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  #51  
Old 08-08-2019, 01:42 PM
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I had an older woman ask if she could work for me without being paid. She just wanted to keep busy at a job where she could work at her own pace, and had no need for money. As a favor to her I actually looked into it. Turns out I couldn't do it as my insurance wouldn't cover an unpaid employee.
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Old 08-08-2019, 05:42 PM
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OK, I hit a nerve, so let me explain myself a little better:

First, it's obvious that a minimum wage has to be backed up by public assistance. The two more or less need each other.

Second, working at low-paying jobs is fine if that's what you're happy with; it's terrible if you're desperately struggling to obtain shelter and food.

Lastly, we already tried the old-fashioned "work builds character" theory, exemplified by what prevailed in America roughly between Reconstruction and the Great Depression. I'll point out that it was necessary to pass vagrancy laws that virtually made it a crime to be homeless and unemployed, in order to get people to perform manual labor for the pittance many industries offered. Otherwise, many would have rather been beggars and tramps- at least they wouldn't have had to be poor AND work.

Pure laissez-faire free markets in an industrial economy would have led to the "contradiction" Marx predicted would collapse the whole system. What we ended up with was a little socialism to save the rest.

Last edited by Lumpy; 08-08-2019 at 05:46 PM.
  #53  
Old 08-08-2019, 05:53 PM
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And to piggyback on an earlier post in reply to the poster who stated that some jobs just shouldn't exist. We already have a social safety net. Let's say that it costs the taxpayers the equivalent of $10/hr to provide for someone who cannot make their own living.

Let's also say that this person is of limited skills and can only fetch $6/hr in a free market. If the government mandates that I pay him $10/hr and he is not worth that, I won't hire him, and then the taxpayers are on the hook for $10/hr.

Wouldn't it be better if he could work for $6/hr so that the taxpayers are only on the hook for the remaining $4/hr? We would have then taken a step to eliminate his poverty, giving him work that he can take pride in along with the ethic that entails, he provides me a valuable service, and we have saved the taxpayers money. What is wrong with my thought process on this?
Is this some kind of modified universal basic income?

The higher cost of living states are usually also the ones with higher minimum wages and also the ones that pay more to the feds than they get back. So, the low-skilled Alabama worker working for $4/hour will get the other $6 (or whatever) from NY, NJ, CT, or CA. Meanwhile, those states are also making sure to pay for their own with higher minimum wages and higher local taxes. Why should Alabama or West Virginia, for example, become even more dependent on transfers from richer states? This would just be another transfer from rich states to poor states, and another subsidy to corporations who can still attract employees even though they don't pay a living wage.
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Old 08-08-2019, 06:36 PM
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Is this some kind of modified universal basic income?

The higher cost of living states are usually also the ones with higher minimum wages and also the ones that pay more to the feds than they get back. So, the low-skilled Alabama worker working for $4/hour will get the other $6 (or whatever) from NY, NJ, CT, or CA. Meanwhile, those states are also making sure to pay for their own with higher minimum wages and higher local taxes. Why should Alabama or West Virginia, for example, become even more dependent on transfers from richer states? This would just be another transfer from rich states to poor states, and another subsidy to corporations who can still attract employees even though they don't pay a living wage.
Actually, your scheme is worse than a UBI because corporations would be incentivized to pay as little as possible. The workers wouldn't care if they were getting $1 or $9.99 per hour, because the government would make them whole, at $10/hour. With a UBI, at least, workers would get more benefit from employers who paid more (I'm not advocating for a UBI). So, Walmart would pay $0.01/hour and the government would pay the rest.
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Old 08-08-2019, 10:11 PM
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Anyway, to actually address the OP, yes, it is based on a calculation of how much someone working 40 hours a week would need to earn to be above the poverty line.
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Old 08-09-2019, 05:28 AM
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Anyway, to actually address the OP, yes, it is based on a calculation of how much someone working 40 hours a week would need to earn to be above the poverty line.
That's <$6/h.
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Old 08-09-2019, 06:40 AM
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I’m reading Lumpy’s point differently than you are. In many places, there are large markets of unskilled labour. That means that the natural price for the unskilled labour is quite low, regardless of the profit that is made off of that labour.
The wage is not just based on the "large market" (supply? number of people?) of unskilled labor. It's also based on the demand for that labor, which is in turn based on the productivity of unskilled labor given the region.

There are large numbers of unskilled/low-skilled labor essentially everywhere, including the US. (Relative proportions are different, but in absolute terms, that's still a lot of people.) Yet you can transport unskilled workers from the developing world to the US and they can quite often, and quite quickly, earn at least an order of magnitude more in wages than they would at home because unskilled work is more productive in the richer place. There are hundreds of millions of people out there in the world who still earn an average of less than two dollars a day, working full days. That same person could earn more money than that with half an hour's equivalent effort in most of the developed world.

If they're allowed to do so. Which they're mostly not.

It's simply not the "large market" (number of workers) that makes their wages low. A small group of hunter-gatherers isn't a large market, but they're all dirt poor on the edge of subsistence. Their small numbers don't make them rich. The difference in wages is, overwhelmingly, driven by differences in productivity. Those differences in productivity are, in turn, driven by the existence of machines, tech, education. What economists call "capital". Rich countries have capital, and financial systems that (at least sometimes) support the accumulation of capital. Poor countries don't. That is the driving difference between rich and poor. The lowest earners in rich countries earn much, much more than the lowest earners in failed states.

You can go to a database like the Penn World Tables and look at figures for capital per person. You can soak up a huge amount of the variation in income just by looking at the variation in capital accumulation, and comparing it. Rich countries have capital. That's why they are rich. That is not at all a question in international development. The question is actually how do people on the edge of persistence start to accumulate and intelligently allocate surplus production into capital that they can own, when they have so little surplus production in the first place? The answer to that has consistently been trade. They create the surplus with trade, and turn that surplus into capital.

