NationStates Jolt Archive

Wal-Mark has advocated increasing the Federal Minimum Wage from $5.15.

Link: http://www.mises.org/story/1950

Thoughts?

Here are mine.

In the first place, the minimum wage is a bad idea. People (wrongly) treat it as a "floor" under wages, if you raise the floor, all the wages go up.

I prefer to think of it as a high jump bar. Here's why.

Different people have different levels of productivity (which we can measure in $/hr) in the same way as different people have different levels of athletic ability.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

On comes the juggernaut of government. They set a minimum wage, $10/hr. Here's what happens. My wages are unaffected, if the employer reduces them, I'll find someone else. Neu Leonstein gets fired, because it is illegal to pay him $8/hr, and it doesn't pay to employ him at $10/hr.

(Sorry, Leonstein, I actually think you're more productive than $8/hr :D ;) )

Here's the nub of this particular issue, Wal-Mart actually pays more than the Federal Minimum Wage, their average wages are between $8.23 and $9.68, so even a 50% increase leaves them unaffected.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Thoughts, anyone?

"Being paid minimum wage is an insult. It's like your boss saying, 'Hey, if I could pay you less, I WOULD!'" - Chris Rock, quote rewritten for simplicity.

Hum de doo...

Lol!

Dont hate the player, hate the game.

Damn minimum wage, preventing us from reliving the 1940s.

Its nice to find another who sees minimum wage as the sham that it is.
What's good for everybody is good for the Syndicate, so to speak.

Dont hate the player, hate the game.

I don't mind economic competition, but I draw the line as using the state to destroy your competitors. This move brings the history of business regulation full circle. It started with big business saying that regulation is needed for X,Y,Z reason (when the real reason was to screw over their competitors), it has gone through various other groups saying its necessary, and now we're back.

Never misunderestimate teh Great Eye of Sauron that is Wal-Mart.

http://img.photobucket.com/albums/v115/chair094/eyeofsauron.bmp

Sadly, there is not an option that reflects my views on the matter.

Regarding Wal-Mart's alleged "üb3r" wages, I'd bet that they include fun things like CEO compensation and perks, which would have the "if Bill Gates walked into a room, the average income for everybody would go up" effect.

But that is not the heart of the matter.

While Wal-Mart may pay a token dollar or two above minimum wage, many of its customers are minimum wage earners. If their wage goes up, they have more money to spend at Wal-Mart, since they probably don't spend much money elsewhere.

Thus, more revenue for a company that finds its growth stymied by community activists who try to block the zoning permits when it wants to build a new store in Anytown, USA.

Advocating a higher minimum wage is just another cynical attempt by Wal-Mart to increase revenue. (And it prolly could then get away with raising prices a few cents, even while it screws its suppliers, if the minimum wage increased.)

I don't mind economic competition, but I draw the line as using the state to destroy your competitors. This move brings the history of business regulation full circle. It started with big business saying that regulation is needed for X,Y,Z reason (when the real reason was to screw over their competitors), it has gone through various other groups saying its necessary, and now we're back.

If you can use the system to win your going to do it. Its win win really and wallmart is doing nothing illegal. So if you don't like it you've got three options. 1. Don't shop at walmart
2. Don't work at walmart
3. Get minimum wage repealled.

To the chap who's lost his trousers: why is minimum wage a good thing?

Regarding Wal-Mart's alleged "üb3r" wages, I'd bet that they include fun things like CEO compensation and perks, which would have the "if Bill Gates walked into a room, the average income for everybody would go up" effect.
I think that most perks aren't counted as wages, as the perks let you underhand cash to people. And I think that the sheer number of wage-slaves in WalMart would over power a handful of CEOs (sort of like how dropping Bill Gates into the Superdome would have had a minimal influence on the average income).

While Wal-Mart may pay a token dollar or two above minimum wage, many of its customers are minimum wage earners. If their wage goes up, they have more money to spend at Wal-Mart, since they probably don't spend much money elsewhere.

Thus, more revenue for a company that finds its growth stymied by community activists who try to block the zoning permits when it wants to build a new store in Anytown, USA.

Advocating a higher minimum wage is just another cynical attempt by Wal-Mart to increase revenue.
As a former WalMart shopper (Yeah I was, I spent 4 years in Virginia by my parents choice, so fuck off!) most of the people there tend to be a) On Welfare, or B) Lower Middle Class, and all of them are C) Horrifying.
No, I that this is more the sort of move designed to crush the competition.

To the chap who's lost his trousers: why is minimum wage a good thing?

Someone lost their pants? How would you know this?

Someone lost their pants? How would you know this?
'Twere a cute way of specifying Teh_pantless_hero without using his moniker directly, methinks.
Alternately, He has recently stole the pants of said poster, which is a very amusing idea that I will now entertain for several seconds.

Mm, fun.

'Twere a cute way of specifying Teh_pantless_hero without using his moniker directly, methinks.
Alternately, He has recently stole the pants of said poster, which is a very amusing idea that I will now entertain for several seconds.

Mm, fun.

lol I didn't see his post in the thread.

Do WalMart employees get anything else other than higher than average hourly rates - like other benefits?

Regarding Wal-Mart's alleged "üb3r" wages, I'd bet that they include fun things like CEO compensation and perks, which would have the "if Bill Gates walked into a room, the average income for everybody would go up" effect.

According to http://www.wakeupwalmart.com/facts/ their wages for "sales associate" (the most common job they have) start at $8.63/hr. Cashiers, their second most common job, start at $7.92/hr, and the site I got this from is decidedly anti-Wal-Mart.

Sales associates and cashiers account for over a third of all jobs.

But that is not the heart of the matter.

True.

While Wal-Mart may pay a token dollar or two above minimum wage, many of its customers are minimum wage earners. If their wage goes up, they have more money to spend at Wal-Mart, since they probably don't spend much money elsewhere.

A minimum wage increase won't affect them, even the peons are getting over $3 more than minimum wage, 60% more. This has nothing to do with what Wal-Mart pays. It is about what their competitors pay, and what they can afford to pay. An increase in the minimum wage will make their competitors less profitable, which means marginal firms will be squeezed out. Which is exactly what Wal-Mart's critics target them for.

Thus, more revenue for a company that finds its growth stymied by community activists who try to block the zoning permits when it wants to build a new store in Anytown, USA.

Advocating a higher minimum wage is just another cynical attempt by Wal-Mart to increase revenue. (And it prolly could then get away with raising prices a few cents, even while it screws its suppliers, if the minimum wage increased.)

Not really

I think that most perks aren't counted as wages, as the perks let you underhand cash to people. And I think that the sheer number of wage-slaves in WalMart would over power a handful of CEOs (sort of like how dropping Bill Gates into the Superdome would have had a minimal influence on the average income).

Well, Bill Gates' income divided amongst 40,000 or so people is still...a substantial increase in average income.

Also, it's not just üb3r CEOs vs. pee-on cashiers; a company as vertically integrated as Wal-Mart would also need a fair amount of middle management to oversee various corporate functions and semi-skilled employees to maintain fun things like its distribution system. Prolly enough of these types of workers to bump up the average wage a buck or so above what the slaves make. Wal-Mart would pay its truckers $9/hour if it could get away with it, of that I have no doubt, but even I acknowledge it wouldn't find too many truckers at that wage offering.

As a former WalMart shopper (Yeah I was, I spent 4 years in Virginia by my parents choice, so fuck off!) most of the people there tend to be a) On Welfare, or B) Lower Middle Class, and all of them are C) Horrifying.
No, I that this is more the sort of move designed to crush the competition.

Um, could you please explain why are you telling me to fuck off? I don't think that was called for...

To the chap who's lost his trousers: why is minimum wage a good thing?
I think the Chris Rock quote summed it up quite well - If I could pay you less, I would. When there was no minimum wage there was none of this jolly "You work harder, you get paid more money" stuff. No. It was the same as it is today, the grunt gets gipped at the same wage as the grunt next to him and the big wigs get far too much money than they should be getting.

According to http://www.wakeupwalmart.com/facts/ their wages for "sales associate" (the most common job they have) start at $8.63/hr. Cashiers, their second most common job, start at $7.92/hr, and the site I got this from is decidedly anti-Wal-Mart.

Sales associates and cashiers account for over a third of all jobs.

meh

True.

OMG a NSer concedes a point!:eek: (just joking;) )

A minimum wage increase won't affect them, even the peons are getting over $3 more than minimum wage, 60% more. This has nothing to do with what Wal-Mart pays. It is about what their competitors pay, and what they can afford to pay. An increase in the minimum wage will make their competitors less profitable, which means marginal firms will be squeezed out. Which is exactly what Wal-Mart's critics target them for.

True. But not all minimum-wage employees are employed by retailers, which is why I made the point about higher minimum=Wal-Mart's customers have a little more money to spend on Wal-Mart's cheap plastic crap.

Not really

See above. Prolly a combination of screwing competitors and an attempt to increase demand for cheap plastic crap.

Um, could you please explain why are you telling me to fuck off? I don't think that was called for...
Everytime I mention that I have been in a WalMart people either react with shock or derision. The "fuck off" was only directed at those people who either started giggling or staring when I mentioned that I have been to one.
You were merely collateral damage, so have a cookie and quitcher bitchin.

Everytime I mention that I have been in a WalMart people either react with shock or derision. The "fuck off" was only directed at those people who either started giggling or staring when I mentioned that I have been to one.
You were merely collateral damage, so have a cookie and quitcher bitchin.

OK, No hard feelings then.:fluffle:

I think the Chris Rock quote summed it up quite well - If I could pay you less, I would. When there was no minimum wage there was none of this jolly "You work harder, you get paid more money" stuff. No. It was the same as it is today, the grunt gets gipped at the same wage as the grunt next to him and the big wigs get far too much money than they should be getting.

To accept what you've said, you must accept that employer's set wages according to their level of generosity. I don't accept that, and you've given me no reason to.

What I accept, which has been shown in the real world, is that what sets wages (in the absence of other coercive means) is marginal revenue productivity theory of wages. http://en.wikipedia.org/wiki/Marginal_revenue_productivity_theory_of_wages

You'd find more on this in www.mises.org

There is one more thing, you say in the days of no minimum wage that "there was none of this jolly "You work harder, you get paid more money" stuff. No. It was the same as it is today, the grunt gets gipped at the same wage as the grunt next to him and the big wigs get far too much money than they should be getting.", but today, with the grunt being screwed over, we have the minimum wage. In any case, that you admit that before the minimum wage there were people paid more than a pittance undermines your argument.

Brush up on your American history. Remember this thing called the "Gilded Age"? Where these presidents of huge corporations worth hundreds of millions enriched themselves at the expense of their workers, who they generally payed around .05 cents an hour to a dollar a day (if they were lucky)?

Wanna go back to that?

More info needed to evaluate.

In the first place, the minimum wage is a bad idea. People (wrongly) treat it as a "floor" under wages, if you raise the floor, all the wages go up.

I prefer to think of it as a high jump bar. Here's why.

Different people have different levels of productivity (which we can measure in $/hr) in the same way as different people have different levels of athletic ability.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

Well, that's still the "floor" but looking at it from the perspective of the employees who lose their jobs as opposed to a macro view. You can call it a "high jump bar", but the examination proceeds in the same fashion as before.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.


That's an interesting analysis. Not only does it hurt competition but it also frees up more labor in the labor market. Walmart could then either pay their employees less or be more selective with their employees and retain more productive ones for the same wages as they have now (assuming this drives competitors out of business).

True. But not all minimum-wage employees are employed by retailers, which is why I made the point about higher minimum=Wal-Mart's customers have a little more money to spend on Wal-Mart's cheap plastic crap.

That's partially right. Those that have money will be able to spend more. However, whenever you raise the minimum wage you also risk some unemployment. Walmart loses some customers, those it keeps get more money. Is this a win for Walmart? It could be a win and it could be a loss, with these sort of competing changes in variables you need to turn to emprical study to be sure what will happen.

According to http://www.wakeupwalmart.com/facts/ their wages for "sales associate" (the most common job they have) start at $8.63/hr. Cashiers, their second most common job, start at $7.92/hr, and the site I got this from is decidedly anti-Wal-Mart.

Here is a bloody revolutionary idea; instead of making poor old Walmart pay for the healthcare of its employees, why doesn't the government do that? like every other country does!

If I were Walmart and I had to pay for the health of employees, this is what I'd do; I wouldn't hire anyone who was the slightest bit overweight, smoked or drank anymore than 3 cans of beer a week.

Why should I be allowed to descriminate? because f*cked if I am going to hire a bunch of people who would eventually become liabilities for my business to look after.

Well, that's still the "floor" but looking at it from the perspective of the employees who lose their jobs as opposed to a macro view. You can call it a "high jump bar", but the examination proceeds in the same fashion as before.

I probably should have developed my high-jump bar analogy more.

Let us take ourselves over to the athletics pitch, and set up all our high-jump equipment.

Bring on the high-jumpers. Each has a different level of high-jump ability, which we can measure in terms of the height they can clear.

We shall set the bar at 1.8m. Here's what happens. The only people who can succeed are the ones who are able to clear at least 1.8m. Someone who can only clear 1.7m will fail.

If you lift the high-jump bar to 2.0m, you will reduce the number of people able to succeed.

Let us take this over to minimum wage.

Take some people who want work. All have different levels of productivity, which we can measure in terms of $/hr.

We shall set the minimum wage at $10/hr. Here's what happens. The only people who can find work are those with a level of productivity over $10. Someone who only has a level of productivity of $7/hr will fail.

If you raise the minimum wage to $15/hr, you will reduce the number of people who will be able to get work.

Why not a floor? Because you can't go through a floor (assuming its well built of course) It follows that if you raise the floor, those standing on the floor will go up with it.

Here is a bloody revolutionary idea; instead of making poor old Walmart pay for the healthcare of its employees, why doesn't the government do that? like every other country does!

If I were Walmart and I had to pay for the health of employees, this is what I'd do; I wouldn't hire anyone who was the slightest bit overweight, smoked or drank anymore than 3 cans of beer a week.

Why should I be allowed to descriminate? because f*cked if I am going to hire a bunch of people who would eventually become liabilities for my business to look after.

Where the hell did this come from?

That's partially right. Those that have money will be able to spend more. However, whenever you raise the minimum wage you also risk some unemployment. Walmart loses some customers, those it keeps get more money. Is this a win for Walmart? It could be a win and it could be a loss, with these sort of competing changes in variables you need to turn to emprical study to be sure what will happen.

I thought that demand for unskilled labor was somewhat inelastic? The economy needs wage slave grunts to function...

of course, if the minimum wage was raised to a completely absurd amount, then Wal-Mart wouldn't have those customers...

But I'd be willing to bet that their economists have already looked at this question and come to a conclusion about just how much the minimum should be raised to maximize Wal-Mart's total revenue. And I'd be willing to bet that this target wage is what Wal-Mart's lobbyists are proposing behind closed doors to any congresscritter who will listen.

Here is a bloody revolutionary idea; instead of making poor old Walmart pay for the healthcare of its employees, why doesn't the government do that? like every other country does!

If I were Walmart and I had to pay for the health of employees, this is what I'd do; I wouldn't hire anyone who was the slightest bit overweight, smoked or drank anymore than 3 cans of beer a week.

Why should I be allowed to descriminate? because f*cked if I am going to hire a bunch of people who would eventually become liabilities for my business to look after.

Well If I were the leader of a country that had universal medicare I wouldn't let anyone into the country who was the least bit over weight, or who smoked or drank. My citizens might not be all that happy with my discriminitory policy, but since they'd be getting healthcare on the cheap, I'd probably manage to remain in power. If an opposition party suggested allowing fat smoky drunk people into the country I would just say that the opposition wanted to destroy public medicare and the people would immediately decide that the opposition was too "scary" and they would all still vote for me. I might even manage to start a sponsorship scandal and get away with it, but I digress.

Here is a bloody revolutionary idea; instead of making poor old Walmart pay for the healthcare of its employees, why doesn't the government do that? like every other country does!



Because paying for someone elses healthcare is not my responsibility. Which it would become if the government paid for it because then taxes would have to go up, and the government should stay out of my wallet. After all, that's where what's left of my minimum wage paycheck goes.

Here is a bloody revolutionary idea; instead of making poor old Walmart pay for the healthcare of its employees, why doesn't the government do that? like every other country does!

If I were Walmart and I had to pay for the health of employees, this is what I'd do; I wouldn't hire anyone who was the slightest bit overweight, smoked or drank anymore than 3 cans of beer a week.

Why should I be allowed to descriminate? because f*cked if I am going to hire a bunch of people who would eventually become liabilities for my business to look after.

Where the hell did this come from?

probably here (http://money.cnn.com/2005/10/26/news/fortune500/walmart/index.htm)

...while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us....
W00t!!!

You'll like this, I think. Everyone, have a good read:
Kruger and Card - Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania (http://ideas.repec.org/a/aea/aecrev/v84y1994i4p772-93.html)

(Sorry, Leonstein, I actually think you're more productive than $8/hr :D ;) )
Especially since one day I could feel good and work for $10/hr and one day I could decide Wal-Mart sucks and work at $-4/hr. :D

A Substantial Number of Wal-Mart Associates earn far below the poverty line

* In 2003, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861.The 2003 poverty line for a family of three was $15,260. [“Is Wal-Mart Too # Powerful?”, Business Week, 10/6/03]
# A 2003 wage analysis reported that cashiers, the second most common job, earn approximately $7.92 per hour and work 29 hours a week. This brings in annual wages of only $11,948. [“Statistical Analysis of Gender Patterns in Wal-Mart’s Workforce”, Dr. Richard Drogin 2003]

I felt I had to quote this from that site. I see they don't make it known that minimum wage is below living wages and Wal-Mart pays well above minimum wage and 29 hours a week isn't even work week of 8 hours a day. $7.29 an hour for 29 hours a week is more than a full 40 hour work week at minimum wage.

This site hates Wal-Mart.

probably here

OK.

Neu Leonstein, there was a similar case with lift drivers (the dudes who used to stand in the lifts and drive them up and down for you), when the minimum wage was increased from $0.40/hr to $0.70/hr. For the first few years, they noticed no decrease in employment, though automatic lifts (push button, goes to floor) became more common. Funny that.

First question: Is there an age range in the minimum wage (often, minimum wage codes have an exception for teenagers)? If there is, then either the increase only really affected some of the management or the make-up of the workers increasingly favoured teenagers)

The other point is that fast-food outlets have a fair bit of freedom to set prices. Most people are in such a hurry that they either don't notice the prices, or are willing to pay the increased prices in order to use their time more efficiently.

P.S. I can't access the report.

OK.

Neu Leonstein, there was a similar case with lift drivers (the dudes who used to stand in the lifts and drive them up and down for you), when the minimum wage was increased from $0.40/hr to $0.70/hr. For the first few years, they noticed no decrease in employment, though automatic lifts (push button, goes to floor) became more common. Funny that.
Implementing technology to do something is often cheaper than paying a person to do it, that is why it happens all the time.

The other point is that fast-food outlets have a fair bit of freedom to set prices. Most people are in such a hurry that they either don't notice the prices, or are willing to pay the increased prices in order to use their time more efficiently.
OK, now you are just making stuff up.

I thought that demand for unskilled labor was somewhat inelastic? The economy needs wage slave grunts to function...

of course, if the minimum wage was raised to a completely absurd amount, then Wal-Mart wouldn't have those customers...

But I'd be willing to bet that their economists have already looked at this question and come to a conclusion about just how much the minimum should be raised to maximize Wal-Mart's total revenue. And I'd be willing to bet that this target wage is what Wal-Mart's lobbyists are proposing behind closed doors to any congresscritter who will listen.

I didn't consider that, I haven't done this sort of economic analysis for awhile. But that's a fair point, if the demand curve is sufficiently inelastic then we can say more likely than not there should be more revenue in Walmart's future depending on the level of the min. wage increase.

But with all of these 'depends on' and 'sufficiently so' clauses it still seems to me that we will need some kind of empirical analysis to be sure. Nevertheless, you do raise a good point.

As far as economists working for Walmart goes I want to offer an anecdote. I heard this one 2 years ago so the specifics are a bit blurry. Economists were asked to calculate the demand elasticity of, I think it was, GM automobiles for wage negotiations with auto union. Now this is a battle of experts situation so you expect some skewed results. Some experts found the elasticity to be about about .2 or so, a low number, and the rest found it to be somewhere ridiculously high (I want to say 100 but that seems way too high).

Anyway, I want to wish Walmart and their diviners good luck.

I probably should have developed my high-jump bar analogy more.

Let us take ourselves over to the athletics pitch, and set up all our high-jump equipment.

Bring on the high-jumpers. Each has a different level of high-jump ability, which we can measure in terms of the height they can clear.

We shall set the bar at 1.8m. Here's what happens. The only people who can succeed are the ones who are able to clear at least 1.8m. Someone who can only clear 1.7m will fail.

If you lift the high-jump bar to 2.0m, you will reduce the number of people able to succeed.

Let us take this over to minimum wage.

Take some people who want work. All have different levels of productivity, which we can measure in terms of $/hr.

We shall set the minimum wage at $10/hr. Here's what happens. The only people who can find work are those with a level of productivity over $10. Someone who only has a level of productivity of $7/hr will fail.

If you raise the minimum wage to $15/hr, you will reduce the number of people who will be able to get work.

Yeah that is the standard analysis from the labor perspective. Basically, you are explaining who will lose their jobs given that some will have to.

I suppose from that perspective then the min. wage is more of a high jump bar for those that can't make the cut. The floor analogy is mostly used at a macro level analysis where it really is a floor for firms and labor in general, you can't fall through it no matter how much you would like to.

You know what else is weird though? Price floors are only effective when they are above the market clearing price. Price ceilings are only effective when they are below the market clearing price. You see the floor is the roof and the roof is the floor. Dismal science indeed. :(

Let me get this straight, Disraeli, not only are you paranoid about the mysterious monstrous ambiguous evil "Gay Lobby", but you think minimum wage is a BAD idea? How about we go back in time to an era when people could barely afford bread, and when employers owned their employees? Surely history taught us once. Don't be so naive.

Implementing technology to do something is often cheaper than paying a person to do it, that is why it happens all the time.
Yes, but you could argue that making the people cost more money makes the machinery more appealing.
OK, now you are just making stuff up.
Not so much. When was the last time you went shopping around between McDonalds and Burger King and <Name of Local Competitor Here>?
On such times as I eat at those sort of places, I just dive in, eat, and run like Hell because I'm late for something. On the other hand, when I go out to buy pots, tupperware, large amounts off paper, or rifles, I spend at least a little time looking around for the right price.
Further, there is the fact that a price increase in a Fast Food chain (which would probably have more customers) will bring more money than a price increase in WalMart. Example, if I sell 1,000 things a day, and raise the price by 1 penny, I'll get $10 more; if I sell 5,000 things, then that penny increase will bring in $50 more.

Implementing technology to do something is often cheaper than paying a person to do it, that is why it happens all the time.

Exactly my point, and the minimum wage can power this tendency by arbitrarily increasing prices. We have automatic lifts because the minimum wage advocates made it too expensive to employ people.

It was largely missed by the people who are supposedly studying this because it took a long time to happen.

OK, now you are just making stuff up.

They do have that freedom to do it, and time preferences are operative in terms of fast-food. The whole idea is that you will get adequate food really quickly. That ability has a premium on it, its something I've noticed frequently in my own personal experiences.

It really depends on why you go to a particular restaurant.

Not so much. When was the last time you went shopping around between McDonalds and Burger King and <Name of Local Competitor Here>?
On such times as I eat at those sort of places, I just dive in, eat, and run like Hell because I'm late for something. On the other hand, when I go out to buy pots, tupperware, large amounts off paper, or rifles, I spend at least a little time looking around for the right price.
Further, there is the fact that a price increase in a Fast Food chain (which would probably have more customers) will bring more money than a price increase in WalMart. Example, if I sell 1,000 things a day, and raise the price by 1 penny, I'll get $10 more; if I sell 5,000 things, then that penny increase will bring in $50 more.

Economy of scale. That's a really good point, that I missed.

You know what else is weird though? Price floors are only effective when they are above the market clearing price. Price ceilings are only effective when they are below the market clearing price. You see the floor is the roof and the roof is the floor. Dismal science indeed.

Yup, and the worst thing is that people are eager to move into such an edifice.

Let me get this straight, Disraeli, not only are you paranoid about the mysterious monstrous ambiguous evil "Gay Lobby", but you think minimum wage is a BAD idea? How about we go back in time to an era when people could barely afford bread, and when employers owned their employees? Surely history taught us once. Don't be so naive.

Make a real argument, or STFU.

Yes, but you could argue that making the people cost more money makes the machinery more appealing.
I recognize that, but I also recognize it is inevitable anyway. Technology becomes infinitely cheaper while people stay the same, even if minimum wage is abolished. It will never be cheaper to employ a human being than it will be to use technology, without minimum wage factored in.


Not so much. When was the last time you went shopping around between McDonalds and Burger King and <Name of Local Competitor Here>?
On such times as I eat at those sort of places, I just dive in, eat, and run like Hell because I'm late for something. On the other hand, when I go out to buy pots, tupperware, large amounts off paper, or rifles, I spend at least a little time looking around for the right price.
I don't go to Hardees because it is expensive as hell - McDonalds, Burger King, and Wendy's all have the same relative prices for all of their menu combos.

P.S. I can't access the report.
Goddammit. I see you need JStore Access for it.

Hmmm, I can only offer the author's rebuttle to a reply written by some other people :( :
www.irs.princeton.edu/krueger/90051397.pdf

I recognize that, but I also recognize it is inevitable anyway. Technology becomes infinitely cheaper while people stay the same, even if minimum wage is abolished.
So we are now recognizing each other. However, technology doesn't become infinitely cheaper because the people who are producing the technology are in business for themselves. Giving everyone a free door-bell hardly makes sense if my business is the manufacturing of door-bells.
I don't go to Hardees because it is expensive as hell.
I don't go to Hardees because the service always seems especially bad and the food tastes like goat crap.
That said, Hardees still turns enough business to keep expanding, and I don't really see that trend dissapearing. This is because (if every franchise opens new branches like McDonalds) when a new restaurant is opened the people in charge insure that it is built somewhere that a lot of people will be rushing by, and possibly planning to stop in.
Further, a restaurant, with limited floorspace, can only have so many people. As a result, when one gets full during the lunch rush, people will go to a more expensive one, simply to save time and effort rather then save a few dimes.

So we are now recognizing each other. However, technology doesn't become infinitely cheaper because the people who are producing the technology are in business for themselves. Giving everyone a free door-bell hardly makes sense if my business is the manufacturing of door-bells.
Infinitely cheaper is like infinitely approaching zero. It never gets there but it gets close.The people who are producing tech are in business for themselves; however, it is being advanced at such a speed that non-cutting edge technology gets cheaper and cheaper. 30 inch plasma screen televisions go down in price, Ford Excursions go up in price.


Further, a restaurant, with limited floorspace, can only have so many people. As a result, when one gets full during the lunch rush, people will go to a more expensive one, simply to save time and effort rather then save a few dimes.
That is not the trend I have observed.

Infinitely cheaper is like infinitely approaching zero. It never gets there but it gets close.The people who are producing tech are in business for themselves; however, it is being advanced at such a speed that non-cutting edge technology gets cheaper and cheaper. 30 inch plasma screen televisions go down in price, Ford Excursions go up in price.
Then we are in agreement as to the facts. A nice way to cap off the night with no arguments forming in my head as I try to sleep.
That is not the trend I have observed.
So you've seen an empty Hardees sitting beside a full McDonalds? Some people really are having problems resisting the McGriddles then. If I have an hour to go out and find food, then why would I waste time standing in line for 10 minutes when the Hardees across the street is empty?

Then we are in agreement as to the facts. A nice way to cap off the night with no arguments forming in my head as I try to sleep.

So you've seen an empty Hardees sitting beside a full McDonalds? Some people really are having problems resisting the McGriddles then. If I have an hour to go out and find food, then why would I waste time standing in line for 10 minutes when the Hardees across the street is empty?
You have to walk across the street to get from one fast-food joint to the next? That is just barbaric. Here they are either side by side or part of the building.

Wal-Mark has advocated increasing the Federal Minimum Wage from $5.15.

Snipped!


What is that in Canadian dollars? I have no concept of American money.

What is that in Canadian dollars? I have no concept of American money.

umm...somewhere around $7 CAD I think. Maybe $8.

Don't quote me on that.:rolleyes:

I misoverestimated...$6.09 CAD. Damn, the American dollar's farther in the crapper than I thought:rolleyes:

http://www.cambridgefx.com/foreign-exchange/currency-rates.html

umm...somewhere around $7 CDN I think. Maybe $8.

Don't quote me on that.:rolleyes:

5.15 USD
United States Dollars = 6.08395 CAD
Canada Dollars
1 USD = 1.18135 CAD 1 CAD = 0.846489 USD

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

On comes the juggernaut of government. They set a minimum wage, $10/hr. Here's what happens. My wages are unaffected, if the employer reduces them, I'll find someone else. Neu Leonstein gets fired, because it is illegal to pay him $8/hr, and it doesn't pay to employ him at $10/hr.


