15 ms·

The current value is also too high. There should be no such thing as a minimum wage.

• bmm6o 12y ago
  How do you see this work in practice? Would you still have government assistance programs to subsidize workers at the low end? I mean, you would expect wages for a lot of people to drop drastically, right?
  • glenra 12y ago
    > Would you still have government assistance programs to subsidize workers at the low end? Those are separable concerns; I see no strong reason to immediately change the status quo in that regard. > I mean, you would expect wages for a lot of people to drop drastically, right? No, I would actually expect wages for a lot of people to increase and the overall need for assistance to decline. But there's an important trick here that renders things a bit counterintuitive, which is that average wages would indeed decline - even though nearly everybody in the economy is being paid as much or more than they were before. This happens because you're adding new workers into the pool of people with jobs, and you're adding them at the low end. If you just look at people at the low end who are currently unemployed, underemployed or illegally employed: without a minimum wage law they would find it much easier to get a legal first job, some transitional employment which gives them experience and references and training that makes it easier for them to get higher-paying later jobs. So THEIR reported income goes UP, both in the short run and in the longer run. But since they weren't employed before, their wage of $0/hour wasn't part of the "average wage" computation BEFORE, and their new wage of, say, $5/hour is part of the "average wage" computation after the change, so their improved salary drags the computed "average" down. Now consider the rest of the economy: The existence of more people in the labor force who were previously unemployed makes the economy more productive, which enables even people earning far above the minimum to also get higher wages. When someone who is highly productive can hire other people to mow the lawn, empty the trash, do the filing or paperwork, that person can focus more of their own time and effort on what they're best at - more workers means more gains can be had from specialization of labor. Also, the fact that fewer people are entirely unemployed and more are rapidly entering the workforce means we need less government assistance which means tax rates could decline, again making the economy more productive and increasing standard of living. (The case for getting rid of the minimum wage is actually quite similar to the case for open borders. Fully opening the borders to let people work wherever they want would by some estimates DOUBLE world GDP. Getting rid of minimum wage laws everywhere wouldn't have nearly THAT large an effect, but it would be quite positive.)