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Some of the businesses demanding that labour will be making minimal profits. However, with cheap labour, most of the businesses will be making significant profits.
That does not follow.

Profit is the difference between the value of what's sold and the cost of inputs. If a firm competes in a highly competitive market, then the owners will be earning little more than the opportunity cost of the capital they poured into the business, regardless of how low the average wage of their workforce, because the price of what they're selling will be pushed down.

For a more extreme example, if I could take a group of sophisticated engineers, each of whose individual output is worth six figures a year, and replace those engineers with crippled orphan children paid tuppence fortnightly, then yes, I would make an absolute killing. But I can't. The kids can't perform work of the same value. Just having cheap labor doesn't give profits, if the price of the output is also low. Of course it can often work to shut down a factory in a higher-cost region and open another in a low-cost region, when a new region has opened up to world markets. The same good can be sold at roughly the same price, with a lower cost of manufacture and low transport costs. (We live in the age of the containership.) That's profit, at least for a while. But even that's a temporary expedient. Wages rise in the region that has opened up, and increased productive capacity drives down the final price of the good.

China ate up a large portion of the textile markets for a long time, but now labor is too expensive there, and most of those businesses have departed for places like Bangladesh. Where wages have also been rising. Chinese production is ever and ever higher on the wage scale. That is how this kind of thing works.

It's simply impossible to look at the cost of any individual input, like labor, and determine the profitability of an industry from the cost of that input.

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Raising the minimum wage both reduces the profits of the business making significant profits, and puts the businesses making minimal profits out-of-business.
This also does not necessarily follow.

The economy is not zero sum.

Firms can be harmed, without necessarily helping the average worker or the rest of the economy. If the new job pay two dollars more an hour, and makes a person ten times as miserable, then that's not necessarily a net gain. If firms downsize staff rather than increase their total payroll, then that's not a net gain either for the people tossed on their ass. If firms have higher opportunity costs for their inputs, then the price of their output most often goes up, which hurts the people who rely on those goods to live. Firms and workers and the rest of the economy can potentially all lose simultaneously.

I don't know that these things will happen, or more precisely, whether this would be the average effect of a policy change. Some people would definitely score a win, but enough of them? Demand curves tend to slope down, which means various kinds of damage are all extremely plausible effects. The empirical research tends to be split, and the advocates (while generally well-intentioned) tend to extrapolate from the poor data they have rather than considering the many, many, many potential flaws of that data.

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The hoped-for outcome from raising the minimum wage is
...is merely "hoped-for", and not anything close to compellingly argued and demonstrated.

I personally think it's a net negative, tho I could be wrong about that. I'd like to be wrong about that, because it seems like a politically popular policy. But the case for it being a net positive is much weaker than the average advocate believes. Even if it's a net-positive policy, there's going to be damage happening at the edges, and that damage should be better appreciated than it currently is.

The minimum wage is ultimately a trade-off, even if its outcomes are positive on net. It's deeply misleading when it's presented it as an unalloyed good, most especially at the national level that completely ignores regional differences.

Last edited by Hellestal; 08-09-2019 at 06:43 AM.
  #58  
Old 08-09-2019, 08:29 AM
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Anyway, to actually address the OP, yes, it is based on a calculation of how much someone working 40 hours a week would need to earn to be above the poverty line.
Seems to me that the best way to go about this whole thing isn't to grandstand and throw fits about raising the minimum wage, and thereby getting into all the political/philosophical/economic debates about living wages, minimum wages, etc...

Rather, gradually redefine the poverty line such that it reflects what the living wage ought to be, then use that as a lever to readjust the minimum wage.
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Old 08-09-2019, 09:03 AM
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Anyway, to actually address the OP, yes, it is based on a calculation of how much someone working 40 hours a week would need to earn to be above the poverty line.
A person has to make $30,000 a year to be above the poverty line? That doesn't seem right.
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Old 08-09-2019, 09:41 AM
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It isn't, at least not for one person.

Last edited by Ruken; 08-09-2019 at 09:41 AM.
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Old 08-09-2019, 10:42 AM
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Actually, your scheme is worse than a UBI because corporations would be incentivized to pay as little as possible. The workers wouldn't care if they were getting $1 or $9.99 per hour, because the government would make them whole, at $10/hour. With a UBI, at least, workers would get more benefit from employers who paid more (I'm not advocating for a UBI). So, Walmart would pay $0.01/hour and the government would pay the rest.
A better alternative would be a negative income tax. Have a goal income of say, $20K, everyone gets their (20k - salary) *50%. Thus people who don't work would get $10K, and those who make $10K would get an extra $5K from the government. This would mean that every worker would still have incentive to make as much money as possible in the labor force.
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Old 08-09-2019, 10:44 AM
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Let's assume that it is true that this demand side economic model will work (I don't believe it will, but lets assume it will). Why does it take the form of a minimum wage and not a social program by the government?

If it is a societal good, it should be provided by the taxpayers, not solely by business owners whether they be large or small, rich or poor, or on the verge of bankruptcy themselves.

I'm with kayaker. The small businesses that we want to promote get screwed over and over again by government red tape and increasing rules and taxes.
The analysis by government needs to encompass 1) if the minimum wage will bring a full time worker over the poverty line, and 2) if the aggregate productivity of minimum wage workers is substantially higher than their cost. My opinion is that a minimum wage shouldn’t be a device to ensure ever higher wages. It should ensure that someone with a full time job is not impoverished. However, it needs to be adjusted in times of relative prosperity. If a large proportion of minimum wage workers are struggling to be profitable, that’s not a good time to raise the minimum wage. As for why the employers should pay for the wage increase, they’re the ones benefiting from the labour. Why should a business that is choosing to pay its employees a living wage be forced to subsidise a business that’s choosing to pay its employees the lowest wages possible?

As to your other point, I agree that there should be a lower minimum wage for some classes of workers including teenagers, apprentices and people on work-assistance programs.
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Old 08-09-2019, 10:52 AM
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Seems to me that the best way to go about this whole thing isn't to grandstand and throw fits about raising the minimum wage, and thereby getting into all the political/philosophical/economic debates about living wages, minimum wages, etc...

