NationStates Jolt Archive

Well? I've always wondered if anyone here can justify having no minimum wage? So, if you do, what are your arguments for it? And why would you be happy to earn less than $2 a month, if that's what your bosses want?

Umm, where I live there is no such thing as a government mandated minimum wage. We usually depend on central negotiations between workers' unions and employers' unions. They usually come to an agreement to what is a reasonable wage level (and increases) in their respective businesses and respective levels of employment and stick to it for some years until they renegotiate it.

We usually depend on central negotiations between workers' unions and employers' unions.

Interesting. But how does that work in a situation where the workers don't have a union? Unless they've all formed unions in Sweden, I suppose.

That would be awesome, except here in the ol' USA, no one would ever come to an agreement. Corporations are too greedy. Anywhere this is true, minimum wage is a necessity.

Umm, where I live there is no such thing as a government mandated minimum wage. We usually depend on central negotiations between workers' unions and employers' unions. They usually come to an agreement to what is a reasonable wage level (and increases) in their respective businesses and respective levels of employment and stick to it for some years until they renegotiate it.

Wow. Now that is a good idea point five.

However, I'd think most people who oppose minimum wage oppose unions too.

I do support minimum wages at a reasonable level and raised accordingly with inflation.

I do oppose unions as they have lost their meaning and as of these days are extremely corrupt (I point to the union at the Los Angeles Metropolitan Transport Authority which "lost track" of millions with union subsidized healthcare).

Interesting. But how does that work in a situation where the workers don't have a union? Unless they've all formed unions in Sweden, I suppose.

People tend to form unions, yes, but it's, of course, not a requirement. The agreements reached cover those who aren't members of a union, too. Mind you, not all places have these deals, called "kollektivavtal," but these tend to be such places where individual bargaining between employers and employees is more practical (for instance, professions that require highly skilled or rare labour that can command certain wage levels in and of their particular training/experience).

we'd be better off with a universal basic income as long as we're keeping the old wage labor system. after that, minimum wages would be pointless.

It's hard not to support in practice; a minimum wage chained to inflation is the best policy and helps take some of the politics out of the process.

The simplest economic argument against a minimum wage is that a price floor on labor set above the equilibrium price (wage) inevitably leads to unemployment. I'll draw the graph at request :) In reality, companies can offset the addition costs in a number of ways: hire less workers, lay workers off, cut hours, or reduce benefits. Whenever the minimum wage is raised, it destroys many entrance level jobs. What often results is that those workers that remain benefit, but only at the expense of those that are layed off or not hired in the first place (and its usually the unskilled workers that get screwed the most because employers can then be more selective).

The simplest economic argument against a minimum wage is that a price floor on labor set above the equilibrium price (wage) inevitably leads to unemployment. I'll draw the graph at request :) In reality, companies can offset the addition costs in a number of ways: hire less workers, lay workers off, cut hours, or reduce benefits. Whenever the minimum wage is raised, it destroys many entrance level jobs. What often results is that those workers that remain benefit, but only at the expense of those that are layed off or not hired in the first place (and its usually the unskilled workers that get screwed the most because employers can then be more selective).

it isn't actually as clear as that. firstly, because these workers making more income have more money to spend and therefore the economy grows, thus creating more jobs. secondly, supporters of minimum wages don't just stop there, but also support unemployment insurance and the like, making sure that those that aren't employed also are able to survive. plus, there are a whole bunch of other factors in economics and politics that throw off everything.

but i still say it would be a lot simpler to have a universal basic income and avoid all of that mess.

The simplest economic argument against a minimum wage is that a price floor on labor set above the equilibrium price (wage) inevitably leads to unemployment. I'll draw the graph at request :)...
Ooooh, finally... :D

Now, what does the Demand Graph represent?
The Marginal Rate of Productivity of Labour. Correct?

Is there such a thing? Is it known? Is it constant?

The minimum wage should be in the negatives. That way we can take people who work at McDonald's money. then, nobody would work there, and Mcdonald's would have no workforce, thus McDonalds = DEAT

The minimum wage should be in the negatives. That way we can take people who work at McDonald's money. then, nobody would work there, and Mcdonald's would have no workforce, thus McDonalds = DEAT

That'll piss off a lot of teenagers but not much else. We'd probably be healthier too.

It's hard not to support in practice; a minimum wage chained to inflation is the best policy and helps take some of the politics out of the process.

Of course, in the US, the minimum wage is no longer tied to inflation. It used to be set as a percentage of the average wages, but is no longer set that way. Thus, it is arbitrarily raised every now and then, to try and give the impression that it is actually set by inflation.

That'll piss off a lot of teenagers but not much else. We'd probably be healthier too.

Seems like a good idea to me. Plus, then we won't have to listen to people complain about corporate exploitation since no one would work in the sweatshops because they would just take your money. It's a win-win situation.

