If minimum wage was reduced, unemployment would go away very quickly as companies would pay $2/hr and get all the labor they need. And then within a year or two, since nobody is making any money they can't buy anything and thus, companies will have to lay off massive amounts of people. YAY unemployment comes back!
Ummm.... are you forgetting that unemployment pays close to current minimum wage? Why would anyone work for $2 an hour when they could get themselves fired and sit at home making $7? Businesses would then have to pay better than unemployment to discourage workers from purposefully performing poorly to get fired and collect unemployment...
I think we just have to look at our financial firms willing to forgo longterm profits for the short term as a reasonable edpectation that is what businesses are willing to do. Also, if you are unskilled labor and nobody is willing to pay you more than $2 an hour, you will either take it or not have a job at all. Of course, this would probably leae to massive deflation which will make all debt that much worse.
If minimum wage was reduced, unemployment would go away very quickly as companies would pay $2/hr and get all the labor they need. And then within a year or two, since nobody is making any money they can't buy anything and thus, companies will have to lay off massive amounts of people. YAY unemployment comes back!
I want you to think critically about what you are saying.
You're predicting that absent a minimum wage, companies would lower their wages to an extent that would, "within a year or two," cause major financial harm or collapse to that same company.
In order for this prediction to happen, one of two things would need to be true: (1) Timothy, Mimeslayer, has a better understanding of economics than these companies, many of which hire teams of trained economic and financial analysts to help them predict these kinds of things, or (2) these companies are perfectly aware that they are shooting themselves in the foot by lowering their wages so much, but decide to do so anyway for some unexplained reason.
Which one is it, and why?
You're joking, right? Companies, for the most part, have shown *definitively* that they are always going to whatever is the legally minimum requirement. Please see: everywhere in Asia. Literally everywhere. People there make what, 25 dollars a day, working 14 hours? Why would you expect companies in the US to do things any differently if they could get away with it?
If minimum wage was reduced, unemployment would go away very quickly as companies would pay $2/hr and get all the labor they need. And then within a year or two, since nobody is making any money they can't buy anything and thus, companies will have to lay off massive amounts of people. YAY unemployment comes back!
I want you to think critically about what you are saying.
You're predicting that absent a minimum wage, companies would lower their wages to an extent that would, "within a year or two," cause major financial harm or collapse to that same company.
In order for this prediction to happen, one of two things would need to be true: (1) Timothy, Mimeslayer, has a better understanding of economics than these companies, many of which hire teams of trained economic and financial analysts to help them predict these kinds of things, or (2) these companies are perfectly aware that they are shooting themselves in the foot by lowering their wages so much, but decide to do so anyway for some unexplained reason.
Which one is it, and why?
You're joking, right? Companies, for the most part, have shown *definitively* that they are always going to whatever is the legally minimum requirement. Please see: everywhere in Asia. Literally everywhere. People there make what, 25 dollars a day, working 14 hours? Why would you expect companies in the US to do things any differently if they could get away with it?
Companies will try to maximize their profits at all costs, I completely agree with you on that. Companies do not do anything for altruistic purposes, they are completely amoral. A company only cares about what is best for that company, not for anyone or anything else.
But that's exactly my point. Timothy postulated that companies would pay very low wages and that paying these low wages would cause a severe reduction in the company's profits in a matter of a couple of years. No selfish, greedy, money-grubbing company would intentionally do something that would harm its profits. So either Timmy is smarter than every savvy global corporation on the planet or something about Timmy's hypothesis is incorrect. That's the extent of what I'm saying.
But if your company gets to pay super low wages, while other sectors still pay good wages, then you get the best of both worlds. It's a variant of the tragedy of the commons.
You're joking, right? Companies, for the most part, have shown *definitively* that they are always going to whatever is the legally minimum requirement.
This is false. Companies have mostly shown quite the oppisite.
But if your company gets to pay super low wages, while other sectors still pay good wages, then you get the best of both worlds. It's a variant of the tragedy of the commons.
Ignoring the merits of this statement for a second, it sounds like you're retrenching from part of your previous statement. While you still assert that companies in certain sectors would pay lower wages, you no longer seem to argue that these lower wages would end up coming back to harm that company and therefore ultimately raise unemployment.
In other words, do you acknowledge that lowering or abolishing the minimum wage would decrease unemployment in both the short and long term? There may be other harms that would come from lowering or abolishing minimum wage (perhaps including the "tragedy of the commons" effect that you discuss), but higher unemployment is not one of them, correct?