An excellent analysis.


Here's the nub of this particular issue, Wal-Mart actually pays more than the Federal Minimum Wage, their average wages are between $8.23 and $9.68, so even a 50% increase leaves them unaffected.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Thoughts, anyone?

I agree.

And before people go on with OMG WALMART IS TEH EVIL OF CAPITALISM (oops too late :P ) lets remember how many anti-capitalists advocate the minimum wages that crush small businesses and leave megacorporations laughing with their state-assisted successes.

5.15 USD
United States Dollars = 6.08395 CAD
Canada Dollars
1 USD = 1.18135 CAD 1 CAD = 0.846489 USD

In that case, yes, minimum wage should be increased.

umm...somewhere around $7 CDN I think. Maybe $8.
It was about $6.10 Canadian as of 5:27 PM today.
Don't quote me on that.:rolleyes:
Too late.

An excellent analysis.



I agree.

And before people go on with OMG WALMART IS TEH EVIL OF CAPITALISM (oops too late :P ) lets remember how many anti-capitalists advocate the minimum wages that crush small businesses and leave megacorporations laughing with their state-assisted successes.

Hey, I think Wal-Mart is t3h evil and I'd like to think I've offered coherent economic reasoning behind my cynicism as to why Wal-Mart would make such a proposal. No one has tried to refute it for the last ten posts on this thread now, for General that's gotta say something:p

It was about $6.10 Canadian as of 5:27 PM today.

Too late.

In case you hadn't noticed...


Damn, the American dollar's farther in the crapper than I thought:rolleyes:

Hey, I think Wal-Mart is t3h evil and I'd like to think I've offered coherent economic reasoning behind my cynicism as to why Wal-Mart would make such a proposal. No one has tried to refute it for the last ten posts on this thread now, for General that's gotta say something:p

Lifting the minimum rate when you're paying above doesn't affect Walmart's pay rates. Anyone paying the minimum when there's better paying work around will probably get the bottom of heap employees anyway.

The reply you posted, Leonstein, did not make it clear the exact provisions of New Jersey's minimum wage laws with regard to the age of employees.

If New Jersey follows the trend (and I can't see any reason for it not to), most of the employees are very young. In most cases, teenagers are not subject to minimum wage laws on the grounds that they live off their parents and only work for a little spending money.

In case you hadn't noticed...
When I started writing my post, that reply wasn't yet available for my perusal.

Hey, I think Wal-Mart is t3h evil and I'd like to think I've offered coherent economic reasoning behind my cynicism as to why Wal-Mart would make such a proposal. No one has tried to refute it for the last ten posts on this thread now, for General that's gotta say something:p

I missed it, but then you should note how I've made one post in this thread that doesn't refute anyone else's post! Usually I'm attempting to refute at least 10 others in one post. I'm not even in refutation-mode. Catch me tomorrow instead. (That way there'll be enough refutation-needy posts to fill my refute-mode quota!)

Lifting the minimum rate when you're paying above doesn't affect Walmart's pay rates. Anyone paying the minimum when there's better paying work around will probably get the bottom of heap employees anyway.

Um, I argued earlier in the thread that Walmart was trying to find new ways of growing revenue (and argued that increasing the minimum would achieve that), and argued that it would hurt Walmart's competitors.

Apparently you missed that, because I know that lifting the minimum wouldn't have a huge effect on Walmart's labor expenses.:p

When I started writing my post, that reply wasn't yet available for my perusal.

Meh, it was edited in after I calculated the exchange rate so you might not have caught it anyway.

Because paying for someone elses healthcare is not my responsibility. Which it would become if the government paid for it because then taxes would have to go up, and the government should stay out of my wallet. After all, that's where what's left of my minimum wage paycheck goes.

*knocks on North Appalachia's head* Hello?! I'm getting paid NZ$11.20 per hour, which puts me around where the average Walmart employee gets paid, and yet, I have health care provided by the government.

You pay taxes to the government, and what do you get out of it? the US is probably one of the most heavily over regulated, over taxed people on earth, and you're honestly expecting me to believe that it would be impossible to pay for a public health care system?!

You guys have state tax, federal tax, this tax that f*cking tax; Jesus Christ, little wonder there is a max exodus of companies looking for cheaper places to produce things; if it weren't for the insane elevel of protectionism that the US government imposes at its boarders, I'd doubt big time that any companies would waste their time in the US.

Um, I argued earlier in the thread that Walmart was trying to find new ways of growing revenue (and argued that increasing the minimum would achieve that), and argued that it would hurt Walmart's competitors.

Apparently you missed that, because I know that lifting the minimum wouldn't have a huge effect on Walmart's labor expenses.:p

Bit slack around reading thru a thread today. :D
Mighty hot day where I am. 30C+

*knocks on North Appalachia's head* Hello?! I'm getting paid NZ$11.20 per hour, which puts me around where the average Walmart employee gets paid, and yet, I have health care provided by the government.

You pay taxed to the government, and what do you get out of it? the US is probably one of the most heavily over regulated, over taxed people on earth, and you're honestly expecting me to believe that it would be impossible to pay for a public health care system?!

Australia isn't far behind in the taxation stakes and our health system is near collapse.

*knocks on North Appalachia's head* Hello?! I'm getting paid NZ$11.20 per hour, which puts me around where the average Walmart employee gets paid, and yet, I have health care provided by the government.

You pay taxed to the government, and what do you get out of it? the US is probably one of the most heavily over regulated, over taxed people on earth, and you're honestly expecting me to believe that it would be impossible to pay for a public health care system?!

You should see what we use tax money on... We definitely don't have our priorities straight.

Australia isn't far behind in the taxation stakes and our health system is near collapse.

The Australian system is at the brink of collapse because the government would rather spend money on employing more public servants and creating more government departments than needed; I was in Canberra for little unde 3 years, and it is remanicint of New Zealand 30 years ago; when the public service had so many people working for them, they had to get them to make chairs for other government departments, just to keep their occupied.

The only thing that allows the massive bloat in the Australia system is the fact that Australia rides ontop of a large amount of mineral wealth, but the day will come, and the minerals will cease to be mined; and Australia will be in the same position as New Zealand.

You should see what we use tax money on... We definitely don't have our priorities straight.

What I find funny is the uncompetitive defence contracts that are given out; the US government might as well write a cheque to Boeing and McDonald Douglas each year, regardless of whether they receive something or not, because the current precurement is the exact reason why no one in the pentagon can locate the $10,000 toiletsets and $50,000 paper weights that apparently they need to 'fight the war on terrorism'.

How about instead of the defence force whinging about more money, they use the money in a smarter way; get some damn efficiency out of the money being spent rather than simply using it to prop up the defence industry - thus a pork barelling exercise on the politicians behalf.

Not so much. When was the last time you went shopping around between McDonalds and Burger King and <Name of Local Competitor Here>?
And being the good economists that they are, Kruger and Card had a look into prices and found that the Fast Food Places did indeed raise their prices and so passed on the extra burden to the consumers.
Interestingly though, there seemed to be no evidence that stores more affected by the minimum wage increase raised their prices more. They reckon that competition stops them from doing that.

And finally, they also looked into new McDonald's Branches being opened, and found that higher minimum wages did not deter anyone from opening a new one.

So to summarise the original article (some valid criticisms are dealt with in the rebuttal I posted above):
There was no evidence suggesting that employment had decreased.
The statistical analysis actually suggests that employment increased - which is strange.
There was some evidence that workers stayed on minimum wage for longer before they got a raise.
Prices were driven up - but competition resulted in the most affected stores losing profit.
Despite that, there seemed to be no downturn in the opening of new stores.

That case brings to light another aspect of a minimum wage: It is a politically easy form of taxation and redistribution.

Interestingly though, there seemed to be no evidence that stores more affected by the minimum wage increase raised their prices more. They reckon that competition stops them from doing that.

This is the "marginal producers" critique of the minimum wage, and goes to the heart of the issue I brought up in the initial post.

The marginal producers get less profitable as a result of minimum wage, and increases thereof. Larger producers can handle it for various reasons, or are simply unaffected by it.

the minimum wage is much bigger than walmart. We arent suffering from inflation, so raising the minimum wage at this point is a good move.

maybe Wal-Mart is just trying to give the working man a break that would be a nice thing to do (especially getting near Christmas time:) )

I say we all go to Wal-Mart (ASDA in the U.K) and buy stuff *accepts bag of money*

the minimum wage is much bigger than walmart. We arent suffering from inflation, so raising the minimum wage at this point is a good move.

Would you care to develop that point? Starting with why the minimum wage is a good idea at all.

maybe Wal-Mart is just trying to give the working man a break that would be a nice thing to do (especially getting near Christmas time )

Depends on how you define break. If you mean a rest, you're right. They'll get a very long rest.

This isn't about what Wal-Mart pays, it is about what their competitors pay, and what they can afford to pay.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Thoughts, anyone?What you wrote there is what I thought when I saw the thread title.

Although a minimum wage can be good if people share the reduced work load (this is accounting for leisure time being a good), it's very rarely like that because from a business point of view it's cheaper to employ one person for five hours than five people for one hour (up-until overtime pay).

To the chap who's lost his trousers: why is minimum wage a good thing?
1. Gives workers purchasing power. This is beneficial to the economy as a whole.

2. Increases quality of life for workers. Back in pre-minimum wage days, workers slaved away all day for a dollar and then collapsed upon the stone floor of their tenement room in which they lived with 30 other people.

maybe Wal-Mart is just trying to give the working man a break that would be a nice thing to do (especially getting near Christmas time:) )

I say we all go to Wal-Mart (ASDA in the U.K) and buy stuff *accepts bag of money*
I hope you don't actually believe this. Disraeliland's explanation, that Wal*Mart is trying to price out its competition is probably true.

That case brings to light another aspect of a minimum wage: It is a politically easy form of taxation and redistribution.

Yes. It's vastly superior to welfare.

Do WalMart employees get anything else other than higher than average hourly rates - like other benefits?

I scrolled and didn't see a response to this, so here goes-

Health Benefits: Accidental Death & Dismemberment, AFLAC Cancer Insurance, Business Travel Accident, Company-Paid Life Insurance, Dental Coverage, Long-Term & Short-Term Disability, Medical Coverage, & limited Medical Plan called STARBRIDGE

Money: Associate Discount Card, Associate Stock Purchase Plan, "Financial Services", Pay Programs (i.e. Bereavement Pay, Holiday Bonus, Holiday Pay, Illness Protection Plan, Incentive Programs, Jury Duty, Military Pay, Paid Break Periods, Pay For Performance, Personal Time, Premium Pay, Shift Differential Pay, Travel Pay, Vacation Pay), Profit Sharing & 401(k) Plan, Sam's Club Membership, Sam$hare, Stakeholder Bonus and Stock-Secured Line of Credit Program

Home: Childcare Discounts, Emergency Volunteer Time, G.E.D. Reimbursement, Hotel/Travel Discounts, Leave-of-Absence Programs(i.e. Medical, Military, Personal), Discounts Available for Education including Foreign Language Classes, Higher Education, Personal Growth Classes & Test Preparation Courses, and Scholarships

There is also an "Open-Door" Policy wherein an Associate may speak to a Manager about any work-related issues that Associate might have (including with the Manager) without fear of reprecussions.

No, I don't work for Wal-Mart. I just know someone who does & thought I'd answer your question. :)

1. Gives workers purchasing power. This is beneficial to the economy as a whole.

What gives worker purchasing power is trade, that they trade their time/energy/talent in exchange for something (usually money)

2. Increases quality of life for workers. Back in pre-minimum wage days, workers slaved away all day for a dollar and then collapsed upon the stone floor of their tenement room in which they lived with 30 other people.

No, it doesn't.

You're adhering to "floor" theory of what the minimum wage.

The theory goes "the minimum wage is like a floor. You can't go through the floor, and if you raise it, everything on it is raised. Raising the minimum wage merely raises everyone's wages".

This theory is false.

The minimum wage is more like a high-jump bar.

Imagine a high jump event. We have the high jump bar, and the athletes. Each athlete has a different level of athletic ability, which in this context is measured in the height he can clear.

We'll have four athletes, and the heights they can clear

John: 2m
Paul: 1.95m
George: 1.75m
Ringo: 1.85m

In the first round, the bar is set at 1.7, and all of them succeed.

Round 2: The bar is moved up to 1.9m. George and Ringo fail.

Lets take this to minimum wage. Everyone has a different producivity level, which can be measured in $/hr, in other words, the amount of money at which it pays for an employer to gove someone a job.

4 workers, and their productivity levels.

John: $15/hr
Paul: $20/hr
George: $8/hr
Ringo: $10/hr

In a free market system, all of them could probably find jobs, there's nothing stopping them.

On comes big government. It sets a minimum wage of $10/hr. George will get sacked. It doesn't make economic sense to employ him at $10/hr, and employing him at $8/hr is illegal.

Then, Wal-Mart comes along and says "The minimum wage should be $15/hr". Mr. Wal-Mart is hailed by certain folk as the friend of the worker, though I doubt Ringo, who has just been sacked will agree.

The minimum wage protects big business from competition, and (in this little example) it protects John and Paul because their level of productivity is above the minimum wage.

By the way, if you're going to give us the Monty Python view of the pre-minimum wage world, please give us some evidence, and context (meaning actually make the connection between minimum wage and improving conditions excluding other factors like advancing technology)

http://www.davidpbrown.co.uk/jokes/monty-python-four-yorkshiremen.html

Yes. It's vastly superior to welfare.

Its not vastly superior. The only people who get advantage out of it are public servants (who's workloads are reduced because private firm do the work), and politicians who get to forcefully seize and redistribute money without saying to the voters those three toxic, vote-destroying word's "We're raising taxes".

The minimum wage does make the fiscal problems of a welfare state worse because the increasing unemployment makes greater demands on it.

Well I believe that a minority of uber-commie/socialist/w/e Wal-Mart haters will now suffer an aneurism:
"Wal-Mart advocates raising minimum wage! But argh, this is coming from the Great Satan Wal-Mart! But then miniumum wage won't go up! Yet if it does go up I have to agree with Wal-Mart! AAARGH!" :headbang:

So that's what those explosions I heard were.

Wal-Mark has advocated increasing the Federal Minimum Wage from $5.15.

Link: http://www.mises.org/story/1950

Thoughts?

Here are mine.

In the first place, the minimum wage is a bad idea. People (wrongly) treat it as a "floor" under wages, if you raise the floor, all the wages go up.

I prefer to think of it as a high jump bar. Here's why.

Different people have different levels of productivity (which we can measure in $/hr) in the same way as different people have different levels of athletic ability.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

On comes the juggernaut of government. They set a minimum wage, $10/hr. Here's what happens. My wages are unaffected, if the employer reduces them, I'll find someone else. Neu Leonstein gets fired, because it is illegal to pay him $8/hr, and it doesn't pay to employ him at $10/hr.

(Sorry, Leonstein, I actually think you're more productive than $8/hr :D ;) )

Here's the nub of this particular issue, Wal-Mart actually pays more than the Federal Minimum Wage, their average wages are between $8.23 and $9.68, so even a 50% increase leaves them unaffected.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Thoughts, anyone?

Actually I think Walmart is doing this for PR. They pay more then minumum wage, but less then a lot of their competetors. They keep getting bad publicity for mistreating their employees. So now they come out and look all pro-workers rights and stuff, when they are responsible for union busting and have been accused of not paying for overtime (note I don't particularly like unions and don't know what I feel about minumum wage). It seems like Walmart is always the example people use when they talk about employee mistreatment. I'm not saying they are the worst about this, but I am saying they have a strong reason to want to look supportive of workers.

Good point.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.
The problem is when a standard of living that is acceptable in terms of the wealth/resources/productivity of a society costs $9.50 on the maximum number of hours that Neu or some other person can work even if their wage hours are limited only by his need to eat, sleep, and excrete.

What good is a job if it doesnt avail you of a minimal standard of living, and does not facilitate the pursuit of life-goals etc? Would in such a case a person be necessarily better off working than say giving burglery a try?

Since all Nuesthat person's non-'bodily function' (ie eating, sleeping excreting) time is devoted to working and yet still this only provides less nutrician than would be offered in prison, no better or even worse accomodation than they would be provided with in prison, clothing of an equal or lesser standard than would be offered in prison, no means to pay for medical needs/emergencies which would be taken care of by the state if they were in prison, and evidently, in prison they can earn a small amount of 'pin' money while working less hours than out of prison, why wouldnt they give crime a whirl?

Even if they were unsuccessful and got caught, in such a circumstance being in prison appears to actually be a gain over being out, and there is some chance that they will profit and remain free as a result of commiting burglary or some similar crime. Why on earth would they bother to continue to work for less than subsistence levels (as per their society) when commiting crime is a comparitive (to their current situation) win/win more situation?

It seems evident to me that rather than being paid what they are able to produce, most workers are actually paid less than they produce. So far as I can tell the lower down the wage/salary ladder a person is, the more likely that person will be paid less in wages/salary than they produce, and the greater that margin (between their production and wage/salary) will be. Conversely it appears to me that the further up the wage/salary ladder a person is, the more likely their wage/salary will either reflect or possibly even exceed their production value.

Further 'who is paid what' can be arbitary. In many cases two people of equal productive value capacity recieve different wages/salary. In other cases, two people of unequal productive value capacity recieve the same wage.

It seems clear to me that wages/salaries are useless if they dont secure a fair share of resources for the person being paid them.

Of course the biggest flaw with the 'production value' theory is that often what one person can produce in profit for another person or entity is actually in real terms not all that productive when compared to other people's productive activities.

I suggest that many people are as productive in real terms as Britney Spears.

In fact so far as the social group is concerned, just what added value does Britney Spears produce (within/for the society) as compared to a firefighter who has through their labour prevented many fires from causing catostrophic damage (as opposed to repairable 'surface'/non structural' damage)

and

has saved several lifes (including that of a medical researcher who later went on to discover a medical proceedure/application/technology/some other thing, that added greatly to the real value/resources of the society concerned),

whilst regularly placing their lives on the line, working in extreme discomfort, and generally appearing (to me at least) a great deal more 'productive' and value-adding, but clearly la great deal less well paid than Britney Spears...

So you've seen an empty Hardees sitting beside a full McDonalds? Some people really are having problems resisting the McGriddles then. If I have an hour to go out and find food, then why would I waste time standing in line for 10 minutes when the Hardees across the street is empty?
Yes, I have. Down the street from myself on the major highway there is a Sonic, Wendy's, Taco Bell, KFC, McDonalds, Hardees, and an Arby's. The Hardees is directly across the street from the McDonalds and not across the highway, but directly across the feeder street. McDonalds regularly has a full parking lot with a near building wrap around line at the drive-through window. Hardees, at peak hours, has maybe two or three more cars in the parking lot than those that belong to the three people that work there. The drive-through may have at most five cars, and that would only be due to backup because serving time is very slow since only three or four people are working the entire place.
I have seen the literally overflowing McDonalds next to the Hardees with four cars in the drive through (drive-through service is faster than in-store) and a practically empty parking lot.


And I would argue with Disraeliland, but I think I would rather try to defeat the evil of Lex Luthor without killing him so that he keeps coming back like a cockroach.

The problem is when a standard of living that is acceptable in terms of the wealth/resources/productivity of a society costs $9.50 on the maximum number of hours that Neu or some other person can work even if their wage hours are limited only by his need to eat, sleep, and excrete.

What good is a job if it doesnt avail you of a minimal standard of living, and does not facilitate the pursuit of life-goals etc? Would in such a case a person be necessarily better off working than say giving burglery a try?

Since all Nuesthat person's non-'bodily function' (ie eating, sleeping excreting) time is devoted to working and yet still this only provides less nutrician than would be offered in prison, no better or even worse accomodation than they would be provided with in prison, clothing of an equal or lesser standard than would be offered in prison, no means to pay for medical needs/emergencies which would be taken care of by the state if they were in prison, and evidently, in prison they can earn a small amount of 'pin' money while working less hours than out of prison, why wouldnt they give crime a whirl?

The basic problem with all you've said is that at he can't be employed at over $8/hr because no one will pay him more.

You can point out all the problems you like about his situation, but he's certainly better off working than not.

You seem to be saying that a minimum wage of at least $9.50/hr will give Leonstein a "living wage". You are not correct. It will reduce's Leonstein's pay from $8/hr to $0/hr.

You're also treating prison like some sort of hotel.

In terms of comparative advantage, Leonstein is clearly better off without a minimum wage.

It seems evident to me that rather than being paid what they are able to produce, most workers are actually paid less than they produce. So far as I can tell the lower down the wage/salary ladder a person is, the more likely that person will be paid less in wages/salary than they produce, and the greater that margin (between their production and wage/salary) will be. Conversely it appears to me that the further up the wage/salary ladder a person is, the more likely their wage/salary will either reflect or possibly even exceed their production value.

The "labour theory of value"? Firstly, its rubbish because it doesn't take into account what consumers will do. Secondly, your bringing it up is based upon a misunderstanding of what I said. I didn't the "the value of what he can produce", I said (basically) "the best price at which he can sell his labour services".

Further 'who is paid what' can be arbitary. In many cases two people of equal productive value capacity recieve different wages/salary. In other cases, two people of unequal productive value capacity recieve the same wage.

Now you're on to something. The price is not fixed to a certain value, it is what the customer is prepared to pay (remember that the employer/employee relationship is a customer/vendor relationship, with the employee selling his services to the employer.

It seems clear to me that wages/salaries are useless if they dont secure a fair share of resources for the person being paid them.

Define fair share.

Of course the biggest flaw with the 'production value' theory is that often what one person can produce in profit for another person or entity is actually in real terms not all that productive when compared to other people's productive activities.

I suggest that many people are as productive in real terms as Britney Spears.

In fact so far as the social group is concerned, just what added value does Britney Spears produce (within/for the society) as compared to a firefighter who has through their labour prevented many fires from causing catostrophic damage (as opposed to repairable 'surface'/non structural' damage)

and

has saved several lifes (including that of a medical researcher who later went on to discover a medical proceedure/application/technology/some other thing, that added greatly to the real value/resources of the society concerned),

whilst regularly placing their lives on the line, working in extreme discomfort, and generally appearing (to me at least) a great deal more 'productive' and value-adding, but clearly la great deal less well paid than Britney Spears...

Not relevant. What is relevant is the very high demand for Britney Spears tripe.

Price is defined subjectively, but the general rules are supply and demand.

You seem to be saying that a minimum wage of at least $9.50/hr will give Leonstein a "living wage". You are not correct. It will reduce's Leonstein's pay from $8/hr to $0/hr.
No, it will increase his pay by $1.50.


In terms of comparative advantage, Leonstein is clearly better off without a minimum wage.
Unless of course he isn't a teenager living at home with his parents.

Would you care to develop that point? Starting with why the minimum wage is a good idea at all.

It puts more money in the poorest sector's pockets. The lower your income, the larger the percentage of your income that gets spent (as compared to the percentage that is saved). This is a well known economic principle based on the proven fact that people who have less money need all the money they have and cant afford to save. The more money that is spent, the more money that flows through the system. The more money that flows through the system, the more taxes the government collects. Etc, etc. From a macro-economic perspective it is a good move unless there is a danger of inflation. Right now, there isnt a danger of inflation, so right now it is a good move. You are taking money from people who save a large percentage of it (corporations and wealthier people) and putting it into the pockets of people who typically spend 100% of it. We want people spending right now, we dont want them saving. Therefore this is a great move right now.

The rumour in the UK is that Walmart is only advocating increasing the minimum wage in an attempt to improve its brand image.

- Apparently the company is losing business (particularly in its international markets, eg ASDA in the UK) due to socially-conscious shoppers boycotting its businesses.

Although, I have to say, the crushing less financially resilient competitors argument is an interesting one that I hadn't considered.

Regarding the "high - jump" argument on the minimum wage - I'm with whoever said that demand for unskilled labour is relatively inelastic and is unlikely to be effected by it. A good support for this argument is the UK, where the minimum wage was only introduced in the last 8 years; apparently with no effect on employment. An increase in the US minimum wage is also unlikely to have an effect because it is currently so low that it has negligible economic effect anyway.

It seems to me that more money equals more things being bought meaning better for the economy. Though I'm sure all the companies have their think-tanks in the backrooms trying to think of ways to screw customers.

Think-tank guy 1: "Well, the minimum wage is increasing."
TT guy 2: "That is excellent news, we can use it as an excuse to raise our product prices to match the minimum wage increase."
TT guy 3: "Yeah, and since it would never really hurt our profit anyway we could use the extra profit to increase the CEOs salary, we will get a raise for this."

No, it will increase his pay by $1.50.

The transition from $8 to $0 is an increase of $1.50. Surely not.

I'll explain it again. Leonstein cannot sell his labour services for more than $8/hr. No one is prepared to pay his $9.50/hr because his services simply aren't worth that much.

Since it is illegal to pay his less than $9.50/hr, anyone who can only sell his services for $8/hr will not be able to sell his services.

Did you read what I've written before?

Unless of course he isn't a teenager living at home with his parents.

With a minimum wage of $9.50/hr, he is unemployed. Clearly it is better to be employed, and earning money than not.

It puts more money in the poorest sector's pockets.

Surely putting them out of work puts less money in their pockets.

You should read this post, and previous posts.

The more money that is spent, the more money that flows through the system. The more money that flows through the system, the more taxes the government collects. Etc, etc. From a macro-economic perspective it is a good move unless there is a danger of inflation. Right now, there isnt a danger of inflation, so right now it is a good move.

What you describe is in fact inflation. Any rise in the amount of money going around without an equivilant rise in the amount of production is inflation.

You are taking money from people who save a large percentage of it (corporations and wealthier people) and putting it into the pockets of people who typically spend 100% of it. We want people spending right now, we dont want them saving. Therefore this is a great move right now.

If it was in their economic interests to spend, they would do so. In any case, the hoarding idea is a fallacy. Money that is put into banks is always spent because it is always lent out. In fact, with fractional reserve banking, for each dollar that is saved, perhaps $4 are lent. So, putting it into the pockets of people (we are of course assuming that a minimum wage rise won't have the main effect it has) who save less is actually doing the reverse of what you want.

It seems to me that more money equals more things being bought meaning better for the economy. Though I'm sure all the companies have their think-tanks in the backrooms trying to think of ways to screw customers.

Think-tank guy 1: "Well, the minimum wage is increasing."
TT guy 2: "That is excellent news, we can use it as an excuse to raise our product prices to match the minimum wage increase."
TT guy 3: "Yeah, and since it would never really hurt our profit anyway we could use the extra profit to increase the CEOs salary, we will get a raise for this."

Well...you see...that's just inflation.

Regarding the "high - jump" argument on the minimum wage - I'm with whoever said that demand for unskilled labour is relatively inelastic and is unlikely to be affected by it.

The demand for unskilled labour is elastic to the extent that it competes with technology. An example is the lift drivers I mentioned earlier. When you arbitrarily increase the price of unskilled labour, you make people think of machines.

The reductio ad absurdum of this is duplication of documents. Let's say I want 1000 copies of a letter quickly, and I do this sort of thing often, say 10 times a week. Do I pay 1000 secretaries to write/type it out while I dictate it?

If I only have to pay them $0.10/hr, then yes I do. It only costs me $100 a time.

If I have to pay them $10/hr, it costs me $10000 a time. Under these circumstances, I should buy a photocopier. By the way, I would also sack the secretaries.

The transition from $8 to $0 is an increase of $1.50. Surely not.
I am not using your magic math numbers to calculate the 1.50, I am using real math. $8 to $9.50 is an increase of $1.50.

I'll explain it again. Leonstein cannot sell his labour services for more than $8/hr. No one is prepared to pay his $9.50/hr because his services simply aren't worth that much.
Which is the point of minimum wage, peoples' skills are only worth as much as the employer says they are worth, and the employer is of course an unbiased source who wants to treat employees as well as possible.


With a minimum wage of $9.50/hr, he is unemployed. Clearly it is better to be employed, and earning money than not.
Theory and supposition.

The transition from $8 to $0 is an increase of $1.50. Surely not.

I'll explain it again. Leonstein cannot sell his labour services for more than $8/hr. No one is prepared to pay his $9.50/hr because his services simply aren't worth that much.

Since it is illegal to pay his less than $9.50/hr, anyone who can only sell his services for $8/hr will not be able to sell his services.

Did you read what I've written before?

I don't agree with this because I think that the demand for unskilled labour is relatively inelastic.

But even then, what you are saying isn't a good economic argument.

X can only sell his services for $8 an hour in an unregulated market. But, the actual productivity of X will be a lot more than that, because the company is making profit from employing him. Say the actual productivity of X is as low as $10/hr - the company will still employ him if the minimum wage is $9.50 per hour, because it would still lose profit of $0.50 /hr if it stopped employing him.

Equally, a company employs all its check-out staff from Group X workers for $8 per hour. This is the market price for this type of work, but these employees are essential for the running of the business. The company will still employ them for $9.50/hr.



