Opponents of the minimum wage argue that it reduces employment by creating an artificial floor on wages, that jobs are lost because employers can't afford to pay the minimum. But if you can't pay the minimum, then you didn't really have a job to offer in the first place!
By extension of this logic, employers could argue that they are losing jobs because they can only afford to pay someone who will work 12 hours a day, or can only afford to pay child workers, or can only afford to hire if they get a huge payroll tax cut. Granted, in the job market there are people who would take sub-minimum wage pay for a variety of reasons -- desperation, lack of education, lack of options near their home, felony record, undocumented status, etc. But it is disingenuous to suggest that just because there are people who would take such jobs, that our economy should allow employers to get away with it.
If you can't pay a basic living wage, for fair hours, in safe conditions, with necessary medical benefits, then you don't have a job to offer.
There is no definition of "minimum", "basic living", "safe conditions", "fair hours" etc. Fair hours used to be 10 hours a day 6 days / week. Living used to be able to survive a famine. Safe conditions used to be hunting for animals.
All it matters is people interacting voluntarily, that's the only argument against minimum wage.
But it is disingenuous to suggest that just because there
are people who would take such jobs, that our economy
should allow employers to get away with it
Ex-felons would also "get away with it" (remember there are always at least two sides in an exchange), but they would be in a better situation if they accepted the job
> All it matters is people interacting voluntarily
My point is that it is most certainly not voluntary. There are people in the world who are not as lucky or intelligent or resourceful as you, me, and most others on HN. Try to empathize and put yourself in the shoes of the disadvantaged, they do not know the world as we do, they cannot shop around for high paying jobs, and if they miss a paycheck, they may very well lose their housing.
Given this asymmetry, society absolutely needs to step in to enforce basic protections that the free market cannot solve.
Putting myself in their shoes is exactly why I think they should be allowed to do whatever they think is best for them. What paycheck would they risk loosing if they can't find a job anyway ? Minimum wage exclude and marginalize poor people
Asymmetry and inequalities are everywhere. I don't know which perfect egalitarian symmetric insert here another utopic adjective society you live in, but it's not certainly not mine
> Minimum wage exclude and marginalize poor people
The elimination of minimum wage would marginalize poor people even more.
It's easy to think that the demand for labor is nearly infinite but at a super low wage. I mean, I'd gladly pay someone $2/hour to clean my house, and there are probably people desperate enough for money to buy food that they would do it. But minimum wage laws generally forbid it.
But consider employees at McDonalds. Walmart cashiers. Any other minimum wage job. If you eliminate the minimum wage, you create a race to the bottom. Eventually, you end up with people willing to flip burgers or work a cash register for $2/hour. They'll be living in a cardboard box with all their belongings in a shopping cart, but at least that $2/hour will buy them some semi-decent meals to survive.
Without a minimum wage, sure we'll probably see 0% unemployment, or something very close to it. But you'd end up absolutely tanking the median wage and standards of living. The term "working homeless" would replace the term "working poor" until some extremely low-quality housing popped up that someone could live in for $200/month.
But this is true for everything where you can apply supply and demand, and there's always a balance between the two.
you end up with people willing to flip burgers or work a cash register for $2/hour
But what happens in your scenario where there is a minimum wage law ? Those people magically make 5 times more ?
Do you think you can force business to hire at any rate ? Or does the rate needs to follow productivity and current standard of living indexes ? What if your increase this rate by 100x, what happens ?
But you'd end up absolutely tanking the median wage and standards of living
If the scenario where people don't work for 2 USD/hour they have 0 of salary. So the second scenario where they work for 2 USD / hour makes everyone more rich, I would be more inclined to believe the median wage would increase, but that's a hard question. The most important is that people worked and sustained themselves.
> But what happens in your scenario where there is a minimum wage law ? Those people magically make 5 times more ?