Rather, gradually redefine the poverty line such that it reflects what the living wage ought to be, then use that as a lever to readjust the minimum wage.
As mentioned above, most people who are earning minimum wage are not poor.

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Old 08-09-2019, 10:59 AM
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It appears to be a proposal to redefine what poor means.
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Old 08-09-2019, 11:18 AM
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It appears to be a proposal to redefine what poor means.
Exactly.

As I perceive it, one of the biggest components of resistance to a higher minimum wage is confusion and misconceptions about the definitions and relationships between poverty, the poverty line, minimum wage and what a living wage would be.

A lot of relatively uninformed people will assume that since minimum wage > poverty line, that's prima facie evidence that it's a living wage of some kind- they're not poor, so what's the problem? Why do they need more for a "living wage"?

If the poverty definition/line was redefined, that would allow for better arguing that a higher minimum is needed- ideally you'd align the poverty line and minimum wage together with whatever the living wage would be. But the first step, IMO is that you'd have to redefine poverty- that's a lighter lift than changing the minimum wage in a vacuum.
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Old 08-09-2019, 11:55 AM
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A lot of relatively uninformed people will assume that since minimum wage > poverty line
It is for one person. For a household of 8, it's >$20/h for one FTE. That's kind of my point; poverty is a function of income and household composition, so by targeting wages we will not get the additional income to where it is needed the most.

Any "living wage" functions the same way re: household composition. There is no wage that lifts anyone and everyone above whichever threshold we choose to use. They can reduce the number of households (with earners) that are under the threshold. But keep in mind that one goal of early progressives in enacting a minimum wage was to prevent undesirables from getting jobs in the first place. While we haven't seen any major harm from modest increases, a living wage (per the MIT calculator) for an adult (1 FTE) with three kids in ~NYC is north of $50/h.

If the desire is to get people above a threshold, whatever that is, then target people below the threshold. MW doesn't do this.
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Old 08-09-2019, 12:46 PM
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A better alternative would be a negative income tax. Have a goal income of say, $20K, everyone gets their (20k - salary) *50%. Thus people who don't work would get $10K, and those who make $10K would get an extra $5K from the government. This would mean that every worker would still have incentive to make as much money as possible in the labor force.
I can't tell if this is something you're advocating -- this version is definitely a UBI proposal.

Maybe the extra money should come from state coffers instead of federal coffers, right? Because states with higher minimum wages are already paying more than their share to states with lower minimum wages. If the corporations aren't going to pay a higher minimum wage, why does it skip the states and go right to the feds?
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Old 08-09-2019, 01:43 PM
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Is this some kind of modified universal basic income?

The higher cost of living states are usually also the ones with higher minimum wages and also the ones that pay more to the feds than they get back. So, the low-skilled Alabama worker working for $4/hour will get the other $6 (or whatever) from NY, NJ, CT, or CA. Meanwhile, those states are also making sure to pay for their own with higher minimum wages and higher local taxes. Why should Alabama or West Virginia, for example, become even more dependent on transfers from richer states? This would just be another transfer from rich states to poor states, and another subsidy to corporations who can still attract employees even though they don't pay a living wage.
No, I am not proposing any particular plan. Any plan must make sure that there are not extreme unintended consequences. My only point was that by eliminating jobs that cannot be financially justified at a minimum wage, the government is increasing poverty.

If you are opposed to transfers from richer states to poorer states, then you should oppose all federal social programs and leave those to the states. Welcome to limited government!
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Old 08-09-2019, 01:50 PM
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No, I am not proposing any particular plan. Any plan must make sure that there are not extreme unintended consequences. My only point was that by eliminating jobs that cannot be financially justified at a minimum wage, the government is increasing poverty.

If you are opposed to transfers from richer states to poorer states, then you should oppose all federal social programs and leave those to the states. Welcome to limited government!
Do you see in color or just in black and white? Care to address the other problem with the proposal that I mentioned?

I just wish the taker states would pull themselves up by their bootstraps, increase their taxes, and do a better job of taking care of their people, rather than lazily relying on NY, NJ, CT, MA, and CA to take care of their people for them. Since MS, MO, AR, WV, etc., refuse to do their fair share, I guess we have to step in.

Last edited by RitterSport; 08-09-2019 at 01:50 PM. Reason: AR, not AK
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Old 08-10-2019, 02:18 PM
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A person has to make $30,000 a year to be above the poverty line? That doesn't seem right.
A person has to make $30k/year to support a family of four, is the model. Which means a single-parent household is not automatically thrown into poverty, or crippled by child-care costs like now, and that a two-parent household would actually have a chance to get ahead rather than just get by, or could have one at-home parent when the kids are young.

You know, something that was economically feasible 50 years ago, but apparently defies the laws of physics now (when executive salaries were double-digit multiples of employee salaries, rather than triple/quadruple digit multiples). Payroll costs haven't changed - how we divvy it up has.
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Old 08-10-2019, 06:33 PM
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A person has to make $30k/year to support a family of four, is the model. Which means a single-parent household is not automatically thrown into poverty, or crippled by child-care costs like now, and that a two-parent household would actually have a chance to get ahead rather than just get by, or could have one at-home parent when the kids are young.

You know, something that was economically feasible 50 years ago, but apparently defies the laws of physics now (when executive salaries were double-digit multiples of employee salaries, rather than triple/quadruple digit multiples). Payroll costs haven't changed - how we divvy it up has.
The HHS poverty guideline and Census poverty threshold for a family of four are both under $26k. Median personal income is over $31k, which is higher than it's ever been (after inflation, obviously.)
There's some persistent myth that people used to be able to "get by" but cannot today. It's fantasy. The percentage of multi-earner has been decreasing over my lifetime. I don't have census data back to 1969, but the rate is certainly lower today than it was in 1980 (Census Table H-12).

