# How do minimum-wage and living-wage laws affect the job market? **URL:** \ **Category:** Great Debates\ **Created:** [January 7, 2005, 6:17pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614 "2005-01-07T18:17:49Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 7, 2005, 6:17pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/1 "2005-01-07T18:17:49Z")
This thread – [http://boards.straightdope.com/sdmb/showthread.php?t=295274](http://boards.straightdope.com/sdmb/showthread.php?t=295274) – brought up a discussion of the economic effects of minimum-wage laws, which I think is important enough to deserve discussion in its own thread. The conservative position on this is that if you raise the minimum wage, employers will simply save the extra expense by offering fewer jobs, and many of the working poor whom the law is meant to help will go from being underemployed to unemployed. Obviously that is perfectly true if the mandated wage is something prohibitively expensive, e.g., $50 an hour for flipping burgers. But some critics argue the position that **all** minimum wage laws have a significant chilling effect on the job market. Since several states have raised their minimum wage in recent years, we do have some hard data to use in assessing this – and it does not support the anti-minimum-wage position. From the Economic Policy Institute Briefing Paper #150, “Employment and the Minimum Wage: Evidence from Recent State Labor Market Trends,” by Jeff Chapman, May 11, 2004, [http://www.epinet.org/content.cfm/briefingpapers\_bp150:](http://www.epinet.org/content.cfm/briefingpapers_bp150:) > [@](#): > > Despite the necessity of a minimum wage that allows low-wage workers to meet basic needs, there is still strong opposition to minimum wage increases, especially from those who don’t view the weak labor market as an imperative to raise minimum wages, but rather as a reason to oppose them. In particular, opponents of state-level minimum wage increases claim that these increases are the cause of weak labor markets, especially in the form of high unemployment rates. > > That argument, however, rests on the simplistic observation that some of the states with high minimum wages also have high unemployment rates. Without more examination, this observation is as useful in understanding state job markets as noting that joblessness has been on the rise in New York since the last time the Yankees won the World Series. It might be true, but it doesn’t mean one is causing the other. > > The argument that state minimum wages have had a substantially negative effect on a state’s labor market is an extreme repackaging of the perennial claim that minimum wages do more harm than good because they cause many low-wage workers to lose their jobs. While this argument was once more prevalent among economists, recent studies with improved methodologies have reached the opposite conclusion. In general, there is no valid, research-based rationale for believing that state minimum wages cause measurable job losses. Making the extreme case that the job losses are severe enough to show up in a noticeably elevated state unemployment rate is a wild extension of a largely unfounded theory. > > A more careful look at state labor markets reveals that minimum wages are clearly not the cause of labor market pain in the states. Much more dominant forces, especially the unrelated decline in manufacturing employment, better explain state economic circumstances. > > **Three states in focus** > Three states have been the primary focus of claims that high minimum wages cause weak labor markets: Alaska, Washington, and Oregon. For example, in newspapers in all three states, Craig Garthwaite, research director at the Employment Policies Institute (EmPI), claimed, "it is perhaps no coincidence that the three states with the highest minimum wages in the nation—Oregon, Washington, and Alaska—are among the five states with the highest unemployment rates in the nation."1 > > Contrary to Garthwaite’s oversimplification of the employment picture in Alaska, Washington, and Oregon, some key facts about these states show that a number of factors unrelated to minimum wage increases are actually responsible for high unemployment rates: > > Alaska’s job growth has been among the strongest in the country since the recession hit. Persistently high unemployment in Alaska is the result of growth in the labor force, not layoffs of minimum wage workers. > > Weakness in Washington’s labor market has primarily been caused by the severe decline in manufacturing employment (19.7% from 2000 to 2003), a relatively high-paying industry largely unaffected by the minimum wage. > > In Oregon, minimum wage increases have not coincided with increases in the unemployment rate. The large uptick in Oregon joblessness occurred in 2001, although the state minimum wage had not increased since 1999. This is an issue of some personal importance to me, because I live in Florida, and last November we passed a state referendum raising the minimum wage from the federally mandated $5.15 an hour ($2.13 for tipped workers) to $6.14 ($3.13 for tipped workers). (To put this in perspective, if you work a 40-hour-a-week job at $5.15 an hour for a year, you will earn an annual income of $10,712; if you work the same job for $6.15 an hour, you will earn $12,792.) It also provides that future increases will