If it was in their economic interests to spend, they would do so. In any case, the hoarding idea is a fallacy. Money that is put into banks is always spent because it is always lent out. In fact, with fractional reserve banking, for each dollar that is saved, perhaps $4 are lent. So, putting it into the pockets of people (we are of course assuming that a minimum wage rise won't have the main effect it has) who save less is actually doing the reverse of what you want.

Aside from the fact that I'm not a big fan of interest-charged lending in the first place...there is a balance to be found between saving and spending. Without people earning enough money to be able to afford borrowing, this would negate the benefit of saving...so actually, increasing the minimum wage and thereby increasing the number of people able to afford to borrow, would actually increase the benefit to others of saving.

I am not using your magic math numbers to calculate the 1.50, I am using real math. $8 to $9.50 is an increase of $1.50.

Making someone unemployable doesn't increase their wage. It reduces it to zero.

Which is the point of minimum wage, peoples' skills are only worth as much as the employer says they are worth, and the employer is of course an unbiased source who wants to treat employees as well as possible.

That is not the point of minimum wage. Minimum wage is at best an exercise in redistribution, and at worst vote-buying with bad cheques.

Employers pay people not out of generosity but out of ex ante advantage. They make the agreement to exchange money for services because the value the services more than the money.

With young Leonstein, he can convince an employer that his services are worth more to the employer than his $8/hr. He cannot convince him that his services are worth the employer's $9.50/hr.

Now, since it is illegal, under the minimum wage to pay less than $9.50/hr, Leonstein cannot convince an employer that his services are worth paying for, because the amount at which he can sell his services will put the employer in prison.

Theory and supposition.

Really? And it is firmly rooted in fact that any employer will accept an arbitrary increase in labour costs, and not try to reduce them by firing workers?

The demand for unskilled labour is elastic to the extent that it competes with technology. An example is the lift drivers I mentioned earlier. When you arbitrarily increase the price of unskilled labour, you make people think of machines.

The reductio ad absurdum of this is duplication of documents. Let's say I want 1000 copies of a letter quickly, and I do this sort of thing often, say 10 times a week. Do I pay 1000 secretaries to write/type it out while I dictate it?

If I only have to pay them $0.10/hr, then yes I do. It only costs me $100 a time.

If I have to pay them $10/hr, it costs me $10000 a time. Under these circumstances, I should buy a photocopier. By the way, I would also sack the secretaries.

Yes, but you presume that most unskilled tasks can be performed by machines. For most tasks it is impossible to substitute machinery for unskilled labour, or at least the cost of producing such machinery is prohibitively high. Also, the increase in technology increases the number of skilled employees required; which in the long-term is of more benefit to the economy.

Furthermore, a complete, or even significant proportional replacement of unskilled labour with machinery won't happen without some sort of economic revolution, because this would effectively cause an economic crash. The low income section of the economy is essentially what the rest of the economy leeches off - if they have no income, they won't buy anything and the markets would crash.

I don't agree with this because I think that the demand for unskilled labour is relatively inelastic.

Unskilled workers compete with machines.

X can only sell his services for $8 an hour in an unregulated market. But, the actual productivity of X will be a lot more than that, because the company is making profit from employing him. Say the actual productivity of X is as low as $10/hr - the company will still employ him if the minimum wage is $9.50 per hour, because it would still lose profit of $0.50 /hr if it stopped employing him.

We're not discussing his actual productivity, we're discussing the maximum price at which he can sell his labour services, which is $8/hr.

If he could sell his services for $9.50/hr, he would.

Your arguments based on margins being high enough to absorb an increase. A reduction in profits caused by the increase in costs, or the reduction in sales caused by increasing the shelf price of the products, or the inflationary effects, will give the firm trouble, its loan payments, and stock price for example.

A very large, very prosperous firm might be able to absorb this, a smaller firm, a less prosperous firm probably won't.

Equally, a company employs all its check-out staff from Group X workers for $8 per hour. This is the market price for this type of work, but these employees are essential for the running of the business. The company will still employ them for $9.50/hr.

Your argument here is based upon the supposition that the firm can afford this, that it is financially. If a firm employs its check-out staff at $8/hr, and they're not doing so well, and the minimum wage is increased to $9.50/hr, they will close stores.

Its no good assuming that everyone works for a firm thats doing great. Wal-Mart's doing great. What about firms that are doing poorly, and can't afford arbitrary increases in costs?

I mean, all this "productivity theory" is complete mince. Companies never pay people anywhere near their productivity value. Usually the link between wage and productivity is tenuous at best. Especially in relation to staff like check-out operators. Without check-out operators, Walmart would make absolutely no money, so they account for all of the company's productivity. But anyone can perform these tasks. There is no relation between "productivity" and "wage" (I am aware of the theoretical economic flaws in this argument, but it always helps to step outside of economic theory and see the objective reality). There will also be some check-out operators who can process transactions much faster than others, but they will still all recieve the same wage - there is no perfect competition in the wage market, the company is effectively a monopsony, or at least has a dominant position.

Making someone unemployable doesn't increase their wage. It reduces it to zero.
I see you don't udnerstand I am not recgonizing your manner of thinking. They will not be unemployed, some one still has to do the job.


Unskilled workers compete with machines.

Unskilled labor is not no-skilled labor and skilled workers compete with machines. When you invent a machine that can mop, sweep, clean windows, vacuum, and paint walls, then you can say something about unskilled laborers competing with machines.

Yes, but you presume that most unskilled tasks can be performed by machines. For most tasks it is impossible to substitute machinery for unskilled labour, or at least the cost of producing such machinery is prohibitively high. Also, the increase in technology increases the number of skilled employees required; which in the long-term is of more benefit to the economy.

Its impossible, or non-viable now. Then again, it was impossible and non-viable to use cranes to move large sections of buildings when the Great Pyramid was built, so they had to use human labour (at least according to the least insane accounts).

The only time when the cost of replacing human labour with machines is prohibative is where it costs less to use human labour. When it gets to cost more, humans will be replaced by machines. That's my point.

Furthermore, a complete, or even significant proportional replacement of unskilled labour with machinery won't happen without some sort of economic revolution, because this would effectively cause an economic crash. The low income section of the economy is essentially what the rest of the economy leeches off - if they have no income, they won't buy anything and the markets would crash.

You seem to be assuming there will be no adaptation. In reality, the replacement of humans with machines (assuming the constant arbitrary increases in labour costs by the state) will follow the advancement of technology.

Its nice to find another who sees minimum wage as the sham that it is.
What's good for everybody is good for the Syndicate, so to speak.

I'm sorry, I must not understand. So minimum wage is a sham? You are in favor of letting an employer pay his employee as little as he wants, and then saying 'Take it or leave it, I can pay someone else less.'

Sure they can try that now, but now there is a level they can't threaten employees below.
Before minimum wage they could pay you a nickel, and you'd have to make that stretch for weekly groceries, a trolley ride, a slice of mincemeat pie, and have enough left over to take your swell gal to the talkie pictures.;)

Unskilled workers compete with machines.



We're not discussing his actual productivity, we're discussing the maximum price at which he can sell his labour services, which is $8/hr.

If he could sell his services for $9.50/hr, he would.

Your arguments based on margins being high enough to absorb an increase. A reduction in profits caused by the increase in costs, or the reduction in sales caused by increasing the shelf price of the products, or the inflationary effects, will give the firm trouble, its loan payments, and stock price for example.

A very large, very prosperous firm might be able to absorb this, a smaller firm, a less prosperous firm probably won't.



Your argument here is based upon the supposition that the firm can afford this, that it is financially. If a firm employs its check-out staff at $8/hr, and they're not doing so well, and the minimum wage is increased to $9.50/hr, they will close stores.

Its no good assuming that everyone works for a firm thats doing great. Wal-Mart's doing great. What about firms that are doing poorly, and can't afford arbitrary increases in costs?

And you assume that companies cannot reduce their costs in other ways.

I'm not saying that there will definitely not be a reduction in the number of jobs, I am just saying that there is not a clear cut off in the way you are saying. You are effectivly saying that all workers who are productive below the minimum wage point will become unemployed, when clearly it is only a small proportion of those who operate below the minimum wage who will become unemployed. And lets not get into some sort of statistical argument here, because clearly economics is an inexact science and a highly normative subject.


I would also argue that the increase in the minimum wage will not effect smaller companies as much as it will affect companies like Walmart - while smaller companies do not have the financial reserves to absorb the increase, neither do they employ as many people.

And while I see your point about the margins of smaller companies, I can still only put across the recent example of the UK introducing the mimimum wage 8 years ago - there has been no subsequent reduction in unskilled employment, despite the doomsday predictions of those opposed to its introduction. And the UK minimum wage is much higher in real terms than that in the US.

In my opinion, indeed from experience in viewing the UK situation, most of the arguments against increasing the minimum wage are from large firms interested in protecting their profits.

I see you don't udnerstand I am not recgonizing your manner of thinking. They will not be unemployed, some one still has to do the job.

That depends on several things. Firstly, the health of the firm. If they're doing well, if they can afford to pass the increase on to their customers without losing too much trade, if they can afford to reduce their profits without causing too much of a reduction of their stock price.

Let's take a check-out operator. You say someone's got to do it. But if the store is closed because they can't afford the higher costs, noone has to operate check-outs that are no longer used.

At best, the effect of a minimum wage increase is a little bit more inflation. At worst, businesses fail.

I mean, all this "productivity theory" is complete mince. Companies never pay people anywhere near their productivity value. Usually the link between wage and productivity is tenuous at best.

Maybe, but it still exists, and there definately does exist a maximum level at which someone can sell their services. That is the point (and I've stated this throughout)

Especially in relation to staff like check-out operators. Without check-out operators, Walmart would make absolutely no money, so they account for all of the company's productivity. But anyone can perform these tasks. There is no relation between "productivity" and "wage" (I am aware of the theoretical economic flaws in this argument, but it always helps to step outside of economic theory and see the objective reality).

One could envisage a system in which checkouts became automatic, probably not possible now, but I'll give it a try.

Automatic terminals, you scan your produce, put your coins/notes into the slot. When full payment is made, you get change, and a recepit, and a device emits some harmless radiation that deactive a security device on a tag (the tag will operate alarms if it is taken past the gates without deactivation, or removal of is attempted without deactivation), labour costs reduced from over 20 check-out staff and security, to some security guards who leap into action when the siren goes. As I said impossible now probably. But, an arbitrary increase in labour costs might get them looking into this stuff.

The basic problem with all you've said is that at he can't be employed at over $8/hr because no one will pay him more.
Well I would ask why not? Is there a shortage of resources that could be used to pay him a decent living wage? I dont see why there should be. It seems to me that if a society is quite able to produce in excess of a decent living wage for every member within it, whilst wasting productive capacity, with the result that some people cannot obtain a decent living wage, that something is seriously wrong with the production/distribution/consumption model that prevails in that society.

So far as I can see the model you are suggesting we ought to accept, includes accepting this very serious flaw. I'm not prepared to accept such a flaw if there is some chance that a better solution could be found.

You can point out all the problems you like about his situation, but he's certainly better off working than not.
Not necessarily, he may be better off in prison. Certainly he'd be better off if he could commit crimes that produced sufficient material value and not get caught. If a production/distribution/consumption model makes crime more rewarding (even in the event of being apprehended) than working for a wage does, I have grave doubts about it's tenability.

You seem to be saying that a minimum wage of at least $9.50/hr will give Leonstein a "living wage". You are not correct. It will reduce's Leonstein's pay from $8/hr to $0/hr.
That is not a necessary consequent, in fact why ought it be a consequent at all in a society where production exceeds the level necessary to provide a living wage to all members?

You're also treating prison like some sort of hotel.
No I'm not, because I can do better for myself outside of prison. Even if I could not, I wouldnt be charged money to be in prison, so I couldnt treat it as a hotel.
Regardless, calling it a hotel or not isnt relevent. What is relevent is the effect of having a production/distribution/consumption model that renders imprisonment no more disadvantageous (and possibily more advantageous) than working for a wage.

In terms of comparative advantage, Leonstein is clearly better off without a minimum wage.
Only if we accept that an economic model that results in production capacity being wasted or grossly under renumerated, to such an extent that people cannot secure a decent living wage, even while despite such waste the society is characterised by production levels that are in excess of the amount needed to meet the consumption needs of a decent standard of living for all members. I do not believe that such an economic model ought to be accepted unless there truely is no better alternative.

While the economic theory/paradigm you appear to be reasoning with may result in only
either people work for less than a decent standard of living,
or
people do not work and are destitute until they starve (or what have you)
as possible outcomes, I question the necessity of such a paradigm.

The "labour theory of value"?
Not that I'm aware of.

Firstly, its rubbish because it doesn't take into account what consumers will do.
I doubt many (if any) theories (of the economic type) can comprehensively take into account what 'consumers' will do, certainly none that have been brought to my attention.

Secondly, your bringing it up is based upon a misunderstanding of what I said. I didn't the "the value of what he can produce", I said (basically) "the best price at which he can sell his labour services".
I dont believe that I did bring it up due to a misunderstanding. In fact it appears you are entirely missing the point in continuing to refer to 'the best price at which he can sell his labour'. The fact is two people who are both equally able to produce, in the same way, in every way, will not necessarily be able to sell thier labour at the same rate. Because of this fact the notion of 'best price at which he can sell his labour' is absurd. If two people who for the purposes of production are exactly alike, sell their labour for differening amounts, for no discernable reason (based on the inherent qualities and attributes of the people concerned) then the concept of 'best price' is simply 'whatever just happens to happen as a matter of happenstance'. So far as I can tell, when we actually consider the concept in regards to actual real-world application, it fails as a meaningful analytical concept/measure/what have you.

Now you're on to something. The price is not fixed to a certain value, it is what the customer is prepared to pay (remember that the employer/employee relationship is a customer/vendor relationship, with the employee selling his services to the employer.
Well you've already defined that as being a consequence of productive value (of the employee) in relation to the cost of employing them. It seems to me that you are positing that a person has some 'productive value' that determines the amount they will be employed for, yet their ability to produce is not relevent to what amount they actually will be employed for...

Define fair share.
Define the specific circumstances in which the share is intended to be fair.

Not relevant. What is relevant is the very high demand for Britney Spears tripe.
Well perhaps it isnt relevent in the 'theoretical realm', but in the real world it is entirely relevent that some people are unable to secure a renumeration that reflects the value to society of their labour/work activities contribution, whilst others are able to secure a renumeration that exceeds the value their work/labour contributes to society, to a point of absolute absurdity.

Price is defined subjectively, but the general rules are supply and demand.
The problem is that price ought to bear some relevent and sensible relationship to value. Yet it appears that the economic model/paradigm theory you are referring to not only fails to deliever such a result (to a degree that goes beyond absurdity) but rather that this desirable result is not even visible to it. Worse than simply not placing adequate priority on what appears (to me) to be a pragmatic and desirable outcome, worse than for whatever reason failing to adequately achieve the outcome either as it is priortised, or to an acceptable level (due to not having appropriately prioritised) the economic theory you appear to consider either best or necessary (or both), doesnt include or even appear to recognise what (appears to me) is the most desirable result.

And you assume that companies cannot reduce their costs in other ways.

Not at all. A reduction in other areas merely puts off the day when people have to go.

I'm not saying that there will definitely not be a reduction in the number of jobs, I am just saying that there is not a clear cut off in the way you are saying. You are effectivly saying that all workers who are productive below the minimum wage point will become unemployed, when clearly it is only a small proportion of those who operate below the minimum wage who will become unemployed. And lets not get into some sort of statistical argument here, because clearly economics is an inexact science and a highly normative subject.

They'd be able to stay on under certain conditions:

1) The firm can afford it
2) The firm can't simply work a smaller workforce harder
3) The employees aren't replacable in the foreseeable future with technology, or self-service, an example of which is seen whenever you pull up for petrol. In the good old/bad old days, someone would pump the fuel for you, maybe even check the oil, or water, and wash the windscreen. Nowadays, you do it yourself (at least you do in Australia), and the only time you see anyone working there is at the checkout, and even that is going, some petrol stations in Australia have card terminals at the bowsers.

I can't think why I didn't think of self-service before. It was so damned obvious, with people saying that labour costs would be passed to consumers, no great leap from that to passing on the labour to consumers.

In my opinion, indeed from experience in viewing the UK situation, most of the arguments against increasing the minimum wage are from large firms interested in protecting their profits.

And, indeed, arguments for the minimum wage.

Its impossible, or non-viable now. Then again, it was impossible and non-viable to use cranes to move large sections of buildings when the Great Pyramid was built, so they had to use human labour (at least according to the least insane accounts).

The only time when the cost of replacing human labour with machines is prohibative is where it costs less to use human labour. When it gets to cost more, humans will be replaced by machines. That's my point.



You seem to be assuming there will be no adaptation. In reality, the replacement of humans with machines (assuming the constant arbitrary increases in labour costs by the state) will follow the advancement of technology.

But in the short-term, an increase of a couple of dollars to the minimum wage is not going to bring about mechanisation of most processes. The only people who can afford to introduce novel mechanisation are large firms such as Walmart. The increase in minimum wage would have to justify a Capital investment of Billions.

And what would you propose would be the mechanical replacement of a check-out worker? There have been a few attempts at introducing "self-service" check outs - which doesn't really even involve the introduction of new technology - but these have largely not been taken up. This perhaps because companies don't really trust people to do this properly, whereas the presence of a real person encourages interaction and honesty which would not be encouraged by a machine. I'm not saying that everyone is honest to everyone else, I am just saying that most people don't have a moral problem from stealing from machinery, for example, how many people who download music from the internet would go out and steal a CD from a shop?

You have to recognise that a large number of unskilled jobs can never be done by machinery due to the need for human-human interaction. And many more jobs are not going to be done by machinery without trillion-dollar Capital investment in AI.

And even then, you have to pose the question of how far do you go. If you develop AI far enough you could replace just about every worker with machinery. This would not be desireable.

Not at all. A reduction in other areas merely puts off the day when people have to go.



They'd be able to stay on under certain conditions:

1) The firm can afford it
2) The firm can't simply work a smaller workforce harder
3) The employees aren't replacable in the foreseeable future with technology, or self-service, an example of which is seen whenever you pull up for petrol. In the good old/bad old days, someone would pump the fuel for you, maybe even check the oil, or water, and wash the windscreen. Nowadays, you do it yourself (at least you do in Australia), and the only time you see anyone working there is at the checkout, and even that is going, some petrol stations in Australia have card terminals at the bowsers.

I can't think why I didn't think of self-service before. It was so damned obvious, with people saying that labour costs would be passed to consumers, no great leap from that to passing on the labour to consumers.



And, indeed, arguments for the minimum wage.

Interesting that we both thought of self-service at the same time there.

As I stated, self-service isn't necessarily a viable option in a lot of industries. In any case, the economy adapts and these people find jobs elsewhere. For example, in petrol stations, pump operators were effectively replaced by CCTV camera, but this increased the number of (higher paid) skilled jobs in the CCTV industry.

But my main argument is thus -

I would argue that the increase in the mimimum wage increases the disposable income of those receiving the increase, which in turn would increase the demand for goods and services provided by those earning mimimum wage. I would argue that this effect would at least offset the small reduction in employment which would result from a minimum wage. This is what happened in the UK. The difficulty in this is finding the optimal minimum wage - you could increase it so high as to cause spiralling inflation.

Clearly a Chicago economist would argue that the optimal minimum wage is that dictated by the market, but clearly companies abuse their position. There is no free competition in the job market. And again, economics is not an exact science and any conclusion from economic data can only be normative.

And what would you propose would be the mechanical replacement of a check-out worker?

I did already. A bit left-field perhaps.

Well I would ask why not? Is there a shortage of resources that could be used to pay him a decent living wage? I dont see why there should be. It seems to me that if a society is quite able to produce in excess of a decent living wage for every member within it, whilst wasting productive capacity, with the result that some people cannot obtain a decent living wage, that something is seriously wrong with the production/distribution/consumption model that prevails in that society.

So far as I can see the model you are suggesting we ought to accept, includes accepting this very serious flaw. I'm not prepared to accept such a flaw if there is some chance that a better solution could be found.

A better solution is destroying the price system?

That is not a necessary consequent, in fact why ought it be a consequent at all in a society where production exceeds the level necessary to provide a living wage to all members?

Because he cannot sell his services at a price greater than $8/hr. $8/hr is the maximum market price. One can set a higher price, but if no one is willing to lay it, then it isn't a market price. Its just a number, which is of no importance to no one, except the poor bugger who's put out of work by the number.

Only if we accept that an economic model that results in production capacity being wasted or grossly under renumerated, to such an extent that people cannot secure a decent living wage, even while despite such waste the society is characterised by production levels that are in excess of the amount needed to meet the consumption needs of a decent standard of living for all members. I do not believe that such an economic model ought to be accepted unless there truely is no better alternative

Only your model will leave him under renumerated. Under a market system, he will get a market price. Under yours, the best he will get is a striped jumper with a number on it, and people giving him funny looks in the shower block.

I doubt many (if any) theories (of the economic type) can comprehensively take into account what 'consumers' will do, certainly none that have been brought to my attention.

Austrian economics is based upon people persuing their material self-interest.

In fact it appears you are entirely missing the point in continuing to refer to 'the best price at which he can sell his labour'. The fact is two people who are both equally able to produce, in the same way, in every way, will not necessarily be able to sell thier labour at the same rate. Because of this fact the notion of 'best price at which he can sell his labour' is absurd. If two people who for the purposes of production are exactly alike, sell their labour for differening amounts, for no discernable reason (based on the inherent qualities and attributes of the people concerned) then the concept of 'best price' is simply 'whatever just happens to happen as a matter of happenstance'. So far as I can tell, when we actually consider the concept in regards to actual real-world application, it fails as a meaningful analytical concept/measure/what have you.

The notion of the best price at which someone can sell their labour is the only noton that stands up.

Your analysis is simply all over the place. Firstly, when are two people ever exactly the same in terms of production?

Secondly, in a market system, if an employer sees the value of the labour of two different people as the same, the same price will be paid.

The root of the whole thing is subjectivity. Prices are determined by what people are prepared to pay. Supply and demand come from this (i.e. is supply increases, people are prepared to pay less because the product is easy to get, if demand increases, people are more eager to get the product, they are therefore prepared to pay more)

Well you've already defined that as being a consequence of productive value (of the employee) in relation to the cost of employing them. It seems to me that you are positing that a person has some 'productive value' that determines the amount they will be employed for, yet their ability to produce is not relevent to what amount they actually will be employed for...

You're getting confused. Their productive value is the maximum an employer is prepared to pay for their services.

Define the specific circumstances in which the share is intended to be fair.

You said "It seems clear to me that wages/salaries are useless if they dont secure a fair share of resources for the person being paid them. "

Well perhaps it isnt relevent in the 'theoretical realm', but in the real world it is entirely relevent that some people are unable to secure a renumeration that reflects the value to society of their labour/work activities contribution, whilst others are able to secure a renumeration that exceeds the value their work/labour contributes to society, to a point of absolute absurdity.

Who says what their value to society is? What is society? It is nothing more than individuals, and each individual decides what is valuable to him.

You might find it absurd, and you are entitled to that view, and further entitled not to spend that which you own on supporting it. You are not entitled to force society on to a heirarchy determined by your ethics only.

The problem is that price ought to bear some relevent and sensible relationship to value.

It does, that's what supply and demand is.

Yet it appears that the economic model/paradigm theory you are referring to not only fails to deliever such a result (to a degree that goes beyond absurdity) but rather that this desirable result is not even visible to it. Worse than simply not placing adequate priority on what appears (to me) to be a pragmatic and desirable outcome, worse than for whatever reason failing to adequately achieve the outcome either as it is priortised, or to an acceptable level (due to not having appropriately prioritised) the economic theory you appear to consider either best or necessary (or both), doesnt include or even appear to recognise what (appears to me) is the most desirable result.

Nonsense. My model allows each individual to set his own priority, but not to force it on others.

I would argue that the increase in the mimimum wage increases the disposable income of those receiving the increase, which in turn would increase the demand for goods and services provided by those earning mimimum wage.

But this increase must be paid for, and the money to do it is typically raised by an increase in the shelf price of goods and services offered.

You're also assuming that money saved is merely sitting around in the vault drinking beer and generally goofing off. Its not, its out there working. Even if its left in the bank, its still being spent becaus people are borrowing it. Banks want people borrowing money. As your previous argument that in this case, increasing the minimum wage is still a good thing because more people will be able to afford loans, the sustainability of that argument depends on the extent to which the lendibg is for things like car loans, or home loans, rather than more upscale business, but either way, the money is lent, and with fractional reserve banking, it goes out with a lot of friends.

Anyway, a huge increase in saving would merely cause some deflation because less money is going to the same amount of goods. If you think deflation is bad, you should look in front of you, you'd see a relatively cheap computer (although that's growth deflation, instead of savings deflation)

Clearly a Chicago economist would argue that the optimal minimum wage is that dictated by the market, but clearly companies abuse their position. There is no free competition in the job market. And again, economics is not an exact science and any conclusion from economic data can only be normative.

Being an Austrian, I'd argue that what you call abuse in companies, is common sense if you were shopping for tyres, because in both, one looks for the lowest possible price for the greatest benefit.

I would argue that the maximum amount that Neu Leonstein could sell his labor would change once a minimum wage increase is put into effect.

A company is always going to be looking out to maximize its profits in the long run. So employing Neu Leonstein for $8 an hour before the minimum wage increase would be maximizing the company's profits if it's the least that a company could get away with paying someone.

However, after the minimum wage increase, the amount of money that Neu Leonstein could sell his labor for would also go up, if indeed he is competent at his job. The amount of profit would decrease, but this doesn't mean that it will suddenly become unprofitable to employ him. The company would still be maximizing its profits if it employed him at the minimum wage.

The number of companies who could not afford to do so would vary, and so it is certainly possible that the wage increase could be so high that large numbers of people would become unemployed. If this happens, they will go onto welfare. Certainly it is not going to be in their best interests to be on welfare before the increase, as unemployment is low. But if unemployment is high it will be, as the amount received from welfare will increase due to politicians increasing it to appeal to the voters who are on welfare.

So I would argue that one person making a living wage and the other being on welfare is better than two people making a subsistence wage, which is what would likely happen if there were no minimum wage.

I did already. A bit left-field perhaps.

I don't think you read that properly. I'm not asking if you are proposing that check-out operators could be replaced by machines, I'm asking how it would be technologically possible that they could be replaced? And then I set out the current means of replacing them with self-service machines, and why that wasn't practical.

Because he cannot sell his services at a price greater than $8/hr. $8/hr is the maximum market price. One can set a higher price, but if no one is willing to lay it, then it isn't a market price. Its just a number, which is of no importance to no one, except the poor bugger who's put out of work by the number.

Only your model will leave him under renumerated. Under a market system, he will get a market price. Under yours, the best he will get is a striped jumper with a number on it, and people giving him funny looks in the shower block.

Austrian economics is based upon people persuing their material self-interest.

The notion of the best price at which someone can sell their labour is the only noton that stands up.

Your analysis is simply all over the place. Firstly, when are two people ever exactly the same in terms of production?

Secondly, in a market system, if an employer sees the value of the labour of two different people as the same, the same price will be paid.


I'm sorry, but you are a victim of assuming a number of things here -

1) That perfect competition is in operation (when perfect competiton doesn't even exist)

2) That economics is an exact science

You are probably correct that 2 people are never the same in terms of production, but companies still generally pay the same wage for the same job no matter how productive they are. This means that some of the employees are being paid less than their optimal value in the market. Equally, it is likely that a company will already be employing people at a cost higher than their optimal market value.

Furthermore, the wage paid ($8) is not necessarily reflective of the true state of the market. This is especially the case in where the particular field of employment is dominated by one or two companies, such as Walmart. There is certainly no perfect competition in the employment market, since a company like Walmart may control as many as 75% of the jobs (example only!!). Therefore, the company can effectively pay whatever it wants, since it controls the majority of the employment; the employee has no bargaining power. It can therefore be argued that the minimum wage is only recovering the true market equillibrium which has been distorted by the actions of the dominant undertaking. In any case, it is clear that in this situation the $8 "market price" is not as fixed as would appear, since it is being kept unnaturally low by the dominant company.


Who says what their value to society is?

Apparently huge corporations?

My model allows each individual to set his own priority, but not to force it on others.

Leaving the side that it is not "your model", it is rather dubious to claim that it allows individuals to set their own priority. How does someone who was brought up in a poor suburb, or trailer park, who has never had access to good schooling or had the chance to get a scholarship, get the chance to determine their own priority? They don't have the money to get anything but the cheapest products and while they may have the intelligence, they don;t have the training to get anything but jobs whose wages are dictated by the companies "providing" them. There is only exploitation here, and the priorities of the rich are being foisted on the poor.

I would argue that the maximum amount that Neu Leonstein could sell his labor would change once a minimum wage increase is put into effect.