Again, people who worked full time over the previous year who are living in poverty was 2.7% of the workforce in 2017. If you want to address poverty, then address poverty. Raising the minimum wage is a piss poor way to do this. Unless you don't actually care about poverty and are just trying to stick it to employers or executives or something.
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Old 08-10-2019, 07:03 PM
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It's entirely possible to live like the 1950's today. If you want just one parent to work, all you have to do is accept that you will live in a 900 sq ft house with no air conditioning. Cut all your communications except for a phone and basic cable. You can have one 26" color Tv, which would be better than what the rich in 1950.

No flying for you. Middle class people didn't fly in the 1950's. Your vacations will generally involve camping, or if you are very lucky, a road trip to Disneyland.

You can have one car, without air conditioning or power anything. The most basic crappy car you can buy today will be much better than what they had in the 1960's. So buy the cheapest car you can - preferably a few years old already.

As for health care, just don't go to the doctor very much. Refuse to pay for CAT scans and other advanced diagnostic equipment. They didn't have that in the 1950's either. Basically, if you can't be diagnosed by a doctor with a blood pressure cuff and a stethoscope, you are out of luck.

If you have kids, they need to work in their teens. Paper routes, McDonald's etc. Give them a small allowance, and they have to earn and save for whatever else they want. And no day care, no after school care, no expensive hobbies. You can pay for swim lessons and maybe some basic sporting goods like a baseball mitt and a ball. Your kid can have a cheap 3-speed bike. No fancy mountain bikes.

And it goes without saying that you will be eating a lot of cheap home-cooked meals. Restaurant meals were for special occasions.

Do all that, and you too can live on one middle-class salary. And if you would rather have your cell phone, computers, 2000 sq foot house, flying vacations, multiple cars, three or four TV's, lots of takeout food, and all the other trappings of life in a wealthier society, maybe stop and think about it all before you blame the rich, defiance of the laws of physics, or some other shadowy cabal for the need to have two salaries.
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Old 08-11-2019, 09:07 PM
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Do all that, and you too can live on one middle-class salary. And if you would rather have your cell phone, computers, 2000 sq foot house, flying vacations, multiple cars, three or four TV's, lots of takeout food, and all the other trappings of life in a wealthier society, maybe stop and think about it all before you blame the rich, defiance of the laws of physics, or some other shadowy cabal for the need to have two salaries.
You're basically saying that a working-class salary could support a working-class lifestyle in the 1950s with all the trappings of a wealthy society for its time, but can't support the modern-day equivalent and shouldn't be expected to. Rationally, shouldn't incomes keep up with the rising cost of living?

A chief argument of proponents of increasing the minimum wage (in general, not the $15/hour figure) is that it's lower than it was in the 1950s and 1960s, adjusted for inflation (afi).The 1955 equivalent was $9.35, and the 1968 equivalent was $11.76.

Simply adjusting for inflation from the 2009-set amount of $7.25 would put it at $8.66 now; in comparison, CEO compensation has doubled since 2009, from $6MM to $12MM on average in 2017 for an S&P 500 company. This is on average nearly 400 times the salary of an entry-level employee; in the 1950s a CEO made 20 times an employee on average.

Now, what I've yet to hear is a sensible explanation for why this growing disparity is considered normal, let alone acceptable.
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Old 08-12-2019, 05:27 AM
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Other people getting even richer doesn't make me worse off. That's why it's acceptable. Standard of living is so much better than in 19XX. Although if you're going to about to thinking otherwise, we could all use a good chuckle.

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Old 08-12-2019, 12:02 PM
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Now, what I've yet to hear is a sensible explanation for why this growing disparity is considered normal, let alone acceptable.
Why do you feel it merits explanation? One doesn't have anything to do with the other. If you take, for example, the CEO of Ford's salary into every employee, you're at under $90 per year per employee, and that's leaving no salary for the CEO. Big, freaking deal.
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Old 08-12-2019, 01:35 PM
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You're basically saying that a working-class salary could support a working-class lifestyle in the 1950s with all the trappings of a wealthy society for its time, but can't support the modern-day equivalent and shouldn't be expected to. Rationally, shouldn't incomes keep up with the rising cost of living?
WADR "the rising cost of living" is not exactly the same as "rising expectations". "All the trappings" includes lots of things in 2019 that simply weren't available in 1959, or nobody thought they were the default.

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Old 08-13-2019, 09:52 AM
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A person has to make $30k/year to support a family of four, is the model.....
So McDonald's has to pay its entry-level highschool employees enough to support a family of 4? Why is this the baseline? At the risk of sounding cruel, I'd say that you shouldn't have a spouse and two children until after you've worked your way up to making more than the minimum.
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Old 08-13-2019, 02:10 PM
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So McDonald's has to pay its entry-level highschool employees enough to support a family of 4? Why is this the baseline? At the risk of sounding cruel, I'd say that you shouldn't have a spouse and two children until after you've worked your way up to making more than the minimum.
Technically you shouldn't have three children until after you've worked your way up - if your spouse also works full time at MW you are over the $30K mark. Well over, in states where the MW is higher than the federal MW.

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Old 08-13-2019, 02:15 PM
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Originally Posted by Rucksinator View Post
So McDonald's has to pay its entry-level highschool employees enough to support a family of 4? Why is this the baseline? At the risk of sounding cruel, I'd say that you shouldn't have a spouse and two children until after you've worked your way up to making more than the minimum.
Yeah, that's great.

What about people such as myself and my spouse who went from a six-digit income household to nada around 2007 - we did everything right and I had to start at the bottom again.

Or weren't you aware of the concept of "falling on hard times"?
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Old 08-13-2019, 03:36 PM
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That kind of doesn't answer the question - why should you and your spouse be paid enough to support a family of four?

Regards,
Shodan
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Old 08-13-2019, 03:54 PM
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Yeah, that's great.