The minimum wage is a great mistake. One of its effects is readily seen by putting yourself in the place of an employer and asking: If I must pay $6.25 or $7.25 an hour to whomever I hire, does it make sense for me to hire a worker whose skills enable him to produce only $4.00 worth of value per hour? Most employers would view doing so as a losing economic proposition. Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers.

it isn't actually as clear as that. firstly, because these workers making more income have more money to spend and therefore the economy grows, thus creating more jobs. secondly, supporters of minimum wages don't just stop there, but also support unemployment insurance and the like, making sure that those that aren't employed also are able to survive. plus, there are a whole bunch of other factors in economics and politics that throw off everything.

but i still say it would be a lot simpler to have a universal basic income and avoid all of that mess.

Firstly, that workers in this case are getting more income does not matter, because any income gained by those workers is, again, lost by others because of unemployment. Secondly, if you have unemployment insurance for the workers that become or remain unemployed as a result of the minimum wage law, the money for the insurance has to come from somewhere. That means increasing taxes for the workers that still are employed. Minimum wage laws therefore simply redistribute wealth, they do not create it.

Even if a company were to decide to bring in lower profits in exchange for paying its workers more, this still would not cause economic growth. All company profit eventually trickles down to households just like wages (for example, investing in a few factory would transfer the comapny's profit to the company that builds it to that company's workers). As all money, whether wage or profit, ends up in households, purchasing power is the same no matter how you choose to distribute that money. Additionally, if a company does not bring in as much profit, its stock value drops and it is no longer able to make as much investments. Less investment = less growth as companies are not able to build new facilities and, therefore, do not employ more workers.

And yes... negative income tax. It's the answer to all our problems. The only problem is that guaranteed income provides a huge incentive to not work at all.

The only problem is that guaranteed income provides a huge incentive to not work at all.

good. work sucks.

do you honestly think that there isn't enough greed/self-interest/comsumerist socialization in people to go out and work so they can afford all the classy video game systems and nice furniture and cable tv and good beer, etc? very few people would be happy for long on just the bare minimum. and it would make sure that nobody goes hungry or without shelter, and removes the remaining element of compulsion from the wage labor system.

And yes... negative income tax. It's the answer to all our problems. The only problem is that guaranteed income provides a huge incentive to not work at all.
Milton Friedman doesn't seem to think so...

Come on, it all depends on how high or low you set the threshold.

...does it make sense for me to hire a worker whose skills enable him to produce only $4.00 worth of value per hour?...
But how in the devil's name do you know that? Labour is not something like a machine. On a good day, that worker might make you 7 bucks, on a bad day, he might lose you money.

A survey in the Winter 2005 issue of the Journal of Economic Perspectives reports that exactly two-thirds of academic economists at top universities agree with the statement, "a minimum wage increases unemployment among young and unskilled."

A survey in the Winter 2005 issue of the Journal of Economic Perspectives reports that exactly two-thirds of academic economists at top universities agree with the statement, "a minimum wage increases unemployment among young and unskilled."
:D

Maybe it does...but I can tell you that exactly two-thirds of economists are neo-classical rightwingers who would, if they could, put orphans up for auction....

Point is, Germany doesn't have a minimum wage as such and people live quite well (if they can find a job that is...). But justifying that with simplistic supply and demand curves is too easy to let you get away with.

:D

Maybe it does...but I can tell you that exactly two-thirds of economists are neo-classical rightwingers who would, if they could, put orphans up for auction....

Point is, Germany doesn't have a minimum wage as such and people live quite well (if they can find a job that is...). But justifying that with simplistic supply and demand curves is too easy to let you get away with.

Granted, supply and demand are abstract ideas in themselves, but for the most part, they hold true. If price ceilings and price floors create shortages in markets for other goods (like oh I don't know... gasoline? :)) it's very likely the same effect will take place in the labor market. Statistics like the ones above (and a dozen more I could pull from Ten Things if you like) reaffirm that idea. In reality, because of the complexity and variance of markets from place to place, the exact impact of minimum wage laws (or any other economic policy) is never certain. But, given the data we have, I'd say there's a much stronger case that the minimum wage is ineffective, if not harmful.

Oh, and think about it: if two-thirds of economists are neo-classical rightwingers... doesn't that just grant more validity to the neo-classical rightwinger arguments? :P What's wrong with orphan adoptions anyway?

Well? I've always wondered if anyone here can justify having no minimum wage? So, if you do, what are your arguments for it? And why would you be happy to earn less than $2 a month, if that's what your bosses want?
I don't support one because I feel that it is the kindest thiing to do, in addition to being the most practical. An employer that looses money today would have to start laying off people. However, every employee has productive potential. So, they'd prefer to cut wages, but cannot do that, in part, because of the minimum wage. Sometimes, employers have minimum wage employees that can't have a wage cut, but more often, everyone expects a wage proportional to the minimal one, making any wage cuts difficult.
I will concede that the idea of wage insurance is floating around, or one that says that the government will reimburse you if wages are too low. But that would be prohibitively expensive, and would cause inflexibility in the labor market, and wages will forever stagnate.

Granted, supply and demand are abstract ideas in themselves, but for the most part, they hold true. If price ceilings and price floors create shortages in markets for other goods (like oh I don't know... gasoline? :)) it's very likely the same effect will take place in the labor market.
I don't follow that argument. A demand curve is a representation of marginal utility. Marginal Utility doesn't exist in this market in this way, so a demand curve for labour may be drawn, but has nothing to do with reality.
Empirical "Evidence" in macroeconomics is generally worthless.