Are we honestly going to ignore that the previous recession was a direct cause of financial institutions ignoring long term plans in exchange for short term profits? Are you guys honestly trying to rewrite history? Companies worry about profits yes, but is it long term or short term profits they are worried about? Recent history has shown us that many only care about the short term.
Ignoring the merits of this statement for a second, it sounds like you're retrenching from part of your previous statement.
What previous statement? Maybe you mistook me for someone else?
While you still assert that companies in certain sectors would pay lower wages, you no longer seem to argue that these lower wages would end up coming back to harm that company and therefore ultimately raise unemployment.
In other words, do you acknowledge that lowering or abolishing the minimum wage would decrease unemployment in both the short and long term? There may be other harms that would come from lowering or abolishing minimum wage (perhaps including the "tragedy of the commons" effect that you discuss), but higher unemployment is not one of them, correct?
What I'm saying is that if you're one company, you have the choice to either pay a decent wage, or pay pennies. If most companies pay a decent wage, the economy is fine, even if you pay pennies. If most companies pay pennies, the economy is in trouble, even if you continue to pay a decent wage.
If most companies pay a decent wage, you want to pay pennies. You get the benefit of customers having money in their pocket, but you don't have to spend money on labor. Similarly, if most companies pay pennies, you need to also pay pennies, because no one will have money to afford expensive products. Either way, your ideal strategy is to pay pennies. It's the Nash equilibrium strategy.
Now, obviously, the same is true for every other company. So everyone is individually incentivized to pay pennies, even though the net effect of everyone doing so would be bad. You're always better off paying pennies, regardless of what everyone else is doing. There's no incentive to unilaterally change your salaries.
Instead, the way out is that you need everyone to agree to pay a decent wage. That's why we have minimum wage laws. It gets us out of the problem of the Nash equilibrium being crappy - no one has to deviate from it unilaterally, because they have a binding assurance that other parties will do so as well.
There are companies currently with entry level positions that are already paying more than minimum wage. There was a point when the average wage for entry level workers was above the minimum wage. People would not be paid pennies if no minimum wage existed. Because capitalist pigs are in competition with each other and would bid up the price of that labor until it is no longer profitable to do so. The damage caused by the minimum wage doesn't really occur on a large scale until it's raised above the equilibrium point. You cannot mandate that someone be paid above their level of productivity. You are just killing jobs in sectors that were able to utilize unskilled labor and shift it toward skilled labor that is more productive.
"No one may threaten or commit violence ('aggress') against another man's person or property. Violence may be employed only against the man who commits such violence; that is, only defensively against the aggressive violence of another. In short, no violence may be employed against a nonaggressor. Here is the fundamental rule from which can be deduced the entire corpus of libertarian theory." - Murray Rothbard, Cited from "War, Peace, and the State"
What I'm saying is that if you're one company, you have the choice to either pay a decent wage, or pay pennies. If most companies pay a decent wage, the economy is fine, even if you pay pennies. If most companies pay pennies, the economy is in trouble, even if you continue to pay a decent wage.
If most companies pay a decent wage, you want to pay pennies. You get the benefit of customers having money in their pocket, but you don't have to spend money on labor. Similarly, if most companies pay pennies, you need to also pay pennies, because no one will have money to afford expensive products. Either way, your ideal strategy is to pay pennies. It's the Nash equilibrium strategy.
Now, obviously, the same is true for every other company. So everyone is individually incentivized to pay pennies, even though the net effect of everyone doing so would be bad. You're always better off paying pennies, regardless of what everyone else is doing. There's no incentive to unilaterally change your salaries.
Instead, the way out is that you need everyone to agree to pay a decent wage. That's why we have minimum wage laws. It gets us out of the problem of the Nash equilibrium being crappy - no one has to deviate from it unilaterally, because they have a binding assurance that other parties will do so as well.
Why hasn't everyone's wage settled at the minimum wage? Shouldn't that be the result of the race-to-the-bottom Nash equilibrium you predict? Could it be that you (incorrectly) assume employers are monopsonists in the labor market, while employees are price-takers?
Except that a lot of states have their own minimum wage above federal levels. You would mostly be helping people in red states by increasing the federal minimum wage and I am perfectly fine with that.
And? One raise puts them over that statistic - we discussed earlier how worthless it is to compare the potential of $7.36/hr vs a $9-10/hr (or even $15/hr) minimum wage.
It's apples to cantaloupes.
