6 ms·

Absolutely. Totally incomplete. My point is not that "higher is better". My point is that some adjustments to some adjustable parameters may be beneficial in so

Absolutely. Totally incomplete. My point is not that "higher is better". My point is that some adjustments to some adjustable parameters may be beneficial in some contexts. Generalize further than that at your own risk.

dennisgorelik 14y ago
Do you have an example of when $X/hour person would benefit from setting mandatory minimum wage to $(X+1)/hour?
- ncallaway 14y ago
  Yes. If the job actually produces more than $(X+1)/hour worth of productivity to the employer. The employer, unable to continue their advantageous position of paying $X/hour (it being illegal), but finding the job still worth retaining (it generating more than $(X+1)/hour) retains the employee. The employee's salary goes from $X/hour to $(X+1)/hour. Or did I totally misunderstand your question?
  - dennisgorelik 14y ago
    That example is too narrow/shaky. It requires employer to have some sort of monopoly on employing that worker (otherwise why would the worker keep working for that employer for $X/hour in the first place?). I was asking about example when employee's gain (from increasing minimum wage) would be more reliable and would not depend on chance so much. Gambler has a chance to win, but gambling is not a good way to get wealthier.
    - ncallaway 14y ago
      I disagree that this example is too narrow/shaky. I believe it actually encompasses a vast majority of people who are currently earning the minimum wage. Note that I'm willing to change my beliefs if my reasoning has led me astray :) The key assumption you've made that I disagree with is this: "why would the worker keep working for that employer for $X/hour in the first place?". It seems to me that this assumption boils down to an underlying assumption that the labor market is an efficient market. In another comment elsewhere in this thread sergiosgc makes a statement that I think is relevant here: "You wrongly assume the job market is a perfect market. It's not; there are barriers to entry, barriers to exit and lots of asymmetric negotiation positions." My argument (and I Am Not An Economist) is that the COST of labor and the VALUE of labor (from the employer's perspective) are not necessarily equal. A quick hyperbolic example of a labor-rich job market that demonstrates this difference: * Your labor market has 1,000,000 people * You are offering the only job in the labor market. For every hour the lone employee works the job will generate $500 of additional revenue for your company. * There is no minimum wage, and your goal is to minimize your costs while maximizing your revenue. What is the price you pay your employees under these conditions? It's not $500/hour. It's probably only room and board. If we introduce a minimum-wage of $5/hour, what is the price you pay now? If we raise the minimum-wage to $10/hour, what is the price you pay now? If we raise the minimum-wage to $100/hour? $1,000/hour? I admit that this was an extraordinarily hyperbolic example, but I think the current U.S. job market is a less-extreme example of this. 1) Based on anecdotal evidence (that I'm too lazy to look up current estimates of the number of people not participating in the U.S. workforce), the current job market around the country currently favors employers. Many people are fervently searching for jobs which drives down the PRICE of labor. This doesn't change the VALUE of any particular job for the employer. 2) The median U.S. income is down over the last several years (http://en.wikipedia.org/wiki/Household_income_in_the_United_States http://en.wikipedia.org/wiki/Household_income_in_the_United_...), while U.S. corporate profits are hitting record highs (https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease...). This is a pretty strong indicator that the PRICE of labor and the VALUE of labor are disconnected. Finally, I refer you to Wikipedia where there is a rather good summary of current economic thinking on the impact of minimum wage laws on unemployment (http://en.wikipedia.org/wiki/Minimum_wage http://en.wikipedia.org/wiki/Minimum_wage). As far as I can tell from a brief summary, currently thinking by economists is relatively mixed.
  - crusso 14y ago
    Why would an employer ever start a business if he had to pay every dollar of "profit" to the employees? Besides, who is to say what that productivity to the employer is? If I start a grocery business and hire you to work the cash register - it's pretty easy for you to see $5k/day come through the drawer and think, "I'm responsible for $5k/day." In reality, though, your contribution is minor compared to the costs of rent, paying for business licenses, paying taxes, stocking inventory, paying for inventory, paying for advertising, and managing the other employees of the business. Your "productivity" is actually what you negotiate for your salary. My productivity as the business owner is what's left after all my costs including your salary.
    - Nursie 14y ago
      So f*ck anyone that can't negotiate well?
      - crusso 14y ago
        Okay, so in your world the government should be responsible for all negotiations? Some people and some businesses (run by people) can't negotiate well - so this logically follows from your caustic and emotional comment. The government should set the price of my airline ticket, the price of milk at the grocery store, my salary, the salaries of professional basketball players, the prices that business use between each other, etc.? Let me just truly get a full view of your philosophy and what kind of zero Liberty world you would have us all live in.
        Nursie 14y ago
        Protecting the weakest in society != zero Liberty. The world ain't black and white and I didn't say the government should be responsible for all negotiations. At the lower end, the people who are stuck on minimum wage, the people who cannot improve themselves, these people need some protection. Yes, there are humans who are not good at looking out for their own long term interests or even their short term interests, lots of them. Looking out for them, protecting them from getting into (for instance) unfair contracts is one very useful government function. One could consider very low wages to be an unfair contract, pretty much by definition.