Oh, and think about it: if two-thirds of economists are neo-classical rightwingers... doesn't that just grant more validity to the neo-classical rightwinger arguments?
No it doesn't.

What's wrong with orphan adoptions anyway?
I would think kiddies would take quite a lot of psychological damage from knowing that they are worth less than their neighbour...

I don't follow that argument. A demand curve is a representation of marginal utility. Marginal Utility doesn't exist in this market in this way, so a demand curve for labour may be drawn, but has nothing to do with reality.
Empirical "Evidence" in macroeconomics is generally worthless.


No it doesn't.


I would think kiddies would take quite a lot of psychological damage from knowing that they are worth less than their neighbour...

Hmmm... That is a good point -- there's a different cause for the negative slope in the two demand curves. However, I would still argue that more workers are hired at lower wages on the following grounds: (1) the output effect... Lower wages = lower production costs = higher supply for product = lower prices = greater amount of product sold = more labor required to produce product (2) input-substitution effect... for example, as farm workers become cheaper to higher, it may become more cost-effective to hire 10 of them to sow a field instead of hiring one and buying a tractor... and (3) competition... at lower wages, business may offer new, low-paying jobs to provide more services for their customers, so that they can attract more customers... for example, hiring some kid (an orphan if you like xD) to offer shoe shines and hot towels in the men's room.

Btw, I was just kidding with the classical liberal economists and the orphans.

What we need is not a "minimum wage", but a "competitive wage". The problem is not that wages are too low, but that prices are too high. If prices were lower, the consumers would then have more purchasing power, and hence would not need as high of a wage. Competion among buisnesses lowers prices. So why shouldn't it work in regards to wages as well? P.S. I do feel however that employers should have the responsibility of providing for the well being and livelihood of there employees. Just as farmers must not neglect there livestock, or parents there children, employees should not neglect the welfare of there dependants.

But how in the devil's name do you know that? Labour is not something like a machine. On a good day, that worker might make you 7 bucks, on a bad day, he might lose you money.
When one applies for a job, they typically fill out an application that lists their work history. If I were inclined to hire someone with no experience listed in this section, I'd also be inclined to pay them less that what an experienced hand would make. What that entry-level wage is set at depends on the area. Around here, I'd probably have to offer $7 an hour to get any takers.

You are posing a problem that has nothing to do with a minimum wage, but with work ability. In general, person that has experience in a particular job will do that job better than one without experience. The problem for the new worker is how to get experience. The problem for the employer is how to properly compensate the unexperienced worker. A minimum wage accomplishes neither goal.

Right, a non-liberal, non-socialist, non-leftwing academic exists. That's a laugh.
:D

Maybe it does...but I can tell you that exactly two-thirds of economists are neo-classical rightwingers who would, if they could, put orphans up for auction....

Point is, Germany doesn't have a minimum wage as such and people live quite well (if they can find a job that is...). But justifying that with simplistic supply and demand curves is too easy to let you get away with.

(1) higher supply for product = lower prices = greater amount of product sold
The effect of this depends on elasticities, some industries have no interest in increasing supply (Petrol).

(2) input-substitution effect... for example, as farm workers become cheaper to higher, it may become more cost-effective to hire 10 of them to sow a field instead of hiring one and buying a tractor...
Income Effect: Since you now pay less for your workers you can go and buy a tractor that you wouldn't have bought otherwise.

(3) competition... at lower wages, business may offer new, low-paying jobs to provide more services for their customers, so that they can attract more customers... for example, hiring some kid (an orphan if you like xD) to offer shoe shines and hot towels in the men's room.
If it's worth it, but we already established that the firm can't necessarily tell accurately, so there'll be friction and inefficiency.

Btw, I was just kidding with the classical liberal economists and the orphans.
:p

You are posing a problem that has nothing to do with a minimum wage, but with work ability. In general, person that has experience in a particular job will do that job better than one without experience. The problem for the new worker is how to get experience. The problem for the employer is how to properly compensate the unexperienced worker. A minimum wage accomplishes neither goal.
I'm posing a problem that invalidates dismissing minimum wages on the basis of dead weight losses caused by price ceilings. No more, no less. ;)

Right, a non-liberal, non-socialist, non-leftwing academic exists. That's a laugh.
I don't get it. :confused:

Leonstein: Stop kicking my ass in this argument. :P I'll give you #2. #1 is a good counterpoint but does not negate the outcome effect, just diminishes it. #3 I would tend to agree, but like I said before, we have witnessed this in reverse with low-paying, entry-level jobs being destroyed by minimum wage increases. I was just reminded by one other side-effect: illegal employment. Many individuals, in particular immigrants, will accept illegal work that pays less because that's the only work they can get.