be indexed to inflation. Of course it’s too soon to tell the change’s economic impact in the particular circumstances of this state, but here’s an excerpt from a summary of an economic analysis by the Center for American Progress, issued before the vote was taken – [http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=191242:](http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=191242:) > [@](#): > > **Main Findings from Research** > > _Costs_ > > The primary costs of the measure will be those incurred by businesses that will pay the increased wages to the low-wage workers they employ. Businesses will face two kinds of wage increases: > > - Legally mandated wage increases for workers now earning between $5.15 and $6.14, and tipped workers now earning between $2.13 and $3.12; and > - So-called “ripple effect” wage increases – non-mandated raises that businesses voluntarily provide to some of their workers after the higher minimum wage rate is implemented. (Economic Analysis of the Florida Minimum Wage Proposal) > > We estimate the total costs of the measure – including all mandated and ripple-effect raises, as well as increases in payroll taxes, for all Florida enterprises, both private businesses and government operations – as $443 million. For private businesses, costs will rise by a total of $406 million. > > The $406 million in cost increases for private businesses amounts to 0.04 percent of the total sales of these businesses, which was $928.7 billion in 2003. The average firm in Florida would therefore have to increase its revenues by 1/25th of 1 percent to fully cover the costs of the minimum wage increase to $6.15. > > The ratio of cost increases/sales will vary widely by industry. The industry with the highest cost increase/sales is the restaurant industry, where the representative firm will face a cost increase of 0.7 percent of sales. With limited-service restaurants, including fast-food outlets, the cost increase/sales ratio is 1.3 percent. > > _Methods of Business Adjustment to Minimum Wage Increase_ > > The primary way that businesses are likely to adjust to these cost increases is to raise their prices by small amounts. > > - A representative retail clothing store would face a cost increase of 0.05 percent of its sales. It could fully cover its increased costs by, for example, raising the price of a $20 sweatshirt to $20.01. > - A representative restaurant would have to raise the price of a $20 meal to $20.14 to cover its increased costs of 0.7 percent of sales. > - A representative hotel would have to raise the price of a room from, for example, $100 to $100.20 to cover its increased costs of 0.2 percent of sales. > > Businesses will also be able to absorb some of their increased costs through increasing productivity. Productivity should rise by a small amount with the wage increases, because workers should become more committed to their jobs. This will lower turnover and absenteeism, and more generally raise morale. > > \*\*Regarding prospects for negative “unintended consequences” resulting from business adjustments to the minimum wage increase, three possibilities have been frequently raised: > > - Unemployment: Businesses lay off workers, creating unemployment; > - Relocation: To avoid having to increase wages for low-wage workers, businesses in Florida relocate out of the state, or out-of-state firms choose not to locate in Florida. > - Inflation: With businesses raising prices to cover their increased costs, an inflationary spiral could result. > > Our results show that these negative “unintended consequences” are very unlikely to occur to any significant extent. This is, again, because businesses will be able to absorb their cost increases through modest price and productivity gains. They will not need to resort to more extensive measures – layoffs or relocations – that are costly for the businesses themselves. Moreover, precisely because the upward price pressures will be modest, they will not encourage inflation, which would mean a significant rise in all prices throughout the state. > Regarding employment effects, we also analyze the experience from other states that have recently raised their statewide minimum wage relative to states that operated with the lower federal minimum wage. We find that employment growth in high minimum wage states did not fall in relative terms after they raised their minimum wage.\*\* > > **Benefits of Minimum Wage Increase** > > _Benefits to Workers_ > > Roughly 300,000 workers earning between $5.15 and $6.14 or, for tipped workers $2.13 and $3.12, will receive mandated wage increases. The average pay for $5.15 - $6.14 workers is now $5.73, so their average mandated raise will be 42 cents/hour to bring them to $6.15. This is an average mandated raise of 7.3 percent for the un-tipped workers. > > About 550,000 workers will receive “ripple effect” increases. > > - Those earning between $6.15 and $6.99 will receive, on average, a 6.3 percent raise. > - Those earning between $7.00 and $7.49 will receive, on average, a 2.2 percent raise. > > Low-wage workers and their families will enjoy increases in disposable income of between $500 and $600. > > - This is an average disposable income gain of about 4 percent for families currently living below 150 percent of the official poverty thresholds. > - It is an average disposable income gain of about 