# A good argument against minimum wage laws.. **URL:** \ **Category:** Great Debates\ **Created:** [September 28, 2014, 12:49am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750 "2014-09-28T00:49:15Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 29, 2014, 1:56am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/81 "2014-09-29T01:56:28Z")
> [@Aspidistra](#): > > Suppose you’re a business with a need for some unskilled workers, and you can get about $10 an hour worth of value out of them. There are a bunch of people in your town willing to work for as little as $1 an hour. What are you likely to offer as a wage for your jobs? Probably $1 an hour. Certainly nothing approaching $10 an hour, the actual value you get out of them, but also very very unlikely to be a split-the-difference $4 or $5. Because, generally speaking, you have the power. > > So, there may be some businesses in town who have $1 workers who are only getting $2 worth of value out of them. Or even $1.01, I guess (lets assume we’ve rolled up all the costs of ‘having a worker’ into their wage - doesn’t make a difference to the underlying argument). We actually can’t tell, as outsiders to the businesses involved, how much profit each is making from their unskilled workers. If asked, all businesses will say “gee, we’re right at the line. We couldn’t POSSIBLY afford to pay our workers one red cent more, or we’d go under.” > > Now, the government comes along and mandates a $5 minimum wage. Companies in the second case will need to lay off workers or go bust. That’s bad. Companies in the first case, however, will just raise the wages and keep on making a profit, albeit a reduced one. That’s good. > they’re actually providing" things might be different, but generally we can’t. Actually, forcing company 2 out of business is good for the economy in the long run. If this company is so inefficient that it can only get 1/5 the value from a worker than company 1, it is probably going to go out of business anyhow, since you can’t cut the cost of supplies and fixed costs the way you can cut worker costs. The sooner the resources it is using - for instance its premises and workers - got reallocated to more productive uses the better. It is tough for the owner, though he deserves it, and tough for the workers, though in a reasonable economy where the benefits of productivity are spread they’ll find a better job. Maybe those against the MW should also demand that the government regulate commodity prices. If gas prices go up it might drive inefficient truckers out of business also. Unfair! ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 29, 2014, 1:58am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/82 "2014-09-29T01:58:47Z")
> [@Stratocaster](#): > > Then why isn’t everyone, in every profession, currently making only the minimum wage and no more? Certainly minimum wage workers have less leverage, but the market works the same way for them: the value of a supply is not set at the buyer’s discretion. Employers will pay as low as the market will bear, but no lower. They can’t if they want people to work for them. A. Minimum wage workers are basically commodities. Workers who are not commodities can negotiate. It is too bad that not everyone can be a non-commodity, but that’s life. As for the pay floor two words - unpaid interns. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [September 29, 2014, 2:00am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/83 "2014-09-29T02:00:27Z")
> [@WhyNot](#): > > How did they manage it when my grandfather was in the workforce? When a salesman could support a family and a house in the 'burbs? I’m sure some of it was simply a lower standard of living, but does that really explain all of it? Your grandfather made MW as a salesman? I find that hard to believe. ---
**Author:** ![WhyNot](https://avatars.discourse-cdn.com/v4/letter/w/c77e96/32.png) [@WhyNot](https://boards.straightdope.com/u/WhyNot)\ **Post date:** [September 29, 2014, 2:21am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/84 "2014-09-29T02:21:11Z")
> [@John\_Mace](#): > > Your grandfather made MW as a salesman? I find that hard to believe. No, my grandfather was a research scientist and made considerably more than minimum wage. I was using his relationship to me as a shorthand for the timestamp of an era - roughly two generations ago, salesmen and other people that worked in malls and shopping centers and supermarkets supported families on their wages working the kinds of jobs that \*\*adaher \*\*says will close if we force them to pay living wages today. And thank you for the answer, **adaher**. That makes a lot of sense. I think it’s a bit of a chicken-and-egg deal. Certainly we as consumers haven’t helped the matter by buying cheap in an era when cheap is often not local or supportive of a living wage, either. But then we see that our own wages (not just minimum wage, but most not-C-level wages) haven’t kept up with the cost of living, and we honestly do feel like we can’t \*afford \*to buy the stuff produced in our own communities, by the people selling their own wares. So they go out of business because we shop at Walmartlandia (not picking on Walmart specifically, but all those types of stores and websites where goods from China and other countries with cheap labor), where they don’t pay a living wage. It’s a conundrum. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [September 29, 2014, 3:39am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/85 "2014-09-29T03:39:59Z")
I don’t really blame consumers. I blame American companies for tailoring their business models to the assumption that their paid politicians would forever protect them from any real competition. That being said, I think American companies are much more competitive now than in the 70s and 80s. That adjustment should have been forced on corporations and unions when Japan and Europe first started rising as economic powers again. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [September 29, 2014, 5:57am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/86 "2014-09-29T05:57:46Z")