dennisgorelik 14y ago

Do you have an example of when $X/hour person would benefit from setting mandatory minimum wage to $(X+1)/hour?

ncallaway 14y ago
Yes. If the job actually produces more than $(X+1)/hour worth of productivity to the employer. The employer, unable to continue their advantageous position of paying $X/hour (it being illegal), but finding the job still worth retaining (it generating more than $(X+1)/hour) retains the employee. The employee's salary goes from $X/hour to $(X+1)/hour. Or did I totally misunderstand your question?
- dennisgorelik 14y ago
  That example is too narrow/shaky. It requires employer to have some sort of monopoly on employing that worker (otherwise why would the worker keep working for that employer for $X/hour in the first place?). I was asking about example when employee's gain (from increasing minimum wage) would be more reliable and would not depend on chance so much. Gambler has a chance to win, but gambling is not a good way to get wealthier.
  - ncallaway 14y ago
    I disagree that this example is too narrow/shaky. I believe it actually encompasses a vast majority of people who are currently earning the minimum wage. Note that I'm willing to change my beliefs if my reasoning has led me astray :) The key assumption you've made that I disagree with is this: "why would the worker keep working for that employer for $X/hour in the first place?". It seems to me that this assumption boils down to an underlying assumption that the labor market is an efficient market. In another comment elsewhere in this thread sergiosgc makes a statement that I think is relevant here: "You wrongly assume the job market is a perfect market. It's not; there are barriers to entry, barriers to exit and lots of asymmetric negotiation positions." My argument (and I Am Not An Economist) is that the COST of labor and the VALUE of labor (from the employer's perspective) are not necessarily equal. A quick hyperbolic example of a labor-rich job market that demonstrates this difference: * Your labor market has 1,000,000 people * You are offering the only job in the labor market. For every hour the lone employee works the job will generate $500 of additional revenue for your company. * There is no minimum wage, and your goal is to minimize your costs while maximizing your revenue. What is the price you pay your employees under these conditions? It's not $500/hour. It's probably only room and board. If we introduce a minimum-wage of $5/hour, what is the price you pay now? If we raise the minimum-wage to $10/hour, what is the price you pay now? If we raise the minimum-wage to $100/hour? $1,000/hour? I admit that this was an extraordinarily hyperbolic example, but I think the current U.S. job market is a less-extreme example of this. 1) Based on anecdotal evidence (that I'm too lazy to look up current estimates of the number of people not participating in the U.S. workforce), the current job market around the country currently favors employers. Many people are fervently searching for jobs which drives down the PRICE of labor. This doesn't change the VALUE of any particular job for the employer. 2) The median U.S. income is down over the last several years (http://en.wikipedia.org/wiki/Household_income_in_the_United_States http://en.wikipedia.org/wiki/Household_income_in_the_United_...), while U.S. corporate profits are hitting record highs (https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease...). This is a pretty strong indicator that the PRICE of labor and the VALUE of labor are disconnected. Finally, I refer you to Wikipedia where there is a rather good summary of current economic thinking on the impact of minimum wage laws on unemployment (http://en.wikipedia.org/wiki/Minimum_wage http://en.wikipedia.org/wiki/Minimum_wage). As far as I can tell from a brief summary, currently thinking by economists is relatively mixed.
- crusso 14y ago
  Why would an employer ever start a business if he had to pay every dollar of "profit" to the employees? Besides, who is to say what that productivity to the employer is? If I start a grocery business and hire you to work the cash register - it's pretty easy for you to see $5k/day come through the drawer and think, "I'm responsible for $5k/day." In reality, though, your contribution is minor compared to the costs of rent, paying for business licenses, paying taxes, stocking inventory, paying for inventory, paying for advertising, and managing the other employees of the business. Your "productivity" is actually what you negotiate for your salary. My productivity as the business owner is what's left after all my costs including your salary.
  - Nursie 14y ago
    So f*ck anyone that can't negotiate well?
    - crusso 14y ago
      Okay, so in your world the government should be responsible for all negotiations? Some people and some businesses (run by people) can't negotiate well - so this logically follows from your caustic and emotional comment. The government should set the price of my airline ticket, the price of milk at the grocery store, my salary, the salaries of professional basketball players, the prices that business use between each other, etc.? Let me just truly get a full view of your philosophy and what kind of zero Liberty world you would have us all live in.
      - Nursie 14y ago
        Protecting the weakest in society != zero Liberty. The world ain't black and white and I didn't say the government should be responsible for all negotiations. At the lower end, the people who are stuck on minimum wage, the people who cannot improve themselves, these people need some protection. Yes, there are humans who are not good at looking out for their own long term interests or even their short term interests, lots of them. Looking out for them, protecting them from getting into (for instance) unfair contracts is one very useful government function. One could consider very low wages to be an unfair contract, pretty much by definition.