Doesn’t matter. We’re talking pay versus value. If you are talking pure market, then it is fine if someone gets paid more than they produce because otherwise the employer can’t find anyone to produce anything.
That’s not what you wrote.
But that’s ok; I don’t really need a cite. I already knew the statement was not grounded in labor statistics, and I am already familiar with the relevant data.
The request was merely meant to prompt a response as a favor to other readers. A test. A call to the chalk board in front of the class. In case readers ask themselves, “Is he or she knowledgeable about this topic?”
So what is it actually that you are disputing?
This -
Not that it’s harder; that it can’t be done.
Regards,
Shodan
Ok, well, look, Shodan, you know I like you but for future reference, when I put can’t just “get another job” in quotations that means I am being hyperbolic. In other words, it is a concession to other intelligent people that my statement is not 100% literal. I suspect, however, you already knew this.
No doubt.
OK, then respond in some non-hyperbolic fashion to UltraVires’ post.
You said that “in reality” that this doesn’t work. It does and it has.
That’s what having a labor market means.
It does mean something. Whether you like it or not, it means something. It means that sometimes, supply for a given skillset exceeds demand, and the market adjusts, and sometimes the demand exceeds supply, and the market adjusts.
What you think about people who make this observation doesn’t change anything.
I have a business, and I want to hire someone to make widgets. The average worker can produce 11 widgets an hour, and widgets cost $1 apiece. So I can hire someone at $10 an hour and make a profit.
Now a law is passed that minimum wage is $12 an hour. Guess how many people I will hire?
Regards,
Shodan
Except “value” is set by the market. It does not exist as some Platonic ideal of a form.
I’m not interested in any neo-con libertarian fantasy land discussion about widgets. Let’s look at a study conducted by Berkeley, where they compare contiguous counties on state borders when the minimum wage is raised in one state.
Abstract:
Abstract—We use policy discontinuities at state borders to identify the
effects of minimum wages on earnings and employment in restaurants
and other low-wage sectors. Our approach generalizes the case study
method by considering all local differences in minimum wage policies
between 1990 and 2006. We compare all contiguous county-pairs in the
United States that straddle a state border and find no adverse employment
effects. We show that traditional approaches that do not account for local
economic conditions tend to produce spurious negative effects due to spatial
heterogeneities in employment trends that are unrelated to minimum
wage policies. Our findings are robust to allowing for long-term effects of
minimum wage changes.
http://www.irle.berkeley.edu/workingpapers/157-07.pdf
Which debate do you want to have? Hypothetical debates about widgets or real life discussions that involve Facts? I am only interested in the second.
UnlessI’m missing something in my cursory look, that cite shows E[sub]d[/sub] < 0 for both employment and hours. Small, true, but it still supports the hypothetical widgets.
Although I don’t really trust the hours results, and they correctly note the issues with the QCEW data and caveat the result heavily, as is appropriate IMO.
But the argument seems to be that if the minimum wage is increased, then I can now increase the prices at which I sell my widgets so that this $12/hr employee makes me profitable. Likewise everyone else raises their prices. This supposedly works because there are more people, through an increased minimum wage, who can now purchase my widgets.
Assuming that this works absolutely perfectly, with no inefficiencies such that all of this money comes straight back to the business, then the best case scenario is that absolutely nothing is accomplished. The workers get a higher wage, but also pay higher prices for the things that they buy. Where is the benefit in that?
The post I was responding to was all offended at the idea of someone being paid more than the value they create in the job. If value is determined only by market forces, this is impossible, since the value is exactly the pay. So, since the post assumed a value created by the employee, I was asking about pay when the employee creates significantly more value.
If we use your definition of value, what you say is trivially true, But, just as suppliers create cooperatives to affect the market, it is entirely appropriate if workers create cooperatives to change the situation from a few employers and a lot of potential workers to a few employers and fewer sources of potential workers, which gives workers bargaining power.
Even if one agrees that market forces set pay, understanding worker created value lets negotiations proceed more efficiently. Employees who demand more than their value are going to get more resistance than employees who demand a reasonable percentage of their value. After all, an argument commonly used against raising the minimum wage is that it will make employers go bust. If we know there is a big gap, employers may make less profit (but there is no right to maximize profit) but we wouldn’t have to worry about them going broke. (There is no right to achieve maximum profit - it is okay to try!)
That is correct if all widget customers make the minimum wage. Since far more make a lot more than the minimum wage, each employer will make more from higher prices than they will pay in increased salary. Especially because higher earning customers will have buying behavior be mostly unaffected by small price increases.
Widgets and Oranges.
If you read and understand part VI (conlusions) of the study, you might realize it is not the bombshell you make it out to be, and does not address the possible effects of a large MW increase.
I do not understand the article. What I do understand, however, is the abstract clearly states:
We compare all contiguous county-pairs in the United States that straddle a state border and find no adverse employment effects.
Do you dispute this claim???
But if the MW didn’t rise, why wasn’t I able to increase my prices anyway, and increase my profits since the vast majority of widget buyers aren’t MW earners? The idea that you can raise prices if the MW goes up a tiny amount, but you can’t do so if the MW stays the same is not very convincing.
They “find no adverse employment effects” because their error is too large to confirm small effects. See p 953. Adverse employment effects are consistent with their analysis; they are not ruled out. Not large ones, mind you, but we’re not talking about large wage differences. They make no claims about the linearity of elasticity, which is good because they can’t.
A key finding is that overall *earnings *to the group that they analyzed (which is not all MW earners and which is a heavily tipped group due to the restaurant focus) should go up with small MW increases. This will happen even if some folks get canned or have their hours cut. Sucks to be them, I guess.
Well, gee, in 953 pages of documents I’m SURE there are going two be at least one or two things a smart guy like you can object too.
Ok you said you didn’t understand it, but it’s hard to do that if you don’t even read it. It’s only 20 pages long; the paper starts on p 945.
I love it when well off people suggest poor people just work twice as many hours.