And fact is, unless you've worked in hiring, you really don't know how workers are when it comes to "price-taking" - I've literally had people applying for being a Grocery Manager or a Meat Department Manager ($55-65k starts normally with reasonable experience, about $45k the lowest I'd ever consider for either for our company) put down or quote during interviewing that they'd accept minimum wage....
Job offers literally about 5-6 times it at the time as a minimum I'd accept if someone was lowballing and more than a few times over the year someone wanted the position bad enough to basically say "Hey I'll be an intern".
Which FYI, interns and other unpaid people trying to "get their foot in the door"? Not counted in that useless 4.7%.
What a USEFUL statistic would be is to determine an appropriate baseline for a working person to consider a minimum - I'd personally say around $22k/yr myself (in my area if you don't earn at least that you won't get considered for 90% of property rentals if they pull a credit report) - then figure out how many people are earning that, not just projected to earn that so you don't have useless figures like "Oh hey, this guy's earning $30/hr - but he's getting 8 hrs a week so his total pay is ****" that make the "average wage" argument look good while "average salary" is total ****.
At the end of the day we want everyone to be affluent to a certain degree, it benefits all of us to have a robust economy - setting things up so that everyone willing to work participates in such is important.
[And of course note the terrible statistic doesn't even mention how many of the people quite work for welfare that in many areas PAYS MORE THAN MINIMUM WAGE - one of the most telling issues with the current minimum wage...]
And? One raise puts them over that statistic - we discussed earlier how worthless it is to compare the potential of $7.36/hr vs a $9-10/hr (or even $15/hr) minimum wage.
The fact that they received even one raise suggests that the market for labor is not a pure Nash equilibrium race-to-the-bottom as Tiax stated.
And fact is, unless you've worked in hiring, you really don't know how workers are when it comes to "price-taking" - I've literally had people applying for being a Grocery Manager or a Meat Department Manager ($55-65k starts normally with reasonable experience, about $45k the lowest I'd ever consider for either for our company) put down or quote during interviewing that they'd accept minimum wage....
Job offers literally about 5-6 times it at the time as a minimum I'd accept if someone was lowballing and more than a few times over the year someone wanted the position bad enough to basically say "Hey I'll be an intern".
Which FYI, interns and other unpaid people trying to "get their foot in the door"? Not counted in that useless 4.7%.
First of all, I am using the term "price taker" in the technical sense as described in the linked article, not in the loose way that you're using it. For example, if (hypothetically) an underqualified laborer with monopoly power in the labor market wanted to rent seek, he or she might try to bargain down the price for an otherwise inaccessible position. This is probably not a likely scenario, but your anecdote, even if its true across the board, doesn't prove that laborers are price takers.
Second, I actually think that laborers usually are price takers. The postulate I take issue with is that employers are monopsonists of labor. In most labor markets, I believe you would find that both employees and employers are price takers.
What a USEFUL statistic would be is to determine an appropriate baseline for a working person to consider a minimum - I'd personally say around $22k/yr myself (in my area if you don't earn at least that you won't get considered for 90% of property rentals if they pull a credit report) - then figure out how many people are earning that, not just projected to earn that so you don't have useless figures like "Oh hey, this guy's earning $30/hr - but he's getting 8 hrs a week so his total pay is ****" that make the "average wage" argument look good while "average salary" is total ****.
At the end of the day we want everyone to be affluent to a certain degree, it benefits all of us to have a robust economy - setting things up so that everyone willing to work participates in such is important.
[And of course note the terrible statistic doesn't even mention how many of the people quite work for welfare that in many areas PAYS MORE THAN MINIMUM WAGE - one of the most telling issues with the current minimum wage...]
I don't even know what you're arguing against, dude. I never said that the market would pay everyone a living wage, absent minimum wage laws. I said that the labor market is not a pure race to the bottom. Prices are determined by a market equilibrium, not purely by the dictates of the employers.
. . . is that the minimum wage doesn't affect anything.
I have never said that, I certainly don't believe that at all. The minimum wage definitely affects things in a very significant way. It increases wages. If there was no minimum wage, most current minimum wage employees would earn less than they currently do (some slightly less, some much less). The minimum wage also increases unemployment. In the absence of a minimum wage, some currently unemployed people would have jobs. The minimum wage can create or eliminate deadweight loss via Harberger's triangle, depending upon market conditions and the price at which the minimum wage is set.
I challenge you to find where I have said anything remotely close to this.
I have made two points, neither of which call for removing the minimum wage: (1) A higher minimum wage is not always better, increasing the minimum wage causes economic problems like unemployment, that need to be offset by measurable gains; sometimes a lower minimum wage is better for the economy. (2) The minimum wage isn't the only thing stopping employers from paying monstrously low wages. The labor market is, in fact, a market with an equilibrium price. Employers would not be able to "pay pennies," though some would be able to pay below the current minimum wage.