What about people such as myself and my spouse who went from a six-digit income household to nada around 2007 - we did everything right and I had to start at the bottom again.

Or weren't you aware of the concept of "falling on hard times"?
Tax me to help people who can't get by on what they're able to make on their own.
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Old 08-13-2019, 04:13 PM
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I paid taxes for 30 years before I needed help - what's wrong with that? I paid into the system, I should be able to make use of it when I need it without people implying (or outright saying) I'm lazy scum or whatever.

Now that I'm back on my feet I'm back to paying taxes again.

Some of us actually thing a social safety net is a good thing.
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Old 08-13-2019, 04:15 PM
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That kind of doesn't answer the question - why should you and your spouse be paid enough to support a family of four?
It was aimed that the "wait to have kids" part - what if you were doing fine and disaster struck? You DID wait to have kids, you COULD support them.. then your house burned down or a volcano erupted or a hurricane washed away your town. But now there are scolds saying "you should have waited to have kids!" Not everyone poor today was poor yesterday or will be poor tomorrow.

Why should you care about your neighbors' kids? Because one day they'll be supporting your pension payments.
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Old 08-13-2019, 05:15 PM
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I paid taxes for 30 years before I needed help - what's wrong with that? I paid into the system, I should be able to make use of it when I need it without people implying (or outright saying) I'm lazy scum or whatever.

Now that I'm back on my feet I'm back to paying taxes again.

Some of us actually thing a social safety net is a good thing.
Nobody in this thread has argued against a social safety net. What we have said is that it shouldn't be funded solely by businesses whether large or small, rich or poor themselves, and shouldn't be handed out to employees whether they need the help or not. The minimum wage is a very poor vehicle for channeling money as part of a social safety net.
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Old 08-13-2019, 05:45 PM
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When did the minimum wage become part of the social safety net?

And why is it bad to prevent a race to the bottom and/or exploitation of employees?
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Old 08-13-2019, 06:03 PM
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Originally Posted by Broomstick View Post
I paid taxes for 30 years before I needed help - what's wrong with that? I paid into the system, I should be able to make use of it when I need it without people implying (or outright saying) I'm lazy scum or whatever.

Now that I'm back on my feet I'm back to paying taxes again.

Some of us actually thing a social safety net is a good thing.
As am I. Perhaps your were responding to someone else.

Last edited by Ruken; 08-13-2019 at 06:07 PM.
  #87  
Old 08-13-2019, 06:06 PM
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And why is it bad to prevent a race to the bottom
This isn't happening.

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Originally Posted by Broomstick View Post
and/or exploitation of employees?
Paying market wage isn't exploitation.

Also, this isn't a quiz show, in case you'd like to make your own arguments instead of Just Asking Questions.
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Old 08-13-2019, 08:44 PM
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What about people such as myself and my spouse who.....
I'm sorry about your situation. But I don't think that paying teenagers that live with their parents enough money to buy their own house is the best solution to situations like yours. Unemployment insurance, TANF, etc. is for things like that.

IOW, not the lowest common denominator, but not the highest either.
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Old 08-14-2019, 04:14 AM
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Nobody in this thread has argued against a social safety net. What we have said is that it shouldn't be funded solely by businesses whether large or small, rich or poor themselves, and shouldn't be handed out to employees whether they need the help or not. The minimum wage is a very poor vehicle for channeling money as part of a social safety net.
Establishing a minimum wage at a level such that an adult single full-time worker in normal circumstances is earning above the poverty line is meant to prevent the use of the social safety net. Why do you think businesses pay the minimum wage? It's because they have to. Set a minimum wage at 50% of the poverty level where there's a large market of unskilled workers and you're forcing the minimum wage workers into the safety net. The social safety net should be for people who've fallen on hard times, not part of the normal baseline.
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Old 08-14-2019, 04:20 AM
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Paying market wage isn't exploitation.
You've never heard of sweat shops?
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Old 08-14-2019, 05:21 AM
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I cannot shake the feeling that a whole bunch of people in this thread are badly misapplying econ 101 when deeper analysis might give us a slightly less completely batty picture.

People have been saying that the minimum wage obviously significantly decreases employment - the world bank does not seem to agree. Quoting from page 20 of the PDF (listed as page 11 in the document):

Quote:
(1) Impact on employment: Although the range of estimates
from the literature varies considerably, the emerging trend is
that the effects of minimum wages on employment are usually
small or insignificant (and in some cases positive).41 For
example, based on a meta-study of 64 minimum wage studies
published between 1972 and 2007 and measuring the
impact of minimum wages on teenage employment in the
United States, the most precise estimates were heavily clustered
at or near zero employment effects.42 A meta-analysis
of 16 U.K. studies found no significant adverse employment
effect.43 In its reexamination of the job strategy, the OECD
came to a similar conclusion, basing its policy advice on the
considerable number of studies that have found that the
adverse impact of minimum wages on employment is modest
or nonexistent.44 Recent studies using natural experiments or
detailed payroll data also point toward no significant effects
on employment and some positive benefits such as reduced
turnover and increased productivity.45
That's really weird, right? The idea that there would be no change, or somehow even more jobs if there was a floor on how little you could pay people, or if you raise that floor? That doesn't fit with econ 101 at all! Weird how if you only follow the absolute most basic, simplistic rules of economics, you end up with results that don't actually match what happen in reality?



Funnily enough, this economics blog has a great example of exactly this sort of thinking in action. Here's the "econ 101" approach (y'know, what you might expect from various right-wingers arguing against raising the minimum wage):

Quote:
From the perspectives of firms, an increase in the minimum wage would increase their costs of production. Also, not only will firms have to increase the wage of workers on the minimum wage, but if they seek to maintain wage differentials – they may need to increase wages of more qualified workers – earning just above the minimum wage.

In this case, a minimum wage could lead to firms passing wage rises onto the consumers in the form of higher prices. This will cause SRAS to shift to the left and higher inflation. Also, if higher minimum wages leads to an increase in consumer spending, it could cause a degree of demand-pull inflation as well.