....yes? Considering that's what we have right now? You don't need to imagine this scenario. We're in it right now. In Oregon, the minimum wage is $10.75/hour.
> Do you think you can force business to hire at any rate ? [...] What if your increase this rate by 100x, what happens ?
Obviously not. I knew someone would try to make this argument, but I think its absurd.
> Or does the rate needs to follow productivity and current standard of living indexes ?
I'd make it follow a standard of living index. What the standard should be is up for debate, but I think at a minimum, someone working 40 hours a week should be able to live in a studio apartment on their own and buy food without government assistance. Two people working 40 hours a week each should be able to have a 2-bedroom apartment while raising a kid.
> If the scenario where people don't work for 2 USD/hour they have 0 of salary. So the second scenario where they work for 2 USD / hour makes everyone more rich, I would be more inclined to believe the median wage would increase
You're forgetting that the people formerly making minimum wage would either have their wage reduced to the hypothetical $2/hour or end up being replaced by a worker willing to work for $2/hour.
If you lower or remove minimum wage, every minimum wage job will have a reduction in the wage. When an employer pays minimum wage, they're implicitly saying "I'd pay you less, but the government won't let me."
> The most important is that people worked and sustained themselves.
....yes? Considering that's what we have right now?
So if you have a magic law that force businesses to pay 5 times the normal productivity for free, then you must have a law that force businesses to pay 5000 times the normal productivity ? There must be something wrong
You're forgetting that the people
Yes I agree but then we need to look at new prices for consumers goods and services that will be lower. I don't think talking about median wage is very meaningful without comparing what you can buy with it
> I don't know which perfect egalitarian symmetric insert here another utopic adjective society you live in, but it's not certainly not mine
Societies make a decision to be as they are. If you're trying to say that you prefer an inequitable society, that's fine. If you're trying to say that nature is inequitable, and that society has some responsibility to coordinate with it to preserve that inequity, I'd say 1) that's a weird nature-religion, and 2) property rights protect the weak from the strong.
I am not saying any of those and I don't want to preserve inequity. I am worried by people trying to force society to be more equal, and in that process produce effect that are going in the opposite direction.
Unfortunately the chances of everyone are rigged because of each of our societies history and past injustices. That's something we need to deal with and it's a hard problem
> I think they should be allowed to do whatever they think is best for them.
I think they should be allowed to vote and agitate for whatever they think is best for them. And thus.... viola, minimum wage and subsequent increases.
Although I know majorities are a touchy subject with libertarians since there are like six of you total nowadays.
Please keep ideological flamewar off HN, regardless of how annoying or wrong another comment is. It leads to degraded discussion, as amply demonstrated below!
So, because the world used to terrible centuries ago, and still is in some undeveloped or wartorn nations, we should be OK with it continuing to be terrible here in one of the richest nations in the world, even though it doesn't have to be?
The argument is 1) there is no common definition of what is acceptable, globally it depends on our current living standard hence ultimately the society's level of development 2) on an individual level some would not make the same choices as you so it is ridiculous for you to make judgments on behalf of others 3) if we had implemented those kind of laws earlier, either everybody was forbidden of improving its conditions and freely shop for employers, there would have been enormous inflation (see Venezuela), or the laws wouldn't have been followed at all (most probable).
we should be OK with it continuing to be terrible
The fact is that most poor people right now are better off than two centuries ago ; so your adjective "terrible" is relative. In 200 years from now, maybe not having its own personal spaceship will be deemed "terrible" by some ;)
>if we had implemented those kind of laws earlier, either everybody was forbidden of improving its conditions and freely shop for employers, there would have been enormous inflation (see Venezuela),
99% sure Venezuela's inflation problems come more from the fact that the president-dictator takes monetary policy advice from a ghost-parrot, and not as much from implementing occupational safety standards that have been normal in North America and Europe for a century.