But, enough bitching about the minimum wage. I still think if we abolish it, people will be better off on net. However, poverty will still obviously be a problem. So here is my solution: "natural" wealth redistribution. Unskilled, low-wage workers are paid low wages, in part, because there are so many of them. This situation is only worsened by the high birth rates among the poor, which further increases the labor pool each year. The solution, IMO, is education. By educating workers, you give them skills that make them desirable for more specialized employment. Therefore, you decrease the unskilled labor pool and increase the skilled labor pool. The result is higher wages for unskilled labor and lower wages for skilled workers. Just like socialism, this screws over the "rich" but it does so in such a way that is fair and not harmful to the economy as a whole. (Of course, how to educate people is a whole different issue) *quietly anticipates Leonstein to tear apart his theory*

There was a study by a couple of economists Card & Krueger that seemed to show the traditional idea of supply and demand doesn't work at the low end of the scale. That minimum wage could actually serve to attract more people to the job market.

That study's been pretty thoroughly debunked now.

On the flip side though, if we extend the logic the other way, we find ourselves coming back to the idea of indentured servitude as a good economic model. And maybe it is. But there's a human cost there as well, because when you put people in the bottom of the barrel conditions, they eventually look for a way out. If the economic system doesn't give them one, they'll make their own -- often by violence or other criminal means.

So I tend to think it's good to strike a balance.

One point that is often glossed over though, if a business isn't making enough to pay a livable wage, perhaps it's not a profitable business to be in in the first place. Only because the public for some reason feels that spending money on increased law enforcement is more palatable then ensuring everybody has a livable wage in the first place is it possible for any business to attract employees at less than that now.

I don't get it. :confused:
Because it's not funny.

I live in a province that has one of the lowest minimum wages in Canada, and I believe in a minimum wage, because they'd be slaving me if there wasn't one...

Income Effect: Since you now pay less for your workers you can go and buy a tractor that you wouldn't have bought otherwise.


If we are going to include secondary effects in every single analysis and not accept that supply and demand graphs that we make already have that built in, then how can we claim that a price floor or price ceiling is the true and sole cause of dead weight loss for any market? (I hope this makes sense...)


Personally, I oppose a minimum wage; practical reasoning aside, I don't feel government has any responsibility in this field.

Many individuals, in particular immigrants, will accept illegal work that pays less because that's the only work they can get.
That is a very good point.

But, enough bitching about the minimum wage. I still think if we abolish it, people will be better off on net.
All I'm saying is that no policy is ever all-inclusive, and needs to be valued on its merits every situation.

The solution, IMO, is education.
:) It always is. All the more worrying that a good number of OECD countries are actually cutting their education budgets...all it does is create more class distinctions in the future.

The result is higher wages for unskilled labor and lower wages for skilled workers.
Relatively, I don't even think rich people's wages would fall. In fact, their real wages may very well rise.

*quietly anticipates Leonstein to tear apart his theory*
:p
I'd never try. I'm a big fan of education (and the less it costs the student, the better)

Most of the people I know who work at minimum wage don't even work hard enough to earn THAT much. I know plenty of people who perform 3-4 dollars an hour worth of work, they should be paid accordingly.

If we are going to include secondary effects in every single analysis and not accept that supply and demand graphs that we make already have that built in...
They certainly do. I just thought I'd respond to the Substitution effect in the obvious manner..
Point is that in many situations where you want to make a policy (eg increased interest rates increase savings?), the effects can very well be the opposite of what you expect.

...then how can we claim that a price floor or price ceiling is the true and sole cause of dead weight loss for any market?
I'd be the last person to claim that :D , as far as I'm concerned, I don't mind a healthy bit of direction from above to prevent the lot of us from doing something st00pid.

:mp5:

If there's no minimum wage, why not just take all the regulations off the economy? Hell, why even make companies pay their employees? If a company decides to cut costs for whatever reason and stop paying its employees, even temporarily, what recourse would the employees have? They already put in long hours for possibly insufficient wages anyway; they would be ruined if they didn't get paid.

I know it's a bit of a slippery slope, but if we just stick to the minimum wage issue, then if the market gets bad enough, there might be a "race to the bottom" for even some skilled workers, let alone unskilled. At least with a minimum wage of some sort, people have something to fall back on, even if it isn't much.

They certainly do. I just thought I'd respond to the Substitution effect in the obvious manner..
Point is that in many situations where you want to make a policy (eg increased interest rates increase savings?), the effects can very well be the opposite of what you expect.


I'd be the last person to claim that :D , as far as I'm concerned, I don't mind a healthy bit of direction from above to prevent the lot of us from doing something st00pid.

Would you support price regulations just on input resources, or on all resources?
It would seem to me that the whole income effect thing could be resolved in the same fashion elasticity of supply is solved between market day and long-term market models. Of course, you are talking about the demand for labor (which seems ironic, since Keynes made it seem like the problem with us weird classical economists is that we got supply all wrong. :p )...
This is going to require some heavy pondering.

Would you support price regulations just on input resources, or on all resources?
Other than petrol? :D
No, labour is not a good like any other, cuz we're talking about people's lives and people's work. Generally I accept that price regulations are a bad idea.

This is going to require some heavy pondering.
Really, if I had been the one to think of this, I'd probably be set for the Nobel Price...
No, I was just parotting Lester Thurow (http://en.wikipedia.org/wiki/Lester_Thurow).