2.6 percent for families currently living below what we define as a “basic needs” living standard, measured relative to expenditures on necessities. > - This increase in disposable income will produce modest benefits, such as enabling the family to reduce debt, reduce work hours or purchase a car. > - It is significant that this improvement results through an increase in earned income rather than government subsidies. In terms of dignity and commitment to work, most low-income workers value a dollar of earned income more highly than a dollar of government support. > > _Benefits to Business_ > > Retail stores in the state’s low-income neighborhoods will experience an increase in sales, reflecting the increased disposable income of workers and their families living in these neighborhoods. > > - For low-income neighborhoods in Miami, we estimate that retail businesses will experience a sales increase of about 3 percent. (Economic Analysis of the Florida Minimum Wage Proposal) ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [January 7, 2005, 6:38pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/2 "2005-01-07T18:38:38Z")
To my simple mind, it seems that it could only have a negative effect if it failed to stimulate demand. If demand didn’t increase with the extra income, then prices would have to rise to maintain profit levels (pretty safe to assume those not making minimum wage would accept a hit). A fifteen cent raise, though, amounts to a whopping six bucks a week. That hardly seems to indicate a massive demand stimulus. But maybe that cumulative effect really does add up to something. It will be interesting to see where this thread will go. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 7, 2005, 6:56pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/3 "2005-01-07T18:56:11Z")
Here’s an apparently unbiased discussion of the issue, from the Wikipedia, [http://en.wikipedia.org/wiki/Minimum\_wage:](http://en.wikipedia.org/wiki/Minimum_wage:) > [@](#): > > **Consequences of minimum wage laws** > > If the law is successfully enforced, and if they are high enough in real terms (or relative to the average wage), minimum wage laws are alleged to have various benefits and costs. > **Hypothetical costs and benefits** > > Minimum wages may have the effect of: > > Reducing low-paid work, which may be viewed as unfair and exploitative. > > Reducing the dependency of the low-paid on welfare-state benefits, which may in turn reduce taxes or allow increases of other government outlays. > > Stimulating economic growth by discouraging labor-intensive industries, thereby encouraging more investment in capital and training. > > Encouraging many of those who would normally take low-wage jobs to stay in (or return to) school and thus to accumulate human capital. > > On the other hand, minimum wages may have the effect of: > > Discouraging employment of low-wage earners, and generally increasing unemployment. > > Raising employment barriers for people with little or no work experience or formal education: if a worker’s labor is not worth the minimum, he may not find employment at all. > > Curbing economic growth by increasing the cost of labor. > > Increasing the price of goods and services, since employers pass on employment costs in the form of higher prices. (Opponents of minimum wage often see a negative income tax, e.g., as a way to support the lower-waged jobs, with the money coming from those who pay taxes, not those who pay for the products including the unemployed) > > Decreasing incentive for some low-skilled workers to gain skills. > > Where implemented locally, making labor more expensive than in other areas, which may discourage inward investment and encourage local businesses to relocate their operations elsewhere. > The effects of minimum wage laws, both positive and negative, may be increased by ‘knock-on effects’, with increased wages for workers already earning above the minimum wage. For example, some labor union contracts are based on a fixed percentage or dollar amount above the minimum wage. Certain public grants or taxes are based on a multiple of the minimum wage. (For example, a worker may have an exemption if his earnings are below 2.5 minimum wages.) > **Debate** > > The costs and benefits arising from minimum wages are subject to considerable disagreement among economists, though the consensus among economics textbooks is that minimum wage laws should be avoided whenever possible as the costs exceed the benefits. This unified view has been disputed by empirical research done by David Card and Alan Krueger. In their 1997 book Myth and Measurement: The New Economics of the Minimum Wage (ISBN 0-691-04823-1), they found the negative employment effects of minimum-wage laws to be minimal if not non-existent (at least for the United States). For example, they look at the 1992 increase in New Jersey’s minimum wage, the 1988 rise in California’s minimum wage, and the 1990-91 increases in the federal minimum wage. In each case, Card and Kreuger present evidence ostensibly showing that increases in the minimum wage led to increases in pay, but no loss in jobs. That is, it appears that the demand for low-wage workers is inelastic. Also, these authors reexamine the existing literature on the minimum wage and argue that it, too, lacks support for the claim that a higher minimum wage cuts the availability of jobs. > > Critics of this research, however, argue that their research was flawed.