a lifelong learner, being always curious, and having the desire to do something useful with your life -- if you have these qualities you'll do just fine.
rayiner 14y ago
Minimum guaranteed income. Let the people whose labor has zero marginal value opt out of the work force, which has the incidental effect of reducing labor competition for people just above the margin.
- Domenic_S 14y ago
  I want to run an experiment: build a town that's equal in all ways: everyone has the same house, the same car, the same clothes, the same bank all provided for them. Give them a monthly stipend. Give them all the same job doing anything (breaking rocks, whatever). I would love to see what the wealth distribution looks like after a year.
  - rayiner 14y ago
    I agree we should run that experiment, but until then abandon the pretense that our society is really meritocratic.
  - BrianEatWorld 14y ago
    I never played but could you be talking about Minecraft?
    - nickzoic 14y ago
      Nothing says "disposable income" like a diamond hoe.
  - spc476 14y ago
    I recently wrote a very simple economic simulator. Given X actors, each starting with $Y (for a total money supply of $(X * Y)). For each "tick," two actors are selected, a buyer and a seller. The buyer gives the seller a random amount of money (if the buyer didn't have that said amount, no transaction happened). That's it. No skill. No talent. No fraud. Just random transactions between a fixed number of actors and money. Even after a few hundred transactions an interesting pattern emerged---a power law distribution of money, with the average amount of money per actor less than the starting amount of money (generally, about 66% of the starting amount). The results were similar regardless of the number of actors, the amount of starting money, and the amount per transaction (even a fixed amount exchanged per transaction would result in a similar result). I think the result would the same for your hypothetical town.

_delirium 14y ago

That's the idealized assumption in a simple supply/demand, all-else-equal model, but there's actually little empirical evidence that minimum wages, at least at the level contemplated in the U.S., actually do have an impact on unemployment in the world world, except on part-time work by teenagers. So economists' consensus has weakened on that from what it was if you had polled them 30-40 years ago. One among many possible positive effects of higher minimum wages is to shift the threshold at which it becomes profitable to upgrade low-tech processes to computerized ones, which can modernize sectors of the economy, and create some highly paid jobs [1]. Another positive effect is to redistribute more money to people in the remaining low-end jobs. But economies are complex and full of feedback loops, so those aren't really well established either. [1] As an AI researcher, of course, this benefits me: humans undercutting us is one of our top problems with deploying research in the real world.

magila 14y ago
Well yeah, that's because most people who are making minimum wage are... teenagers working part-time. At its current level the US minimum wage has very little impact on anything, positive or negative. Very few jobs are worth so little, and most of them are being worked by immigrants who get paid under-the-table anyways.
- sukuriant 14y ago
  Knowing a few people that make or have made approximately minimum wage for the time I've known them, and seeing the age of people working at various low-end jobs, I would like to see some statistics to compare to your statement to my anecdotal evidence.
  - specialist 14y ago
    I'd also like to see underemployment / multiple job stats too. All this talk about minimum wage, haven't seen mention of living wage.
- slurgfest 14y ago
  The number of jobs worked by immigrants paid under the table is not 'very few'.

jiggy2011 14y ago

I struggle to think of a task that needs to be done by a human being that wouldn't be worth at least that. Even hiring someone who was unskilled to do basic chores around my house would be freeing time up for me either to work at a higher rate (thus profit?) or gives me valuable relaxation time.

wnight 14y ago
You're making a mistake by confusing effort and difficulty with value. There are uncountably many human-requiring tasks that don't improve the world at all. For instance, "count all 'pretty' things and divide the number by two". While silly this work still takes effort and you'd have a hard time finding someone to put out that effort without you paying them. You don't benefit in this scenario though because the work is silly. There is no value in having it done. This is further complicated by subjective value. Even if we had identical homes in identical states we wouldn't identically value the same incremental improvement from having them cleaned. This is especially true across income levels. If you set a minimum wage you ensure everyone working in that industry makes that wage in the same way that if you execute everyone over six-feet tall you ensure that nobody bumps their head. While you personally may even end up paying a bit more for a cleaner, poorer people who can't afford that would simply stop hiring cleaners. Their ex-cleaners make nothing but have conveniently been removed from the statistics so everything seems to be better. And now everyone's house is dirty.

nhaehnle 14y ago

To add to the excellent points made by the sibling comments, here's another reason why this logic doesn't necessarily apply: Consider that, as the wage at the bottom end decreases, the supply of labor may actually increase, because people with low income may be looking for a second (or third) job, trying to work more hours to make up for their low income. In other words, the standard textbook picture of how supply and demand work need not apply to labor. When that happens, the market for labor may never clear despite falling wages. And then everybody loses - even capitalists would lose, because low wages means low income means low spending means low revenue for firms means low profits for capitalists.

goodcanadian 14y ago

I used to believe in the law of supply and demand when applied to labour. Since coming to Australia, where the minimum wage is $14 and change (it varies by region . . . I am not an expert), however, my opinion has changed somewhat. Fast food is a bit more expensive, though not as much as you might expect. The difference, however, is that the minimum wage teenagers are generally working their asses off and earning their pay. At an equivalent place in the U.S. or Canada, the places seem to have 3 or 4 people standing around scratching themselves for every one that is sort of working. I can't offer any deep analysis, but perhaps, with higher wages, employers are more careful with their hiring decisions and with their use of labour (or perhaps, they can simply attract better workers). Perhaps, also, the workers value their jobs more as the jobs are literally worth more.

NamTaf 14y ago
It's actually $15.96 an hour / $606.40 a week for an adult employee (with younger people earning proportionally less)[1]. Also, it's worth noting that now the first $18,200 of income (58% if you earn minimum wage for 52 weeks) is tax-free - that is, tax will be withheld on the basis of your estimated yearly income but then returned to you at mid-year when you file your tax return. The tax rate above the tax-free threshold is then 19% [2]. So if you earned absolute minimum wage for 52 weeks a year, you'd net a total of $28,999.57 - essentially, $29,000 after tax. This does not include any further tax breaks you may receive for being a low-income earner. There's then various social safety nets if you are minimum wage and supporting a dependent (child, disabled family member, etc.) which stack on top of that and/or give tax breaks, but I'm not really familiar with them so can't elaborate much further there. [1] http://www.fairwork.gov.au/pay/national-minimum-wage/pages/default.aspx http://www.fairwork.gov.au/pay/national-minimum-wage/pages/d... [2] http://www.ato.gov.au/individuals/content.aspx?doc=/content/12333.htm http://www.ato.gov.au/individuals/content.aspx?doc=/content/...

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mhb 14y ago

They should contact Phil Greenspun: http://blogs.law.harvard.edu/philg/2012/12/12/what-do-the-high-wages-of-house-cleaners-and-nannies-say-about-the-reliability-of-economists/ http://blogs.law.harvard.edu/philg/2012/12/12/what-do-the-hi...