It’s instructive to wonder why Venezuelan rulers felt forced to print money so wantonly. Ie. why did what should be a prosperous country given their natural advantages need to devalue their currency so massively, where did their debts, ruined oil industry, and fiscal irresponsibility come from?
The answer is at least in part that the state attempted to deliver benefits to the poor not directly and honestly through taxing and redistribution, but through wage & price controls, and outright nationalization. Direct massive manipulation of the market. Obviously implementing occupational safety standards, or collecting resource extraction royalties at a rate similar to Canada wouldn’t have had this effect, neither would have a modest increase in the minimum wage that reflected natural wage growth. However there is something to GPs point; the history of labor laws in developed countries haven’t only altered the conditions a competitive labor market must operate in, but also reflect changes that have already been achieved through the competitive market. The laws against child labor, for instance, were only possible once a critical mass of the population had already pulled their children out of the labor market as productivity and living standards increased and made this possible (and don’t forget that unpaid child labour was rampant in agricultural families, and to this day remains largely exempt from legal censure in developed nations).
As productivity reaches higher levels, labor has been able to demand a greater share of the surplus through competitive labor markets and eventually agitate to institute that in laws, but it’s always been an interplay between these two effects. The massive unprecedentedly rapid reduction in absolute poverty in China where millions have left the brutality of rural poverty to work in factories that many of us in more developed nations would consider inhumane has seen this played out in an incredibly compressed timeline, and I’m certain that there are very few people living in a Chinese special economic zone who would trade places with a resident of Caracas in 2018.
You can repeat the living standards meme as often as you like, but when people think the system is rigged against them, they will try to burn down the current system (best case just by election) and replace it with whatever might be more fair. And become susceptible to crappy populist promises.
So: yes, the rising inequality is a problem, no matter how badly some want to sell that as just a part of life (at least the way we currently structure it).
And i don't want a communist utopia. But also not reducing taxes for top earners to zero.
I agree, and I don't think inequality cannot be solved. But I really do think minimum wage increase the inequality problem anyway. Also, "fair" could just mean everyone pays the same tax percentage
It's not a full monopsony, there's often choice. And increasing minimum wage increases their monopsony power because it favors big companies that can afford it (here, Amazon).
Stop right there. What about people who don't need a basic living wage, like students who still live with their parents? Why should they be pushed out of the market?
I worked in high school, starting when I was 16. It was minimum wage. Without that job I wouldn't have been able to afford a car (necessary where I lived), travel to Greece and Italy, and have my own spending money. I also gained a lot of real world experience.
Employers should pay what the position is worth. Why should people like you have the right to tell people like me that we can't willingly work?
This is the key point. There are people who aren't trying to support a family as a sole wage earner.[1] If you raise the minimum wage, those jobs go away.
> What about people who don't need a basic living wage, like students who still live with their parents? Why should they be pushed out of the market?
Part time work. You can work 15-25 hours a week at the higher minimum wage while having time to study or deal with other things. A proper minimum wage should be the amount for a worker to live on after working 40 hours a week. If an employee can not make enough to live in that area (after working for 40 hours), the employer should not be there and is taking advantage of the employees.
So the less fortunate who are forced to rely on these basic jobs should live below poverty, so you can enjoy some extra cash to travel internationally?
The reality is, in modern America the percentage of people relying on these jobs as their sole source of income is much larger than the highschoolers looking to make some extra cash. We shouldn't sacrifice the masses to enable the few to maintain an optional job, in my opinion.
You raise an interesting point, but I am honestly more concerned with people who would otherwise starve or be homeless rather than students who would not be able to backpack around Europe for a summer. Minimum wage (and other worker protections) are aimed at protecting those who literally have no other options.
> Why should people like you have the right to tell people like me that we can't willingly work?