[1] ([http://www.fee.org/vnews.php?nid=3896](http://www.fee.org/vnews.php?nid=3896)),[2] ([http://www.cato.org/pubs/journal/cj15n1-8.html](http://www.cato.org/pubs/journal/cj15n1-8.html)) For example, Card and Krueger gathered their data by telephoning employers in California and New Jersey, asking them whether they intended to increase, decrease, or or make no change in their employment. Subsequent attempts to verify the claims requested payroll cards from employers to verify employment, and ostensibly found that the minimum wage increases were followed by decreases in employment. On the other hand, data analysis by David Neumark and William Wascher, economists who are usually critical of minimum-wage increases, supported the Card/Krueger results.[3] ([http://www.epinet.org/briefingpapers/minimumw\_bp\_1996.pdf](http://www.epinet.org/briefingpapers/minimumw_bp_1996.pdf)) > > Some idea of the empirical problems of this debate can be seen by looking at recent trends in the United States. The minimum wage fell about 29% in real terms between 1979 and 2003. This should have helped fight the problem of youth unemployment (since these workers are likely to have fewer skills than older workers). But young workers between the ages of 16 and 19 suffered from increased rates of unemployment (relative to those of workers 20 and older) than before this fall. Similarly, poverty rates in the United States ended their long-term decline after 1979. This suggests that critics of the minimum wage need to present a more complete theory of the origins of unemployment of young or poor people. > **Theoretical arguments** > > As is usual in serious social science, any empirical conclusion is subject to doubt and is simply the basis for further questions and research. One key question is the possible theoretical explanation of the different results. > > The traditional view that minimum wages have significant negative effects on employment typically assumes that labor markets for low-skill workers can be characterized as fitting the model of a perfectly competitive market, where the only role of wages is as a cost. On the other hand, if Card and Krueger’s empirical research is valid, it may be explained by the efficiency wage hypothesis which states that higher wages may “pay for themselves” by increasing worker efficiency (i.e., labor productivity). Higher wages encourage a higher willingness of low-skill workers to stay with their current employers and to gain experience and skill, while the employers are more willing to train them. Alternatively, if monopsony exists, then an increase in the minimum wage can raise employment. Alan Manning’s 2003 book, Monopsony in Motion: Imperfect Competition in Labor Markets (ISBN 0691113122) suggests that this kind of market is common if not ubiquitous in labor markets. > > Even if Card and Krueger’s results are accurate, there may be a “tipping point” above which their conclusions do not apply and the standard economic consensus does apply. The possible validity of their research may be the result of political forces: in the United States, business political pressure on legislatures and Congress may have kept the minimum wage so low that it has little negative employment effect. Further, the Federal minimum wage has moved away from the presumed tipping point, becoming less relevant. It has fallen from about 50 percent of the average hourly wage in manufacturing during the late 1960s to less than 40 percent. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [January 7, 2005, 9:08pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/4 "2005-01-07T21:08:39Z")
IANAEconomist, but it seems salient to me to point out a couple of things. First, correct me if I am wrong, but very few people make minimum wage. They make close to it, but most of the Burger King/Walmart type jobs are $1-3 above minimum wage. I know that was the case whe I was in HS, and is the case now where I live. That suggests to me that the by and large, the _de facto_ minimum wage (that is, the lowest common salary) may already have been $6.15, and so relatively few workers were affected. That’s why, even as a libertarian, I don’t think the higher _de jure_ minimum wage is a big deal. Frankly, I suspect that many of the people making under that that may have been recent immigrants and/or teenagers who don’t know the true market value of their labor. But IMO the danger lies in thinking that therefore we can keep on raising the minimum wage with no adverse consequences: i.e., thinking that if we went to $6.15 with no hitch, we can easily raise it to the $8 or $9 an hour that some want, also with no problems. At some point you will reach the “tipping point” the wikipedia article references, and employers will start saying the employee isn’t worth it. ---
**Author:** ![blowero](https://avatars.discourse-cdn.com/v4/letter/b/41988e/32.png) [@blowero](https://boards.straightdope.com/u/blowero)\ **Post date:** [January 7, 2005, 9:29pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/5 "2005-01-07T21:29:49Z")
> [@furt](#): > > IANAEconomist, but it seems salient to me to point out a couple of things. > > First, correct me if I am wrong, but very few people make minimum wage. They make close to it, but most of the Burger King/Walmart type jobs are $1-3 above minimum wage. I know that was the case whe I was in HS, and is the case now where I live. Perhaps things have changed since my first job, but I worked at Burger King, and did not make one cent over the minimum wage, which was $3.35 at the time. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [January 7, 2005, 9:49pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/6 "2005-01-07T21:49:14Z")