If there's no minimum wage, why not just take all the regulations off the economy?...
It's probably an issue of attitude here. You think that the employer will exploit the worker wherever possible, and that's a valid way of looking at it.
I'd rather look at it as a matter of two people making a deal. Neither is forced to do anything that won't benefit - but it certainly matters how much either benefits.
So I'm a strong advocate of worker's rights and unions, because of this power difference your talking about. But as long as unions are allowed to bargain with employer groups, minimum wages probably do more harm than good. And besides, firms will pay incentive wages anyway to keep their worker's experience.

Other than petrol? :D
It's probably an issue of attitude here. You think that the employer will exploit the worker wherever possible, and that's a valid way of looking at it.
I'd rather look at it as a matter of two people making a deal. Neither is forced to do anything that won't benefit - but it certainly matters how much either benefits.
So I'm a strong advocate of worker's rights and unions, because of this power difference your talking about. But as long as unions are allowed to bargain with employer groups, minimum wages probably do more harm than good. And besides, firms will pay incentive wages anyway to keep their worker's experience.
*yawn* I went to bed but I'm back. The above is probably the most reasonable reply you've typed on this post :P I'm kidding. I wouldn't exactly call worker exploitation a "valid way of looking at it." That whole "attitude" goes back to labor theory of value, which is just plain wrong. I think the perceived "power" employers have over employees is a result of, again, too many workers. Ideally, all workers for a given job (say, a cashier) would refuse to work below a certain wage. Jazmin might want at least $4/hour, Latasha $4.25, Shandra $4.50. The firm would have to pay a wage that's high enough to attract as many workers as it needs. If it needs 2 cashiers, it'll pay $4.25; 3 cashiers, $4.50 and so on. The problems comes when you get more and more people applying for the same job. Many of the new people will realize that the only way they can get hired is if they are willing to work for less than that $4.25 -- otherwise, the company will just hire Jazmin and Latasha. So Pedro and Carlos say they're willing to work for $3.75. The firm then hires them. If any more people apply and want the job, they'll have to aim even lower... $3.50...$3.00... This is why unions hate Mexicans and other immigrants :) This is also part of the reason why executive and other high-income jobs pay so much. In comparison, there's a small number of potential employees and a high expectation of wages ("I didn't go through college and business school to be paid $7/hour!"), so firms have to offer much higher wages for those jobs than they do for unskilled ones. Hence my prior conclusion that the one groups wages would increase while the other's would decrease. I'm almost willing to bet you IT jobs are lower now because of increase competition (i.e., a bigger available labor pool) caused by offshoring.

I live in a province that has one of the lowest minimum wages in Canada, and I believe in a minimum wage, because they'd be slaving me if there wasn't one...
While we're sharing personal anecdotes... I worked as a bagger/cashier my first job. I think the minimum wage was at $5.15 then. I had no prior experience, no skills, but they started me at $6.00. By the time I quit, I was making $7.00/hour, $1.85 above the minimum. My employer did not pay me that much more out of generosity but out of self-interest -- paying me more was probably a lower cost to them than having to train more people.

Employers don't like minimum wages for obvious reasons, that's why a lot of business goes to Asia where you can pay Asian workers to slave for you for less than $1.00 an hour. Depends to the kind of work of course.

Most of the people I know who work at minimum wage don't even work hard enough to earn THAT much. I know plenty of people who perform 3-4 dollars an hour worth of work, they should be paid accordingly.


Thats nice. They should be fired then. Speaking as someone who worked for these slave wages (despite being educated) you cant live off these, when your own city only has enough housing opportunities for those who can afford 800 a month rent and there is nothing else without a one year waiting list! Forget public housing -they wont even put you on a list! Those are passed down from generation to generation and most people are discriminated against there. Forget HUD- this section falsely claims the median income is higher than what it is so we dont get any more federal help!! So please please ...take away the minimum wage and make everything even more miserable for the 90% of us here who can only GET minimum wage jobs.

Employers don't like minimum wages for obvious reasons, that's why a lot of business goes to Asia where you can pay Asian workers to slave for you for less than $1.00 an hour. Depends to the kind of work of course.
Yes, those evil, self-interested corporations. How absolutely horrible that they should pay wages at or above the national average (http://www.csmonitor.com/2005/0802/p09s02-coop.html) . Seriously though, the use of the words "slave" and "slavery" to describe low-income, manual labor is getting old. Its pathos -- nothing more than an emotional appeal. Companies do not coerce foreign workers into working for them; employees choose to work for them because that is their best option. The alternative -- most often substance farming or unemployment -- is worse than the factory job in terms of wages, work conditions, or both.

Well? I've always wondered if anyone here can justify having no minimum wage? So, if you do, what are your arguments for it? And why would you be happy to earn less than $2 a month, if that's what your bosses want?
I suspect that if there were no minimum wage, the welfare rolls would explode. :(

I suspect that if there were no minimum wage, the welfare rolls would explode. :(

Yeah, right. If minimum wage laws are dropped, chances are that welfare and social security will be dropped, too.