In theory, a higher minimum wage could cause inflation for two reasons:

1. Higher spending by workers (demand pull inflation)
2. Higher costs for firms, leading to wage-push inflation.
...And immediately following, here's what actually happens:

Quote:
However, in reality, the inflationary impact of a rise in a minimum wage is likely to be muted.

As a percentage of a firm’s overall costs, the minimum wage bill is only a small component.
Also, given the low inflationary pressures, there is also a pressure for firms to absorb the wage increases without increasing prices (reduce profit margins).

Also, in theory, firms could respond to higher minimum wages by investing in capital to raise labour productivity and so will be able to afford the higher wages – without increasing prices.

UK inflation since 1997 has been low. The spikes in 2008-11 were due to cost-push factors (oil prices, devaluation) not rising wages.
Looking back through this thread, there's a whole lot of this. "I learned what a demand curve was in high school, therefore I can say that the minimum wage will have this effect".

Let's take a look at some of them, shall we?

*cracks knuckles*

Quote:
Originally Posted by FlikTheBlue View Post
I agree with the idea that minimum wages distort the market. If they are implemented the way that someone like AOC wants to, we would probably end up with inflation rising to a level to meet the new minimum wage, which would then have to raised again.

One issue is that those people already making more than minimum wage will demand an increase as well, and then the price of the goods / services from those workers will increase. For example, if public employees like teachers, police, firefighters, etc. all got raises, some of that would be paid for by an increase in taxes on those people now making $15 per hour. The same goes for the price of basic goods. If the entry level workers at Walmart make $15 and the more experienced workers are up into the $20s, the prices at Walmart will go up to cover those salaries. The only way it works is if the Walton family (and the owners of the companies in general) to volunteer to reduce their own profits. I don’t see any way of accomplishing that.

I think a better idea would be a minimum basic income which is slowly phased out for those who earn more than whatever the minimum is to avoid causing an incentive to not work.
Note the lack of actual citation. What's this based on? Gut feelings and poorly-remembered econ 101 would be my guess. It's all theorycrafting, with no actual data behind it. Raising the price of basic goods is not a trivial thing. It's not a natural or obvious response to rising wages. It may ultimately even out, but people notice when the price of what they're buying creeps up. It shouldn't be hard to check this - is there any noticeable correlation between inflation and the minimum wage? Not really. The article that graph comes from goes over a lot of myths surrounding the minimum wage, and does actually say that there is short-lived mild inflation when the minimum wage is raised, but this is a far cry from what Flik is describing here.

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Originally Posted by UltraVires View Post
Not only that, but it can be "easily" done. Still waiting for this magical leftwing unicorn fairy that gives out free money at no cost to society.
Ha ha, it's funny because the idea of a higher minimum wage (something already instituted successfully in many places!) is a magical left-wing dream-world idea that couldn't possibly work. Meanwhile, in New York:
After NYC raised its minimum wage from $7.25/h to $15/h this year -- the largest pay hike for low-waged workers in half a century -- the city's restaurants boomed, posting the highest growth levels in the country.

The findings come from a study undertaken by the Center for New York City Affairs at The New School and the National Employment Law Project.

The study found no negative effects on city business attributable to the pay rise, though they also note that the city is experiencing strong cross-sectoral growth overall that makes it hard to attribute the restaurant industry's incredible showing to any single factor (though the outer boroughs experienced growth comparable to Manhattan, despite overall cooler economies).
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Originally Posted by Hellestal View Post
People with limited skills work those kinds of jobs because they believe that earning that money is better than the alternative. Preaching to them from a position of relative comfort that they're better off not having a job, better off not earning their own living because their work is beneath one's dignity is not a morally enlightened position. Quite the opposite.
It seems like the idea here is that without the minimum wage, there are whole classes of jobs that would open up that pay basically starvation wages. Is there any information on this counterfactual? The effects it might have? Any data whatsoever on knock-on effects? Certainly nothing cited. And, indeed, as this slate article kindly points out, "But when it comes to the labor market, Econ 101 is almost never the whole story."
To start, it’s actually a bit of a leap to assume that just because existing businesses could hire cheap workers to do new jobs, they necessarily would. Economist Jared Bernstein, who also took part in the Intelligence Squared debate, pointed out last year that although the value of the minimum wage fell 32 percent during the 1980s thanks to inflation, teen employment actually dropped slightly.

“Now, this is nothing like careful analysis—it’s just broad trends,” he wrote. “But it makes the point, especially given the steep 1980s real decline in the wage floor, that you shouldn’t blithely assert without evidence that abolishing the minimum wage would automatically lead to a ‘sliding down the demand curve.’ ” (In this case, sliding down the demand curve is a fancy way of saying “more hiring.”)
The article discusses several plausible reasons why this is a bad idea. Is any data presented? Not much, but more than Hellestal offers. But hey, if you're reading this, Hellestal, why would I hire more people than I need simply because wages dropped? I clearly don't need any more employees, or else I would have already hired them. Wouldn't it be smarter to fire the people I have and rehire the same number of people, but for a lower wage?

Quote:
Originally Posted by Sam Stone View Post
Do all that, and you too can live on one middle-class salary. And if you would rather have your cell phone, computers, 2000 sq foot house, flying vacations, multiple cars, three or four TV's, lots of takeout food, and all the other trappings of life in a wealthier society, maybe stop and think about it all before you blame the rich, defiance of the laws of physics, or some other shadowy cabal for the need to have two salaries.
Boy, this all sounds super convincing and shit. I wonder if there's any actual data to back it up? We'll never know, because Sam Stone doesn't actually provide any. I considered spending the time to fact-check this myself, but I couldn't be fucked so here's a Vox explainer on an actual expert on economics:
The “two-income trap,” as described by Warren, really consists of three partially separate phenomena that have arisen as families have come to rely on two working adults to make ends meet:
  • The addition of a second earner means, in practice, a big increase in household fixed expenses for things like child care and commuting.
  • Much of the money that American second earners bring in has been gobbled up, in practice, by zero-sum competition for educational opportunities expressed as either skyrocketed prices for houses in good school districts or escalating tuition at public universities.
  • Last, while the addition of the second earner has not brought in much gain, it has created an increase in downside risk by eliminating an implicit insurance policy that families used to rely on.
Bolding mine. A significant portion of the gains from two incomes goes not towards a more luxurious standard of living, but into zero-sum competition; "keeping up with the joneses" if you will. Except that in this case, it doesn't mean "getting a jaccuzi to wow the neighbors" but "competing for spots in the neighborhood with the good school district".