> [@blowero](#): > > Perhaps things have changed since my first job, but I worked at Burger King, and did not make one cent over the minimum wage, which was $3.35 at the time. I think these kinds of things vary significantly by region. In California, for example, you can start flipping burgers at In N Out and make about $9 - with paid vacation and sick time. I imagine things are different elsewhere. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [January 7, 2005, 9:49pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/7 "2005-01-07T21:49:37Z")
> [@blowero](#): > > Perhaps things have changed since my first job, but I worked at Burger King, and did not make one cent over the minimum wage, which was $3.35 at the time. We’re the same age. 😃 I worked minimum-wage too, on my first job. But within a couple of months I learned I could make 50 cents more up the road, so I left. I think within a year I was working somewhere for about $4. Hence, my comment about teenagers who didn’t know their real market value. Where I live now (a not-especially-nice part of Orlando) I’ve seen several ads for fast-food work paying $7 an hour. I’m not saying that nobody was making less than $6.15 before the new law; I am saying that it was very few, and that most of them probably could have found something better if they wanted to and knew how. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [January 7, 2005, 9:54pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/8 "2005-01-07T21:54:05Z")
And where I worked as a kid in my first job in HS, after a 90 day ‘trial’ period I made a dollar above minimum wage…and got another raise within 6 months. And others in my family, less skilled than I am with English worked in various agricultural endevors for much less than minimum wage (and usually for cash only). Which goes to show…what? I’m not sure exactly. As I’m not an economist and this seems a technical question though I won’t get involved too deeply. Myself I’m for doing away completely with minimum wage laws and letting the market set the price of labor for any given job. To my mind this will allow for more employment. After that, then as John Mace has said in other threads, set up direct aid to those people who aren’t making enough to make ends meet in the form of food stamps and perhaps housing allowances as well as other assistance based programs (carefully monitored of course). -XT ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [January 7, 2005, 10:41pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/9 "2005-01-07T22:41:05Z")
I’m going to get away from the cites, and play with concepts a little bit. First of all, in the other thread, **Bone** and I were having a discussion about _worth_. He said: > [@](#): > > I fundamentally disagree with you that is possible to pay a worker less than they are “worth”. Worth is determined by what individuals agree to. Unless there is some form of coersion going on, by definition, a person’s labor is worth what is paid for it. As I said there, there isn’t just one definition of ‘worth’, and I pointed out how his definition did away with the notion of a ‘bargain’ - the idea of getting something for less than one would be willing to pay for it - less than that something is _worth_ to you. This is applicable to the minimum-wage discussion, because bargains are surely possible in the world of employment, as they are in any other negotiation. If I’m willing to pay someone $7/hour for a particular kind of work, because I can still make a profit that’s worth my while, while paying that wage, then that work is worth $7/hour to me. If I find I can fill those jobs while only offering $5.50/hour, I’ve gotten a bargain. If the minimum wage is hiked from $5.15/hour to $6/hour, then I’m going to get less of a bargain in labor, but it will still be a bargain. So I’ll keep on employing my workers, though I’ll be less happy about the terms than I’d been. The other thing worth a nod is the libertarian idea of ‘coercion’. I’m not happy with it as such, which is one of a few zillion reasons I’m not a libertarian. I just don’t think it models life as we know it in the West very well. To me, ‘coercion’ is a more flexible concept, and it doesn’t have to come from a person; it can come from circumstances. If my car’s about to be repossessed, I regard that as coercion of a sort: if I don’t come up with some money, bad shit will happen to me. Similarly if I can’t afford the rent on a place in a safe neighborhood, and have to move my family into a part of town where people shoot up and get into gang wars. IOW, coercion can be something in the background of a potential contract, rather than something wielded by one of the parties. As a result, we go through life being involved in unequal power relationships. Transactions between a willing buyer and a willing seller, neither of which feels they particularly _have_ to make a deal, but both of whom _want_ to, tend to happen primarily in unimportant circumstances. If