Why hasn't everyone's wage settled at the minimum wage? Shouldn't that be the result of the race-to-the-bottom Nash equilibrium you predict? Could it be that you (incorrectly) assume employers are monopsonists in the labor market, while employees are price-takers?
It certainly depends on the sector. Skilled labor has significant market power and can shop around for a good salary. But look at what happens with unskilled labor like rote manufacturing jobs. Because of the ease of transporting products, manufacturing companies are easily able to find extremely low-wage labor in third world countries. Similarly, look at the rates illegal immigrant farm workers get paid.
I don't mean to imply that all labor would suddenly be worth nothing. It's only unskilled labor for which the problem exists, because there is not the same level of competition to enforce a reasonable wage.
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Ummm.... are you forgetting that unemployment pays close to current minimum wage? Why would anyone work for $2 an hour when they could get themselves fired and sit at home making $7? Businesses would then have to pay better than unemployment to discourage workers from purposefully performing poorly to get fired and collect unemployment...
You're joking, right? Companies, for the most part, have shown *definitively* that they are always going to whatever is the legally minimum requirement. Please see: everywhere in Asia. Literally everywhere. People there make what, 25 dollars a day, working 14 hours? Why would you expect companies in the US to do things any differently if they could get away with it?
Companies will try to maximize their profits at all costs, I completely agree with you on that. Companies do not do anything for altruistic purposes, they are completely amoral. A company only cares about what is best for that company, not for anyone or anything else.
But that's exactly my point. Timothy postulated that companies would pay very low wages and that paying these low wages would cause a severe reduction in the company's profits in a matter of a couple of years. No selfish, greedy, money-grubbing company would intentionally do something that would harm its profits. So either Timmy is smarter than every savvy global corporation on the planet or something about Timmy's hypothesis is incorrect. That's the extent of what I'm saying.
This is false. Companies have mostly shown quite the oppisite.
EDIT: in before an additional qualifier is added.
calling liberals loons=not okay
The standard to which the forum moderators apply the rules here.
Ignoring the merits of this statement for a second, it sounds like you're retrenching from part of your previous statement. While you still assert that companies in certain sectors would pay lower wages, you no longer seem to argue that these lower wages would end up coming back to harm that company and therefore ultimately raise unemployment.
In other words, do you acknowledge that lowering or abolishing the minimum wage would decrease unemployment in both the short and long term? There may be other harms that would come from lowering or abolishing minimum wage (perhaps including the "tragedy of the commons" effect that you discuss), but higher unemployment is not one of them, correct?
calling liberals loons=not okay
The standard to which the forum moderators apply the rules here.
Re: People misusing the term Vanilla to describe a flying, unleash (sometimes trample) critter.
It is a pretty poor standard of living when 11 million people can't go outside due to smog.
Goalpost shift. Show me stats that suggest they are worse off than they were before the jobs. Are they are poorer? Are they sicker?
calling liberals loons=not okay
The standard to which the forum moderators apply the rules here.
http://www.medicalnewstoday.com/articles/249136.php
Why yes, they are getting sicker.
So they would be better off with out the jobs? Or would they be better off with better polution controls?
calling liberals loons=not okay
The standard to which the forum moderators apply the rules here.
It is the lack of pollution controls that keeps costs down that makes it worthwhile for us to ship jobs there. At least partly.
These terrible slave labour jobs really are improving their lives. That doesn't excuse them, but there are measurable benefits.
What previous statement? Maybe you mistook me for someone else?
What I'm saying is that if you're one company, you have the choice to either pay a decent wage, or pay pennies. If most companies pay a decent wage, the economy is fine, even if you pay pennies. If most companies pay pennies, the economy is in trouble, even if you continue to pay a decent wage.
If most companies pay a decent wage, you want to pay pennies. You get the benefit of customers having money in their pocket, but you don't have to spend money on labor. Similarly, if most companies pay pennies, you need to also pay pennies, because no one will have money to afford expensive products. Either way, your ideal strategy is to pay pennies. It's the Nash equilibrium strategy.
Now, obviously, the same is true for every other company. So everyone is individually incentivized to pay pennies, even though the net effect of everyone doing so would be bad. You're always better off paying pennies, regardless of what everyone else is doing. There's no incentive to unilaterally change your salaries.