New Zealand has a min wage, and the lowest unemployment rate in the western world (if labours campaign ads are to be believed) so it can work fine.

Yeah, right. If minimum wage laws are dropped, chances are that welfare and social security will be dropped, too.
Probably, but the original question was "Does anyone support no minimum wage." The original post didn't stipulate what might happen to welfare and social security.

Yes, those evil, self-interested corporations. How absolutely horrible that they should pay wages at or above the national average (http://www.csmonitor.com/2005/0802/p09s02-coop.html) . Seriously though, the use of the words "slave" and "slavery" to describe low-income, manual labor is getting old. Its pathos -- nothing more than an emotional appeal. Companies do not coerce foreign workers into working for them; employees choose to work for them because that is their best option. The alternative -- most often substance farming or unemployment -- is worse than the factory job in terms of wages, work conditions, or both.
Oh, right. We're doing them a favour by paying barely enough to survive on, because they'll starve otherwise. How noble of us. Really wish we could afford to pay them more.
Ignoring the fact that Nike pays Tiger Woods more than what they pay their entire Thai workforce.

When one applies for a job, they typically fill out an application that lists their work history. If I were inclined to hire someone with no experience listed in this section, I'd also be inclined to pay them less that what an experienced hand would make. What that entry-level wage is set at depends on the area. Around here, I'd probably have to offer $7 an hour to get any takers.
You are posing a problem that has nothing to do with a minimum wage, but with work ability. In general, person that has experience in a particular job will do that job better than one without experience. The problem for the new worker is how to get experience. The problem for the employer is how to properly compensate the unexperienced worker. A minimum wage accomplishes neither goal.
Well, you probably have to offer $7 /hr because no-one can live on less than that.
And you seem to be sayingg that the minimum wage is what you would be prepared to pay an experienced worker, and that's unfair to their experience as they on the same amount as an unexperienced worker.
Now why the hell are you paying an experienced worker minimum wage? If you can't reflect and reward their experience then you shouldn't be in business.

Minimum wage is there to ensure that a person can get enough money to live on, and that's there's a real incentive to look for a job. If you on welfare and see a job that's paying $4 /hr, what's the point in taking it?

Since we on anaecdotes, though slightly off-topic, when I was on the dole there was no point looking for part-time work. Reason was that if I did take a part-time job, I would have been effectively taxed at 63% for the first $80 I earned and 109% for anything after that. So if I earned $100 for a day's work I would see $27.80 of that. Minus travelling and lunch expenses of course. If I worked another day, I'd have a net income of $18.80.
So I turned down any part-time work, and just looked for full-time.
Similarly with having no minimum wage. Unless a job's going to significantly alter your present living conditions, why bother?

Yes, those evil, self-interested corporations. How absolutely horrible that they should pay wages at or above the national average (http://www.csmonitor.com/2005/0802/p09s02-coop.html) . Seriously though, the use of the words "slave" and "slavery" to describe low-income, manual labor is getting old. Its pathos -- nothing more than an emotional appeal. Companies do not coerce foreign workers into working for them; employees choose to work for them because that is their best option. The alternative -- most often substance farming or unemployment -- is worse than the factory job in terms of wages, work conditions, or both.
Have you looked into why it's the employee's best option?
Often it's because the corporation has bought the land that was being used to grow food. They can do this because it's typically "public" land under control of the government.

Often it's because people give up everything they have for a bus ticket into the city where they hear things are so much better. Once they get there, they find there's no way back, so the choice is work at near starvation levels, risk being executed for committing a crime, or actually starve.

Also, saying wages are above the national average is misleading when you're dealing with a subsistence economy. Farmers often have an income of near $0 and be surviving better than workers who are making money in the city.

I think minimun wage is a good thing. Admittedly it does have its bad points but still. I get minimun wage +anti social hours. The stuff I have to put up with at work is barely worth it for that. A friend of mine worked in Dominos pizza in some place in NYC she made $1.71 /hr +tips. Now she did make a bit in tips which is fine cos its a part of that culture, but I don't get tips just a stream of constant abuse!

There has to be a minimum wage... Or Worlds will colide!

no minimum wage = more jobs and cheaper products

Why settle for a minimum wage? I promise I will not rest until every worker has a salary higher than the national average!

The idea that anyone could oppose a minimum wage disgusts me. Would people really like to live in a society where a person can work long hours and still be excessively poor? Where a person can't even afford to feed his family because his employer decides that he isn't worth more than $4 an hour? I don't care what people say - work is work, and unskilled jobs can be equally hard as highly paid ones. Thus, no matter what work you do, you should be guarenteed a fair wage.

The idea that anyone could oppose a minimum wage disgusts me. Would people really like to live in a society where a person can work long hours and still be excessively poor? Where a person can't even afford to feed his family because his employer decides that he isn't worth more than $4 an hour? I don't care what people say - work is work, and unskilled jobs can be equally hard as highly paid ones. Thus, no matter what work you do, you should be guarenteed a fair wage.