I’m trying to unload our old dining room table, and I think it’s worth $200, I can hold out for $200 until someone’s willing to pay it, or until I change my mind about what the table’s worth. But if I feel my labor is worth $25 an hour, and I can’t find an employer willing to pay me that rate today, I have a very finite time I can hold out for my price before capitulating. This, by my definition, is coercion, though it doesn’t come from a potential employer: it comes from life itself. OTOH, since many employers employ lots of workers, there are all sorts of ways they can make do with one less worker if the only worker they can find believes he’s worth more than the employer wants to pay. And in most labor markets, there are other potential hires out there. So as a rule, the employer is under a good deal less coercion than the potential employee. He has, as we say, the upper hand in the negotiations. And this is why an employee can be working for an employer at a wage that’s less than what either one of them believes the employee is worth. ---
**Author:** ![blowero](https://avatars.discourse-cdn.com/v4/letter/b/41988e/32.png) [@blowero](https://boards.straightdope.com/u/blowero)\ **Post date:** [January 7, 2005, 10:56pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/10 "2005-01-07T22:56:46Z")
> [@iamthewalrus(:3=](#): > > I think these kinds of things vary significantly by region. In California, for example, you can start flipping burgers at In N Out and make about $9 - with paid vacation and sick time. > > I imagine things are different elsewhere. In N Out is a special case. They have a policy of paying well over minimum wage in order to attract better workers. They do things quite a bit differently than most other fast food chains. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [January 7, 2005, 10:58pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/11 "2005-01-07T22:58:33Z")
> [@RTFirefly](#): > > But if I feel my labor is worth $25 an hour, and I can’t find an employer willing to pay me that rate today, I have a very finite time I can hold out for my price before capitulating. This, by my definition, is coercion, though it doesn’t come from a potential employer: it comes from life itself. I think your definition breaks down to the point of it not being informative. Consider the scenario when a person could never receive what they believe their labor to be worth. Are they then being coerced in some way? Using your definitioin, If I believe my labor is worth $1M/second, why is that less valid than a person who believes their labor to be worth $5/hour? If worth is determined on a one sided basis as you’ve described, the concept itself seems meaningless. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [January 7, 2005, 11:08pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/12 "2005-01-07T23:08:37Z")
I think it’s hard to tell the effects of a marginal change in the minimum wage on the economy as a whole – but easier to predict the effects of large changes. For instance, if we had the minimum wage set at $50 an hour, there would obviously be either massive unemployment or massive inflation, most likely both. Over the long run, the economy as a whole suffers due to government interfering with the natural workings of the economy and introducing inefficiencies in the form of inflation. On the other hand, no minimum wage would most likely produce no change – for awhile, that is. Then _some_ jobs will start paying less, then SOME of the jobs that pay a premium OVER minimum will start paying less, whilst some will remain at the high wage. A drastic lowering of the minimum wage, then, cannot but accentuate the already large gap between rich and poor. While I have no opinion on the moral correctness of it, it seems obvious to me that given a large enough gap, some businesses will shy away from the cheap and mass-produced to the expensive and hand-crafted. Or at least expensive and well-made. Which only the richest 10% can afford. This is a _massive_ inefficiency: due to the massive gap between rich and poor, economies of scale are not realized. This degrades the economy, producing less overall real GDP due to lack of economies of scale due to a two-tiered production system. In the balance, though, I’m not sure where the tipping point is between governmentally-produced and free-market-produced inefficiencies. ---
**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:** [January 7, 2005, 11:11pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/13 "2005-01-07T23:11:19Z")
> [@RTFirefly](#): > > The other thing worth a nod is the libertarian idea of ‘coercion’. I’m not happy with it as such, which is one of a few zillion reasons I’m not a libertarian. I just don’t think it models life as we know it in the West very well. > > To me, ‘coercion’ is a more flexible concept… But you are simply making up your own definition of [coercion](http://dictionary.reference.com/search?q=coerce). In your defintion, everything unpleasant that happens to a person is “coercion”. You have eliminated the part of the definition that is \*\*essential \*\*to the meaning of the word. It’s like saying you don’t consider “unique” to mean “one of a kind”, but just anything that happens to be somewhat rare. We already have a words that mean “somewhat rare” and if unique loses its meaning as “one of a kind” then we have to invent a new word for that. The concept of coercion is that someone has used physical force to get you to do something that you wouldn’t agree to do without that force being present. If you define away the “force” part, then we’ll just have to invent another word that DOES contain it. ---