Instead, the way out is that you need everyone to agree to pay a decent wage. That's why we have minimum wage laws. It gets us out of the problem of the Nash equilibrium being crappy - no one has to deviate from it unilaterally, because they have a binding assurance that other parties will do so as well.
Outliers aren't how you create a model of how things are operating - they're outliers.
Re: People misusing the term Vanilla to describe a flying, unleash (sometimes trample) critter.
Only about 4.7% of hourly-wage workers earn a wage at or below the federal minimum.
Why hasn't everyone's wage settled at the minimum wage? Shouldn't that be the result of the race-to-the-bottom Nash equilibrium you predict? Could it be that you (incorrectly) assume employers are monopsonists in the labor market, while employees are price-takers?
It's apples to cantaloupes.
And fact is, unless you've worked in hiring, you really don't know how workers are when it comes to "price-taking" - I've literally had people applying for being a Grocery Manager or a Meat Department Manager ($55-65k starts normally with reasonable experience, about $45k the lowest I'd ever consider for either for our company) put down or quote during interviewing that they'd accept minimum wage....
Job offers literally about 5-6 times it at the time as a minimum I'd accept if someone was lowballing and more than a few times over the year someone wanted the position bad enough to basically say "Hey I'll be an intern".
Which FYI, interns and other unpaid people trying to "get their foot in the door"? Not counted in that useless 4.7%.
What a USEFUL statistic would be is to determine an appropriate baseline for a working person to consider a minimum - I'd personally say around $22k/yr myself (in my area if you don't earn at least that you won't get considered for 90% of property rentals if they pull a credit report) - then figure out how many people are earning that, not just projected to earn that so you don't have useless figures like "Oh hey, this guy's earning $30/hr - but he's getting 8 hrs a week so his total pay is ****" that make the "average wage" argument look good while "average salary" is total ****.
At the end of the day we want everyone to be affluent to a certain degree, it benefits all of us to have a robust economy - setting things up so that everyone willing to work participates in such is important.
[And of course note the terrible statistic doesn't even mention how many of the people quite work for welfare that in many areas PAYS MORE THAN MINIMUM WAGE - one of the most telling issues with the current minimum wage...]
Re: People misusing the term Vanilla to describe a flying, unleash (sometimes trample) critter.
The fact that they received even one raise suggests that the market for labor is not a pure Nash equilibrium race-to-the-bottom as Tiax stated.
First of all, I am using the term "price taker" in the technical sense as described in the linked article, not in the loose way that you're using it. For example, if (hypothetically) an underqualified laborer with monopoly power in the labor market wanted to rent seek, he or she might try to bargain down the price for an otherwise inaccessible position. This is probably not a likely scenario, but your anecdote, even if its true across the board, doesn't prove that laborers are price takers.
Second, I actually think that laborers usually are price takers. The postulate I take issue with is that employers are monopsonists of labor. In most labor markets, I believe you would find that both employees and employers are price takers.
I don't even know what you're arguing against, dude. I never said that the market would pay everyone a living wage, absent minimum wage laws. I said that the labor market is not a pure race to the bottom. Prices are determined by a market equilibrium, not purely by the dictates of the employers.
(You should get your hearing checked)
I have never said that, I certainly don't believe that at all. The minimum wage definitely affects things in a very significant way. It increases wages. If there was no minimum wage, most current minimum wage employees would earn less than they currently do (some slightly less, some much less). The minimum wage also increases unemployment. In the absence of a minimum wage, some currently unemployed people would have jobs. The minimum wage can create or eliminate deadweight loss via Harberger's triangle, depending upon market conditions and the price at which the minimum wage is set.
I challenge you to find where I have said anything remotely close to this.
I have made two points, neither of which call for removing the minimum wage: (1) A higher minimum wage is not always better, increasing the minimum wage causes economic problems like unemployment, that need to be offset by measurable gains; sometimes a lower minimum wage is better for the economy. (2) The minimum wage isn't the only thing stopping employers from paying monstrously low wages. The labor market is, in fact, a market with an equilibrium price. Employers would not be able to "pay pennies," though some would be able to pay below the current minimum wage.
It certainly depends on the sector. Skilled labor has significant market power and can shop around for a good salary. But look at what happens with unskilled labor like rote manufacturing jobs. Because of the ease of transporting products, manufacturing companies are easily able to find extremely low-wage labor in third world countries. Similarly, look at the rates illegal immigrant farm workers get paid.
I don't mean to imply that all labor would suddenly be worth nothing. It's only unskilled labor for which the problem exists, because there is not the same level of competition to enforce a reasonable wage.