6 ms·

> did you really put an "if" there? Yes, I put it there because a large fraction of minimum wage workers are teens who live with their parents or are otherwise

by glenra 12y ago

> did you really put an "if" there? Yes, I put it there because a large fraction of minimum wage workers are teens who live with their parents or are otherwise in a living situation where they aren't the only breadwinner. Hence, they aren't so desperate that they can't not work. Since choice exists (yet again, on the margin), labor employment is a normal good that responds to supply and demand. > do you have proof of this? Quoting from http://www.themoneyillusion.com/?p=24759 http://www.themoneyillusion.com/?p=24759 : Regarding the minimum wage, here is some data for Western Europe: There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment. There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment. Still want to raise our minimum wage to $10? Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment. Still want to raise our minimum wage to $10?" > No reference to the market dynamics? Your "market dynamics" claim doesn't make sense. I'm familiar the concept of elasticity, but it doesn't have any obvious relevance. I suspect you don't have the economic background to paraphrase the argument you're trying to make - could you perhaps point me to a link where somebody else makes it? One problem is that you're making an "argument from personal incredulity" - you just say "I find it incredible that..." rather than giving any actual, you know, evidence or even argument - but the other problem is that the claim you "find incredible" is so weirdly phrased that I can't really tell what it is. AFAIK, the best story labor economists have come up with in defense of their own claims involves theorizing that the employers have excess "monopsony power", but it's not actually a plausible story. Anyway, we're probably well past the point of diminishing returns here.

bakhy 12y ago
"a large fraction of minimum wage workers are teens" -- how large? source? in the end, it does not matter - if they don't need to work, where is the problem? why should we even encourage them to work, to bring down the price of labor of those who already earn the least? the data on minimum wage you quote is incorrect. i happen to know that Austria does have minimum wage, just not a single global one. i was offered work there, and then found out that they have minimum wages defined per occupation (country-wide collective bargain), and there exists a minimum wage for programmers in Austria. i actually found that unnecessary :D i believe in Sweden there is a similar situation, the unions are very politically strong there. as for Germany, when exactly did it have high unemployment, and how high? this is very sketchy. also, a factor for Germany is that a lot of people work part-time, which has reduced reported unemployment here. but i must admit, even if unemployment is slightly greater, i don't care. because i believe that removing minimum wages in those countries that have it, even if it would hire some people, would cause a big drop in the pay and quality of life of many, many more people who would have been employed anyway. this is something that ultimately needs empiric check (Germany is also soon about to introduce minimum wage so there's another opportunity), but you already waved that off - what was it you said, we should not be fooled by lack of evidence to support your claim? :D lastly, yes, i do not have economic background so i cannot phrase things in expert terms, but i would appreciate hearing some reason why it does not make sense. the point is, since demand is always equally present, and the supply is limited and independent of the demand (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets), then the price of low-educated labor simply goes down until it hits some bottom, i.e. it becomes too low to earn a living, or it becomes comparable to social security payments. is it really so hard to grasp? or are you simply trying to discredit me and avoid the whole argument?
- glenra 12y ago
  > (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets) How is this feature specific to labor markets? Suppose a company is buying laptop computers to accomplish some task. If the company is willing to offer great pay - a high price - in exchange for laptop computers, they will easily find laptops, but they won't choose to buy more laptops simply because a lot of vendors submitted bids. Right? Going back a bit, it's not true about either workers or laptops that "demand is always equally present". And it is true about both workers and laptops that "the supply is [somewhat, in the short term] limited and independent of the demand". I honestly don't get the point you're trying to make. People respond to incentives. If companies can hire people for less than the value of their labor product, companies will expand and try to hire more people. If they can't, companies will contract and hire fewer. In the extreme cases supply fluctuates via emigration/immigration. People have a reserve price - they generally aren't willing to work unless offered enough to make it worth their while, just as they aren't willing to sell a bicycle unless offered enough on eBay to make it worthwhile. Sometimes that price is less than the minimum, and sometimes it's more, in which case the minimum becomes irrelevant because it's less than the market rate. I think I'm done looking up specific numbers for you; it never makes any difference to your views. Yes, collective bargaining exists in some sectors in Europe - it exists in some sectors in the US too! But there's no national minimum in those countries, which is what matters most for general employment. (And yes, these things are always in flux. Switzerland just last month voted on whether to have a $25/hour minimum, but 75% of the electorate voted against it - common sense prevailed for once!)
  - bakhy 12y ago
    first of all, we are looking at it from different sides :) i was talking about the demand for jobs, not workers, and the supply of jobs. perhaps that created some of the misunderstanding. the laptop example also illustrates the difference quite well. majority of the people need work, and they have to work, whether they like the price they will get or not. in the end they must eat. so, the demand for jobs (or, the supply of workers) cannot fall below a certain level, particularly the low skilled ones. laptops are not such a necessity, so people may choose, if conditions become too unfavorable, to simply not buy them. this is why producers, who of course want to get the highest price possible, cannot raise prices as they wish. with low-skilled labor, however, companies can lower wages as much as they like. if they reach the point where people can no longer feed themselves, people don't simply decide not to work (really?!) - we then have a revolution. your comparisons actually demonstrate this quite clearly, it really amazes me that you can compare a low skill workers quest for jobs with selling a bike on eBay without noticing any difference. "I think I'm done looking up specific numbers for you; it never makes any difference to your views." -- that's a cheap shot. i gave some arguments, you ignored them, and you're now just weaseling out. the effects of a nation-wide collective bargain, which defines a mandatory minimum wage for all sorts of professions, are pretty much the same. in fact, since many professions have pretty healthy situations in the job market, i would say that that actually is harmful in the way you described. but ultimately, i explained that i actually accept that a minimum wage may mildly increase unemployment. did you just skip that part?