**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:** [January 7, 2005, 11:20pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/14 "2005-01-07T23:20:34Z")
**RTF** : Further that that last post… I don’t understand why you can’t simply disagree with libertarianism by saying that you think government should do MORE than prevent coercion between people. If the whole world decided to use your definitino of “coercion”, then libertarianism would change-- it would just use a different word to describe the concept of what “coercion” meant before the world accepted your definition. ---
**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:** [January 7, 2005, 11:22pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/15 "2005-01-07T23:22:31Z")
Boy, did I screw up that post. Correct version: Further to my last post… I don’t understand why you can’t simply disagree with libertarianism by saying that you think government should do MORE than prevent coercion between people. If the whole world decided to use your definitino of “coercion”, then libertarianism **wouldn’t** change-- it would just use a different word to describe the concept of what “coercion” meant before the world accepted your definition. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 7, 2005, 11:39pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/16 "2005-01-07T23:39:34Z")
Both the ethics and the semantic issues brought up so far in this thread are important, but tangential to the issue of the thread: What are the **concrete economic** effects of establishing, or increasing, the minimum wage? Can we do that without “unintended consequences” such as a depressed job market at the lower end of the pay scale? ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [January 7, 2005, 11:42pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/17 "2005-01-07T23:42:32Z")
You want to discuss the intended consequences and table the unintended consequences? Isn’t that going to be fruitless? If the intent is to help people, that’s great if you ignore the unintended consequences. If those unintended consequences happen to hurt people, well you’ve tabled that portion of the discussion. Did you mean something else when you said that? ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [January 7, 2005, 11:47pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/18 "2005-01-07T23:47:15Z")
> [@RTFirefly](#): > > As a result, we go through life being involved in unequal power relationships. … This, by my definition, is coercion, though it doesn’t come from a potential employer: it comes from life itself. My mom told me when I was six that life wasn’t fair, and damned if she hasn’t been proven right every time. What your analysis leaves out is that there are innumerable times where the employee/consumer benefits from the “bargain” effect. There are very, very few things I buy that I absolutely would not purchase if it cost one cent more; hence I get a “bargain” every single day, and I think it is much the same for everyone else. It’s because the market, much like the world in general, is not designed to fit my personal needs. My computation of what anything is “worth” – including my own labor – is significant only as a single data point. Moreover, that calculation of “worth” is fluid. This past summer, I was jobless. In May, I ignored listings that were “beneath me.” By August, $7 an hour was strting to look pretty decent. On Monday, I’ll be starting a job that will pay me twice as much as I’ve ever made in my life. If a month ago you’d offered me a job paying 3/4 what this job will, I’d have jumped in a heartbeat. I am, in my honest opinion, being paid more than I’m worth. But I guarantee you that a year from now I’ll have a whole different appraisal of what I’m worth and “what I deserve.” Such are the vicissitudes of life in a world where all of us – even the millionaires – want _more_. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 7, 2005, 11:52pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/19 "2005-01-07T23:52:29Z")
> [@Bone](#): > > You want to discuss the intended consequences and table the unintended consequences? 😕 No, just the opposite. I want to discuss whether minimum-wage laws will or will not lead to unintended and undesirable consequences. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [January 7, 2005, 11:57pm UTC](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614/20 "2005-01-07T23:57:29Z")
> [@BrainGlutton](#): > > What are the **concrete economic** effects of establishing, or increasing, the minimum wage? I addressed it in my first post. You’re asking for the concrete effects of a theoretical question; if you’re talking about raising it by a penny, I submit there will be no significant effects whatsoever. If you’re talking about raising it to $20 an hour, I think it’s pretty obvious that there will be economic upheaval and significant job loss. How much are you proposing to raise the minimum wage? [Next page](https://boards.straightdope.com/t/how-do-minimum-wage-and-living-wage-laws-affect-the-job-market/283614.md?page=2)