This isn't personal, I as a member of this society have a right to make my point that the powerful shouldn't exploit the powerless. Not that I'm calling you a trust fund kid, but this is the same argument you hear from people who are sitting on inherited wealth, and appeal to "natural rights" to keep the evil tax man from taking anything away from what is rightfully theirs. Rightfully theirs, by birth alone, mind you. Think for a minute about the opposite end of the spectrum, people born into abject poverty. They have a right to a dignified life, with a job that pays them enough to survive, rather than having to beg for whatever Johnny Moneybags decides to toss into the street from the window of his Rolls.
>I am honestly more concerned with people who would otherwise starve or be homeless rather than students who would not be able to backpack around Europe for a summer.
Okay, I worked part time from the end of high school through college. I didn't go backpacking, I just graduated with a smaller student loan balance. Is that a noble enough goal for it to matter if jobs are available?
My general feeling is that if people want jobs and can't find them, that's an economic problem worth considering, even if they'll have food without it.
> If you can't pay a basic living wage, for fair hours, in safe conditions, with necessary medical benefits, then you don't have a job to offer.
Why not let the employees decide if the job is worth taking? If there exists people willing to voluntarily take a job given its wage/conditions, you have a job to offer.
* The switching cost for jobs is very high. You lose the social network of people you know at the old job, all of the knowledge and skill that's specific to that company goes out the window, you may have to uproot and move.
* Jobs are not transparent. It is fantastically hard to tell if a new job is going to be better than your current job. You know the base numbers like pay, but you have little way to accurately evaluate the culture, office politics, other people, management, company direction, etc.
* In many areas, there are few jobs to choose between. Amazon fulfillment centers are a good example because they hire many people in a areas with few other jobs to choose from. (This is also, I think, a big reason for the demographic changes towards cities in the US today: they give employees access to a more diverse job market.)
* Jobs are not homogeneous and interchangeable. One job might have better hours or a shorter commute but worse coworkers. One may pay more but have worse health insurance. There is so much variance that it's impossible to define an "optimal" job or even precisely compare two jobs.
If you, as a company, can't exchange full time work for an amount of money that keeps an individual out of poverty, you're forcing the rest of society to cover the difference.
That's not a deal any government, or any taxpayers, should want to be a part of. I don't want my taxes subsidizing profitable corporations because they can find people willing to work for sub-poverty wages who fill in the gaps using the welfare state.
But isn't using welfare to fill in the gaps the most efficient solution?
A well functioning market drives down the cost of goods and services to the minimum possible price, provided there's adequate competition. Commoditization is a good thing. The fact that bread and milk only cost a few dollars is net-good for society. Commoditization of labor should, thus, also be similarly good for society.
At the end of the day, we as a society (rightly) demand a minimum standard of living for everyone, and we collectively pay for that one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. I'd argue that paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.
As long as we make sure that markets are competitive via regulation and that everything is commoditized, this sounds like a welfare problem and not a wage problem.
Not on it's own. You can't rely on free market + welfare and everything is fine. You need a number of levers to support those that might be marginalized by your system, defense in depth.
By that logic, any welfare is corporate welfare. Single payer healthcare paid for by taxpayers allows corporations to not provide their employees health insurance benefits.
For sure, that's one way to look at it, but the rest of my comment lays out why welfare is the least bad way to maintain standard of living.
This will lead to worsening conditions. For example, a person who lives with parents and doesn't pay any rent can work for significantly lower salary than the one who lives alone. For him even $1/hour is better than getting $0 sitting at home. Or immigrants who live 8 people in a room will be happy to work for a lower pay. The number of available jobs is limited. So people with higher demands, especially people with kids, will have a tough choice: either stay unemployed or live 8 people in a room too.
This sounds like a welfare problem and not a wage problem. If the market drives down the cost of labor, that's good for everyone. If there exists people whose skillsets aren't sufficient to maintain some minimum standard of living, we ought to give them welfare, either in the form of direct money or "free" goods/services.
The number of available jobs is _not_ limited, it's a supply and demand curve!
