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This is silly...of course it reduces poverty for those that do not lose their jobs...and if you operate under the assumption that anyone earning the minimum wag

This is silly...of course it reduces poverty for those that do not lose their jobs...and if you operate under the assumption that anyone earning the minimum wage is living in poverty, then of course it would reduce the percentage of people living in poverty in aggregate. There is still a few major problems with it as policy: 1) For those that do lose their jobs, their effect is extremely negative. 2) For those with little to no work history, the possibility of being priced out of an entry level job is a huge problem, leading to the prospect of reduced earnings for the rest of their life. [1] 3) For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers. A minimum wage increase for these people is like treating the symptoms instead of the disease, and without addressing these issues, these people will likely be underemployed for a long time. For those reasons alone, the minimum wage is a terrible way to reduce poverty. A serious answer is three-fold: 1) Use real programs to reduce poverty. This means a robust welfare system or a negative income tax or a universal basic income. These cost money, but at least their costs are known, as opposed to the mostly invisible costs of the minimum wage. 2) Promote wage transparency laws (which help those who are underpaid to know the true value of their labor). These prohibit employers from firing or retaliating against employees for discussing wages, which is a tactic to keep information asymmetrical in the favor of the employer. 3) Abolish the minimum wage. [1] http://www.nber.org/papers/w5030.pdf http://www.nber.org/papers/w5030.pdf

crdoconnor 13y ago
>For those that do lose their jobs, their effect is extremely negative. Raising the minimum wage does not lead to higher unemployment. >For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers That's paternalistic bullshit. In reality, they can't afford to have a long term time horizon. They usually need a job quickly and cannot afford to hold out for a better one.
nhaehnle 13y ago
3) For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers. Oh, they understand perfectly well about negotiations. Here's the employer reaction when they try to negotiate: "Well, I guess I'll fire you and hire this unemployed person instead." The employer reaction when the minimum wage is raised is to say, well, guess I now have to pay those guys more. So a minimum wage increase helps people perfectly well. You could argue that it would be even better if we as a society decided to eliminate unemployment by making sure that demand for labor was always high enough.
glenra 13y ago
> For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers You left out a more likely option - that they effectively didn't WANT a higher wage and are being made worse off by the change - their job is now crappier and less desirable than it was before DESPITE paying more than it did before. Changing any single term of a contract by fiat usually makes both parties worse off - the fact that they could have negotiated for that outcome but chose not to suggests it's part of a suboptimal equilibrium. What makes a job good isn't just the wage. If you force employers to pay more in MONEY per hour worked they will pay less in other ways to compensate. Less benefits. Less flexibility. Less training. Less "slack"/tolerance. Less willingness to take a chance on less qualified applicants. And so on.

crdoconnor 13y ago

>For those that do lose their jobs, their effect is extremely negative. Raising the minimum wage does not lead to higher unemployment. >For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers That's paternalistic bullshit. In reality, they can't afford to have a long term time horizon. They usually need a job quickly and cannot afford to hold out for a better one.

nhaehnle 13y ago

3) For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers. Oh, they understand perfectly well about negotiations. Here's the employer reaction when they try to negotiate: "Well, I guess I'll fire you and hire this unemployed person instead." The employer reaction when the minimum wage is raised is to say, well, guess I now have to pay those guys more. So a minimum wage increase helps people perfectly well. You could argue that it would be even better if we as a society decided to eliminate unemployment by making sure that demand for labor was always high enough.

glenra 13y ago

> For those who do not lose their jobs, the fact that they didn't lose their jobs is indicative of more major problems...they either don't understand the value of their labor, or they don't know how to negotiate with their employers You left out a more likely option - that they effectively didn't WANT a higher wage and are being made worse off by the change - their job is now crappier and less desirable than it was before DESPITE paying more than it did before. Changing any single term of a contract by fiat usually makes both parties worse off - the fact that they could have negotiated for that outcome but chose not to suggests it's part of a suboptimal equilibrium. What makes a job good isn't just the wage. If you force employers to pay more in MONEY per hour worked they will pay less in other ways to compensate. Less benefits. Less flexibility. Less training. Less "slack"/tolerance. Less willingness to take a chance on less qualified applicants. And so on.