A company is always going to be looking out to maximize its profits in the long run. So employing Neu Leonstein for $8 an hour before the minimum wage increase would be maximizing the company's profits if it's the least that a company could get away with paying someone.

However, after the minimum wage increase, the amount of money that Neu Leonstein could sell his labor for would also go up, if indeed he is competent at his job. The amount of profit would decrease, but this doesn't mean that it will suddenly become unprofitable to employ him. The company would still be maximizing its profits if it employed him at the minimum wage.

You can't simply ignore the premise without any real justification (and an arbitrary increase in price is not a real justification).

Leonstein cannot sell his labour for any more than $8/hr, full stop.

What the minimum wage does is not increase the amount he can sell his labour services for, it merely makes it illegal to pay less than the minimum wage.

You're also assuming that a firm can keep him on, and afford the increase.

I don't think you read that properly. I'm not asking if you are proposing that check-out operators could be replaced by machines, I'm asking how it would be technologically possible that they could be replaced? And then I set out the current means of replacing them with self-service machines, and why that wasn't practical.

Its not practical now. Going back to the increase for the lift operators, it wasn't practical then to pull out all the old lifts then and there, it happened gradually. You're only putting it off.

You are probably correct that 2 people are never the same in terms of production, but companies still generally pay the same wage for the same job no matter how productive they are. This means that some of the employees are being paid less than their optimal value in the market. Equally, it is likely that a company will already be employing people at a cost higher than their optimal market value.

Furthermore, the wage paid ($8) is not necessarily reflective of the true state of the market. This is especially the case in where the particular field of employment is dominated by one or two companies, such as Walmart. There is certainly no perfect competition in the employment market, since a company like Walmart may control as many as 75% of the jobs (example only!!). Therefore, the company can effectively pay whatever it wants, since it controls the majority of the employment; the employee has no bargaining power. It can therefore be argued that the minimum wage is only recovering the true market equillibrium which has been distorted by the actions of the dominant undertaking. In any case, it is clear that in this situation the $8 "market price" is not as fixed as would appear, since it is being kept unnaturally low by the dominant company.

Whether a price is, or is not natural, or optimal doesn't matter. It is what he can get.

Apparently huge corporations?

Consumers decide by spending their money.

Leaving the side that it is not "your model", it is rather dubious to claim that it allows individuals to set their own priority. How does someone who was brought up in a poor suburb, or trailer park, who has never had access to good schooling or had the chance to get a scholarship, get the chance to determine their own priority? They don't have the money to get anything but the cheapest products and while they may have the intelligence, they don't have the training to get anything but jobs whose wages are dictated by the companies "providing" them. There is only exploitation here, and the priorities of the rich are being foisted on the poor.

How is there exploitation? There is trade. Someone works because he values the results of that work more than his time/energy, and the employer values the time/energy more than the money. It is exactly the same as buying milk. I value a bottle of milk more than money, the shopkeeper values my money more than the bottle of milk. Therefore we both benefit.

What the minimum wage does is not increase the amount he can sell his labour services for, it merely makes it illegal to pay less than the minimum wage.

You're also assuming that a firm can keep him on, and afford the increase.
By making it illegal to pay less than the minimum wage, it increases the amount that he can sell his labor for. A company would not pay him more than $8 if it can get away with doing so. One of the things that determines how much someone can sell their labor for is the number of people who would sell their labor for less.

In the rest of the post I said that it was entirely possible that a firm wuld not keep him on, but most likely they would. Most likely they'd do what comsumers usually do when faced with less money - they'd borrow more.

But this increase must be paid for, and the money to do it is typically raised by an increase in the shelf price of goods and services offered.

Indeed, I already talked about inflation though. Economics isn't that clear. It could result in an increase in prices, but equally, the increase in disposable income with a proportionate increase in spending will mean that although margins will still have decreased slightly, sales will have increased and as a result companies will not have to raise prices, since overall profits will remain the same. Thus the resultant increase in sales will offset the need to reduce employment.

Both these are viable economic possibilities. You can argue either to the extreme...spirallying inflation or increasing profitability to the extent that companies employ more people. The reality is likely to be somewhere in between. As I said, in the UK, the introduction of a minimum wage did not lead to any corresponding increase in unemployment and did not interrupt one of the longest periods of low inflation in recent history.


You're also assuming that money saved is merely sitting around in the vault drinking beer and generally goofing off. Its not, its out there working. Even if its left in the bank, its still being spent becaus people are borrowing it. Banks want people borrowing money. As your previous argument that in this case, increasing the minimum wage is still a good thing because more people will be able to afford loans, the sustainability of that argument depends on the extent to which the lendibg is for things like car loans, or home loans, rather than more upscale business, but either way, the money is lent, and with fractional reserve banking, it goes out with a lot of friends.

I never mentioned anything about money sitting around doing nothing. All I said was that there was a balance to be found between spending and saving...

I will say that a lot of borrowing these days comes from the lower-earning sector of society and a lot of businesses and banks rely on the interest earned from such borrowing. If minimum wage was so low that people could not afford even to borrow, this would have a major effect on borrowing and make saving for the rich much less profitable.


Sorry, but you definitely didn't read that part of the post properly.

Anyway, a huge increase in saving would merely cause some deflation because less money is going to the same amount of goods. If you think deflation is bad, you should look in front of you, you'd see a relatively cheap computer (although that's growth deflation, instead of savings deflation

That's totally wrong....an increase in saving has no logical effect on the price of goods.

But in any case, an increase in the amount of saving, if accompanied by other factors can result in serious recession. If it causes a decrease in demand it will decrease the amount produce and, as a result, a decrease in employment. This will further decrease demand in the economy and decrease investor confidence. Seriously, you are not giving an objective view to economics here.



Being an Austrian, I'd argue that what you call abuse in companies, is common sense if you were shopping for tyres, because in both, one looks for the lowest possible price for the greatest benefit.[/QUOTE]

By making it illegal to pay less than the minimum wage, it increases the amount that he can sell his labor for.

How?

A company would not pay him more than $8 if it can get away with doing so. One of the things that determines how much someone can sell their labor for is the number of people who would sell their labor for less.

The point of the price system is that each party goes into the market to get the greatest benefit from the minimum cost.

What this means is that the benefits of hiring Leonstein are worth more to the firm than the $8/hr it costs. If the cost is arbitrarily raised to $9.50, they must reevaluate the equation. As I stated, the premise of this whole thing is that if you go beyond $8/hr, the costs of employing him outweigh the benefits from the employer's point of view. Since $9.50 is more than the amount at which the employer thinks the costs of employing him outweigh the benefits, there is no justification in employing him.

In the rest of the post I said that it was entirely possible that a firm wuld not keep him on, but most likely they would. Most likely they'd do what comsumers usually do when faced with less money - they'd borrow more.

You mean to say that in addition to employing him at $9.50/hr (a rate at which the employer already believes the cost of employing him outweigh the benfits), he will take on the added cost of loan repayments?!

Besides, a firm that's not doing very well might not have a good enough credit rating to borrow enough to cover the increased costs, and they will still have to raise shelf prices, only this time they must add increased labour costs and loan repayments.

Let's take a check-out operator. You say someone's got to do it. But if the store is closed because they can't afford the higher costs, noone has to operate check-outs that are no longer used.
You are obsessed with making stuff up. You should think of writing books.

Indeed, I already talked about inflation though. Economics isn't that clear. It could result in an increase in prices, but equally, the increase in disposable income with a proportionate increase in spending will mean that although margins will still have decreased slightly, sales will have increased and as a result companies will not have to raise prices, since overall profits will remain the same. Thus the resultant increase in sales will offset the need to reduce employment.

The increase in sales is all well and good for firms that directly deal with their workers, and for firms that deal with people on the minimum wage generally, but what about firms that don't? They will have to raise prices.

I agree that the increased sales will offset the reduction in employment, but I will point out that the reduction in employment was the problem I pointed to in the first place.

I never mentioned anything about money sitting around doing nothing. All I said was that there was a balance to be found between spending and saving...

And I said that saving always ends up as spending anyway.

That's totally wrong....an increase in saving has no logical effect on the price of goods.

An increase in saving (all other things being equal) will reduce the amount of money being circulated in the market for the buying and selling of goods.

Its not practical now. Going back to the increase for the lift operators, it wasn't practical then to pull out all the old lifts then and there, it happened gradually. You're only putting it off.

It is practical to replace them now. You can use self-service machines. There have been attempts to use them in supermarkets, but they have never taken off because people don't have the same moral dilemma in "lying" or stealing from machines as they do from people. Inter-person interaction is more profitable for the company.

The only other option is some seriously advanced AI, which requires trillions of investment before it will become practical. So, it really isn't a factor in the current minimum wage argument.


Whether a price is, or is not natural, or optimal doesn't matter. It is what he can get.


That is not the standpoint in economic theory. The optimal wage is the best for the economy in general. Corporate power which distorts the economic market for wage distribution is unfair and causes allocative inefficiency.



Consumers decide by spending their money.

You underestimate corporate power.


How is there exploitation? There is trade. Someone works because he values the results of that work more than his time/energy, and the employer values the time/energy more than the money. It is exactly the same as buying milk. I value a bottle of milk more than money, the shopkeeper values my money more than the bottle of milk. Therefore we both benefit.

But you can choose not to buy the milk and switch to water instead. Unless you are independently wealthy you cannot choose not to work.

Because such a person, not by fault of their own, but by chance of birth, has not recieved the same opportunites as many other people, is unskilled, they are forced to take a job at the wage offered by the company, or starve to death. This is exploitation.

You are obsessed with making stuff up. You should think of writing books.

Insults? That's below form.

It is practical to replace them now. You can use self-service machines. There have been attempts to use them in supermarkets, but they have never taken off because people don't have the same moral dilemma in "lying" or stealing from machines as they do from people. Inter-person interaction is more profitable for the company.

Clearly not. It is impractical for cultural reasons. You're last sentence is not always true. Take banking. Some people like talking to the tellers, but electronic forms of banking are becoming so popular that it is becoming more profitable for the banks to close branches.


That is not the standpoint in economic theory. The optimal wage is the best for the economy in general. Corporate power which distorts the economic market for wage distribution is unfair and causes allocative inefficiency.

I'd say that depends on the economic theory to which you adhere.

You underestimate corporate power.

[Darth Vader]You underestimate the power of the Dark Side[/Darth Vader]

Woolworths don't put a gun to my head and make me shop in their stores.

But you can choose not to buy the milk and switch to water instead. Unless you are independently wealthy you cannot choose not to work.

Because such a person, not by fault of their own, but by chance of birth, has not recieved the same opportunites as many other people, is unskilled, they are forced to take a job at the wage offered by the company, or starve to death. This is exploitation.

Its still not exploitation, its trade. People are still trading things they value less for things they value more. They may not have very much to trade, but is it anyone else's responsibility to change that?

The reason people are "forced" to work is that they cannot independently provide their needs and wants. That has been the case since we were driving woolly mammoths over cliffs, specialisation and division of labour.

The increase in sales is all well and good for firms that directly deal with their workers, and for firms that deal with people on the minimum wage generally, but what about firms that don't? They will have to raise prices.

That's an artificial separation of the economy. There are companies who don't employ people at minimum wage, but deal with customers who are minimum wage. These companies will have increased business from their clients who now have more money, without a corresponding increase in wages. These companies will therefore take on more employees or their owners will have more money and they will spend this money on products produced by companies who employ people at minimum wage but who don't normally deal with customers on minimum wage, thus increasing their sales, and offsetting the reduction in profitability caused by increasing the minimum wage.

I agree that the increased sales will offset the reduction in employment, but I will point out that the reduction in employment was the problem I pointed to in the first place.

But I am arguing that that problem won't occur, because the need for such reduction is offset by the resultant increase in sales.



And I said that saving always ends up as spending anyway.

Eventually, but it can have a damaging effect on the economy in the long run. In any case you can't argue all-out for either saving or spending. It doesn't work like that. Saving is essential to the economy, but an economy cannot exist when all the money is saved. As I said there is a balance to be struck (I seem to recall 30% saving to 70% spending from somewhere)



An increase in saving (all other things being equal) will reduce the amount of money being circulated in the market for the buying and selling of goods.

But that's assuming that there isn't an increase in productivity in the market. There is no direct link between saving and prices. Usually an increase in saving is only symptomatic of a decrease in consumer confidence. The decrease in consumer confidence has resulted in a decrease in demand. It is not the increase in saving which has cause the decrease in demand, it is only a symptom of this.

Insults? That's below form.
Insults? Nothing of the kind, I recognize you as imaginatively morbid.

That's an artificial separation of the economy. There are companies who don't employ people at minimum wage, but deal with customers who are minimum wage. These companies will have increased business from their clients who now have more money, without a corresponding increase in wages. These companies will therefore take on more employees or their owners will have more money and they will spend this money on products produced by companies who employ people at minimum wage but who don't normally deal with customers on minimum wage, thus increasing their sales, and offsetting the reduction in profitability caused by increasing the minimum wage.

I'd say that's artificial integration of the economy. This is all driven by an arbitrary increase in prices, and the money has to be found somewhere, else it must be conjured (inflation). This increase in prices will affect the marginal firms who can't afford it. Larger firms have economies of scale, smaller firms don't.

Clearly not. It is impractical for cultural reasons. You're last sentence is not always true. Take banking. Some people like talking to the tellers, but electronic forms of banking are becoming so popular that it is becoming more profitable for the banks to close branches.

The last sentence related only to the example of check out workers. Banking is a different situation - people are dealing with their own money, not buying goods from the bank. ( And banks don't usually employ tellers at minimum wage anyway)


I'd say that depends on the economic theory to which you adhere.

Any economic theory except extremist Chicago/Austrian.

Mainstream, positive, objective economics makes it clear that this is the case.


[Darth Vader]You underestimate the power of the Dark Side[/Darth Vader]
Woolworths don't put a gun to my head and make me shop in their stores.

But they do use media manipulation to distort the market.


Its still not exploitation, its trade. People are still trading things they value less for things they value more. They may not have very much to trade, but is it anyone else's responsibility to change that?

The reason people are "forced" to work is that they cannot independently provide their needs and wants. That has been the case since we were driving woolly mammoths over cliffs, specialisation and division of labour.

That's a shocking argument.

So...the slave trade is not expoitative because it the slaves are trading things they value less (their freedom) for things they value more (their lives)?

Essentially it is the same argument. People are not truey free in their choice to trade here. They can either choose to work for minimum wage, or they can choose not to work and therefore to starve to death (or resort to crime). This is not truely a choice and therefore, it is exploitative.

But anyway, the real point I was making is that unskilled workers have no bargaining power and therefore the minimum wage is not a true reflection of the market value of their labour. Minimum wage is an attempt to redress the unfairness of the situation. Ah yes, and because the minimum wage is not reflective of their true value, the companies can afford to increase the wages.

I'd say that's artificial integration of the economy. This is all driven by an arbitrary increase in prices, and the money has to be found somewhere, else it must be conjured (inflation). This increase in prices will affect the marginal firms who can't afford it. Larger firms have economies of scale, smaller firms don't.


But again, the increase in disposable income which is largely redirected from teh profits of larger firms will fund and increase in spending and this will increase sales and counter the problems caused by the decrease in margins.

Again, this is supported by recent experience in the UK market.... ;)

The last sentence related only to the example of check out workers. Banking is a different situation - people are dealing with their own money, not buying goods from the bank. ( And banks don't usually employ tellers at minimum wage anyway)

They are getting services from the banks, and goods (in the form of earned interest on their deposits). I should have been saying "goods and services", but that's a lot more typing.

Any economic theory except extremist Chicago/Austrian.

Mainstream, positive, objective economics makes it clear that this is the case.

By mainstream, positive, and objective, I assume you mean fashionable and politically correct?

But they do use media manipulation to distort the market.

You could say they advertise, or simply they exercise their right to free speech, but large firms are unfashionable.

That's a shocking argument.

Bully for you.

So...the slave trade is not expoitative because it the slaves are trading things they value less (their freedom) for things they value more (their lives)?

That is a false analogy. Slaves don't voluntarily trade anything. The use of force makes your analogy false (and don't try to play a semantic game with the word "force", you know quite well it means whips, and guns etc)

But anyway, the real point I was making is that unskilled workers have no bargaining power and therefore the minimum wage is not a true reflection of the market value of their labour. Minimum wage is an attempt to redress the unfairness of the situation. Ah yes, and because the minimum wage is not reflective of their true value, the companies can afford to increase the wages.

Put the sledgehammer down. They do have bargaining power. Not much bargaining power.

As for fairness, they provide someone's notion of fairness, though to the poor buggers put out of work, I suspect its not so fair.

But again, the increase in disposable income which is largely redirected from teh profits of larger firms will fund and increase in spending and this will increase sales and counter the problems caused by the decrease in margins.

Of course large firms can handle it. The reduction in profits is small enough (to a point, it depends on the size of the minimum wage) to be able to stay up there.

But what about a firm that has been running at a loss, already, or only a tiny profit? The increase in costs will squeeze marginal firms.

A better solution is destroying the price system?
Perhaps, perhaps not. Is there any reason why 'destroying the price system' (as an isolated and distinct non-implicatory phenomena) would necessarily rule out a solution that is premised on the destruction of either the price system or the price system as it currently functions, or that has as a material consequent the destruction of either the price system, or the price system as it currently functions?

Because he cannot sell his services at a price greater than $8/hr. $8/hr is the maximum market price.
You keep saying as much, but why on ought anyone believe it?

I see no good reason to assume that because he cannot sell his services for a greater price than $8.00 in the absence of a minimum wage, that he necessarily cannot sell his services for a greater price should a minimum wage be introduced.

Your primary argument appears to be that 'he might not be able to gain a greater renumeration' should a minimum wage be introduced. It's hardly a convincing argument, especially in the absence of any reason to believe his not being able to sell his services at a greater price (in the event of the introduction of a minimum wage) is any more likely than his being able to sell his services for a greater price.

One can set a higher price, but if no one is willing to lay it, then it isn't a market price. Its just a number, which is of no importance to no one, except the poor bugger who's put out of work by the number.
Whilst that is as obvious as stating that gold would be without a price value if no person would purchass it at any price, it is meaningless in the absence of any reason to believe that no one will be willing to pay a higher price. It doesnt seem entirely silly to suppose that any sensible business concern will minimise their wage costs, and so only pay the least they can get away with giving the factors effecting 'the least'. Clearly a minimum wage effects the 'least' that can be paid. It seems reasonable to suggest that the effect of a minimum wage will be to raise the market value of his services.

Only your model will leave him under renumerated. Under a market system, he will get a market price. Under yours, the best he will get is a striped jumper with a number on it, and people giving him funny looks in the shower block.
My model? You are clearly confused. In the first place I have not posited a model. Additionally, the scenario that I was describing was not a possible result of some alternative model to the one you are describing, but a possible result of the model you are describing.

Austrian economics is based upon people persuing their material self-interest.
I suggest that such a description oversimplifies the situation to the point of rendering the comment redundant for the purposes of this particular discussion. A hunter-gatherer economy is based on people pursuing their material self interest, yet is materially different to the economy that operates in Australia, in ways that are significant and relevent to a discussion of this nature.

The notion of the best price at which someone can sell their labour is the only noton that stands up.
No, it is fallacy. The best price at which someone can sell their labour in a particular market is not absolute. The best price that someone can get for thier labour in a market that has no minimum wage is not necessarily the best price they can get for their labour in a market characterised by a minimum wage. You are attempting to posit the result (in terms of 'best price') of one possible market as necessarily dictating the best price result of another possible market.
When we consider that the distinction between the two possible markets, it is nonsense to suggest that the best price under one market is necessarily the best price under the other.

Your analysis is simply all over the place. Firstly, when are two people ever exactly the same in terms of production?
It doesnt matter when, or even if. We dont need proof of a real-world occurance in order to make logical deductions or inductions. We only need logical consistency.

Secondly, in a market system, if an employer sees the value of the labour of two different people as the same, the same price will be paid.
Not necessarily. Unless we are talking about an idiot (characterised with a particular type of idiocy that has implications for their feasability as an employer), the employer will pay each the absolute least he or she can and that is not necessarily the same amount. Further, seeing the productive value (and the potential for profit creation/extraction/what-have-you) of two people as identical, does not neccesitate that the profit can be accrued from both simultaneously. Most obviously, is the fact that not everyone works for the same employer.

The root of the whole thing is subjectivity. Prices are determined by what people are prepared to pay.
No, what people are prepared to pay is one factor, a factor that evidently is itself not an absolute, but subject to other factors.

Supply and demand come from this (i.e. is supply increases, people are prepared to pay less because the product is easy to get, if demand increases, people are more eager to get the product, they are therefore prepared to pay more)
That is an oversimplification; in the context of this discussion simplification to such an extent is erroneous.

You're getting confused. Their productive value is the maximum an employer is prepared to pay for their services.
I'm not getting confused.
We're not discussing his actual productivity, we're discussing the maximum price at which he can sell his labour services, which is $8/hr.
You need to make up your mind if you wish to present a convincing argument. A necessary condition of a convincing argument is that it be internally coherent (ie not self contrary/contradictory). It is self contradictory to assert that the maxium price/best price/the most an employer will pay is both a person's productive value/actual productivity, and not a person's productive value/actual productivity.

You said "It seems clear to me that wages/salaries are useless if they dont secure a fair share of resources for the person being paid them. "
Yes. You then asked what was a fair share of resources. Of course that's like asking 'what size is a hole?' The answer is dependent on the particular facts in a particular case. What is a fair share in a society where (for instance) 'medical modernity' means a having the most up to date 'blood letting' practises and the best bred leaches, is not necessarily (and in fact is unlikely to be) a fair share in a society where 'medical modernity' means organ transplants, IV treatments, life support machines etc...what is a fair share, is not absolute, but rather relative (for instance to what there actually is to share).

Who says what their value to society is?
In what circumstance? In the one you are either suggesting is necessary or best (or both), it seems that the most accurate answer to your question be 'employers'.

What is society? It is nothing more than individuals, and each individual decides what is valuable to him.
Yet another oversimplification that is inappropriate. Society is not simply a bunch of discrete individuals who happen to get lumped categorically together just because we are too lazy to say (or type) 'a whole bunch of discrete individuals'.

You might find it absurd, and you are entitled to that view, and further entitled not to spend that which you own on supporting it. You are not entitled to force society on to a heirarchy determined by your ethics only.
I dont see what ethics has to do with the absurdity. Can you demonstrate how such an outcome is not an absurdity - that is can you posit some basis on which it is either beneficial or neutral in light of some reasonable or logical principal or 'goal-outcome'?

It does, that's what supply and demand is.
No. It is not that simple. Supply and demand are not a priori causes, but rather themselves are effects that are somewhat causitive.

[/quote]Nonsense. My model allows each individual to set his own priority, but not to force it on others.[/QUOTE]
Is there any practical point to 'setting a priority' if it cannot be realised?

You keep saying as much, but why on ought anyone believe it?

I see no good reason to assume that because he cannot sell his services for a greater price than $8.00 in the absence of a minimum wage, that he necessarily cannot sell his services for a greater price should a minimum wage be introduced.

Your primary argument appears to be that 'he might not be able to gain a greater renumeration' should a minimum wage be introduced. It's hardly a convincing argument, especially in the absence of any reason to believe his not being able to sell his services at a greater price (in the event of the introduction of a minimum wage) is any more likely than his being able to sell his services for a greater price.

Simply saying you don't like the premise isn't sufficient.

You've shown no reason why he would be able to sell his services for more than $8/hr.

I shall tell you why no one will pay him more than $8/hr.

An employer makes essentially the same decision as you do when buying bread. He must decide what he values more, Leonstein's labour, or a certain amount of money.

He decides that at a rate of no more $8/hr, Leonstein's services are worth more to him than that $8/hr. That is simple cost/benefit. If there is an edict saying it is illegal to pay less than $9.50, that doesn't change the basis of the employer's evaluation, except to make it illegal. It does not change the fact that he believes that Leonstein's services are worth no more than $8/hr.

Whilst that is as obvious as stating that gold would be without a price value if no person would purchass it at any price, it is meaningless in the absence of any reason to believe that no one will be willing to pay a higher price. It doesnt seem entirely silly to suppose that any sensible business concern will minimise their wage costs, and so only pay the least they can get away with giving the factors effecting 'the least'. Clearly a minimum wage effects the 'least' that can be paid. It seems reasonable to suggest that the effect of a minimum wage will be to raise the market value of his services.

It doesn't change the market value of someone's labour services. It merely pushes out of the market those who's service value is less than the minimum wage.

No, it is fallacy. The best price at which someone can sell their labour in a particular market is not absolute. The best price that someone can get for thier labour in a market that has no minimum wage is not necessarily the best price they can get for their labour in a market characterised by a minimum wage.

Why not, the employer doesn't change, he still wants the same things. The employee doesn't change

You are attempting to posit the result (in terms of 'best price') of one possible market as necessarily dictating the best price result of another possible market.
When we consider that the distinction between the two possible markets, it is nonsense to suggest that the best price under one market is necessarily the best price under the other.

The only effect of the distinction is to render unemployable anyone who's best price is under the arbitrary level set by the state.

Not necessarily. Unless we are talking about an idiot (characterised with a particular type of idiocy that has implications for their feasability as an employer), the employer will pay each the absolute least he or she can and that is not necessarily the same amount. Further, seeing the productive value (and the potential for profit creation/extraction/what-have-you) of two people as identical, does not neccesitate that the profit can be accrued from both simultaneously. Most obviously, is the fact that not everyone works for the same employer.

Since we are dealing with a single employer who makes the decision of the costs and benefits of employing someone, that argument doesn't apply. If a single employer sees two people who are the same in terms of the criteria he is looking for, he will come to the same conclusions, and pay the same price.

No, what people are prepared to pay is one factor, a factor that evidently is itself not an absolute, but subject to other factors.

If people aren't prepared to pay a price, they will hold on to their cash.

You need to make up your mind if you wish to present a convincing argument. A necessary condition of a convincing argument is that it be internally coherent (ie not self contrary/contradictory). It is self contradictory to assert that the maxium price/best price/the most an employer will pay is both a person's productive value/actual productivity, and not a person's productive value/actual productivity.

You got hooked on a single word "productivity", and assumed I was referring to a single, universal measure.

I dont see what ethics has to do with the absurdity. Can you demonstrate how such an outcome is not an absurdity - that is can you posit some basis on which it is either beneficial or neutral in light of some reasonable or logical principal or 'goal-outcome'?

You think it is an absurdity. Evidently, others don't because they buy the crap she produces.

Is there any practical point to 'setting a priority' if it cannot be realised?

It can be realised to the entent that you, and others that think like you can support it with your own money, or refuse to support things you think are absurd by not spending your money on them, and by trying to persuade others by eloquent argument. Don't be so lazy as to expect the state to set and realise them for you, they'll only bugger it up.

The point of the price system is that each party goes into the market to get the greatest benefit from the minimum cost.
Yes. (Good stuff we have established a premise that we mutually agree on).

What this means is that the benefits of hiring Leonstein are worth more to the firm than the $8/hr it costs.
Ok, we're on a roll, that makes two (count them two) mutually agreed permises (hahaha)....[with but I few exceptions I hated Sesame Street...the Count was one of those exceptions....]

If the cost is arbitrarily raised to $9.50, they must reevaluate the equation.
That seems a reasonable and likely induction.

As I stated, the premise of this whole thing is that if you go beyond $8/hr, the costs of employing him outweigh the benefits from the employer's point of view.
And we part ways. Stating that X is the premise, doesnt demonstrate that X has a positive truth value. What reason is there to believe that the employer would be recompensing the employee (relative to the profit the employee generates for the employer) at a nill margin, or for a margin of only less than 1 cent in every 8 dollars, or even 1 whole cent in every 8 dollars.

The statement
'if you go beyond $8/hr, the costs of employing him outweigh the benefits from the employer's point of view'
is simply your opinion of what may be the case in the instance of one, some or more employers. We dont know that this is true in even one case, much less in a sufficient number of cases to actually have any impact on the overall employment situation measured on an economy wide basis.

Since $9.50 is more than the amount at which the employer thinks the costs of employing him outweigh the benefits, there is no justification in employing him.
That's about as convincing as me stating
"since the employee generates a profit (for the employer) that makes it profitable to employ the employee up to the cost of 70 million dollars an hour, clearly not a single person will loose their job.
I beleive (and I suspect you'd agree) that your statement appears less unlikely, but that's not the poing, the point is that both are arbitary and based on what deisred conclusions rather than than fact, logic, etc.


Ok, now I'm grinding my teeth in frustration, because I gotta go and take an exam and I'd rather stay and carry on this conversation....

Ok, now I'm grinding my teeth in frustration, because I gotta go and take an exam and I'd rather stay and carry on this conversation....
Glutton for punishment, eh?

And we part ways. Stating that X is the premise, doesnt demonstrate that X has a positive truth value. What reason is there to believe that the employer would be recompensing the employee (relative to the profit the employee generates for the employer) at a nill margin, or for a margin of only less than 1 cent in every 8 dollars, or even 1 whole cent in every 8 dollars.