Note we can use the same argument as the OP to justify an unsafe work environment. If I can find some guy willing to work on my construction site without a hard-hat, then that’s OK, right? After all, spending $5 on a hard-hat would put my company under. And don’t get me started on the cost of fire extinguishers. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [September 29, 2014, 6:15am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/87 "2014-09-29T06:15:23Z")
In the case of workplace safety, there’s a cost/benefit analysis. In the case of minimum wage, there isn’t. A worker gets $5/hr for $5 worth of work vs. a worker getting $10/hr for $5 worth of work. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 29, 2014, 6:23am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/88 "2014-09-29T06:23:44Z")
> [@adaher](#): > > In the case of workplace safety, there’s a cost/benefit analysis. In the case of minimum wage, there isn’t. A worker gets $5/hr for $5 worth of work vs. a worker getting $10/hr for $5 worth of work. However in real life a worker gets $5/hr for $15 worth of work. Why not? The extra goes as profit. We can see that from stagnant raises and increasing productivity, and the fact that the lower end of the income spectrum has lost ground during this recovery. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [September 29, 2014, 6:28am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/89 "2014-09-29T06:28:56Z")
Depends on the worker. You’re looking at the entire economy, such as the manufacturing sector, where automation is increasing productivity dramatically. Retail and fast food, by contrast, have not become much more productive since the 1960s. Some workers though, yeah, they produce even $100 worth of work every hour. Others are almost completely worthless or even cost the company money just by being on the premises. If you’ve ever managed minimum wage workers, you know pretty much where they’ll be five years from now based on how well they are doing. The guy producing vastly more than he is worth is underpaid today but will be doing pretty well for himself in the future. The guy producing vastly less than he’s worth will still be getting fired from minimum wage jobs when he’s 40. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 29, 2014, 6:33am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/90 "2014-09-29T06:33:04Z")
From what I understand, accounting for inflation, we’ve basically been cutting the minimum wage over the past few years by not raising it. Do all these people think that the time and productivity of all those people has gone DOWN? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [September 29, 2014, 6:36am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/91 "2014-09-29T06:36:35Z")
No, it’s just that most states have taken over the minimum wage making a federal increase mostly unnecessary. In addition, many states have indexed the minimum wage to inflation. Which would be a good idea for the federal version too, so it doesn’t a) go down automatically, and b) doesn’t turn into a political football every couple of elections. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [September 29, 2014, 6:58am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/92 "2014-09-29T06:58:53Z")
> [@adaher](#): > > In the case of workplace safety, there’s a cost/benefit analysis. Not really. Making an environment safe can be very costly, particularly in the manufacturing industry. If it was something that paid for itself, we would scarcely need regulation and we would see widespread safety measures even in countries where they are not legally required. That’s not the case. > [@](#): > > In the case of minimum wage, there isn’t. A worker gets $5/hr for $5 worth of work vs. a worker getting $10/hr for $5 worth of work. Firstly, this argument would have some relevance if companies were obliged to hire people. They are not. I don’t have to take on someone to do a virtually worthless task, and make a net loss. But secondly, it’s disingenuous. No business owner is out there thinking “I need one more barman, but I only expect to be able to turn over $6 more in receipts, and minimum wage is $7.50 \”. Or, if they are, that’s a business that’s going under tomorrow. Given all the overheads and volatile nature of business, plus the time and cost of finding someone in the first place, their anticipated productivity needs to be several times their salary before most businesses consider hiring. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 29, 2014, 7:53am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/93 "2014-09-29T07:53:36Z")
“Workplace safety is subject to a cost/benefit analysis…” And that’s supposed to be a GOOD thing? ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [September 29, 2014, 10:16am UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/94 "2014-09-29T10:16:28Z")
> [@Mijin](#): > > Note we can use the same argument as the OP to justify an unsafe work environment. > If I can find some guy willing to work on my construction site without a hard-hat, then that’s OK, right? After all, spending $5 on a hard-hat would put my company under. And don’t get me started on the cost of fire extinguishers. Correct. And when The Party That Loves Freedom gains control of Congress and the White House by 2017, we can finally abolish OSHA and all these other impediments to prosperity. Look: If you want a job, whether minimum-wage or $50,000/hr, _ **it’s your responsibility** _ to hire consultants to check the safety records of your potential employers. Don’t expect nanny to give you a hard-hat: Hire another consultant to do a cost-benefit analysis and decide whether to buy your own. Anyone too lazy or tight-fisted to spend a few thousand dollars doing such due diligence before applying for a minimum-wage job deserves any problems they get. It’s time America turned away from its flirtation with socialism and returned to the principles of Adam Smith, James Fisk and Charles and David Koch which made this country so great. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [September 29, 2014, 2:05pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/95 "2014-09-29T14:05:27Z")