Is that a low-quality source? Arguably; the book, while written by an expert, is a decade and a half old, and this is a secondary source talking about it.

Is it better than no source, which is what Sam Stone offers?

Quote:
Originally Posted by UltraVires View Post
I'm with kayaker. The small businesses that we want to promote get screwed over and over again by government red tape and increasing rules and taxes.
This is the level of argument we're having here? Shit, I shouldn't have bothered googling.

We're about fighting ignorance here, and economics is an incredibly complex (and politically fraught!) field. If you're going to throw out claims, you should damn well provide evidence. Econ 101 is not good enough. Hell, I'd say I've done better at citing decent sources in this post than damn near anyone in this thread, and even that isn't anywhere near good enough! It's just trying.
  #92  
Old 08-14-2019, 05:31 AM
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By the by, this is the exact same of "econ 101" bullshit you get from Republican politicians, or at least did when they pretended to care about this kind of shit:

Quote:
“[W]hen you raise the cost of something, you get less of it,” said House Speaker John Boehner, after the White House revealed its plan to raise the minimum wage for federal contract workers. He continued: “We know from increases in the minimum wage in the past that hundreds of thousands of low income Americans have lost their jobs.”


Likewise, after voting to block cloture on a minimum wage bill in the Senate—thus killing the proposal—Indiana Sen. Dan Coats, the senior Senate Republican on the Joint Economic Committee, said, “Raising the minimum wage creates winners and losers—it will raise the wages of some but result in job losses for many low-income workers. The true problem plaguing impoverished Americans is not low wage rates but a lack of good job opportunities.”

In both instances, the message is that an increase is either futile or counterproductive—a cure that’s worse than the disease. We know that’s an exaggeration. According to a February report from the Congressional Budget Office, the Democratic proposal to raise the minimum wage to $10.10 would reduce total employment by 500,000 workers over the next three years. At the same time, it would lift more than 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers. What’s more, it’s reasonable to think we would gain jobs as a result of new economic activity generated by higher wages and new consumer spending.
  #93  
Old 08-14-2019, 05:34 AM
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Originally Posted by Wrenching Spanners View Post
Establishing a minimum wage at a level such that an adult single full-time worker in normal circumstances is earning above the poverty line [. . .]
Last I checked, that wage, in the United States, is $5.84/h
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Old 08-14-2019, 05:36 AM
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You've never heard of sweat shops?
Again, this isn't a quiz show
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Old 08-14-2019, 06:47 AM
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Again, this isn't a quiz show
Well since it's a Great Debate, do you mind an actual question? Do you believe that market forces do an adequate job of setting the baseline wage of typical unskilled workers? The question is, of course, open to everyone.

Also, I do realise that the subject of the debate is a US $15/hour minimum wage. I haven't looked at the numbers, but that strikes me as high. I'm not arguing against that idea. I'm arguing against the idea proposed by Sam Stone:

Quote:
Minimum wages are a form of price control, and they are among the more destructive ways an economy can be messed with as they destroy information about supply and demand.

For that matter, it's ridiculous to have a national minimum wage, because the cost of living varies dramatically around the country. $15/hr in San Fransisco gets you a tent if you can find a place to pitch it. $15/hr in rural Texas or Louisiana is a whole other thing. This is one area where states should be setting their own minimums if they want them. A national minimum wage is crazy.
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Old 08-14-2019, 07:21 AM
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Well since it's a Great Debate, do you mind an actual question? Do you believe that market forces do an adequate job of setting the baseline wage of typical unskilled workers? The question is, of course, open to everyone.
Since it's a Great Debate, you first; make your argument one way or another and I'll tell you why I think you're right or wrong instead of just peppering you with questions.
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Old 08-14-2019, 07:43 AM
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Originally Posted by Wrenching Spanners View Post
Well since it's a Great Debate, do you mind an actual question? Do you believe that market forces do an adequate job of setting the baseline wage of typical unskilled workers? The question is, of course, open to everyone.
That depends, of course, on what you mean by "adequate". Does it get them as much as they want? No, and that is not their purpose. Does it get them enough to support a family? No - also not their purpose. Does it get them as much as they "should" get? No, and that is also not their purpose.

What they "should" get is a moral question, and the market is not moral. Neither is it immoral. The market is amoral.

The market is information. It reflects the price point at which demand for a given resource, in this case labor and jobs, meets the opportunity cost of those willing to supply it, in a given market. The market does not care if that price point is ten cents an hour or a million dollars a year. Your labor is worth whatever you can convince someone else to pay.

If you impose a minimum wage (or a living wage), or even if you put a cap on salaries, again, the market does not care. The price point then adjusts to whatever employers are willing to pay, at or above that MW, to turn a profit, and employees are willing to forgo their leisure/unemployed state in order to earn that wage. If the MW is set high enough to reduce profits, employers don't hire, or they hire less, or they automate, or they relocate somewhere else where the MW is lower. Or the capital flows to some other business with higher profits.

The Congressional Budget Office found that an increase in MW to $10.10 would increase income for many families, and would reduce job growth by about half a million jobs. Increasing it to $15 an hour would, presumably, have even stronger effects in both directions. "Is that worth it?" is a moral question, not a market one.