An employer doesn't just have X jobs to fill a business. They have some number of tasks to do, and there's always more they could be doing. If they have the option of hiring some people at $5/hr and some at $10/hr, the boss can figure out how to get at least $5/hr in value out of the cheaper people he hires.
I think the person living with parents is a bad example too. $1/hr is nothing, and it'd probably just be better for that person to not have a job at all. Sometimes doing nothing is better than having a job that crappy.
$1/hour is not nothing. If you work full month you get $160 which is more than $0 that you get playing games all day long (also you spend less on an electicity bill). So it is more beneficial than doing nothing.
In a market without minimun wage you'll have to compete against such people for a job.
They can if legal. I am not interested in supporting crime. You can argue that it is a crime worth comitting for many people, but its still not something we should encourage in employment law of all places.
If a job doesn't provide the means to survive then the government is subsidizing these jobs assuming you make sure everyone has enough to live.
Another issue is that the unemployment rate is no longer meaningful although that could be solved by having another statistic but unemployment is much easier to measure.
At the end of the day, we as a society rightly demand a minimum standard of living for everyone, and we collectively pay for that in one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. The argument I'm making here is paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.
That is an interesting perspective that I admittedly did not think of.
However why do the prices have to be inflated? Can't the company just accept lower profits? That would be progressive since most of the profits currently go to the rich at least for public companies no?
It would actually be a good thing for the prices to be inflated because that would mean that the market is competitive. In a competitive market, profit margins are typically very thin, so unless the increase in labor cost is passed onto the customer, the business will have to operate at a loss.
because employees have inherently more power then workers in suchs an example. Workers need wages and money to survive in the economy, and usually have little negotiation power compared to (massive) companies.
You could argue we could go back to the 1800's in terms of labour standards, but don't be suprised when workers simply decide to kill their bosses and companies retaliating[1].
Diminishing labour rights is just asking for another violent class struggle.
Why would they have more power ? Employees have the power to say no, shop somewhere else, to do a shitty job / not follow orders and let the employer figure it out, quit when they want, leave the employers without the job being done overnight. They also receive something very defined and predictable (money defined in the contract) in exchange for some vague objectives where the employers needs to constantly check if the company mission is being fulfilled, and constantly update this mission.
Workers need wages and money to survive in the economy
And employers don't need wages and money to "survive in the economy" ?
> And employers don't need wages and money to "survive in the economy" ?
Not if they inherited it. The key idea here is asymmetry of power. When people are desperate enough that they would take a sub-minimum wage job, this doesn't necessarily imply a "voluntary exchange". If you're facing starvation or medical bankruptcy, you are essentially being coerced to take any job you can find.
If you're worried about people being in bad situations, why do you think laws that would prevent them from improving their situation is a good idea ? What do you do with those that are not in this situation, yet still interested in the jobs you judge not good ? How can you make that judgment for others ?
Because employers often have more power than employees in that negotiation. they'll pay as little as possible/legal, with working conditions skirting what's allowed by law.
On top of that, taxpayers will have to foot the bill by funding welfare to all these people whose labor is being exploited. Especially since they increasingly don't have the negotiating power of a union to make this idealistic vision you have of the job market fair to both sides.
Techies like to believe they're enlightened when they lean libertarian, when in reality all that amounts to is privatized gains, socialized losses.
In the past I've been downvoted for replying to such a comment with something along the lines of "that makes sense if you're a libertarian". I think people assumed that I was baiting for something but I'm actually totally genuine when I say that: if you think a totally libertarian society is the way to go then things like minimum wage make little sense, just let individuals figure out what they want and don't want to do.
If you don't go full libertarian and you think that the state should provide some level of protection then things change because if people are not paid enough to live a decent life they'll end up falling into one of society's safety net (cost of law enforcement if people start stealing, cost of welfare if they require handouts to eat decently, cost to social security if they become sick due to poor living or working conditions etc...).