The statement
'if you go beyond $8/hr, the costs of employing him outweigh the benefits from the employer's point of view'
is simply your opinion of what may be the case in the instance of one, some or more employers. We dont know that this is true in even one case, much less in a sufficient number of cases to actually have any impact on the overall employment situation measured on an economy wide basis.


You probably didn't pick up on the hypothetical nature of this example.

It is an illustration. We don't need to know exactly why the employer won't find it to his advantage to pay more than $8/hr.

That's about as convincing as me stating
"since the employee generates a profit (for the employer) that makes it profitable to employ the employee up to the cost of 70 million dollars an hour, clearly not a single person will loose their job.
I beleive (and I suspect you'd agree) that your statement appears less unlikely, but that's not the poing, the point is that both are arbitary and based on what deisred conclusions rather than than fact, logic, etc.

If one found an employer that would pay $70 mil/hr, then it would be true, though the chances of finding such an employer in the real world would be nil.

You've shown no real justification for questioning the premise of my analysis, the crux of your argument is an appeal to probability fallacy.

By the way, hypothetal figures tend to be arbitrary.

minimum wages work in the UK and much of Europe, and theyre going up all the time. I don't see the problem. It's only fair... unless you're an exploitative, money grubbing free market capitalist...

minimum wages work in the UK and much of Europe, I don't see the problem. It's only fair... unless you're an exploitative, money grubbing free market capitalist...

A little scant on the detail there (leaving aside the personal attack). Western Europe is stagnating economically. The East is growing quite well, and lacks a lot of statist rubbish.

By the way, in case you missed the initial post, the people who get derided as exploitative, money grubbing free market capitalists are the ones saying "increase the minimum wage"

A little scant on the detail there (leaving aside the personal attack). Western Europe is stagnating economically. The East is growing quite well, and lacks a lot of statist rubbish.
Which is honestly a problem which can only be fractionally, if at all, attributed to minimum wage.

Which is honestly a problem which can only be fractionally, if at all, attributed to minimum wage.

An arbitrary increase in prices won't help, and there is huge unemployment in Western Europe. The minimum wage laws in Europe create a disincentive to use the valuable human capital Europe has.

http://www.taemag.com/issues/articleid.18719/article_detail.asp

http://www.cato.org/pub_display.php?pub_id=4953

http://www.philippelegrain.com/Articles/europe'smightyec.html

http://www.enterstageright.com/archive/articles/0605/0605europe.htm

A question for minimum wage advocates in general, why are you all being pikers about it? Why not push for rates like $100/hr, or $1000/hr, there are people who make that much? And they'll be able to spend it, fuelling massive economic growth ... or so I'm told.

They are getting services from the banks, and goods (in the form of earned interest on their deposits). I should have been saying "goods and services", but that's a lot more typing.

But the point is, they are not buying a product that can be shoplifted.


By mainstream, positive, and objective, I assume you mean fashionable and politically correct?

No I mean that you are not using positive economics, but a normative based system.


You could say they advertise, or simply they exercise their right to free speech, but large firms are unfashionable.

? Firms use advertising to manipulate the market....

large firms are unfashionable?


That is a false analogy. Slaves don't voluntarily trade anything. The use of force makes your analogy false (and don't try to play a semantic game with the word "force", you know quite well it means whips, and guns etc)

Actually some slaves do/did become slaves voluntarily.

And well done for pre-empting my next move, I nearly used it earlier on. But it's not a semantic game. Power takes many forms, and economic power, especially in the case we are describing, is no less a use of force than physical force. In fact, non-physical force is often much more effective than physical force, mainly due to the fact that its exercise is much more difficult to detect.


Put the sledgehammer down. They do have bargaining power. Not much bargaining power.

No, they have the power to take minimum wage or starve. You have obviously never worked an unskilled, minimum wage job. You have no bargaining power - you either take the job or you go without, and for some people this is the choice to take the job or starve. No choice at all.

When companies dictate the market in this way, this is nothing short of exploitation.

As for fairness, they provide someone's notion of fairness, though to the poor buggers put out of work, I suspect its not so fair.

Already addressed this point. The increase in the minimum wage is unlikely to increase unemployment for the reasons I set out above.

Of course large firms can handle it. The reduction in profits is small enough (to a point, it depends on the size of the minimum wage) to be able to stay up there.

But what about a firm that has been running at a loss, already, or only a tiny profit? The increase in costs will squeeze marginal firms.


Sorry...you aren't listening to the argument.

Again - the increase in disposable income caused by the increase in the minimum wage leads to an increase in spending. This in turn leads to an increase in sales which offsets the decrease in margins caused by the increase in underlying costs.

In the very short-term this is funded by the larger firms, because the major proportion of minimum wage workers are employed by these firms. But this is very short-term.

But again, both sides are working with uncertain economics here. You can never state economic theory as fact, because it is a very inexact science, which most people approach with a preset viewpoint. However, I have the example of the UK on my side. The UK having introduced a minimum wage in either 1997 or 1998 and having increased it again this year. With no related reduction in employment.

But the point is, they are not buying a product that can be shoplifted.

Oh, I don't know. I saw HEAT.

Firms use advertising to manipulate the market....

large firms are unfashionable?

Yes, they are unfashionable. This thread, and the media coverage linked to its subject ought to show you that.

Actually some slaves do become slaves voluntarily.

Indentured servitude, you mean? Of course, that's not really slavery, it just has some of the trappings of it.

And well done for pre-empting my next move, I nearly used it earlier on. But it's not a semantic game. Power takes many forms, and economic power, especially in the case we are describing is no less a use of force than physical force.

Economic power is not coercive in its nature. Force is coercive.

No, they have the power to take minimum wage or starve. You have obviously never worked an unskilled, minimum wage job. You have no bargaining power - you either take the job or you go without, and for some people this is the choice to take the job or starve. No choice at all.

When companies dictate the market in this way, this is nothing short of exploitation.

That is still a choice.

Already addressed this point. The increase in the minimum wage is unlikely to increase unemployment for the reasons I set out above.

Your argument is operative within a certain window or minimum wage, and as it tends to rise over time, it squeezes more and more producers. Britain is not at that stage yet, but countries like France and Germany are getting very close. It costs so much to hire people on the continent that they simply aren't doing so. Germany's working-age immigrant population doubled in the last 25 years, but the number of immigrants employed didn't rise. They have pushed it too high too long.

Did you read the links I posted.

Why not push for rates like $100/hr, or $1000/hr, there are people who make that much?
Because it is so much for fun to see people flounder around fighting an increase of minimum wage to living wage level.

And about that valuable human capital, I assume you mean Albanian immigrants. The population growth in the EU is very low and the birthrate is being exceded by the deathrate.

Why would they advocate something that won't affect them? Because it will affect their competitors. It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Thoughts, anyone?

Actually this article was released because of the need to offset Friday's unsealing of the documents in the federal investigation, implicating top Walmart executive's direct involvement in setting up numeous front companies that hire illegal aliens for less than 1.00 per hour to clean their stores. Walmart settled their case with the government for 11 million dollars with the understanding that they had nothing to do with it and no criminal charges would be filed against Walmart executives. It turns out though that Walmart told the contractor to open the front companies in case one of the businesses was shut down by the government, there would be many others still operating.
The source is the Wall Street Journal, but since it is a subscription based service I don't know if it is accessable. Page A3 of the hard copy.

Simply saying you don't like the premise isn't sufficient.

You've shown no reason why he would be able to sell his services for more than $8/hr.

I shall tell you why no one will pay him more than $8/hr.

An employer makes essentially the same decision as you do when buying bread. He must decide what he values more, Leonstein's labour, or a certain amount of money.

He decides that at a rate of no more $8/hr, Leonstein's services are worth more to him than that $8/hr. That is simple cost/benefit. If there is an edict saying it is illegal to pay less than $9.50, that doesn't change the basis of the employer's evaluation, except to make it illegal. It does not change the fact that he believes that Leonstein's services are worth no more than $8/hr.

Yes, he makes the same decision as you do when you buy a loaf of bread. If the bread was your staple diet, and the price of bread increased by 50% on all brands, you would still buy the bread.

Again, what you are saying about this $8 rate is true for an individual worker unilaterally raising his demanded rate of pay, but it is not true when the price increases arcoss the market.

The best you could hope to argue on your side is that a proportion of minimum wage workers will lose their jobs. If an employer employes 100,000 workers at $8 an hour, and only values those workers at $8 an hour (in your extreme argument) then the employer will not fire ALL of them because the minimum wage rises to $9.5, because they are necessary to the business. It may fire a small proportion of them, but it will still require a large proportion of them to function as a business. Equally, a small firm that employs only 1 member of staff will not fire that member of staff just because the minimum wage increases by $1.50 an hour. Even if the firm is operating on a low margin this is highly unlikely to be a significant increase in cost compared with other raw materials.

But then you have the fact that most companies are price-setters (rather than price takers) in the wage market, and therefore employ staff at a uniform wage level. There is therefore a large margin between the value of the employee and the amount that they earn that can more than absorb the increase in the minimum wage.

And then add the fact that the increase in the disposable income of the minimum wage sector of the economy will lead to a proportional increase in expenditure and therefore a proportional increase in sales, and you see that a reasonable increase in the minimum wage is unlikely to have a significant effect on emploment levels.

Yes, it could have the effect that you are putting forward, but only if the minimum wage was increased to a ridiculous level. Maybe if it was increased by 75 or 100 percent or something, yes, but if it is a reasonable increase, as in the UK, then it is unlikley it will have a detrimental effect on the economy.



It doesn't change the market value of someone's labour services. It merely pushes out of the market those who's service value is less than the minimum wage.


Why not, the employer doesn't change, he still wants the same things. The employee doesn't change

To add to Zagat's argument - since we are not working in a perfect competition economy, the wage price is usually pushed unnaturally low in most markets and therefore companies are paying below the level at which they actually value the employee.

Furthermore, he is correct in saying that the "best price" that can be got in a non-minimum wage market is not necessarily the same as can be found in a minimum wage market. Not only can the increase in disposable income and resultant increase in sales offset the need to reduce employment, it also increases employee expectations, and pressurises firms to provide better conditions for their staff.

The only effect of the distinction is to render unemployable anyone who's best price is under the arbitrary level set by the state.



Since we are dealing with a single employer who makes the decision of the costs and benefits of employing someone, that argument doesn't apply. If a single employer sees two people who are the same in terms of the criteria he is looking for, he will come to the same conclusions, and pay the same price.


The only effect of the distinction is to render unemployable anyone who's best price is under the arbitrary level set by the state.

If people aren't prepared to pay a price, they will hold on to their cash.

It's not an absolute. Again, if they can still make money from employing people they will. Even if they were paying someone above the level they value them, they will still employ them if they can make money from them. Because we are not working on a "labour value theory" economy, employees are not paid anywhere near the actual value they contribute to a firm, so firms will still make money from employing them even if they are paying them above the level at which they value them.

Oh, I don't know. I saw HEAT.

Absolutely no idea what you're talking about.

Yes, they are unfashionable. This thread, and the media coverage linked to its subject ought to show you that.

They're not unfashionable, otherwise people wouldn't buy their products. It's more that despite their unfashionable image in the more liberal sections of society, they can still manage to manipulate mainstream buying habits to purchase their products.

Economic power is not coercive in its nature. Force is coercive.

No power is coercive in its nature. It is how it is used. Physical power behind the force is not in its nature coercive, but it can be used as physical force to be coercive. Equally, economic power can be used as economic force. If it is not coercive, why are economic sanctions a means of action open to the UN Security Council and the WTO?

Indeed, since the difference in economic power between an individual and Walmart is even greater than the difference in economic power between the US and Libya, economic power can be used to even greater effect here. It's an act of self-delusion to say that economic force cannot be coercive.


That is still a choice.

In name only. Not in reality.


Your argument is operative within a certain window or minimum wage, and as it tends to rise over time, it squeezes more and more producers. Britain is not at that stage yet, but countries like France and Germany are getting very close. It costs so much to hire people on the continent that they simply aren't doing so. Germany's working-age immigrant population doubled in the last 25 years, but the number of immigrants employed didn't rise. They have pushed it too high too long.
Did you read the links I posted.[/QUOTE]


The problems in mainland Europe are more complex than that. And in anycase, the UK minimum wage is in real terms about twice that in the US, so there's not that much danger to you in raising it by a couple of dollars.

As for your links, it is pretty easy for me to go out and find simialr opposing arguments from left wing websites.

Because it is so much for fun to see people flounder around fighting an increase of minimum wage to living wage level.

A bit petty, isn't it.

And about that valuable human capital, I assume you mean Albanian immigrants. The population growth in the EU is very low and the birthrate is being exceded by the deathrate.

Racial slurs? The EU has a vast number of unemployed people, most not Albanians.

Actually this article was released because of the need to offset Friday's unsealing of the documents in the federal investigation, implicating top Walmart executive's direct involvement in setting up numeous front companies that hire illegal aliens for less than 1.00 per hour to clean their stores. Walmart settled their case with the government for 11 million dollars with the understanding that they had nothing to do with it and no criminal charges would be filed against Walmart executives. It turns out though that Walmart told the contractor to open the front companies in case one of the businesses was shut down by the government, there would be many others still operating.

Very interesting.

Yes, he makes the same decision as you do when you buy a loaf of bread. If the bread was your staple diet, and the price of bread increased by 50% on all brands, you would still buy the bread.

I could decide to change my diet.

Again, what you are saying about this $8 rate is true for an individual worker unilaterally raising his demanded rate of pay, but it is not true when the price increases arcoss the market.

But at $8/hr, he can't offer a price that the market will take.

If I try to sell a biro at $1 trillion, that is not a market price, because no one will pay $1 trillion for a biro. $8/hr is not a market price if the minimum wage is $9.50/hr because no one can pay $8.

The best you could hope to argue on your side is that a proportion of minimum wage workers will lose their jobs. If an employer employes 100,000 workers at $8 an hour, and only values those workers at $8 an hour (in your extreme argument) then the employer will not fire ALL of them because the minimum wage rises to $9.5, because they are necessary to the business. It may fire a small proportion of them, but it will still require a large proportion of them to function as a business. Equally, a small firm that employs only 1 member of staff will not fire that member of staff just because the minimum wage increases by $1.50 an hour. Even if the firm is operating on a low margin this is highly unlikely to be a significant increase in cost compared with other raw materials.

You seem to assume the firm would still operate. Assuming they can afford an arbitrary increase in total costs of $150000, or that their sales would hold up if that was all passed on to the consumers, the firm will still operate. If it can't afford an extra $150000, or if consumers won't pay increased prices for their goods, then the firm will fold, and all of them will be out of work.

But then you have the fact that most companies are price-setters (rather than price takers) in the wage market, and therefore employ staff at a uniform wage level. There is therefore a large margin between the value of the employee and the amount that they earn that can more than absorb the increase in the minimum wage.

That doesn't actually change my case. The price of labour is set by supply and demand.

And then add the fact that the increase in the disposable income of the minimum wage sector of the economy will lead to a proportional increase in expenditure and therefore a proportional increase in sales, and you see that a reasonable increase in the minimum wage is unlikely to have a significant effect on emploment levels.

It will also lead to a price rise, which would hit the bottom harder than the top.

Yes, it could have the effect that you are putting forward, but only if the minimum wage was increased to a ridiculous level. Maybe if it was increased by 75 or 100 percent or something, yes, but if it is a reasonable increase, as in the UK, then it is unlikley it will have a detrimental effect on the economy.

I have some containers at home, in which I keep smaller denomination coins. I only add a little each day. I recently took them to the bank, I had $180.

Each little increase sounds reasonable by itself, but over time, it is massive.

To add to Zagat's argument - since we are not working in a perfect competition economy, the wage price is usually pushed unnaturally low in most markets and therefore companies are paying below the level at which they actually value the employee.

Furthermore, he is correct in saying that the "best price" that can be got in a non-minimum wage market is not necessarily the same as can be found in a minimum wage market. Not only can the increase in disposable income and resultant increase in sales offset the need to reduce employment, it also increases employee expectations, and pressurises firms to provide better conditions for their staff.

The only effect of the distinction is to render unemployable anyone who's best price is under the arbitrary level set by the state.

His argument is actually nothing more than a misunderstanding of what I've said, and I think you've made the same misunderstanding.

The rates I quoted at the beginning of the thread were simply what the employers would pay. Whether it is an optimal price or not is irrelevant. It is the price.

He isn't correct in saying the "best prices" are different. They are the same, the difference is that one is a market price, because it is above the minimum wage, one is not a market price, because if the employer hired at that rate, he'd go to gaol.

The increase in wage must be met with an increase in prices.

Even if they were paying someone above the level they value them

Why would they pay more than they're willing to pay?

Because we are not working on a "labour value theory" economy, employees are not paid anywhere near the actual value they contribute to a firm, so firms will still make money from employing them even if they are paying them above the level at which they value them.

This is a variation of "I don't find Disraeliland's OP convenient, so I shall ignore it"

Every purchasing decision is one of cost versus benefit.

In employing someone, we have the benfits of their services versus wages. Our notional employer decided that "The most I will pay for Leonstein's services is $8/hr". At more than $8, the costs outweigh the benefits as far as this employer is concerned.

Absolutely no idea what you're talking about.

HEAT is a movie, Robert de Niro, Val Kilmer, Al Pacino. Its about bank robbers.

It's more that despite their unfashionable image in the more liberal sections of society, they can still manage to manipulate mainstream buying habits to purchase their products.

In other words, they try to persuade people to buy their products.

Well, I suppose they could just hope people gravitate towards the stores ...

No power is coercive in its nature. It is how it is used. Physical power behind the force is not in its nature coercive, but it can be used as physical force to be coercive. Equally, economic power can be used as economic force. If it is not coercive, why are economic sanctions a means of action open to the UN Security Council and the WTO?


Now you are getting into semantics. You are essentially describing unpalettable, and extreme versions of the cost/benefit question that is fundamental to economics.

Take economic sanctions against Cuba, Castro won't buckle to them because he believes the benefits outweigh the costs.

This is as ridiculous as the Gay Lobby conspiracy thread.

This is as ridiculous as the Gay Lobby conspiracy thread.

I think I'm starting to agree with you...:D

I think I'm starting to agree with you...:D
Well, it is now at any rate.

hire illegal aliens for less than 1.00 per hour

Shit, I missed this bit.

This is another flaw with minimum wage laws, they provide incentive for illegal immigration, and this makes the minimum wage law enforceable only to the extent that immigration laws are enforced (which isn't very much in the US, its easier for us in Australia, though)

Shit, I missed this bit.

This is another flaw with minimum wage laws, they provide incentive for illegal immigration, and this makes the minimum wage law enforceable only to the extent that immigration laws are enforced (which isn't very much in the US, its easier for us in Australia, though)

Walmart wanted people to miss this one...BADLY. I subscribe to WSJ but I just became aware that I can provide a link to it for 7 days, so here it is. This is some major shit. http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=887824269

wall-mart is evil, and this is just another symptom of it. I support the minimum wage, without it I couldnt even afford to live, and even now it is barely enough to make ends meet. But wallmart only wants to destroy its competitors, which will put people out of work. The minimum wage is essential but there has to be a compromise between paying people a good wage, and actually being able to employ them.

on an unrelated note I just saw a advert for star wars 3 on DVD and i noticed that I have misplaced the DVD drive in my computer. how odd.

Western Europe is stagnating economically.

The UK's managed to come off pretty unscathed so far... unemployment is very low compared to france, spain or germany

wall-mart is evil, and this is just another symptom of it. I support the minimum wage, without it I couldnt even afford to live, and even now it is barely enough to make ends meet. But wallmart only wants to destroy its competitors, which will put people out of work. The minimum wage is essential but there has to be a compromise between paying people a good wage, and actually being able to employ them.

on an unrelated note I just saw a advert for star wars 3 on DVD and i noticed that I have misplaced the DVD drive in my computer. how odd.

An essential part of capitalism is competition, not only in the offering of goods and services, but in labor. Our government has failed the system entirely, in eliminating that competition for fair compensation, by opening the floodgates to illegal immigration for the sole purpose of increasing the labor pool to a level that workers are an easily replaced commodity. This failure, while mostly ignored by the general public and certainly by corporate media, is George Bush's greatest failure. It is not by mistake that Walmart was his single largest contributor and it was not without intent when he chose to ignore the situation or increase the flow of illegals. Most unfortunately though, so do all the other politicians on both sides of the spectrum.

Here's an alternative to the minimum wage that may interest you: http://www.ldp.org.au/tax.html

It is called the 30/30 System.

Simply saying you don't like the premise isn't sufficient.
Actually it is your premise and (crucially) it is a premise of an affirmitive nature; I dont need to posit anything other than a generalised doubt.

The onus of establishing the truth of an affirmitive premise lies with the person positing it. Until you can demonstrate that the premise has a positive truth value, it hasnt been established. Doubt (in the form of some possible alternitive contrary premise) is a sufficient counter-argument unless and until you establish reason for the premise to be accepted.

You've shown no reason why he would be able to sell his services for more than $8/hr.
I dont need to. You made a suggestion, one that you have not demonstrated as necessarily true. The onus is with the affirmitive. The mere suggestion of an alternative counter-premise is sufficient to counter an unproven affirmative claim.

I shall tell you why no one will pay him more than $8/hr.
An employer makes essentially the same decision as you do when buying bread.
No an employer does not make essentially the same decision as I do when I buy a loaf of bread. The motivation for making a decision about hiring someone and the motivation for making a decision about buying bread are entirely different in detail. The goals are different, the rational is different.

A decision to purchass a good/service for 'ordinary-consumption' is materially different to making a decision about purchassing goods/services for the purpose of generating profit/capital.

He must decide what he values more, Leonstein's labour, or a certain amount of money.
No, he must decide based on a variety of factors including the costs of not hiring (or firing). In such a decision there is not only the benefit vs cost of purchass, but also the cost of non-purchass to be considered.

He decides that at a rate of no more $8/hr, Leonstein's services are worth more to him than that $8/hr.
Well in the first place, Leonstein is not being hired, but is in fact already employed (otherwise you could not reasonably suggest that Leonstein was being deprived of existing employment by the introduction of minimum wage).

The fact is it is unlikely that an employer would employ someone at 'break even'. Why employ someone if their productive activities (in their employment) does not result in a margin between the cost of hiring and the value being produced?

That is simple cost/benefit. If there is an edict saying it is illegal to pay less than $9.50, that doesn't change the basis of the employer's evaluation, except to make it illegal. It does not change the fact that he believes that Leonstein's services are worth no more than $8/hr.
If his services were only worth that much, what was the point of hiring him? There would be no point unless there were a margin between cost of employing Leo and value of Leo's productive acitivities (as an employee).

So we have a situation in which employer has some margin between the cost of Leo and the value of Leo's productive efforts. Leo was already employed before the minimum wage.

The cost of now firing Leo includes the loss of any training costs (for instance familiarising Leo with 'inhouse' systems etc), the cost of any equipment that was purchassed soley on the rational that Leo would produce enough excess value over time to recoup the costs, the costs of any reorganising of the business labour-pool (in order to ensure the efficient use of Leo's productivity apon integration into the business's labour force), and also the costs of setting it back how it was before Leo was hired.

As you can see the costs of firing Leo are mounting up. All this is without taking into account that on the basis of Leo's labour, contracts have been taken up that without Leo's labour simply cannot be honoured. Even assuming that there are no financial penalities for failure to supply built into the supply contract, the loss of good faith alone could be prohibitive.

As you can see, there is a great deal more to consider than merely the cost of paying Leo, in relation to the possible profit that can be extracted from Leo's labour.

It doesn't change the market value of someone's labour services. It merely pushes out of the market those who's service value is less than the minimum wage.
I see no reason to believe your assertion and since I am positing a counter premise (rather than positing an affirmitive premise) I need do no more than suggest a contrary possibility.

It seems to me that Leo would not have been hired initially if his labour were not needed. If it were possible for existing employees (prior to hiring Leo) to meet the output demands of the business, why hire anyone else? More profit could be made by extracting the full productive capacity of existing employees, unless that isnt possible (for instance because they simply cannot meet the output demand without another labourer/worker).

Economics at an economy level is rationalised by reference to outcomes, not individual anecdotal experiances of individuals.

The implication is that even if some people would loose their jobs in some cases, for the most part the loss of productivity and the costs of firing an employee, will outweigh the benefits of firing that employee.

At an economy level, the outcome will not be significantly effected by a few job losses at the lowest end of the scale occuring in the least profitable businesses. For the most part, the fact that the labour of a substantial labour group, has increased slightly, will not change the fact that the work still needs to be done.

Remember we have already established that if there were no margin between wages paid and profit extracted, then the person wouldnt have been hired in the first place. So in fact it is reasonable to induce that there is some margin between cost before minimum wage and profit generated, and there are costs involved in firing existing employees, and evidently there's still in most cases a need for the work to be done.

You will recall the 'lift doorman' scenario? The jobs didnt disappear over-night. They were phased out over time. It seems unreasonable to assume that over that period of time new labour needs did not arise to replace the needs being phased out.

Remembering that in economics it is the economy that actually matters, the phasing out of doormen is not inherently 'bad' for the economy. In fact if the labour needs that arose in place of the need for doormen was of a kind that produced more value, then in fact the nett effect is arguably beneficial for the economy.

Why not, the employer doesn't change, he still wants the same things. The employee doesn't change
Remember your friend supply and demand? If there is a pool of labour available at 8 dollars per hour, then why would anyone pay more than 8 dollars? They wouldnt. So 8 dollars an hour reflects the ability to hire people at that rate at least as much as it reflects the actual benefit of hiring the employee.

The fact that the labour pool available at 8 dollars an hour ceases to exist, changes the dynamics of supply and demand.

In all cases for all employers effected, it is pay more or loose the benefits of an employee's services and incur the costs of firing that existing employee.

Nothing you have posited suggests that 8 dollars an hour doesnt generate a significant margin between the cost and benefit (of hiring a person at that rate). If in fact the supply of cheap labour is no longer available for many employees the cost of paying more for labour is still the best most profitable course of action available to them.

In those few cases where it is not, the job concerned was clearly very marginal. Such marginal jobs disappear all the time because any business operating at such close margins is vulnerable to even the smallest ripples in the economy or in supply and demand or in the cost of material productive capacity. In essence the loss of such marginal jobs is a negliable loss.

The only effect of the distinction is to render unemployable anyone who's best price is under the arbitrary level set by the state.
That's not their absolute best price. It is their best price in a labour market characterised by a pool of available labour at 8 dollars per hour. That pool has ceased to exist.

The pay rate of 8 dollars an hour was the outcome not of productive value, but of a confluence of factors that included the ready supply of labour at 8 dollars an hour. The confluence of factors determing the best price has been altered.

For most employers meeting the extra labour cost of 9.50 would have resulted in a profit before the introduction of a minimum wage, but it would have been silly to pay such a rate when it was not necessary do to so, and most particularly when one's competors were paying only 8 dollars.

Since we are dealing with a single employer who makes the decision of the costs and benefits of employing someone, that argument doesn't apply.
Hang on, I posited that example. My example was not premised on one employer, if you chose to respond to a 'one employer' premise, then you didnt respond to the example I had posited.

If a single employer sees two people who are the same in terms of the criteria he is looking for, he will come to the same conclusions, and pay the same price.
Whyever would an employer do that if it were possible to employ one at a lesser rate for whatever reason? There are a variety of reasons why employees could have (despite their equivalent production capacity) been hired at different rates. For instance I did not suggest they commenced employment at the same time.

The labour market, the businesses needs, even the sourcing of the employee are all variables that can effect the hiring rate of new employees.

It is entirely possible that one arrived in response to an advert in the paper at a time when the extra production capacity was particularly needed for some reason or other and with no other suitable candidates available.

The other employee had been hired months earlier when under conditions of non-urgency, the employer asked the local government career office to send over some applicants. As one of several with equivalent production value, sent from a labour office under conditions of non-urgency, the employee had no bargaining power in terms of negotiating wages. If he/she wouldnt work for that much one of the other equivalent half dozen applicants sent by the career office would have.

If people aren't prepared to pay a price, they will hold on to their cash.
Again you are oversimplifying. An employer might be prepared to pay 15.00 per hour, and yet percieve that it is possible to get the labour at 8 dollars and so only pay 8 despite being prepared to pay 15. And as simple as that we have found a variable other than 'what people are prepared to pay'.

You got hooked on a single word "productivity", and assumed I was referring to a single, universal measure.
Er no, I assumed you were making sense. Such an assumption necessitated that I interpret the meaning of your words in accordance with the 'sense making' rules of discourse (because if your words didnt accord with the 'sense making rules of discourse' then you wouldnt be making sense).

From the assumption that you were making sense, the rest was deductive.

The meaning of the comments you were replying to formed part of the meaning of the reply you were making (as dictated by the 'sense making rule' - maxim of relevence). Either the meaning I interpreted was the meaning of the words or the comments were in fact without sense due to violation of the 'sense making rule', maxim of relevence).