A lot of minimum wage earners are teenagers with no dependents. Paying a high minimum wage wouldn't do anything but drive up prices and cause a spike in inflation, hurting the buying power of everyone else.

The amount you earn is tied to the value you produce. It doesn't matter at all how hard you work, but rather the value of that work.

Why settle for a minimum wage? I promise I will not rest until every worker has a salary higher than the national average!

Wouldn't that cause the national average to rise, thereby leading to an infinite cycle of wage hikes and hyperinflation? :p

Wouldn't that cause the national average to rise, thereby leading to an infinite cycle of wage hikes and hyperinflation? :p

:eek: Never mind the fact that it's impossible for all the values in a sample to be above the average for that sample.

:eek: It was a bit of a joke, that.

I know that! :D

(You never know on these forums, though)

A lot of minimum wage earners are teenagers with no dependents. Paying a high minimum wage wouldn't do anything but drive up prices and cause a spike in inflation, hurting the buying power of everyone else.

Except the question isn't the level of the minimum wage but whether or not it should be allowed.

The amount you earn is tied to the value you produce. It doesn't matter at all how hard you work, but rather the value of that work.

Value is a funny concept, so let's ignore that.

Your wage is also tied to the number of people competing for your job. You can provide an incredibly valuable service, like let's say... sanitation services, but if there a large number of people who could replace you then your wage won't be all that high.

Also, if your wage isn't tied to your productivity then you are throwing a major premise of Neo-classical economics right out the window. Actually, you may be 'assuming' it into non-existance.

no minimum wage = more jobs and cheaper products

Technically speaking, and disregarding the possibility that the traditional supply-demand model doesn't apply well to labor (as Leonstine has been suggesting) then yes that is true.

However, by instituting a minimum wage we are not committing some kind of sin against the sacred market, but merely making a societal value judgment; that consumers are going to pay to increase the wage of low-wage workers so that they can live off of their employment.

I know that! :D

(You never know on these forums, though)

Same here. Just making sure; I'm a little new here so I don't have an established reputation.

Sorry for editing your quote out of my original. I had been hoping to get it before anyone saw. I'm not disclaiming those words, I just like the new ones better.

Except the question isn't the level of the minimum wage but whether or not it should be allowed.

I had already mentioned it in the first page or so; the wage should be inflation adjusted but should most certainly not be a living wage.



Value is a funny concept, so let's ignore that.

Your wage is also tied to the number of people competing for your job. You can provide an incredibly valuable service, like let's say... sanitation services, but if there a large number of people who could replace you then your wage won't be all that high.

Also, if your wage isn't tied to your productivity then you are throwing a major premise of Neo-classical economics right out the window. Actually, you may be 'assuming' it into non-existance.

But, the value of your work has a lot to do with the supply of labor. Productivity generates the value of your work, and jobs that have a large labor supply are almost always low productivity. The individual sanitation worker produces little of value by themselves, because they require an entire staff of personnel to do a certain task. So, productivity is lower per worker which has a lot to do with their low wage. Compare this to an investment banker, who can produce a large amount of value to a large number of people by themselves. They are very high productivity, so they are paid more.

Productivity is measured by the value of the output divided by the number of workers; so, if a job produces value but requires more workers (like any min. wage job), wages are going to be lower.

But, the value of your work has a lot to do with the supply of labor. Productivity generates the value of your work, and jobs that have a large labor supply are almost always low productivity...

Productivity is measured by the value of the output divided by the number of workers; so, if a job produces value but requires more workers (like any min. wage job), wages are going to be lower.


Productivity is a way to describe the ratio of input to output. Nations, firms, workers, even the world has a certain level of productivity.

Productivity doesn't generate anything; it is a measure of what you are generating. When productivity goes up, you are making more with the same or less input. But, it's a measure not a reason; for example, usually a rise in productivity is attributed to technological improvements.

The individual sanitation worker produces little of value by themselves, because they require an entire staff of personnel to do a certain task.

Doctors need hospitals and supporting staff, bankers need banks and supporting staff, lawyers need the justice system and each other (damn hippies). That some jobs need a number of workers to accomplish a task isn't a statement on the creation of value but on the division of labor.

Imagine if you will the highly peculiar situation where everyone in the world could become a CEO of roughly equal competence but very few could be janitors. Who would be earning millions?

Does anyone actually have any figures on how many people are actually getting paid minimum wage and not a cent above?

Technically speaking, and disregarding the possibility that the traditional supply-demand model doesn't apply well to labor (as Leonstine has been suggesting) then yes that is true.

Labor is a market just like any other. It is driven by marginal utility. If you lower the marginal cost of one worker, you significantly increase the labor demand. I will look for Leonstein's argument saying otherwise.

However, by instituting a minimum wage we are not committing some kind of sin against the sacred market, but merely making a societal value judgment; that consumers are going to pay to increase the wage of low-wage workers so that they can live off of their employment.

I know this, and I was making points saying that it is possible more people will benefit from eliminating minimum wages. I was not defending the free market, I was making my own societal judgement.

Umm, where I live there is no such thing as a government mandated minimum wage. We usually depend on central negotiations between workers' unions and employers' unions. They usually come to an agreement to what is a reasonable wage level (and increases) in their respective businesses and respective levels of employment and stick to it for some years until they renegotiate it.