In such a situation you basically end with society subsidizing these jobs indirectly by cleaning the mess. That's why it makes more sense to simply force decent working conditions instead of encouraging a destructive race to the bottom.
Now in practice, regardless of our opinions, the USA is not a libertarian state, there are security nets, there is a certain level of socialized assistance (too much for some, not enough for others). In this situation it makes complete sense to have things like minimum wages and laws making it mandatory to wear your seat belt for instance.
That leads to a society that, it appears, many people don't want to live in. Many people don't want to live in a USA where people can work full-time and yet still have miserable lives bereft of hope. Some people do want to live in that USA; we see every day the battles as these differing visions of the USA compete.
I genuinely believe that you're not asking that question in good faith; I believe that for whatever reason, you have some issue with my assertion that some people want one kind of society in the US and some people want a different kind (nothing wrong with having a different opinion), and I genuinely believe that your question is, rather than an honest question on that topic, some kind of sideways attack on this, perhaps based on the practicality of maintaining a decent society, but without actually stating your case such that it can be discussed.
Part of this belief is based on the fact that your question is a fake question (and that when it was clear that I was suspicious of your motives, you simply repeated it without any amplifying remarks - you knew I didn't understand, but you didn't do anything to help me understand you). That the answer is apparent to everyone involved, but drawing our attention to that answer doesn't actually add anything to the conversation. If your fake question did actually add to the topic, it would be a useful rhetorical device, but it doesn't. In effect, you've stated "people want to move to the US" and... that's it. How's that relevant? I don't think it is. I think it's just a veiled attempt to derail.
As such, I choose not to engage. If I have mistaken your intentions, I do apologise, but that's what I believe. In that case, at least now you know why I think you're acting in bad faith.
> Why not let the employees decide if the job is worth taking?
That's the way it should work. And in a functioning market, employees don't make these decisions alone against large corporations, they make those decisoins in large groups like voters or in a union. Thinking that each employer is free to offer and each employee is free to value whether its worth it makes for some kind of "free market" balance for labor is pretty naïve when it comes to individuals vs large corporations.
We wouldn't allow employers to bargain on risk and "letting the employee decide whether the risk is worth taking", I don't see any difference with wages.
If someone is willing to work for $5/hour, I can't pay them $5/hour, even if that's all I can afford. Not all jobs should have to pay a basic living wage for two reasons. Not all jobs create enough wealth to justify that wage, and there are lots of people looking for side work, or just a bit of extra cash, and aren't relying upon this type of job for their living.
A 12 year old running a paper delivery route on their bike doesn't need $15/hour and isn't creating $15/hour in wealth, yet the kid and the employer would be happy to agree on some lesser amount.
> But if you can't pay the minimum, then you didn't really have a job to offer in the first place!
Which minimum? Today's minimum, or yesterday's?
> But it is disingenuous to suggest that just because there are people who would take such jobs, that our economy should allow employers to get away with it.
How is it disingenuous if someone says such a thing and honestly means every word of it?
The point about minimum wage is to prevent labor abuse in crappy week conditions by making sure people are just expensive enough to take their safety seriously.
Anyone can choose their employer, it's the employer who can't pay less than some amount we as a society deem is a necessary minimum.
If anyone's going to have their freedom restrained, let's let it be the folks running businesses, hiring and firing, etc. They already hold more cards.
By extension of this logic, employers could argue that they are losing jobs because they can only afford to pay someone who will work 12 hours a day, or can only afford to pay child workers, or can only afford to hire if they get a huge payroll tax cut. Granted, in the job market there are people who would take sub-minimum wage pay for a variety of reasons -- desperation, lack of education, lack of options near their home, felony record, undocumented status, etc. But it is disingenuous to suggest that just because there are people who would take such jobs, that our economy should allow employers to get away with it.
If you can't pay a basic living wage, for fair hours, in safe conditions, with necessary medical benefits, then you don't have a job to offer.