So either the comments are contradictory or they never actually made sense in the first place....whether your argument lacks coherence because it is self contradictory, or because in fact it was nonsensical all along....well, it's all the same to me.

You think it is an absurdity. Evidently, others don't because they buy the crap she produces.
No, the conclusion
'people dont believe it is absurd that X is paid this much for a, b, c, while Y is paid that (ie some other amount) much for l,m,n'
does not necessarily follow from the premise
'people buy the products from which X's renumeration stems'.
As a real world example,

my friend does think that Britney Spears renumeration is absurd when it is compared to the renumeration of a fire-fighter. She none the less has purchased products from which Spear's renumeration stems.

So in fact not only is your conclusion not a necessary consequent of the premise you posited, but in fact there is at least one real world, empiracal proof of the conclusion's falsity.

It can be realised to the entent that you, and others that think like you can support it with your own money, or refuse to support things you think are absurd by not spending your money on them,
Which is avoiding the question entirely. The justification you posited appeared (to me) to be based on an appeal to 'autonomy'. Yet if the outcome is less autonomy or even not more autonomy than can be achieved through some alternative, then your posited justification looses any force it might otherwise have.

and by trying to persuade others by eloquent argument. Don't be so lazy as to expect the state to set and realise them for you, they'll only bugger it up.
I dont expect the state to set my priorities.

You probably didn't pick up on the hypothetical nature of this example.
It is an illustration. We don't need to know exactly why the employer won't find it to his advantage to pay more than $8/hr.
No such an example is only adequate as a refutation of a postive assertion. In order to substantiate a positive assertion it is necessary to do more than suggest something could in theory be so. To prove an affirmitive assertion it is necessary to prove that it is so.

You cannot prove an affirmation (in the positive) by demonstrating only that it is possibly true.

Whilst a hypothetical example can demonstrate that something is not necessarily true, it is not sufficient for establishing that something is in fact true.

No an employer does not make essentially the same decision as I do when I buy a loaf of bread. The motivation for making a decision about hiring someone and the motivation for making a decision about buying bread are entirely different in detail. The goals are different, the rational is different. A decision to purchass a good/service for 'ordinary-consumption' is materially different to making a decision about purchassing goods/services for the purpose of generating profit/capital.

No, they aren't. You're just expressing cost/benefit in different terms. "Ordninary consumption" results from people deciding that the consumer goods/services they want are of more value to them than a certain amount of money. Employment (or any purchase towards production) results from people deciding the productive goods/services they want are worth more than a certain amount of money.

In both cases, that certain amount of money is the market price.

The general goal is the same, getting something you value more after the trade than you had before.

No, he must decide the costs of not hiring. In such a decision there is not only the benefit vs cost of purchass, but also the cost of non-purchass to be considered.

Again, you're not disputing me. They consider the cost vs. benefit in a transaction.

The fact is it is unlikely that an employer would employ someone at 'break even'. Why employ someone if their productive activities (in their employment) does not result in a margin between the cost of hiring and the value being produced?

Again, you're not disputing me. I've said the employer will always aim for maximum benefir for minimum cost.

If his services were only worth that much, what was the point of hiring him? There would be no point unless there were a margin between cost of employing Leo and value of Leo's productive acitivities (as an employee).

So we have a situation in which employer has some margin between the cost of Leo and the value of Leo's productive efforts. Leo was already employed before the minimum wage.

The cost of now firing Leo includes the loss of any training (for instance familiarising Leo with 'inhouse' systems etc), the cost of any equipment that was purchassed soley on the rational that Leo would produce enough excess value over time to recoup the costs, the costs of any reorganising of the business labour-pool, and also the costs of setting back how it was.

As you can see the costs of firing Leo are mounting up. All this is without taking into account that on the basis of Leo's labour, contracts have been taken up that without Leo simply cannot be honoured. Even assuming that there are no financial penalities for failure to supply built into the supply contract, the loss of good faith alone could be prohibitive.

As you can see, there is a great deal more to consider than merely the cost of paying Leo, and the possible profit that can be extracted from Leo's labour.

Which would put off firing him. The point is if they can't afford the increase, he'll go.

Again you are oversimplifying. An employer might be prepared to pay 15.00 per hour, and yet percieve that it is possible to get the labour at 8 dollars and so only pay 8 despite being prepared to pay 15. And as simple as that we have found a variable other than 'what people are prepared to pay'.

You're saying the same thing as I am in a different way. He will try to extract maximum benefit for minimum cost. Can you explain to why someone would pay $15 for something he can get for $8? There is no reason for it, unless your firm is doing so well that it can throw cash about as if it were confetti.

It seems to me that Leo would not have been hired initially if his labour were not needed.

He was hired because it would benefit those who hired him.

The implication is that even if some people would loose their jobs in some cases, for the most part the loss of productivity and the costs of firing an employee, will outweigh the benefits of firing that employee.

Still the assumption that the increase is affordable by the firm. Nothing more than a Nirvana fallacy. It would be very nice is all the firms could absorb an artitrary price increase without any bad effects on the firm, or the market, but the world doesn't work that way.

For the most part, the fact that the labour of a substantial labour group, has increased slightly, will not change the fact that the work still needs to be done.

Provided the firm can afford it. If they can't, no work will need to be done.

You will recall the 'lift doorman' scenario? The jobs didnt disappear over-night. They were phased out over time. It seems unreasonable to assume that over that period of time new labour needs did not arise to replace the needs being phased out.

They were replaced gradually because it paid to do so due to the nature of the Lift Driving Industry. It underlines my point, the increase in labour costs will create a disincentive to employ. You may not see the effects tomorrow, or even for years, but the man-driven lifts will be replaced with the push-button jobs.

There's no reason to assume in an environment where a new disincentive to employ has been introduced that there would be enough demand for labour to take care of the sackings with new hirings.

In those few cases where it is not, the job concerned was clearly very marginal. Such marginal jobs disappear all the time because any business operating at such close margins is vulnerable to even the smallest ripples in the economy or in supply and demand or in the cost of material productive capacity. In essence the loss of such marginal jobs is a negliable loss.

To whom is it negligable? I suspect not for the people who lose their jobs, and can't find new ones.

In any case, why should the state be allowed to destroy marginal firms? If the firm, by itself, becomes unable to compete in the market, and no one wants what it produces, then I've no problem with it going. I do have a problem with the government doing it. What right have they?

For most employers meeting the extra labour cost of 9.50 would have still been profitable before the minimum wage, but it would have been silly to pay such a rate when it was not necessary and most particularly when one's competors were paying only 8 dollars.

That they can afford $9.50 because they can afford $8 is not a justified assumption.

Whyever would an employer do that if it were possible to employ one at a lesser rate for whatever reason?

But what would be the reason? You brought up the idea of two people who were the same. If they're the same, there's no reason, and positing the idea that one might exist is not justified. They are the same, therefore the market clearing price for their services is the same because they offer the same thing in terms of what the client wants.

No, the conclusion
'people dont believe it is absurd that X is paid this much for a, b, c, while Y is paid that (ie some other amount) much for l,m,n'
does not necessarily follow from the premise
'people buy the products from which X's renumeration stems'.
As a real world example,

my friend does think that Britney Spears renumeration is absurd when it is compared to the renumeration of a fire-fighter. She none the less has purchased products from which Spear's renumeration stems.

So in fact not only is your conclusion not a necessary consequent of the premise you posited, but in fact there is at least one real world, empiracal proof of the conclusion's falsity.

Your friend may well say its absurd for Spears to get so much, but she does contribute to it.

It is nevertheless a trivial objection which in no way alters my overall point, which is that there is nothing intrinsically wrong with what she gets, people give it to her voluntarily because they like her "music".

I dont expect the state to set my priorities.

But who do you expect to carry them out?

No, they aren't. You're just expressing cost/benefit in different terms.
No I am expressing materially relevent distinctions between the qualities of the costs/benefits applicable in the two cases.

"Ordninary consumption" results from people deciding that the consumer goods/services they want are of more value to them than a certain amount of money. Employment (or any purchase towards production) results from people deciding the productive goods/services they want are worth more than a certain amount of money.
Whilst it is possible to semantically describe them as the same, that doesnt negate the fact that the two are distinguishable on materially relevent grounds. Specifically the differing qualities of the goals that define the values on which the decision will rest.

Simple consumption doesnt involve as many variables. Possible rise or reductions in monetary interest rates over the next 6 months, 12 months, 5 years are not in the least bit relevent to the benefit/cost ratio of a loaf of bread that will not even exist in 7 days. Such variables (as only one example of a wide range of such variables) may be not only relevent, but actually crucial determining factors in the benefit/cost ratio of a business decision regarding purchases.

In both cases, that certain amount of money is the market price.
Market price is etheral. The price of a product varies across time and space. In some cases the price is primarily an effect of such variables as 'supply and demand' at other times it is a cause of 'supply and demand'. Given the fact that I can walk a couple of metres and find multiple different market prices of the same goods, market price is not an absolute objective value.

The general goal is the same, getting something you value more after the trade than you had before.
The general goal of transporting myself through space from one location to another is the same whether I walk, or go in a helicopter. The two are none the less distinguishable, and in some contexts the distinguishment is materially relevent. In this context the distinguishment between ordinary-consumption purchass and business purchass is materially relevent.

Again, you're not disputing me. They consider the cost vs. benefit in a transaction.
Whether or not the qualification I offered was contrary to your assertion, isnt the point. The point is the implications of the assertion as you posited, and the implications of the qualification I posited. The divergence of the implications is materially relevent in this context.

Again, you're not disputing me. I've said the employer will always aim for maximum benefir for minimum cost.
Which would put off firing him. The point is if they can't afford the increase, he'll go.
Aha, but you have not demonstrated that it will be the case (that the employee will have to go) in any purportion that is significant in determining the outcome at an economy level.

You're saying the same thing as I am in a different way. He will try to extract maximum benefit for minimum cost. Can you explain to why someone would pay $15 for something he can get for $8? There is no reason for it, unless your firm is doing so well that it can throw cash about as if it were confetti.
Actually somewhere at some point along the way I am clearly not saying the same thing as you because if I were, there wouldnt be any divergence in our conclusions (divergence of conclusions itself proves divergence of what is being said).

It seems to me that you take the implications only so far, and then drop them like a hot potatoe exactly where they demonstrate the dubious quality of your conclusion.

He was hired because it would benefit those who hired him.
The benefit being derived from the utility of the needed labour he provided.

Still the assumption that the increase is affordable by the firm.
Not at all. We are discussing economics. The fate of any one firm is not a deciding factor. The materially relevent effects are those observed at an economy level.

Nothing more than a Nirvana fallacy. It would be very nice is all the firms could absorb an artitrary price increase without any bad effects on the firm, or the market, but the world doesn't work that way.
It might well be nice, just as it would probably be very nice if people in return for their hard sloggin' recieved a renumeration that provided a decent minimal standard of living relative to the society in which they live. Now if the niceness of decent minimum standard of living renumeration is not sufficient to justify such minimum wage laws consistent with providing such a standard, then the niceness of a particular firm (or firms) remaining in business is not sufficient to justify the non-existent of minimum wage laws.

As for the 'market', that is secondary to the economy-outcome. If the economy-outcome is positive what does the market matter? The market outcome is not an end in itself. The economy is.

Provided the firm can afford it. If they can't, no work will need to be done.
Work always needs to be done (at least that's how it is in my house...;) ).
Work will still need to be done. People will continue to consume because they will die if they dont (ya gotta eat) thus necessitating and funding production. Production requires work be done. So work will always need to be done.

The point is not whether work will need to be done (it always will be) but rather the scope of variables that characterise the production/consumption/distribution relationships that the work is constituent of.

To prove the affirmitive assertion 'minimum wage laws would have a negative effect' you need to prove that a contextually relevent negative effect is a necessary consequent of mimimum wages.

In this context, contextually relevent effects (negative or otherwise) are those observable at the level of economy-outcome.

'A firm, or some firms would not be viable' doesnt demonstrate that there would be a negative economy-outcome, much less one sufficient enough to ignore other factors that are of importance in terms 'ultimate goals' (ie the goals from which 'good economy-outcome' derives it's positive valuation).

They were replaced gradually because it paid to do so due to the nature of the Lift Driving Industry. It underlines my point, the increase in labour costs will create a disincentive to employ. You may not see the effects tomorrow, or even for years, but the man-driven lifts will be replaced with the push-button jobs.
It doesnt underline your point, rather your apparent interpretation of it's possible significance seems to indicate a failure to distinguish between 'output' and 'outcome'.

The lift driving industry is an output, not an outcome. Outputs are not in and of themselves significant, their only significance arises from their relationship to outcomes.

So for the lift driving industry's demise to have any significance, it must have some effect on the outcome (at the economy level). I dont see any reason to believe that the effect of the industry's demise on the economy-outcome was in fact negative.

There's no reason to assume in an environment where a new disincentive to employ has been introduced that there would be enough demand for labour to take care of the sackings with new hirings.
In the absence of a determination to the contrary on your part, I dont need to prove it ought to be assumed, so long as it is not provably impossible, and is contrary to your assertion, it serves as a counter example to the necessary truth of your assertion; it proves that your assertion is not necessarily true.

To whom is it negligable? I suspect not for the people who lose their jobs, and can't find new ones.
Not 'whom', but rather 'what'. The economy-outcome.

In any case, why should the state be allowed to destroy marginal firms?
Why shouldnt it? Again I draw your attention the implications of asserting an affirmitive with regards to the onus of proof.

If the firm, by itself, becomes unable to compete in the market, and no one wants what it produces, then I've no problem with it going. I do have a problem with the government doing it. What right have they?
What lack of right have they?
A firm's viability is not determined soley by how much people want their products. It is determined by it's ability to generate profit, which is subject to various variables, such as the cost of production, including the costs of abiding by the relevent laws that exist in it's operating environment.

That they can afford $9.50 because they can afford $8 is not a justified assumption.
It's not an assumption. It is a possibility that is contrary to the necessary premises/conclusions of your affirmitive assertion. As such, unless and until it is proven to be impossible, it is sufficient proof that your affirmitive assertion is not necessarily true.

But what would be the reason? You brought up the idea of two people who were the same.
No I have not. They are not the same, they are equivalent in a particular aspect that is a determining factor in the cost/benefit ratio of employing them at any particular time.

If they're the same, there's no reason, and positing the idea that one might exist is not justified.
They are not 'the same', they are 'the same' in one particular (significant) respect, that does not exclude existence or mitigate the effects of variables that are also significant.

They are the same, therefore the market clearing price for their services is the same because they offer the same thing in terms of what the client wants.
No, they are equivalent (the same) in one aspect. Not only is it possible for two (or more things) to have (materially relevent) equivalent qualities in some respects whilst remaining distinguishable in other respects (that are also materially relevent), it is actually a very common actuality.

Your friend may well say its absurd for Spears to get so much, but she does contribute to it.
Exactly. Given the truth of your premise, your conclusion can still be not true. So the argument is provably unsound.

It is nevertheless a trivial objection which in no way alters my overall point, which is that there is nothing intrinsically wrong with what she gets, people give it to her voluntarily because they like her "music".
Your overall point is irrelevent. It entirely misses the point that was being made in favour of addressing a straw man.
I called it an absurdity, not a 'wrong'. (Maybe I'm misremembering, but I'm sure I even posted at some point that an ethical judgement was not the point or even relevent to the point being made in itself).

I suspect you are interpeting absurdity to mean 'moral value/judgement of some kind or other' (which is not an unreasonable possible interpretation). That is however not the possible meaning that it conveys in this context (ie my particular use of the word on this particular occasion).

Further you appear to be focusing on a secondary relationship rather than the relationship that the example is illucidating. The relationship between Britney and the people who 'fund' her, and/or Britney and the 'deservedness' of her renumeration are not the focus of the example.

The relationship that is being illucidated is the nonsensical relationship between what is achieved and the renumeration the achievement attracts.

If you were to want to influence my perception (regarding the absurdity I was pointing to) that could best (and possibly only) be achieved, by positing and getting me to accept some principal that makes sense out of the relationship.

The point of me posting the example was to convey to you a significant obstical in convincing me to accept your theoretical position/argument.

But who do you expect to carry them out?
Carry them out?!:confused:

I expect that I will determine my priorities to the best of my ability (at any particular time) and that I will act in accordance with them to the extent of my capacity at any particular time.

That case brings to light another aspect of a minimum wage: It is a politically easy form of taxation and redistribution.
All policy is exactly that, you know.

We call it "Sequencing Effects", and it is its own little area in research when it comes to microeconomic reforms.

The idea is to neutrally assess who benefits most from what, and which parts of a reform should therefore be implemented first (plus you need to consider that one reform might be necessary or desirable for another, since it makes it more effective).

Don't kid yourself, abolishing the minimum wage would also be a redistribution effect, as are the new IR reforms here.

Leonstein cannot sell his labour for any more than $8/hr, full stop.
Now you're being just harsh! ;)
And in none of your posts so far you have bothered to address my question as to how wages actually correspond to me having good days and bad days, which clearly makes my productivity change.

Ultimately, Labour is not a good like any other! There is no simple market for Labour with a demand curve and a supply curve. And even if there were, an Austrian would have to reject it - a true Austrian would not parrot CSE theories. The two schools are fundamentally opposed to each other on everything but the most superfluous observations.

Point: For a demand curve to exist, there needs to be a marginal product of something. One more widget will increase my happiness as much as one more dollar will. Ergo, if the widget is sold at the supermarket for .99c, I'll buy it, if it sells for $1.01, I won't.

Now, I'm the employer, and I want to "buy" a widget maker.
I know that an extra widget-maker of average quality (ie like everyone else) is worth 10 bucks an hour to me - that is as much as he will produce.
Now Disraeliland, the hardworking hero straight out of Atlas Shrugged comes along and says: "I can make a thousand widgets an hour - I'd make you a hundred dollars an hour!"
I say: "Prove it" - and he can't. There is no way I can believe his claims, and there is no way he can prove them short of being employed. So I do - but do I pay him a thousand dollars per hour? Hardly, I factor my risk into it, and no matter how long he stays, he will never get as much as he's really worth.
No, you say, he's going to leave! And whereto?, I ask. Everyone does the same.

This is just one quick scribble on the stupidity of assuming productivity to be a reasonable estimate of wages. Show me one (1) firm that actually knows the productivity of every single worker it employs - and then pays everyone a different wage.
Show me just one HR Department that will not try to entice people to work harder by giving more money than the worker is currently worth.
Show me the one HR Dept. that actually knows every single function a worker performs and pays incentive wages that actually cover it all.
And show me that there are no workers who get a raise simply because they've been employed for so long, and the firm doesn't want to lose the experience and the firm-internal knowledge to go to the competition.

Is that an argument for the minimum wage? Probably not - but it most certainly is an argument against condemning minimum wages based on simplistic notions of two lines intersecting on a piece of paper.

And that, my friends, is probably the most Austrian thing we've heard so far. :D

And in none of your posts so far you have bothered to address my question as to how wages actually correspond to me having good days and bad days, which clearly makes my productivity change.

No, you've simply agreed an hourly rate with the employer. I've an hourly rate agreed with my employer, and it remained constant in sickness and in health.

I say: "Prove it" - and he can't. There is no way I can believe his claims, and there is no way he can prove them short of being employed.

You've not heard of a trial, "we'll start you for a day, or so, and see how you go". The point is not that I can make such a claim, its whether I can convince an employer of it. I've always rooted my arguments in what an employer would be convinced of.

Whilst it is possible to semantically describe them as the same, that doesnt negate the fact that the two are distinguishable on materially relevent grounds. Specifically the differing qualities of the goals that define the values on which the decision will rest.

Simple consumption doesnt involve as many variables. Possible rise or reductions in monetary interest rates over the next 6 months, 12 months, 5 years are not in the least bit relevent to the benefit/cost ratio of a loaf of bread that will not even exist in 7 days. Such variables (as only one example of a wide range of such variables) may be not only relevent, but actually crucial determining factors in the benefit/cost ratio of a business decision regarding purchases.

Doesn't invalidate what I've said. I know that capital purchases need a more detailed assessment because unlike a loaf of bread, it won't be gone in two days, but the assessment is the same, the costs versus the benefits.

Market price is etheral. The price of a product varies across time and space. In some cases the price is primarily an effect of such variables as 'supply and demand' at other times it is a cause of 'supply and demand'. Given the fact that I can walk a couple of metres and find multiple different market prices of the same goods, market price is not an absolute objective value.

I never said market value was objective.

The general goal of transporting myself through space from one location to another is the same whether I walk, or go in a helicopter. The two are none the less distinguishable, and in some contexts the distinguishment is materially relevent. In this context the distinguishment between ordinary-consumption purchass and business purchass is materially relevent.

Its a false analogy, and if you were evaluating whether to walk, or fly, you'd still essentially weigh up the same things, cost, and benefit. You may say "I only want to cross the street, and its costs a lot to operate the helo, so I'll walk", or conversly if you felt the distance you wanted to travel made using a helo a good idea, or you wanted to use it for some other reason.

The scale of the factors on each side are more complicated if we were evaluating what method of transport to use for the trip.

Example. Lets go back to bread. The cost/benefit analysis is very simple.

On the cost side, if you don't buy the bread, you'll have no bread to eat, but if you do buy the bread, you lost your $0.50.

On the benefit side, if you don't buy the bread, you've still got $0.50, and if you do you've got toast.

So then you decide, basing your decision on your preferences at the time, and what you'll think they'll be later.

In tranportation, there are more factors, but it is basically the same.

Cost: If you use the helo, there's fuel costs, maintenance costs, you might have to pay a pilot, there may be a landing fee where you land. If you walk, there's the physical strain, and the slowness.

Benefit: For the helo: speed, comfort, and convenience over long distances.
For walking: more exercise for yourself (I know it is a different way of saying "physical strain", but it is a valid factor because you may want more exercise), and there's the reduced expenditure of money.

Aha, but you have not demonstrated that it will be the case (that the employee will have to go) in any purportion that is significant in determining the outcome at an economy level.

www.walterblock.com/publications/minimum_wage.pdf

[N.B. pdf, you ought to Right Click, and Save Target As]

It's not an assumption. It is a possibility that is contrary to the necessary premises/conclusions of your affirmitive assertion. As such, unless and until it is proven to be impossible, it is sufficient proof that your affirmitive assertion is not necessarily true.

An alien invasion that introduces a communist society on Earth is a possibility that's contrary to my premises/conclusions. Shall I also try to prove that impossible (leaving aside the fact that you can't prove a negative). I've already said that this employer will not pay Leonstein more than $8/hr. You've not proven that he will change his mind, and if you had you must still show that he would not have done it without a minimum wage increase.

The benefit being derived from the utility of the needed labour he provided.

Of course, and the cost being what he is paid. If that cost is raised by government, there comes a point at which the employer gets to think "not worth it"

It might well be nice, just as it would probably be very nice if people in return for their hard sloggin' recieved a renumeration that provided a decent minimal standard of living relative to the society in which they live. Now if the niceness of decent minimum standard of living renumeration is not sufficient to justify such minimum wage laws consistent with providing such a standard, then the niceness of a particular firm (or firms) remaining in business is not sufficient to justify the non-existent of minimum wage laws.

You've not justified the existance of minimum wage laws.

As for the 'market', that is secondary to the economy-outcome. If the economy-outcome is positive what does the market matter? The market outcome is not an end in itself. The economy is.

That's a wierd argument, that by placing state restrictions on entry to the market, you get a better economic result.

To prove the affirmitive assertion 'minimum wage laws would have a negative effect' you need to prove that a contextually relevent negative effect is a necessary consequent of mimimum wages.

In this context, contextually relevent effects (negative or otherwise) are those observable at the level of economy-outcome.

'A firm, or some firms would not be viable' doesnt demonstrate that there would be a negative economy-outcome, much less one sufficient enough to ignore other factors that are of importance in terms 'ultimate goals' (ie the goals from which 'good economy-outcome' derives it's positive valuation).

A straw man. I have argued that the minimum wage will increase unemployment. The refutation of that from you seems to be "who cares about more unemployment, I think the economy is better off".

In the absence of a determination to the contrary on your part, I dont need to prove it ought to be assumed, so long as it is not provably impossible, and is contrary to your assertion, it serves as a counter example to the necessary truth of your assertion; it proves that your assertion is not necessarily true.

Negative proof fallacy.

No, they are equivalent (the same) in one aspect. Not only is it possible for two (or more things) to have (materially relevent) equivalent qualities in some respects whilst remaining distinguishable in other respects (that are also materially relevent), it is actually a very common actuality.

In which case they are not the same in terms of what criteria an employer looks at in determining "at what rate does it pay to employ this person". They are similar. The only factors that are materially relevant are those the employer believes are in terms of the price of labour.

Your overall point is irrelevent. It entirely misses the point that was being made in favour of addressing a straw man.
I called it an absurdity, not a 'wrong'. (Maybe I'm misremembering, but I'm sure I even posted at some point that an ethical judgement was not the point or even relevent to the point being made in itself).

I suspect you are interpeting absurdity to mean 'moral value/judgement of some kind or other' (which is not an unreasonable possible interpretation). That is however not the possible meaning that it conveys in this context (ie my particular use of the word on this particular occasion).

I misinterpreted what you meant by absurdity. I thought a you were making a moral judgement because you were referring to "deservedness" of Spear's income versus the Fireman's.

The relationship that is being illucidated is the nonsensical relationship between what is achieved and the renumeration the achievement attracts.

If you were to want to influence my perception (regarding the absurdity I was pointing to) that could best (and possibly only) be achieved, by positing and getting me to accept some principal that makes sense out of the relationship.

The point of me posting the example was to convey to you a significant obstical in convincing me to accept your theoretical position/argument.

The explaination of it is subjective value.

According to subjective value, value is in the eye of the beholder (which is what I've been arguing in terms of "what the employer is prepared to pay").

A lot of people want to buy Spears' rubbish, so many that her income is huge.

For info: http://en.wikipedia.org/wiki/Marginalism

The only reason I think Spears' income is an absurdity is that she's so utterly bereft of talent.

As to firemen, I think people take them for granted. People will say they're more important than bimbos like Spears, but they're simply forgotten until one dies, or they pull someone out of a building, then they're heros for 30sec.

I think the real problem is that people spend too much time on trivialities.

Walmart's evil to the core anyway, it's like Hitler giving 10c to the Survivors of the Holocaust Fund

In the first place, the minimum wage is a bad idea. People (wrongly) treat it as a "floor" under wages, if you raise the floor, all the wages go up.

I prefer to think of it as a high jump bar. Here's why.

Different people have different levels of productivity (which we can measure in $/hr) in the same way as different people have different levels of athletic ability.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

On comes the juggernaut of government. They set a minimum wage, $10/hr. Here's what happens. My wages are unaffected, if the employer reduces them, I'll find someone else. Neu Leonstein gets fired, because it is illegal to pay him $8/hr, and it doesn't pay to employ him at $10/hr.

That sounds about right, for an imaginary world in which unskilled laborers actually get paid at around the value of their productivity.

Unfortunately, in the real world this does not happen, due to the law of supply and demand.

Think of price this way: If I am a buyer of Item X, I attach a certain value to it: a "willing to pay" price. Of course, if I can get Item X for much less than my "willing to pay" price, I certainly will -- that's what we call a "good deal."

The "willing to pay" price of an employee is what you call the "value of her/his productivity." If I produce at $8 per hour, my employer's "willing to pay" price is $8 per hour. That does not necessarily mean that I get paid $8 per hour.

Of course, if I am a skilled or professional worker, I may get paid very close to the value of my productivity... because workers of my type are in relatively short supply, we can demand a high wage for our labor. But minimum wage law is not really directed at skilled or professional workers, for precisely this reason.

Rather, minimum wages are designed to benefit unskilled, entry-level laborers. Because the supply of such laborers is especially large, individual workers are relatively (though rarely entirely, given training costs) expendable. This gives workers little leverage with which to bargain for wages approaching their employer's "willing to pay" price -- the worker's own productivity, as you put it.

Thus, in a world without a minimum wage, an unskilled worker whose productivity is $8 per hour may be getting half of that. In a world in which the minimum wage is $5.15, he/she will probably be making $5.15 per hour.

Of course, there is nothing inherently wrong with people (and even employers) getting "good deals." Supply and demand, ordinarily, does a good job of leading the market to a mutually beneficial result. The problem here is that when large masses of people are getting extremely low wages, this can contribute to a variety of social problems. Thus, governments intervene in the market to establish minimum wages.

The economic calculations involved are not easy. For one thing, the government does not want to raise the minimum wage past the "willing to pay" price for most businesses hiring unskilled labor, for exactly the reason you state: this would probably lead to cutbacks. But the important thing for this argument is to understand that increases in the minimum wage do not necessarily lead to the result you suggest, because in general the wages it affects most directly are significantly below the "willing to pay" price. Employers are getting a "good deal" on labor, which is fine in itself... but not if it is at great social cost.

Here's the nub of this particular issue, Wal-Mart actually pays more than the Federal Minimum Wage, their average wages are between $8.23 and $9.68, so even a 50% increase leaves them unaffected.