This is wonderful to hear, workers protecting themselves through negotiations and avoiding using government to impose regulations. Now if only all socialist measures could be arrived at without government regulation.

Wow. Now that is a good idea point five.

However, I'd think most people who oppose minimum wage oppose unions too.

Anyone who truly objects to government regulation of labor markets must also object to government hindrance of unions.

Well? I've always wondered if anyone here can justify having no minimum wage? So, if you do, what are your arguments for it? And why would you be happy to earn less than $2 a month, if that's what your bosses want?
I don't currently support no minimum wage (though, in my utopia, there wouldn't be one), but I can answer the last part of your question. I wouldn't be happy to earn less than $2 a month, which is why I make sure I have skills and education that are worth much much more to employers. I don't want to be dependent on the minimum wage to set my salary, so I make sure that I am valuable as an employee. If my current employer tried to cut my pay, I could just leave because there will be plenty of other people willing to pay me more for my abilities. In my opinion, if the minimum wage laws are the only thing preventing you from taking a pay cut, then you are a serious fuckup. Unless you are a 14 year old working as a bag-boy at a grocery store (like my kid brother), in which case it's nobody's fault at all.

I don't follow that argument. A demand curve is a representation of marginal utility. Marginal Utility doesn't exist in this market in this way, so a demand curve for labour may be drawn, but has nothing to do with reality.
Empirical "Evidence" in macroeconomics is generally worthless.

How does marginal utility not apply in the labor market? It applies to every single economic and financial decision that one makes.

How does marginal utility not apply in the labor market? It applies to every single economic and financial decision that one makes.
It does apply, but it's not quantifiable anything like you could in other factors. The Marginal Product of Labour is not constant, nor can it possibly be known before the decision is made - a worker has power over how much he produces. He can choose to be lazy and his MPL will be much lower than if he's working hard on a good day, and so a wages will never be equal to MPL, perhaps they're not even likely to be close. To put that onto a Labour Market S&D Diagram is impossible.

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And here some useful stats by the US Department for Labour:

http://www.bls.gov/cps/minwage2004.htm

It does apply, but it's not quantifiable anything like you could in other factors. The Marginal Product of Labour is not constant, nor can it possibly be known before the decision is made - a worker has power over how much he produces. He can choose to be lazy and his MPL will be much lower than if he's working hard on a good day, and so a wages will never be equal to MPL, perhaps they're not even likely to be close. To put that onto a Labour Market S&D Diagram is impossible.

It is extremely easy to approximate the MPL at the sustinence wage level. We are not talking about opening new positions and offices, we are talking about expanding the number of low level positions. This means that there will be an extremely large sampling to pull from when calculating just how much utility the marginal labor hour provides. If a factory already uses 10,000 hours of manual labor, it should be able to estimate the output of 1,000 more labor hours with reasonable accuracy.

It is extremely easy to approximate the MPL at the sustinence wage level. We are not talking about opening new positions and offices, we are talking about expanding the number of low level positions. This means that there will be an extremely large sampling to pull from when calculating just how much utility the marginal labor hour provides. If a factory already uses 10,000 hours of manual labor, it should be able to estimate the output of 1,000 more labor hours with reasonable accuracy.
That's true, but it depends on how many employers of 10000 labour hours at subsistence wages there are. Many such jobs may be provided by smaller firms, which may also not be in production line-type positions (in which the MPL would indeed vary much less).
Nonetheless, it is anything but unproblematic to simply create a labour demand curve for the market and believe that employers will actually adhere to it in reality, for even if I as an Economist could estimate such a curve, I don't know how likely it would be an employer would actually give much of a flying fart.
My criticism was merely with creating a simple diagram with a price floor in it like you would in first year microeconomics...

That's true, but it depends on how many employers of 10000 labour hours at subsistence wages there are. Many such jobs may be provided by smaller firms, which may also not be in production line-type positions (in which the MPL would indeed vary much less).
Nonetheless, it is anything but unproblematic to simply create a labour demand curve for the market and believe that employers will actually adhere to it in reality, for even if I as an Economist could estimate such a curve, I don't know how likely it would be an employer would actually give much of a flying fart.
My criticism was merely with creating a simple diagram with a price floor in it like you would in first year microeconomics...

There certainly are factors that would cause a simple diagram to be inaccurate.

I am very sure, however, that lowering the marginal cost of a labor hour will cause a dramatic rise in the aggregate demand for labor. As with any economic estimation, the markets will be sticky as individuals will not react immediately and some will make poor decisions, but aggregate labor demand will rise eventually.

We get into questions about how low the wages will go until they break the Iron Law of Wages and come back up.

-snip-
So we agree. :D
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If you want to set a minimum wage, you have to carefully investigate every single industry and evaluate the decision that way. That's a long and expensive task.
Alternatively, you simply let the workers and the employers figure it out among themselves. In which case you'd have to be careful to cater for possible power differences between the poor guy from the trailer park and the owner of the one factory in town...so Unions are vital IMHO.