> [@Leaper](#): > > From what I understand, accounting for inflation, we’ve basically been cutting the minimum wage over the past few years by not raising it. Do all these people think that the time and productivity of all those people has gone DOWN? While I do support pinning the MW to inflation, tying it to productivity doesn’t make much sense. Productivity gains are largely due to investment in technology, and that doesn’t necessarily translate into smarter unskilled workers. For instance, your typical fast food cashier doesn’t need to know how to make change or even know the prices of the various items on the menu. I’m not seeing the advance of punishing companies for automating. ---
**Author:** ![wonky](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wonky/32/393_2.png) [@wonky](https://boards.straightdope.com/u/wonky)\ **Post date:** [September 29, 2014, 3:11pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/96 "2014-09-29T15:11:00Z")
> [@Trinopus](#): > > I don’t know much about small businesses, but, other than the risk of not being able to pay the mortgage payments, I’m pretty sure there are lots of protections that keep the owner of a failed small business from losing his house. There are ways to shield the risk. (Again, putting the house down as collateral is an exception to this.) In some states, there are “homestead exemption” laws that do protect home ownership to some degree in the case of bankruptcy. I do not know exactly how that protection works or how extensive it is. Barring such an exemption, which has to be written into the bankruptcy laws, I don’t think there is anything that is going to protect the home. ---
**Author:** ![RivkahChaya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rivkahchaya/32/8919_2.png) [@RivkahChaya](https://boards.straightdope.com/u/RivkahChaya)\ **Post date:** [September 29, 2014, 3:26pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/97 "2014-09-29T15:26:47Z")
> [@jsgoddess](#): > > In some states, there are “homestead exemption” laws that do protect home ownership to some degree in the case of bankruptcy. I do not know exactly how that protection works or how extensive it is. Barring such an exemption, which has to be written into the bankruptcy laws, I don’t think there is anything that is going to protect the home. They protect the home you actually live in (as opposed to home you own and rent out), to the extent that it’s paid for. If it’s not paid for, you still have to pay the mortgage, if you want to keep it, IIRC, but that’s a separate issue. The homestead exemption is designed not to leave people on the street after declaring bankruptcy. You have to liquidate virtually everything you have, with the exception of the house where you live, and in some places, a single car. There may be a few other exceptions for things which belong to your family and just happen to be in your possession, and there are exceptions for personal possessions-- you don’t have to sell everything in your house, like all your cookware, and your TV. But IIRC, a judge might decide that if you own something unusual and valuable, that isn’t a typical possession, and isn’t something you can use to earn a living (like a 35mm projector in your living room), you might be forced to sell it. I’ve never declared bankruptcy, but I know some people who have, and I’ve always been kind of surprised by what they didn’t have to liquidate. ---
**Author:** ![Broomstick](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/broomstick/32/246_2.png) [@Broomstick](https://boards.straightdope.com/u/Broomstick)\ **Post date:** [September 29, 2014, 3:26pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/98 "2014-09-29T15:26:55Z")
You can’t be forced to sell your primary residence to discharge your bankruptcy. However, if you have a mortgage before bankruptcy you’ll still have one afterward. If getting rid of all your other debts doesn’t leave you with sufficient funds to pay that mortgage then yes, you’ll lose your home. If you can continue making the payments you’ll keep it. If you’re bankrupt due to unemployment yeah, you’ll probably lose the home unless you get a job sufficient to cover the monthly housing costs pretty damn quick. Unemployment isn’t the only reason people go bankrupt, though, it’s not even the most common reason. So a lot of people go bankrupt while fully employed and, with getting rid of their burdensome debt, are in fact able to pay for their housing afterward. ---
**Author:** ![billfish678](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@billfish678](https://boards.straightdope.com/u/billfish678)\ **Post date:** [September 29, 2014, 3:29pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/99 "2014-09-29T15:29:17Z")
> [@Aspidistra](#): > > For me, one of the major issues about the minimum wage is one I don’t think I’ve seen addressed yet in this thread. Very good point and post there. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 29, 2014, 4:05pm UTC](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750/100 "2014-09-29T16:05:40Z")
> [@Leaper](#): > > “Workplace safety is subject to a cost/benefit analysis…” And that’s supposed to be a GOOD thing? **Everything** is subject to a cost/benefit analysis. [Previous page](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750.md?page=4) [Next page](https://boards.straightdope.com/t/a-good-argument-against-minimum-wage-laws/699750.md?page=6)