Obviously it will operate at the margins mostly, as economic factors are wont to do. Regions and states with lower average income will be affected more than those with average incomes above the MW. (Cite.)

Market forces are efficient, in that they bring about the average greatest good for the average greatest number. It can be decided that efficiency is less desirable than greater good for some, which is why MW is a form of cost-shifting. Sometimes that can happen, but it is a mistake to believe that cost-shifting is the same as free money, for anyone.

Regards,
Shodan
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Old 08-14-2019, 07:47 AM
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CBO did release a report on $15 in July, predicting what you'd expect. Although certainly not everyone agrees with their methodology.
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Old 08-14-2019, 07:58 AM
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Originally Posted by Budget Player Cadet View Post
I cannot shake the feeling that a whole bunch of people in this thread are badly misapplying econ 101 when deeper analysis might give us a slightly less completely batty picture.
"Econ 101" can certainly be wrong.

But it's also very often correct. Or more precisely, the main thrust of its arguments still apply forcefully and predictively even when more bells and whistles are added. I can write down an upward-sloping labor supply model which will, in certain strange circumstances, exhibit stronger labor demand at a higher price within a limited range of employment, at least if the conditions are aligned. That's not "101" (rather, it's intermediate or labor econ), but all of the ideas of 101 are still completely in place for that model. It's a new twist on the same foundation of ideas. And if the wage goes even higher, past the narrow band of interest, then people lose their jobs, and for exactly the same reason that people lose their jobs in the intro model.

In my experience, people who sneer at the basics almost never have an understanding of those basics, let alone the more complicated arguments that are built squarely on top of the ideas taught in those basic classes. The point of a model is to reason consistently. People who can't reason consistently about the intro stuff are never going to have a solid argument for the complex stuff.




Quote:
Originally Posted by Budget Player Cadet View Post
The article discusses several plausible reasons why this is a bad idea. Is any data presented? Not much, but more than Hellestal offers.
My claim, which I've made in two separate posts, is that the empirical evidence is mixed.

Do you need a citation for that? Is that what you're asking for here?

It's not especially hard for an honest inquirer to find evidence of the empirical dispute in the academic literature -- at least if they're actively looking -- but I can help you out on this if you are somehow mistaken in believing that all the evidence points in one direction. What I cannot provide on this topic is any kind of proof that one side or the other is definitively right. As I already said: "The empirical research tends to be split..." and "I personally think it's a net negative, tho I could be wrong about that. I'd like to be wrong about that, because it seems like a politically popular policy."

I can cite papers. I can talk about those papers' methodologies, and the general problem of poor data in the social sciences. I can talk about the theoretical justifications they have for their findings. I can explain why I lean one way on this topic, rather than the other. I can give the single best argument I know in favor of the minimum wage, which as far as I know is discussed almost exclusively among economists and is never a popular political reason for its support. I can explain why I think that sophisticated argument is wrong. I can cite anything you need me to cite here within those guidelines. I just don't know what it is that you want. I have already pointed out that the empirical evidence is mixed. That doesn't seem to satisfy you, but it's unclear what it is that you're looking for.

If a person lands on one side or the other of a disputed literature, and is confident in their conclusion despite not knowing what the other side thinks, then it simply isn't the available evidence that is driving their confidence in their beliefs. It's something else. There are extremely smart, knowledgeable people on both sides of this. That's not always the case in a highly disputed literature, but it is the case here.




Quote:
Originally Posted by Budget Player Cadet View Post
But hey, if you're reading this, Hellestal, why would I hire more people than I need simply because wages dropped? I clearly don't need any more employees, or else I would have already hired them.
This logic doesn't necessarily follow.

I'm not trying to be snarky here, but it's explained in "Econ 101" why your logic here does not have to obtain. You're making the assumption that additional employees have the same marginal benefit to the firm, which is not a safe assumption even if you hire your workers from a homogeneous clone army.
Quote:
Originally Posted by Budget Player Cadet View Post
Wouldn't it be smarter to fire the people I have and rehire the same number of people, but for a lower wage?
Not necessarily, no.

It would depend on the cost structure of your firm. A firm definitely wouldn't want to pay the same high cost workers if there were cheaper workers available (who could somehow produce the same value of output), but even if the firm "fired" its entire higher-cost workforce and rehired similarly qualified people at lower cost, it is plausible that they'd rehire more people than they had previously. It's actually more than plausible, rather closer to inevitable, if they're dealing with diminishing returns on their own production, and an extremely elastic labor supply. It would be more profitable for them to hire more people, rather than maintain their previous smaller workforce. These conditions would also very likely drop the final price of the good, making things cheaper for the people who needed that good.

Not every story can be right. This story could be wrong, as I've already said repeatedly. But the advantage of a model is that the consistency is strictly enforced. Most people who advocate a favored idea can and will change their assumptions on the fly, in order to preserve their favored conclusion. I'm sorry to say that this tendency is especially bad in the empirical research. But there it is.
  #100  
Old 08-14-2019, 08:01 AM
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Quote:
Originally Posted by Shodan View Post
The market is information. It reflects the price point at which demand for a given resource, in this case labor and jobs, meets the opportunity cost of those willing to supply it, in a given market. The market does not care if that price point is ten cents an hour or a million dollars a year. Your labor is worth whatever you can convince someone else to pay.
This paragraph is full of so many asterisks that it looks like an extremely cheap digital fireworks show. "Whatever you can convince someone else to pay"? Go ahead, try to negotiate your salary for an entry-level minimum wage job, see how far you get. "It reflects the price point"? In a completely idealized system, yes, but the labor market looks absolutely nothing like that idealized system you learned in econ 101. "Meets the opportunity cost of those willing to supply it"? Marx is rolling in his grave right now, mate. Yeesh.

Quote:
Market forces are efficient
https://www.youtube.com/watch?v=_n5E7feJHw0

Quote:
Sometimes that can happen, but it is a mistake to believe that cost-shifting is the same as free money, for anyone.
I don't think anyone is saying that.
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