I strongly suspect that this "average" includes even Wal-Mart's most highly paid employees. The median would be a better measure of normal pay, and I expect it to be significantly less than $8.23/hour.

It is nothing more than an attempt to use the state to destroy Wal-Mart's remaining competitors, and, as a bonus, the people who criticise Wal-Mart for destroying their competition are now praising Wal-Mart ... for destroying their competition.

Not necessarily. While I happen to be particularly cynical about Wal-Mart's motives, it is certainly possible for a corporation to desire increased government regulation. Believe it or not, higher-ups in a variety of corporations are not only conscious of the negative impact of their business practices, but quite seriously bothered by them. Polluters, for instance, rarely enjoy destroying the environment... but in a competitive market, they "have no choice," lest they be driven out of business for adopting costly preventative measures that their less conscientious competitors avoid. Similarly, one corporation cannot unilaterally raise wages while its competitors do not.

The competitive market has a "lowest common denominator" effect... As a result, the conscientious businessperson--who wants to keep the air clean and their workers well-paid--may demand (or at least not oppose) government regulations that raise the bar for minimum performance.

Again, I'm not so sure that's what Wal-Mart is up to... but it's something to keep in mind.

According to http://www.wakeupwalmart.com/facts/ their wages for "sales associate" (the most common job they have) start at $8.63/hr. Cashiers, their second most common job, start at $7.92/hr, and the site I got this from is decidedly anti-Wal-Mart.

The site does not say that they start at those wages, it indicates that those are the overall averages. Once again, in a distribution in which we should expect a relatively small proportion of the population to have long seniority (and thus especially high wages), an average is not a good measure of the central tendency (what the "typical" employee makes). The median would be a better measure, and I expect it to be lower... Indeed, conceivably the median wage could be the minimum wage, with more than half of such employees making minimum wage, and then smaller numbers making higher wages. (I actually expect that the median is somewhat higher, for a variety of reasons, but I think it would be impressively close.)

This is so frequently a problem for people who don't understand statistics.

What I accept, which has been shown in the real world, is that what sets wages (in the absence of other coercive means) is marginal revenue productivity theory of wages.

Unfortunately, the marginal revenue productivity theory only applies in a competitive labor market... and the market in nonskilled labor is effectively non-competitive, due to the large supply of cheap labor. Employers do not compete for these laborers.

That sounds about right, for an imaginary world in which unskilled laborers actually get paid at around the value of their productivity.

Unfortunately, in the real world this does not happen, due to the law of supply and demand.

Think of price this way: If I am a buyer of Item X, I attach a certain value to it: a "willing to pay" price. Of course, if I can get Item X for much less than my "willing to pay" price, I certainly will -- that's what we call a "good deal."

The "willing to pay" price of an employee is what you call the "value of her/his productivity." If I produce at $8 per hour, my employer's "willing to pay" price is $8 per hour. That does not necessarily mean that I get paid $8 per hour.

Willing to pay a certain amount is the same as value of productivity under the subjective value theory (value is in the eye of the beholder, q.v. Marginalism link, my last post)

If you're employer wants to pay it, he'll pay it.

Rather, minimum wages are designed to benefit unskilled, entry-level laborers. Because the supply of such laborers is especially large, individual workers are relatively (though rarely entirely, given training costs) expendable. This gives workers little leverage with which to bargain for wages approaching their employer's "willing to pay" price -- the worker's own productivity, as you put it.

You don't understand the "willing to pay" concept. It is the maximum an employer is willing to pay for your labour services. Under the subjective value theory, it is identical to the worker's productivity.

The phenomenon you describe is in fact nothing more than factors which may reduce the price they are willing to pay.

The minimum wage doesn't therefore benefit unskilled workers. They are infact the worst affected, especially young men/teenagers, and again especially young men/teenagers of racial minority groups, as Block established in the .pdf I linked.

They are marginalised because the supply of their labour is very large, so their prices are low. After a certain point, they are below the minimum wage, in that case, it may be that the firm can afford it (for whatever reason, usually an increase in shelf prices for products/services), although marginal firms probably won't be able to afford it. Minimum wages tend to be lifted over time through indexation, and politically motivated increases. What this means is an increase in the tendency I mentioned.

Another thing minimum wages does, and this is especially the case in countries with relatively undefended land borders, is it gives an incentive for people smuggling and illegal immigration. Illegals can be employed below the minimum wage relatively easily, and below the minimum wage because they are off the books (so to speak). In the US, the unskilled workers who you claim are protected are in fact unemployed, their jobs being taken by illegal immigrants. Governments of the left and the right don't enforce immigration laws (in the US, anyway, in Australia, both major parties support strong immigration enforcement though being an island continent, we've got less of a problem than the US). The left because they like to pander to ethnic minorities, the right because big business wants illegal immigration so it can have cheap labour. You can't say "we should pay the illegals the minimum wage" because you have to investigate them, and the firms that hire them (including Wal-Mart, as Liverbreath pointed out), and if you do that, why not just enforce the immigration laws and kick them out? They're breaking the law anyway.

For one thing, the government does not want to raise the minimum wage past the "willing to pay" price

It depends on the government. You see, the politicians do cost/benefit analyses too. In the case of a minimum wage increase, in the cost column is the economic effects you describe, in terms of the number of votes that will be lost. In the benefit column is the number of votes they's gain from people who think increasing the minimum wage is a good thing.

Also, a minimum wage is not relevant is its at, or below the "willing to pay" price because the "willing to pay" price is what they want to pay for someone's services. A minimum wage is only an operating factor if it is set about this price.

Not necessarily. While I happen to be particularly cynical about Wal-Mart's motives, it is certainly possible for a corporation to desire increased government regulation. Believe it or not, higher-ups in a variety of corporations are not only conscious of the negative impact of their business practices, but quite seriously bothered by them. Polluters, for instance, rarely enjoy destroying the environment... but in a competitive market, they "have no choice," lest they be driven out of business for adopting costly preventative measures that their less conscientious competitors avoid. Similarly, one corporation cannot unilaterally raise wages while its competitors do not.

The competitive market has a "lowest common denominator" effect... As a result, the conscientious businessperson--who wants to keep the air clean and their workers well-paid--may demand (or at least not oppose) government regulations that raise the bar for minimum performance.

Again, I'm not so sure that's what Wal-Mart is up to... but it's something to keep in mind.

I don't accept the argument that if they support more "socially responsible" practices, they want the government to regulate it. If they wanted to do it, they'd simply do it (but from this point, we get into state funding for such practices)

In terms of pollution, there are already motives to reduce, for example in trucks. If they have trucks with a lower gas mileage, they emitt less, and they cost less to run because they get the same travelling with less fuel.

As to raising wages, they might want to unilaterally raise wages in order to attract good workers. This seems to be one of Wal-Mart's ways of squeezing out competition by using their economy of scale to raise wages while still maintaining low prices.

A business executive supports increased regulation in order to increase the regulatory burden. Big business has the economies of scale to support this, smaller firms don't, so they become less competative.

Doesn't invalidate what I've said. I know that capital purchases need a more detailed assessment because unlike a loaf of bread, it won't be gone in two days, but the assessment is the same, the costs versus the benefits.
What you said was never valid to begin with. You attempted to substantiate a point based on inductive analogy. The capacity of inductive analogious reasoning to provide support for any assertion is based on the relationship between the compared subjects. By demonstrating that the compared subjects share certain traits/qualities we can sometimes reason that what is likely to be true for one is likely to be true for the other/s.

However if the traits/qualities are such that there is no or little reason to believe that the outcome extracted from one subject and applied to the other is the result of the shared qualities/traits, then the induction is weak. Further if it can be demonstrated that there is some quality or trait (or more than one) that would materially effect the 'cause-effect' relationship that is being generalised from one subject to the other, then again the induction is weak.

In the case of the analogy you posited, the differences between the subjects is materially relevent to the cause-effect relationship you are attempting to generalise from. Because the apparent cause/s of the effect you suggesting can be generalised (from one subject) in order to suggest a likely effect/state of affairs in the other are in fact distinguishable, there is no reason to assume that what is true for one is true in the case of the other.

I never said market value was objective.
Ok, I induced that perhaps that might be the point of the comment. Unless you can explain what the comment means other than 'the particular price paid for some particular thing at a particular time and place by a particular person/entity to a particular/person entity, is the particular price paid' I have no ideas (having eliminated my original supposition) as to what you intended to communicate, nor how it might be relevent in supporting your assertions.

Its a false analogy,
How is it false?

and if you were evaluating whether to walk, or fly, you'd still essentially weigh up the same things, cost, and benefit. You may say "I only want to cross the street, and its costs a lot to operate the helo, so I'll walk", or conversly if you felt the distance you wanted to travel made using a helo a good idea, or you wanted to use it for some other reason.
Thats as may be, but I dont see how it is relevent in this context.

snippage
None of this indicates that the analogy I posited was false, nor (so far as I can work out) does it indicate or substantiate anything else of relevence.

[N.B. pdf, you ought to Right Click, and Save Target As]
Sorry, but no thanks; PDF I avoid so much as I can, apparently my computer doesnt much like them (if you have an alternative html link I'll be happy to look at it).

An alien invasion that introduces a communist society on Earth is a possibility that's contrary to my premises/conclusions.
Yes I suppose it is.

Shall I also try to prove that impossible (leaving aside the fact that you can't prove a negative).
Depends on your goals/aims. If you wish to prove your affirmative suggestion, it seems to me that your efforts would be better spent proving your affirmative assertion than they would be elminating all possible contrary assertions.

I've already said that this employer will not pay Leonstein more than $8/hr.
Imaging a fictional employer and endowing it with imaginary qualities does not prove anything other than your capacity to be imaginitive.

You've not proven that he will change his mind, and if you had you must still show that he would not have done it without a minimum wage increase.
I dont need to prove anything. I only need to posit a contrary possibilty. You appear to know this (either technically or intuitively) since you assert the principal that makes it so
"leaving aside the fact that you can't prove a negative".

Of course, and the cost being what he is paid. If that cost is raised by government, there comes a point at which the employer gets to think "not worth it"
Unsound argument. The premises you are posting could be factually true and yet the conclusion could be factually false.
The fact that an employer will not remain both willing and able to pay wages up to the value 'infinite', is tautological given the meaning of infinite.
The fact that there is a point at which an employer would no longer benefit as a result of the cost/benefit ratio is irrelevent unless minimum wage is set higher than that point. In the absence of logical proof that all and any minimum wage legislation passed by a government necessitates that this point will be reached in even one case, it remains irrelevent.

You've not justified the existance of minimum wage laws.
Why would I?

That's a wierd argument, that by placing state restrictions on entry to the market, you get a better economic result.
Yes it is a weird argument. If I were to speculate that you are implying or even believe that I have made such an argument, would I be entirely off-base? I ask because it seems an odd sort of comment to just throw in, I dont see any reason to suppose you'd have bothered typing it unless you perceived it was somehow either relevent, or capable of being passed off as relevent.
On the off-chance that my speculation is not entirely off-track, it seems sensible to state outright that the weird argument you refer to is not one that I have posited.

A straw man. I have argued that the minimum wage will increase unemployment. The refutation of that from you seems to be "who cares about more unemployment, I think the economy is better off".
Not a strawman, but rather deduction. The notion that unemployment will result is entirely based on economic theory, which is based on either facts or presumed facts regarding the operation and function of economies. If economies do not necessarily operate and function in such a way that the necessary result of minimum wages is in fact the consequential unemployment you are asserting will be a necessary consequence, then what exactly is the basis of your argument?

Negative proof fallacy.
What do you mean by 'fallacy'? The assertion you are calling a fallacy is a logical necessary truth. Tautologically a necessary truth cannot be a logical fallacy, so if not a logical fallacy what do you mean by 'fallacy'.

In which case they are not the same in terms of what criteria an employer looks at in determining "at what rate does it pay to employ this person".
That's exactly right.
So returning to the premise you began with....
Secondly, in a market system, if an employer sees the value of the labour of two different people as the same, the same price will be paid
...you can now see why I disputed it as being flawed. It is flawed because the criteria the employer looks at in determing what rate it pays to pay an employed person at is not soley determined by the employer's perception of their labour.

I misinterpreted what you meant by absurdity. I thought a you were making a moral judgement because you were referring to "deservedness" of Spear's income versus the Fireman's.
Aha, it's not an unreasonble interpretation, I can see how you could have arrived at it. It just happens that it isnt a meaning I would ever intend, and I can certainly see why you would dispute such an argument...

The explaination of it is subjective value.

According to subjective value, value is in the eye of the beholder (which is what I've been arguing in terms of "what the employer is prepared to pay").

A lot of people want to buy Spears' rubbish, so many that her income is huge.

For info: http://en.wikipedia.org/wiki/Marginalism

The only reason I think Spears' income is an absurdity is that she's so utterly bereft of talent.

As to firemen, I think people take them for granted. People will say they're more important than bimbos like Spears, but they're simply forgotten until one dies, or they pull someone out of a building, then they're heros for 30sec.

I think the real problem is that people spend too much time on trivialities.
Aha but the problem is that I dont see the absurdity as being unexplanable, I simply see it as absurd - the explanation you are offering doesnt negate the aspect of absurdity, but rather is consistent with the rational that leads me to categorise it as absurd.
You state that people will say firemen are more important, I think that (in as far as any generalisation can be) that is a fairly accurate accessment. I think that generally the people stating as much would actually believe it.

Whether or not Britney's income is absurd in relation to her qualities and activities isnt a point I care about or intend to make either way.

Rather the point of what I was saying was that, as far I can tell, most people would not only say and believe the fireman was the more important of the two, they would also consider the contrary assertion (ie that Britney were in fact the more important of the two) to be ridiculous or unreasonable....in other words to be absurd.

Ok, you've gone down in my estimation after this post.


I could decide to change my diet.

You're being trite. Of course you could change your diet, but the point was that the unskilled worker's choice is between working, crime, and dying. Which is really no choice at all.


Quote:
Again, what you are saying about this $8 rate is true for an individual worker unilaterally raising his demanded rate of pay, but it is not true when the price increases arcoss the market.


But at $8/hr, he can't offer a price that the market will take.

If I try to sell a biro at $1 trillion, that is not a market price, because no one will pay $1 trillion for a biro. $8/hr is not a market price if the minimum wage is $9.50/hr because no one can pay $8.

Errr...that doesn't make sense. We're not talking about a $1 trillion biro in a market of normal priced biros. It's not a valid comparison for a number of reasons - Firstly, that in the example you give the price of the other biros remains the same, so of course there will be no demand for your biro (whereas in the minimum wage, the price rise is uniform). Secondly, the demand for biros is particularly cross-elastic with the demand for pencils and fountain pens (whereas in the minimum wage there is nothing for it to be cross-elastic with...OK, machinery, but we've already covered that). Thirdly, the price rise you are talking about is disproportionately large.

But anyway...the point is that no economic theory argues that everyone whom the market values at $8 per hour would become unemployed if the minimum wage went to $9.5 per hour. Even the most extreme argument can only validly claim that a proportion of those would become unemployed. The economy would save money by firing some staff, but it would still have to keep on some of those working below minimum wage value productivity to keep making money - the money saved from firing some of the unskilled workers would be used to fund loss in margins from the others.

And even this is totally ignoring the fact that companies do not pay staff anywhere near their productivity level. The $8 per hour that the company gives is not some magic number that exactly represents the worth of the employee! Economics is not an exact science!


You seem to assume the firm would still operate. Assuming they can afford an arbitrary increase in total costs of $150000, or that their sales would hold up if that was all passed on to the consumers, the firm will still operate. If it can't afford an extra $150000, or if consumers won't pay increased prices for their goods, then the firm will fold, and all of them will be out of work.


And you are ignoring the fact that the company could fire SOME of the workers and not ALL of them.

And then you are blatantly ignoring the point that I made about the fact that increased sales would mean that there is no need to pass on the extra costs in the first place. (As seen in the UK!)

That doesn't actually change my case. The price of labour is set by supply and demand.

No it does change your case, because the price of labour isn't set by supply and demand where there is an abuse of a dominant position. You are thinking about perfect competition, which certainly doesn't exist in a market with a company like Walmart, if it even exists at all.


It will also lead to a price rise, which would hit the bottom harder than the top.

But you see, the increase in sales would lead to an increase in income, which would compensate for the decrease in margins. So there wouldn't need to be a price rise. Inflation in the UK after the introduction of the minimum wage did not increase (in fact, from about 2 years before the introduction of the minimum wage until the present day, we have enjoyed the lowest rate of inflation for about the last 100 years.)


I have some containers at home, in which I keep smaller denomination coins. I only add a little each day. I recently took them to the bank, I had $180.

Each little increase sounds reasonable by itself, but over time, it is massive.

Yes...but that doesn't particularly help your argument, because I've already demonstrated how the market can adapt and how this has happened in the UK.

I'm not saying that it isn't possible for the minimum wage to be too high. I've already pointed this out. What I am saying is that in the UK it hasn't had a detrimental effect on the economy and our minimum wage is twice as high in real terms as that in the US.


His argument is actually nothing more than a misunderstanding of what I've said, and I think you've made the same misunderstanding.

The rates I quoted at the beginning of the thread were simply what the employers would pay. Whether it is an optimal price or not is irrelevant. It is the price.

He isn't correct in saying the "best prices" are different. They are the same, the difference is that one is a market price, because it is above the minimum wage, one is not a market price, because if the employer hired at that rate, he'd go to gaol.

No, you are incorrect. The whole point of the free market is that perfect competition leads to the optimisation of prices and wages. If this is distorted, then there is allocative inefficiency in the economy. To say that we should not aim for the optimal price is to totally miss the fundamental principle of economics.

The increase in wage must be met with an increase in prices.

Not necessarily.


Why would they pay more than they're willing to pay?

They don't pay on the basis of the productivity of the individual, they pay a set price for a particular class of jobs. If someone works below that particular level of productivity, it will take some time to fire them.


This is a variation of "I don't find Disraeliland's OP convenient, so I shall ignore it"

Every purchasing decision is one of cost versus benefit.

In employing someone, we have the benfits of their services versus wages. Our notional employer decided that "The most I will pay for Leonstein's services is $8/hr". At more than $8, the costs outweigh the benefits as far as this employer is concerned.


No...you see big firms main management set the wage levels for particular jobs, and have little to do with directly hiring people to jobs like check-out operator. So it really isn't as direct as you are making out. And the wage certainly isn't based on the individual productivity of the worker. This is a complete myth.

Add that to the fact that poor working conditions and wages often lead to a dercrease in productivity, that people often work according to how valued they feel and as a result you may find that increasing minimum wage actually increases prodictivity anyway.

What you said was never valid to begin with. You attempted to substantiate a point based on inductive analogy. The capacity of inductive analogious reasoning to provide support for any assertion is based on the relationship between the compared subjects. By demonstrating that the compared subjects share certain traits/qualities we can sometimes reason that what is likely to be true for one is likely to be true for the other/s.

However if the traits/qualities are such that there is no or little reason to believe that the outcome extracted from one subject and applied to the other is the result of the shared qualities/traits, then the induction is weak. Further if it can be demonstrated that there is some quality or trait (or more than one) that would materially effect the 'cause-effect' relationship that is being generalised from one subject to the other, then again the induction is weak.

In the case of the analogy you posited, the differences between the subjects is materially relevent to the cause-effect relationship you are attempting to generalise from. Because the apparent cause/s of the effect you suggesting can be generalised (from one subject) in order to suggest a likely effect/state of affairs in the other are in fact distinguishable, there is no reason to assume that what is true for one is true in the case of the other.

You've made the unjustified assertion that they are different. Tell me why "materially relevant differences" do in fact changes the thought process at work here, apart from making him more careful. I'll add that with consumers, people tend to be more careful in terms of their thinking depending on the prices. I've seen it myself in personal experience. If I'm after a 6-pack of beer, I go to the first bottleshop I can find. If I want to buy a car, I shop around, I test drive, I get a mechanic to inspect it, but the thinking is essentially the same, I buy if the benefit of having the product is higher (to me) than the cost of giving up the resources exchanged for it.

All you've said is different is the scales of costs and benefits over diffenent amounts of time. The thinking is the same, except that more is at stake in business purchases. The bread buyer, and the manager thinking of retooling the factory do the same thinking. I don't see any reason why changing the scales in operation changes the validity of my argument.

Ok, I induced that perhaps that might be the point of the comment. Unless you can explain what the comment means other than 'the particular price paid for some particular thing at a particular time and place by a particular person/entity to a particular/person entity, is the particular price paid' I have no ideas (having eliminated my original supposition) as to what you intended to communicate, nor how it might be relevent in supporting your assertions.

Its a fair enough interpretation based upon the language I used, I should have placed emphasis on the term "subjectivity" from the outset to prevent such confusion.

Thats as may be, but I dont see how it is relevent in this context.

You used the walk/helo analogy to reason that there was a difference between the cost/benefit analyses of buying capital goods, and the cost/benefit analysis of buying consumer goods.

I have argued that there are more things to consider in purchases of capital goods (which is obvious), but it is essentially the same process.

I dont need to prove anything. I only need to posit a contrary possibilty. You appear to know this (either technically or intuitively) since you assert the principal that makes it so
"leaving aside the fact that you can't prove a negative".

What you're saying is you can essentially pull stuff from where the sun doesn't shine, without really justifying it, because you can't prove a negative (which begs the question of why you're asking me to)

Your contrary possibility is not relevant because value is essentially subjective, and the employer's subjective considerations say to him "not worth paying this dude more than $8/hr". This man won't pay more than that.

Unsound argument. The premises you are posting could be factually true and yet the conclusion could be factually false.
The fact that an employer will not remain both willing and able to pay wages up to the value 'infinite', is tautological given the meaning of infinite.
The fact that there is a point at which an employer would no longer benefit as a result of the cost/benefit ratio is irrelevent unless minimum wage is set higher than that point. In the absence of logical proof that all and any minimum wage legislation passed by a government necessitates that this point will be reached in even one case, it remains irrelevent.

It is a continuum. A minimum wage law is meaningless unless it is above the minimum value in the market. If it is balanced, or less than this value, wages are unaffected. There is simple empirical proof of this, the fact that there are already people who make more than the minimum wage. If a minimum wage law sets a level at, or below the minimum market price for anyone's labour, it effectively doesn't exist.

That's exactly right. So returning to the premise you began with you can now see why I disputed it as being flawed. It is flawed because the criteria the employer looks at in determing what rate it pays to pay an employed person at is not soley determined by the employer's perception of their labour.

Nevertheless, an employer does have a set of criteria by which he determines value. It is the value of their labour because he's paying for their labour. The criteria may not be exclusively related to their ability to perform the basic work in the job for which the potential employee is applying, but all will feed into the employer's evaluation of the question "is this person worth hiring". One could also argue that these different criteria may in fact all have some relation to work. Dress and grooming for example. Two people with the same ability to perform the work as indicated by references, etc. One comes in t-shirt and thongs and looks and smells as though he's just come from the beach, the other in a suit, well groomed etc. The suit would in most cases get the job because his dress indicates a serious attitude, and that he cares about how he presents himself to clients. That may not be directly related to work, but the link is there, even if its just in the employer's mind.

What do you mean by 'fallacy'? The assertion you are calling a fallacy is a logical necessary truth. Tautologically a necessary truth cannot be a logical fallacy, so if not a logical fallacy what do you mean by 'fallacy'.

You're saying my argument is unsound unless I prove a negative.

Aha but the problem is that I dont see the absurdity as being unexplanable, I simply see it as absurd - the explanation you are offering doesnt negate the aspect of absurdity, but rather is consistent with the rational that leads me to categorise it as absurd.
You state that people will say firemen are more important, I think that (in as far as any generalisation can be) that is a fairly accurate accessment. I think that generally the people stating as much would actually believe it.

Fair enough, now we know, and its clear. I think your last sentence is absolutely right.

Rather the point of what I was saying was that, as far I can tell, most people would not only say and believe the fireman was the more important of the two, they would also consider the contrary assertion (ie that Britney were in fact the more important of the two) to be ridiculous or unreasonable....in other words to be absurd.

Quite right.

But anyway...the point is that no economic theory argues that everyone whom the market values at $8 per hour would become unemployed if the minimum wage went to $9.5 per hour. Even the most extreme argument can only validly claim that a proportion of those would become unemployed. The economy would save money by firing some staff, but it would still have to keep on some of those working below minimum wage value productivity to keep making money - the money saved from firing some of the unskilled workers would be used to fund loss in margins from the others.

The point is that minimum wage laws will create unemployment. All you've said is that it if they can afford some increase in labour costs, they might leave some on, but they will lay off to the extent that a rise in costs is not economical.

And even this is totally ignoring the fact that companies do not pay staff anywhere near their productivity level. The $8 per hour that the company gives is not some magic number that exactly represents the worth of the employee! Economics is not an exact science!

I've explained this before. You simply took the word "productivity" and ran off with it. There is no such thing as objective value. Value is subjective.

According to subjective value, value is in the eye of the beholder (which is what I've been arguing in terms of "what the employer is prepared to pay").

The $8/hr figure is subjective.

Secular Europe, and Zagat, I've traced where the misunderstanding came from, in the OP, I used the term: Marginal revenue productivity theory of wages.

I should have been clear on using the term "subjectivity" because what I think you've done is you've seen "Margin", and "productivity", and gone from there.

Anyway, here's a site (no .pdf's): http://en.wikipedia.org/wiki/Marginal_revenue_productivity_theory_of_wages

And you are ignoring the fact that the company could fire SOME of the workers and not ALL of them.

And then you are blatantly ignoring the point that I made about the fact that increased sales would mean that there is no need to pass on the extra costs in the first place. (As seen in the UK!)

You've spoken of the UK, but where's the information. You have ignored France and Germany, and the US.

Your increased sales argument is reliant on the money for the wage increase coming from somewhere. You're just assuming that it magically enters the worker's pockets. There must be a price rise in order to raise the money to pay extra, which simply means that all you're arguing for is using inflation to deal with the minimum wage.

No it does change your case, because the price of labour isn't set by supply and demand where there is an abuse of a dominant position. You are thinking about perfect competition, which certainly doesn't exist in a market with a company like Walmart, if it even exists at all.



But you see, the increase in sales would lead to an increase in income, which would compensate for the decrease in margins. So there wouldn't need to be a price rise. Inflation in the UK after the introduction of the minimum wage did not increase (in fact, from about 2 years before the introduction of the minimum wage until the present day, we have enjoyed the lowest rate of inflation for about the last 100 years.)

Where does the money come from for the increased buying? You are completely ignoring the fact that the money has to be gotten from somewhere, and the place where it can be gotten most easily is increasing prices.

Yes...but that doesn't particularly help your argument, because I've already demonstrated how the market can adapt and how this has happened in the UK.

I'm not saying that it isn't possible for the minimum wage to be too high. I've already pointed this out.

You're neglecting the tendency of the state to increase minimum wages. In countries like France and Germany, minimum wages are getting to that threshold. You shouldn't ignore what's happening there, especially with this push for integration. I suspect that one factor helping the UK is what is happening across the Channel in terms of minimum wage, and other "employment" related laws in that you still have a competative advantage, to what extent if the EU an integrated market.

They don't pay on the basis of the productivity of the individual, they pay a set price for a particular class of jobs. If someone works below that particular level of productivity, it will take some time to fire them.

You're talking large firms. Anyway, the fact that it will take time doesn't essentially change my argument, you're merely putting off the inevitable.

No...you see big firms main management set the wage levels for particular jobs, and have little to do with directly hiring people to jobs like check-out operator. So it really isn't as direct as you are making out. And the wage certainly isn't based on the individual productivity of the worker. This is a complete myth.

This isn't relevant to my argument. All you're saying is that they go in to a negotiation with an idea "if he's worth less than $x/h (x being the rate set by head office for that job), then he won't get a job". The subjective value of an individual's labour is still relevant.

Add that to the fact that poor working conditions and wages often lead to a dercrease in productivity, that people often work according to how valued they feel and as a result you may find that increasing minimum wage actually increases prodictivity anyway.

So, why would they not pay more anyway, without coercion. I mean, their not dummies, they know what to do to turn a buck, they wouldn't be big firms if they didn't. If they believe paying more will benefit them, for the reason you outlined, they will pay more.

You've made the unjustified assertion that they are different. Tell me why "materially relevant differences" do in fact changes the thought process at work here, apart from making him more careful.
It's not an unjustified assertion. Most significantly, if the cost of bread was more than I wished to pay for it, I have a range of options that in terms of my goals are 'good enough'.

For an employer, this is not the case. Whilst I could buy cabin bread, or bake at home, or have fruit instead in order to achieve my goal (in purchasing a consumable food good). In essence I could substitute another good without compromising my goal.

This is just not the case for the employer. There is no substitute good or service that will meet the employer's goal (in hiring labour). If you need someone to pick kiwi fruit, and labour costs are unattractive, what substitute good might you buy instead in order to meet the goal?

You might suggest some technological solution, however even if one were immediately available (and it is not necessarily true that one would be available) the cost outlay of the set up costs are not likely to be less unattractive than the labour costs.