by glenra 12y ago

bakhy 12y ago

"a large fraction of minimum wage workers are teens" -- how large? source? in the end, it does not matter - if they don't need to work, where is the problem? why should we even encourage them to work, to bring down the price of labor of those who already earn the least? the data on minimum wage you quote is incorrect. i happen to know that Austria does have minimum wage, just not a single global one. i was offered work there, and then found out that they have minimum wages defined per occupation (country-wide collective bargain), and there exists a minimum wage for programmers in Austria. i actually found that unnecessary :D i believe in Sweden there is a similar situation, the unions are very politically strong there. as for Germany, when exactly did it have high unemployment, and how high? this is very sketchy. also, a factor for Germany is that a lot of people work part-time, which has reduced reported unemployment here. but i must admit, even if unemployment is slightly greater, i don't care. because i believe that removing minimum wages in those countries that have it, even if it would hire some people, would cause a big drop in the pay and quality of life of many, many more people who would have been employed anyway. this is something that ultimately needs empiric check (Germany is also soon about to introduce minimum wage so there's another opportunity), but you already waved that off - what was it you said, we should not be fooled by lack of evidence to support your claim? :D lastly, yes, i do not have economic background so i cannot phrase things in expert terms, but i would appreciate hearing some reason why it does not make sense. the point is, since demand is always equally present, and the supply is limited and independent of the demand (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets), then the price of low-educated labor simply goes down until it hits some bottom, i.e. it becomes too low to earn a living, or it becomes comparable to social security payments. is it really so hard to grasp? or are you simply trying to discredit me and avoid the whole argument?

glenra 12y ago
> (that is what i found incredible in the comment above - a company that offers great pay will easily find employees, but it will not choose to hire more simply because a lot of people applied, which is specific for labor markets) How is this feature specific to labor markets? Suppose a company is buying laptop computers to accomplish some task. If the company is willing to offer great pay - a high price - in exchange for laptop computers, they will easily find laptops, but they won't choose to buy more laptops simply because a lot of vendors submitted bids. Right? Going back a bit, it's not true about either workers or laptops that "demand is always equally present". And it is true about both workers and laptops that "the supply is [somewhat, in the short term] limited and independent of the demand". I honestly don't get the point you're trying to make. People respond to incentives. If companies can hire people for less than the value of their labor product, companies will expand and try to hire more people. If they can't, companies will contract and hire fewer. In the extreme cases supply fluctuates via emigration/immigration. People have a reserve price - they generally aren't willing to work unless offered enough to make it worth their while, just as they aren't willing to sell a bicycle unless offered enough on eBay to make it worthwhile. Sometimes that price is less than the minimum, and sometimes it's more, in which case the minimum becomes irrelevant because it's less than the market rate. I think I'm done looking up specific numbers for you; it never makes any difference to your views. Yes, collective bargaining exists in some sectors in Europe - it exists in some sectors in the US too! But there's no national minimum in those countries, which is what matters most for general employment. (And yes, these things are always in flux. Switzerland just last month voted on whether to have a $25/hour minimum, but 75% of the electorate voted against it - common sense prevailed for once!)
- bakhy 12y ago
  first of all, we are looking at it from different sides :) i was talking about the demand for jobs, not workers, and the supply of jobs. perhaps that created some of the misunderstanding. the laptop example also illustrates the difference quite well. majority of the people need work, and they have to work, whether they like the price they will get or not. in the end they must eat. so, the demand for jobs (or, the supply of workers) cannot fall below a certain level, particularly the low skilled ones. laptops are not such a necessity, so people may choose, if conditions become too unfavorable, to simply not buy them. this is why producers, who of course want to get the highest price possible, cannot raise prices as they wish. with low-skilled labor, however, companies can lower wages as much as they like. if they reach the point where people can no longer feed themselves, people don't simply decide not to work (really?!) - we then have a revolution. your comparisons actually demonstrate this quite clearly, it really amazes me that you can compare a low skill workers quest for jobs with selling a bike on eBay without noticing any difference. "I think I'm done looking up specific numbers for you; it never makes any difference to your views." -- that's a cheap shot. i gave some arguments, you ignored them, and you're now just weaseling out. the effects of a nation-wide collective bargain, which defines a mandatory minimum wage for all sorts of professions, are pretty much the same. in fact, since many professions have pretty healthy situations in the job market, i would say that that actually is harmful in the way you described. but ultimately, i explained that i actually accept that a minimum wage may mildly increase unemployment. did you just skip that part?