This one materially relevent difference is sufficient cause for treating the cases as distinguishable rather than analogous.

snippage
All you've said is different is the scales of costs and benefits over diffenent amounts of time. The thinking is the same, except that more is at stake in business purchases. The bread buyer, and the manager thinking of retooling the factory do the same thinking. I don't see any reason why changing the scales in operation changes the validity of my argument.
It isnt simply a difference in scale. Hiring and firing labour involves consequences in terms of the functionality of the business that must be factored into the decision. In many cases this limits the flexibility of employers. My ability to alter my bread consumption habits immediately, and/or often is free from the constraints that limit the ability of an employer to alter labour hiring with the same degree of frequency.
[snippage]
You used the walk/helo analogy to reason that there was a difference between the cost/benefit analyses of buying capital goods, and the cost/benefit analysis of buying consumer goods.No, I used it to point out that shared properties can exist between things that are dissimilar enough to make real differences in outcomes, and so whether or not things that share some like qualities can be compared in order to generalise the outcome of one for the purposes of making analogous 'conclusions' about the other depends as much on their differences as it does their similarities.

I have argued that there are more things to consider in purchases of capital goods (which is obvious), but it is essentially the same process.
The process may be not dissimilar in overview, but the devil is in the detail. I can substitute a variety of goods if bread costs are unattractive without compromising my goal. It's not that easy for an employer to substitute 'some other good' for labour, in many cases it's not even possible. This is fundamental distinction that constitutes a fatal flaw for a claim of analogous similarity. I have options that allow me to forego bread in favour of some equally effective (in terms of my goal) good, the employer who's goal necessitates the particular good labour doesnt. The distinction lies in my ability to alter the goods purchased without compromising or frustrating my goal.

What you're saying is you can essentially pull stuff from where the sun doesn't shine, without really justifying it, because you can't prove a negative (which begs the question of why you're asking me to)
Actually I am simply drawing your attention to finer points of logical proof. You are affirming a premise. If you prove the affirmitive, contrary premises are not possible. How can a premise contrary to a logical necessity be possible? If I can posit a contrary possible premise, that is proof of your not having proven the logical necessity of your assertion.

Your contrary possibility is not relevant because value is essentially subjective, and the employer's subjective considerations say to him "not worth paying this dude more than $8/hr". This man won't pay more than that.
This argument ignores the employer's goals. When I purchas the value of the good is measured more subjectively because I can substitute goods, delay purchass or not purchass at all in the case of many goods. An employer necessarily (in order to remain an employer) must achieve certain goals that exclude substitution of labour for some other good, that dont allow for labour to purchas to be delayed as I can delay most kinds of purchases, and which cannot be met without the purchas of labour. While I can go without car and use the bus, train, cycle, arrange for someone to commute with me in exchange for gas money, etc until car prices are more favourable, the employers goals exclude or prohibit such flexibility with regards to labour.

It is a continuum. A minimum wage law is meaningless unless it is above the minimum value in the market. If it is balanced, or less than this value, wages are unaffected. There is simple empirical proof of this, the fact that there are already people who make more than the minimum wage. If a minimum wage law sets a level at, or below the minimum market price for anyone's labour, it effectively doesn't exist.:confused:
I think you might has misinterpreted. I am simply saying that it is not necessarily true that the minimum wage will prevent profit being generated from the purchassed labour. Remember that the employer will pay the lowest possible wage, so even though a profit could be generated from labour purchassed at 20 per hour, the employer is (without minimum wage) only playing 8. A mimimum wage could easily increase the pay of the employee whilst still generating a profit for the employer.

Nevertheless, an employer does have a set of criteria by which he determines value. It is the value of their labour because he's paying for their labour. The criteria may not be exclusively related to their ability to perform the basic work in the job for which the potential employee is applying, but all will feed into the employer's evaluation of the question "is this person worth hiring". One could also argue that these different criteria may in fact all have some relation to work. Dress and grooming for example. Two people with the same ability to perform the work as indicated by references, etc. One comes in t-shirt and thongs and looks and smells as though he's just come from the beach, the other in a suit, well groomed etc. The suit would in most cases get the job because his dress indicates a serious attitude, and that he cares about how he presents himself to clients. That may not be directly related to work, but the link is there, even if its just in the employer's mind.
None of these differences are of the kind I have already demonstrated is sufficient to produce wage differentiation that is unrelated to the percieved value of labour according to the employers 'criteria'. It is possible for an employer to pay 2 people different rates passed entirely on 'opportunism'. It's even possible for an employer to pay more to an employee they view as less productive and 'ideal'.

You're saying my argument is unsound unless I prove a negative.
No, I am saying that if a contrary premise is possible, then you cannot have demonstrated necessary logical truth. I am in effect simply stating a logical truth. 2 contrary premises cannot be true at the same time. If you have not made an argument that excludes the possibility of contrary arguments, then you have not made a sound argument.

Fair enough, now we know, and its clear. I think your last sentence is absolutely right.
Aha, what difference a little clarification can make! The joys of disambiguity...;)
Quite right.


According to subjective value, value is in the eye of the beholder (which is what I've been arguing in terms of "what the employer is prepared to pay").
The range of viable options (ie options that do not frustrate the goals of the employer) circumscribes and limits subjectivity. It is possible an employer knowing that profit of 5.00 per hour can be generated by hiring a worker at 10.00 per hour will choose to not hire at that cost. Of course the employer would be stupid to do so. We might wonder how anyone with such a lack of good sense ever got to own a profit generating business in the first place. Still it's possible that an employer will choose to throw away 5.00 per hour because in thier subjective opinion hiring labour at a cost that generates a profit is somehow less subjectively worthwhile than generating profit...perhaps they inherited the business....recently. In which case, given thier 'subjective' valuation of 0.00 profit being better than 5.00 per hour, they were not ever going to maintain a viable business with or without minimum wage, because they are 'business illiterate'.

Secular Europe, and Zagat, I've traced where the misunderstanding came from, in the OP, I used the term: Marginal revenue productivity theory of wages.
Actually my reasoning is based on assuming employer has at least minimum level of good sense. What kind of business moron subjectively chooses to forgo profit because even though they know empiracally the profit generating capacity of an employee, and understand this to be greater than 0, the profit generating capacity of Mr Nobody, the only other alternative (to paying minimal way), they subjectively percieve not making money is a better option than making money?

Anyway, here's a site (no .pdf's):
Yay for pdf free data procurment...:)
(crappy old computer...:rolleyes:, I'm wondering how much longer the it's disks gonna keep spinning...the odd intermittent noises the hard drive keeps generating are probably not good sign I take it...:( )

..Different people have different levels of productivity (which we can measure in $/hr) in the same way as different people have different levels of athletic ability.

Let us say that an imaginary society, there is no minimum wage. I have a level of productivity equivilant to $15/hr, while Neu Leonstein only has a productivity level of $8/hr. We both have a job, because it pays to employ us.

On comes the juggernaut of government. They set a minimum wage, $10/hr. Here's what happens. My wages are unaffected, if the employer reduces them, I'll find someone else. Neu Leonstein gets fired, because it is illegal to pay him $8/hr, and it doesn't pay to employ him at $10/hr..

Yeah. People get paid exactly what they're worth. If their job produced more money for the employer, it would pay more to the employee.

It's just like when I go to tag sales and flea markets and I see furniture or antiques that I know are being sold for a fraction of their value. Will I buy the $800 armoire for the $200 that they're asking? Of course not. I'll say to the guy selling it, "excuse me, but I think you're really selling yourself short here. Allow me to pay an extra $600 for this piece of furniture." I do this in the full knowledge that if he had reduced the price because of some defect in the piece that had missed my notice then he'd surely tell me "some of the panelling on the back isn't original," or some such.

All economic dealings are completly fair already and all dealings will be made as equitible as possible by the force of the great god Mahr-Khet.

We should repeal minimum wage laws, abolish coporate welfare and tariffs, etc., and everything else that hinders competition.

It's not an unjustified assertion. Most significantly, if the cost of bread was more than I wished to pay for it, I have a range of options that in terms of my goals are 'good enough'.

For an employer, this is not the case. Whilst I could buy cabin bread, or bake at home, or have fruit instead in order to achieve my goal (in purchasing a consumable food good). In essence I could substitute another good without compromising my goal.


This is just not the case for the employer. There is no substitute good or service that will meet the employer's goal (in hiring labour). If you need someone to pick kiwi fruit, and labour costs are unattractive, what substitute good might you buy instead in order to meet the goal?

Exactly.

You might suggest some technological solution, however even if one were immediately available (and it is not necessarily true that one would be available) the cost outlay of the set up costs are not likely to be less unattractive than the labour costs.

It isnt simply a difference in scale. Hiring and firing labour involves consequences in terms of the functionality of the business that must be factored into the decision. In many cases this limits the flexibility of employers. My ability to alter my bread consumption habits immediately, and/or often is free from the constraints that limit the ability of an employer to alter labour hiring with the same degree of frequency.

Exactly.


The process may be not dissimilar in overview, but the devil is in the detail. I can substitute a variety of goods if bread costs are unattractive without compromising my goal. It's not that easy for an employer to substitute 'some other good' for labour, in many cases it's not even possible. This is fundamental distinction that constitutes a fatal flaw for a claim of analogous similarity. I have options that allow me to forego bread in favour of some equally effective (in terms of my goal) good, the employer who's goal necessitates the particular good labour doesnt. The distinction lies in my ability to alter the goods purchased without compromising or frustrating my goal.

Yep.



I am simply saying that it is not necessarily true that the minimum wage will prevent profit being generated from the purchassed labour. Remember that the employer will pay the lowest possible wage, so even though a profit could be generated from labour purchassed at 20 per hour, the employer is (without minimum wage) only playing 8. A mimimum wage could easily increase the pay of the employee whilst still generating a profit for the employer.

I've made this point so many times!

None of these differences are of the kind I have already demonstrated is sufficient to produce wage differentiation that is unrelated to the percieved value of labour according to the employers 'criteria'. It is possible for an employer to pay 2 people different rates passed entirely on 'opportunism'. It's even possible for an employer to pay more to an employee they view as less productive and 'ideal'.

ditto


Actually my reasoning is based on assuming employer has at least minimum level of good sense. What kind of business moron subjectively chooses to forgo profit because even though they know empiracally the profit generating capacity of an employee, and understand this to be greater than 0, the profit generating capacity of Mr Nobody, the only other alternative (to paying minimal way), they subjectively percieve not making money is a better option than making money?

Exactly!

How?Zagat actually pointed this out better than I did. Because the amount that Leonstein is making is relative to many things, but one of those things is how much other employees would charge to do the same job. If, for instance, Leonstein is the worst at his job but still not so bad that he is unemployable, then $8 would be the lowest price someone doing the job would be asking for. Or, if he is reasonably competant, he might be worth paying a little extra. In either case, there will be people who will work for $8 an hour. This is not the case if the minimum wage is raised to $9.50. In either case, if he is the lowest paid or not, he will still be making at least $9.50.

The point of the price system is that each party goes into the market to get the greatest benefit from the minimum cost.

What this means is that the benefits of hiring Leonstein are worth more to the firm than the $8/hr it costs. If the cost is arbitrarily raised to $9.50, they must reevaluate the equation. As I stated, the premise of this whole thing is that if you go beyond $8/hr, the costs of employing him outweigh the benefits from the employer's point of view. Since $9.50 is more than the amount at which the employer thinks the costs of employing him outweigh the benefits, there is no justification in employing him.For the sake of argument, I can see how it is possible that he will only be worth $8 an hour after the minimum wage is increased, but he will, by definition be worth less than that beforehand. If he isn't worth the price increase and the employer decides that his labor isn't worth paying for, then he will be S.O.L. The problem here is determining how often this might be true.


You mean to say that in addition to employing him at $9.50/hr (a rate at which the employer already believes the cost of employing him outweigh the benfits), he will take on the added cost of loan repayments?!

Besides, a firm that's not doing very well might not have a good enough credit rating to borrow enough to cover the increased costs, and they will still have to raise shelf prices, only this time they must add increased labour costs and loan repayments.If the firm decides that remaining in business is the ultimate goal, then the firm will decide to hold its nose and do something it doesn't like and pay him more than it thinks he's worth. It is possible that some firms will go out of business, but it is unlikely, especially if the minimum wage isn't greatly increased.

Asides:
I believe in all likelihood Wal-Mart is doing this for a combination of all three scenarios posited in this thread: to put competition out of business, to increase its sales, and to improve its image with the world.

What's a biro?

Secular Europe raises an interesting point. It is also true here in the U.S. that following the minimum wage increase, the economy did better. The minimum wage was increased from $4.25 to $5.15 in '96-'97 and subsequently we had our biggest economy ever. I can't say whether this is a result of the wage increase or in spite of it, but nonetheless minimum wage increases do not necessarily lead to more unemployment.

Willing to pay a certain amount is the same as value of productivity under the subjective value theory (value is in the eye of the beholder, q.v. Marginalism link, my last post)

That is exactly what I have been saying.

If you're employer wants to pay it, he'll pay it.

Only if he has to. If I go out for lunch, I may be willing to pay as much as, say $10 for my meal. My meal's subjective value is $10. But if the restaurant only charges $7, I'm not going to pay $10, regardless of how willing I would be to pay $10 if they asked for it. I will go away thinking, "that was a great deal."

You don't understand the "willing to pay" concept. It is the maximum an employer is willing to pay for your labour services. Under the subjective value theory, it is identical to the worker's productivity.

Again, that is exactly what I have been saying. You, however, fail to understand the implications of that fact. If a worker produces at $8 per hour, however, and an employer can get away with paying her $5/hour, the employer will pay her $5 per hour.

The phenomenon you describe is in fact nothing more than factors which may reduce the price they are willing to pay.

No, I am describing factors that reduce the price they must pay, i.e. the "asking price." They will buy at any price less than or equal to their "willing to pay" price, the subjective value of the labor, i.e. the worker's productivity.

I don't accept the argument that if they support more "socially responsible" practices, they want the government to regulate it. If they wanted to do it, they'd simply do it (but from this point, we get into state funding for such practices)

Then you clearly don't understand competitive markets. Under conditions of perfect competition, such a move would certainly run you under. While the real world deviates markedly from conditions of perfect competition, the principle still remains: if I want to stay in business, I cannot be the only one to put expensive filters on my smokestacks; I cannot be the only one to pay high wages for cheap labor.

The point is that minimum wage laws will create unemployment.

What makes you think so?

While it may be true that, at the margins, some jobs are lost due to an increase in minimum wage, it is equally true that at any given minimum wage there are a large number of two-job minimum wage workers. At the margins, some of these will quit one job when the minimum wage increases. This creates jobs.

The assertion that minimum wage increases "create unemployment" is predicated on the belief that the number of jobs lost is larger than the number of second-job resignations. That this will occur is hardly obvious. Indeed, one conclusion is that only piddling increases are detrimental: larger increases, approaching a living wage, will severely reduce the number of doubly employed individuals, thus broadening the low-wage job market in general.

they will lay off to the extent that a rise in costs is not economical.

Again, they should be willing to pay anything right up to the productivity of the worker, according to your own argument. Your conclusion assumes, without reason, that the existing minimum wage approximates the maximum that employers are willing to pay for unskilled labor.

There is no such thing as objective value. Value is subjective.

Absolutely. But that does not change the fact that people get "good deals," i.e. purchases for significantly less than the subjective value of the product. Advocates of minimum-wage increases are simply arguing that, by and large, employers are getting a damn good deal on unskilled labor.

Anyway, here's a site (no .pdf's): http://en.wikipedia.org/wiki/Marginal_revenue_productivity_theory_of_wages

Right. Notice that in the definition you post, it specifies that the theory applies to competitive labor markets. The whole argument here is that low-wage, non-skilled labor markets are non-competitive.

This is just not the case for the employer. There is no substitute good or service that will meet the employer's goal (in hiring labour). If you need someone to pick kiwi fruit, and labour costs are unattractive, what substitute good might you buy instead in order to meet the goal?

You might suggest some technological solution, however even if one were immediately available (and it is not necessarily true that one would be available) the cost outlay of the set up costs are not likely to be less unattractive than the labour costs.

I think there are machines available for that, in this case the decision would be over scale. Larger agricultural ventures tend to be more mechanised.

If labour costs in the legitimate market are unattractive, illegal immigration is a viable alternative.

This argument ignores the employer's goals. When I purchas the value of the good is measured more subjectively because I can substitute goods, delay purchass or not purchass at all in the case of many goods. An employer necessarily (in order to remain an employer) must achieve certain goals that exclude substitution of labour for some other good, that dont allow for labour to purchas to be delayed as I can delay most kinds of purchases, and which cannot be met without the purchas of labour. While I can go without car and use the bus, train, cycle, arrange for someone to commute with me in exchange for gas money, etc until car prices are more favourable, the employers goals exclude or prohibit such flexibility with regards to labour.

The goals you've outlined are "do we produce, or don't we". Now, a minimum wage increase could cause a firm to delay, or cancel an expansion of production as unaffordable because of the increase in labour costs. If the purchase of labour for production becomes uneconomical, he may choose to reduce production, and lay off the relevant people.

I think you might have misinterpreted. I am simply saying that it is not necessarily true that the minimum wage will prevent profit being generated from the purchassed labour. Remember that the employer will pay the lowest possible wage, so even though a profit could be generated from labour purchassed at 20 per hour, the employer is (without minimum wage) only playing 8. A mimimum wage could easily increase the pay of the employee whilst still generating a profit for the employer.

You've said the same thing I've said, the only real case in which the minimum wage won't result in layoffs is if the firm can afford it. But this creates other problems, if they absorb the increase by reducing their profits, their profits go down, and hence their share price. If they raise "shelf" prices, their sales will probably take a hit.

None of these differences are of the kind I have already demonstrated is sufficient to produce wage differentiation that is unrelated to the percieved value of labour according to the employers 'criteria'. It is possible for an employer to pay 2 people different rates passed entirely on 'opportunism'. It's even possible for an employer to pay more to an employee they view as less productive and 'ideal'.

Nevertheless, the price of their labour is dependent on the employer's subjective evaluation of it. We don't know what he bases this on, and we don't need to know.

Asides:
I believe in all likelihood Wal-Mart is doing this for a combination of all three scenarios posited in this thread: to put competition out of business, to increase its sales, and to improve its image with the world.

Sounds good.

What's a biro?

A pen.

Again, that is exactly what I have been saying. You, however, fail to understand the implications of that fact. If a worker produces at $8 per hour, however, and an employer can get away with paying her $5/hour, the employer will pay her $5 per hour.

Who said he produces at $8/hr? I said in the OP that the employer would pay him $8/hr, subjective value. I said the employer believes that it pays to employ him at a rate of $8/hr.

Then you clearly don't understand competitive markets. Under conditions of perfect competition, such a move would certainly run you under. While the real world deviates markedly from conditions of perfect competition, the principle still remains: if I want to stay in business, I cannot be the only one to put expensive filters on my smokestacks; I cannot be the only one to pay high wages for cheap labor.

No, a firm that wants to be green must simply decide that it values "being green" more than higher profits. Once we get into the area of havin them go to the government to make it mandatory, we get to this notion of raising a bar to entry, and squeezing marginal producers out.

Another thing, what you're arguing (in the context of this thread) is that Wal-Mart are infact being benevolent to the poor bloody workers. Not a praise or a criticism of your argument, just something to consider.

Again, they should be willing to pay anything right up to the productivity of the worker, according to your own argument. Your conclusion assumes, without reason, that the existing minimum wage approximates the maximum that employers are willing to pay for unskilled labor.

My OP assumes no minimum wage, until $9.50 is introduced.

For a minimum wage law to be anything other than very rough toilet paper, it must be above the lowest employers are willing to pay. If it is at, or below that, there is no point to introducing it. One can't assume that such a law is brought in simply to give legislators something to do.

The whole argument here is that low-wage, non-skilled labor markets are non-competitive.

Except that legitimate non-skilled low-wage labour markets must compete with technology, and with the illigitimate labour markets (illegal immigrants).

Let's take Wal-Mart's cleaning (this is from Liverbreath). Wal-Mart clearly decided that the minimum wage was too high a rate at which to hire cleaners. In other words, it didn't pay for them to hire cleaners at $5.15/hr (the Federally Mandated Minimum Wage in the US).

Since automatic cleaning machines haven't been invented, and skutters are only in Red Dwarf, technology wasn't the solution.

So they hired illegal immigrants at $1/hr.

While they may be trying to gouge the competition, to say this is the only motivation is illogical, as I would say from what I understand of them an the American system that over 30% of their customers would be on the minimum wage. thus they would logically spend more.
While we could be nice and say they might be just be socially active, I doubt many would believe that.
Currently the Australian Minimum Wage is $12.75 per hour, or $484 per 38 hour week, of which only 10% of Australian workers earn, plus youth wages are lower therefore only approximately 1 million Australians.
Factoring in exchange rates, the US equivalent is approximately $9.17 per hour, or $348 per 38 hour week, which from a previous post is fairly close to Walmart

While this is an Australian article I find it interesting as it refers to both positive and negatives of Minimum Wages Increases

Good news: raising the minimum wage is not as costly as we thought
http://www.onlineopinion.com.au/view.asp?article=1774
Setting the federal minimum wage is a balancing act. On the one hand, a higher minimum wage improves the living standards of thousands of working Australians. At the same time, raising the minimum wage may cost jobs. To get the balance right, we need to know whether a higher minimum wage causes employment losses that are large, small or non-existent.

Much of the Australian debate over minimum wages has centred on findings from a controversial US study. Comparing employment rates in New Jersey and Pennsylvania after a 1992 rise in the New Jersey minimum wage, economists David Card and Alan Krueger found that there the minimum wage rise had zero impact on low-wage workers.

Even those who criticise this study tend to agree that the employment cost of boosting the US minimum wage is fairly small. Most US labour economists believe that a 1 per cent rise in the minimum wage would decrease employment by between zero and 0.25 per cent.

Given that Australian minimum wages are higher (compared with median earnings) than US minimum wages, translating this research into the Australian context is not straightforward. In recent years, the Australian Industrial Relations Commission has borne witness in its annual minimum wage case to polarised arguments from both sides.

While the Australian Council of Trade Unions (ACTU) contends that raising the minimum wage has zero effect on unemployment, employer groups and the federal government argue that the cost could be much higher, citing a 1998 Productivity Commission study that found that a one per cent rise in the minimum wage causes youth employment to fall by up to five percentage points (a figure so high as to be scarcely believable).

In an effort to more precisely estimate the employment effect of Australian minimum wages, I adopted an approach similar to Card and Krueger, exploiting what is known as a “natural experiment”. While minimum wages in most states move in concert, Western Australia under the Liberal government of Richard Court was unique in setting its own statutory minimum wage, meaning that increases in the WA statutory minimum wage did not coincide with increases in the rest of Australia. In experimental terms, WA was the “treatment” group, while the rest of the nation served as the “control”.

This allowed me to ask the question: do we see a difference in employment rates between WA and the rest of Australia when WA raises its minimum wage? Aggregating the results from six increases in the minimum wage, it appeared that a one per cent rise in the WA statutory minimum wage was associated with a 0.13 percentage point fall in employment. This suggests that the employment effects of Australian minimum wages are around the midpoint of estimates for the US.

Though some may be disappointed to discover that the employment cost of raising the minimum wage is not zero, they should instead be heartened to learn that the cost is relatively low. These findings indicate that modest increases are not likely to cause significant employment losses.

What does this mean for both sides’ claims in the 2004 minimum wage case? While the ACTU is calling for a six per cent increase in the federal wage floor, the federal government is likely (based on its submissions in recent years) to call for about a two to three per cent rise. My findings suggest the ACTU’s claim would result in a 0.8 percentage point fall in employment, while the government’s would cause a 0.3 percentage point drop.

Only half a percentage point separates the employment effect of the two claims. This is a relatively small amount, given that the employment rate often moves by this amount from one month to the next due to seasonal variation. The employment costs of raising the minimum wage appear relatively small, while the chance to provide a boost to the incomes of the working poor is real.

The evidence from the West Australian minimum wage experiment appears to provide support for regular, moderate increases in the federal minimum wage.

I can't believe that yanks only pay people $5.15 an hour (minimum wage)! thats ridiculous. My god, how do people live in there? Do you guys even have a standard of living (Apart from the rich people obviously)?

sorry, just my 2 cents.

Not sure if this has been addressed yet, because I only read the 1st page. Didn't want to spend an hour or so looking through 11 more pages

Didn't Wal-Mart have some scandal in which they were paying migrant workers less than minimum wage? If so, they have a lot of balls to be so two-faced as to actually tell the government to increase it.

Like some people said on the 1st page, yes, this is just another attempt to put a couple more Jaguars or Bentleys in a CEO's garage.

One could envisage a system in which checkouts became automatic, probably not possible now, but I'll give it a try.

Automatic terminals, you scan your produce, put your coins/notes into the slot. When full payment is made, you get change, and a recepit, and a device emits some harmless radiation that deactive a security device on a tag (the tag will operate alarms if it is taken past the gates without deactivation, or removal of is attempted without deactivation), labour costs reduced from over 20 check-out staff and security, to some security guards who leap into action when the siren goes. As I said impossible now probably. But, an arbitrary increase in labour costs might get them looking into this stuff.
Wal-mart and Kmart have these already
and any company that dosen't will have 8 cashers instead of 10 or they will keep all 10 and give them less hours so they don't get benefits.
then again in the US most companies pay above min wage so a small increase would not hurt most employer to much it is the smaller mom and pop stores that would be hurt.
profit margins on avg. are about 5 % for most companies , Walmart is about 1%

Oh by the way at Walmart when a department manger gets a raise they like to fire one of the people in his/her department to make up for the cost. Just thought you like to know.

Not sure if this has been addressed yet, because I only read the 1st page. Didn't want to spend an hour or so looking through 11 more pages

Didn't Wal-Mart have some scandal in which they were paying migrant workers less than minimum wage? If so, they have a lot of balls to be so two-faced as to actually tell the government to increase it.

Like some people said on the 1st page, yes, this is just another attempt to put a couple more Jaguars or Bentleys in a CEO's garage.

Yes, they timed that announcement to take the attention off the unsealing of the federal investigation against them. Here's the link again.

http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=887824269

I can't believe that yanks only pay people $5.15 an hour (minimum wage)! thats ridiculous. My god, how do people live in there? Do you guys even have a standard of living (Apart from the rich people obviously)?

sorry, just my 2 cents.We have lots of people in debt. One of the things about our system is that there will always be companies trying to sell you credit, no matter how bad your credit actually is.

I can't believe that yanks only pay people $5.15 an hour (minimum wage)! thats ridiculous. My god, how do people live in there? Do you guys even have a standard of living (Apart from the rich people obviously)?

sorry, just my 2 cents.

We get by with credit cards. This has the dual advantage of letting people enjoy a higher standard of living than they can afford, and allowing society to blame poverty and debt on people who foolishly buy luxuries that they can't affor, like heat, electricity, and 2000 calories a day.

Never misunderestimate teh Great Eye of Sauron that is Wal-Mart.

http://img.photobucket.com/albums/v115/chair094/eyeofsauron.bmp

Sadly, there is not an option that reflects my views on the matter.

Regarding Wal-Mart's alleged "üb3r" wages, I'd bet that they include fun things like CEO compensation and perks, which would have the "if Bill Gates walked into a room, the average income for everybody would go up" effect.

But that is not the heart of the matter.

While Wal-Mart may pay a token dollar or two above minimum wage, many of its customers are minimum wage earners. If their wage goes up, they have more money to spend at Wal-Mart, since they probably don't spend much money elsewhere.

Thus, more revenue for a company that finds its growth stymied by community activists who try to block the zoning permits when it wants to build a new store in Anytown, USA.

Advocating a higher minimum wage is just another cynical attempt by Wal-Mart to increase revenue. (And it prolly could then get away with raising prices a few cents, even while it screws its suppliers, if the minimum wage increased.)

..and how dare they want to increase revenue, profit, and value for investors?

how dare they practice free enterprise?! Death to money!

hehe

We get by with credit cards. This has the dual advantage of letting people enjoy a higher standard of living than they can afford, and allowing society to blame poverty and debt on people who foolishly buy luxuries that they can't affor, like heat, electricity, and 2000 calories a day.

of course, while this system is rather ingenious, it is also reaching a sort of tipping point. in a (possibly foolish) effort to prop it up a while longer, we also had to make sure that it was ridiculously hard for regular people to declare bankruptcy.

..and how dare they want to increase revenue, profit, and value for investors?

how dare they practice free enterprise?! Death to money!

hehe

Yay! Let's let corporations buy legislation to let them expand! While we're at it, let's let corporations buy monopoly power from the government, which the government will then refuse to regulate!

Yay! Political influence is just another market commodity! Capitalism=mission accomplished!:D

(Sorry, I'm in a Dave Barry sort of mood today. The post you quoted objected to Wal-Mart trying to influence legislation to create market conditions more favorable to itself, not Wal-Mart's existence.)