Wage laws

[starcraftzzz]

1) No Labor is not just like any another good. (ill explain in number 2)

As far as the firm is concerned there is no difference

Really so you think an apple is the same thing as human being....
Yes that does sound incredibly stupid.

2) As shown by all the evidence minimum wage increases result in increased productivity; of which occurs due to signnifi9cnaly lower employee turnover, better living standards, happier workers and workers who feel their work is actually worth doing.

I agree that there is a correlation between productivity and wages, but correlation does not prove causation. Case in point, the opposite could be said as well (increased productivity is rewarded with higher wages).
And yes higher wages should decrease employee turnover, and increase living standards, thus leading to happier workers, but at the expense of the DWL labor members. Which is my point to begin with.

The thing about your point is that all the evidence contradicts it.
I have a hypothesis about how minimum wage helps the economy you have one about how it hurts the economy; both are logically sound; the only difference is that in reality my hypothesis is the one that plays out.

Also higher minimum wages results in more people looking for jobs and therefor companies are able to hire more skilled people whoa re more productivity.

You are right here as well, "higher minimum wages results in more people looking for jobs" but looking for jobs and getting hired are two different stories. There are a lot of jobs that pay millions of dollars and people look for them, but will they get hired?

No not all of them however the ones deemed most productive and valuable by firms will be the ones hired.

Firms still will not hire the inframarginal supply of laborers that it would due to price floors in the labor market

Except that that is not how it plays out in real life. Firms don't pay people based on how much money those people make for the firm; they usually pay as little as possible in order to pad their own pockets. This is evident by the fact that education attainment and productivity of minimum wage worked has increased by 50% despite a significant drop in their real wages.

 

[kaz]

Don't need them. In fact they hurt low skill workers the most.

In keeping with the deep critical thinking that so obviously went into producing this POV, my response shall be likewise:

Nah-uh!

Actually that paraphrases every post you write...

 

[OohPooPahDoo]

... there is no doubt that price floors in the labor market make some people unaffordable thus those individuals are never hired.

That's a scientific theory. Its certainly a reasonable theory but has it actually been tested? What empirical evidence is there of this?



And what is your point exactly? You seem to be trying to argue against minimum wage laws by pointing out some of their theoretical disadvantages - but when you are confronted with the disadvantages associated with getting rid of them (driving down wages for everyone else for instance) - you side-step and take the attitude you're only here to provide facts and not take sides.

 

[inALIENable]

Minimum wage laws can negatively impact children. All throughout my teen years I actively sought employment and odd jobs. I always needed money for my hobbies, snacks, movies, pocket change. Fortunately though I was worth more than minimum wage, but I knew my sister was always pissed that baby sitting always paid less than minimum, but what did she expect to earn watching TV and chatting on the phone.

Minimum wage laws should not be an issue for grown adults.

 

[OohPooPahDoo]

Minimum wage laws should not be an issue for grown adults.

The world of "should" - where the right lives. If only we could build a time machine, we could all have "should".

Unfortunately, the the world of "real" - ages 16-24 barely accounts for half of the minimum wage workforce

Who Earns Minimum Wage? A Statistical Profile

 

[ThinkCritically]

I have a question. Isn't a good thing to not make it easier for people to get shitty paying jobs
and instead of working in a job were they produce $1 in goods an hour they should find a job that actually contributes more production?

If you are referring to the very low skill worker to which I have been referring to this whole time, then the answer is NO, because it will result in their unemployment.

Let me try and explain it a different way. There is a labor pool of people all with different skills. Firms hire these people and pay them an amount slightly less than what that worker will produce. This goes for people who make $100 an hour or $10 an hour or $1 an hour. The firm will only hire the person so long as they make a profit off of that labor i.e. $110 revenue per hour for the $100 dollars in costs for labor. The firm makes a profit of $10 dollars.

Firms need different types of labor. Some need high skill workers like the guy who is making $100 per hour , some need low skill workers like manual laborers.

Now say a firm needs very low skill workers (like handing out fliers or pamphlets) they will only hire workers so long as they can make a profit off of the transaction of hiring them. If the cost of hiring that worker is higher than the revenue that they will receive from hiring then they won't hire. If LaborCosts>revenue from labor, the firm won't hire.

Another way of looking at it...
Say there are 10 people that are willing to work for a given amount of money. There is one firm willing to hire those 10 people for that price because it will result in a profit. Then suppose someone comes in and says that the firm isn't allowed to hire those workers for the agreed upon price and that it must be a higher price. There are three results that will occur.

1. either the new cost of labor will still be cheap enough for them warrant hiring the 10 new laborers thus reducing revenue but still resulting in a profit (this is what minimum wage laws intend to achieve)
2. It will not be profitable to hire any of the 10 new workers because the costs of hiring exceeds the revenue= no new hiring= 10 workers still unemployed
3. some range within these two results. i.e. it is profitable to hire 5 of the 10 workers but after that marginal costs become greater than marginal revenue.

 

[inALIENable]

If LaborCosts>revenue from labor, the firm won't hire.

You can't sustain a deficit forever. These lowly unskilled jobs use to be reserved for children after school, part time work for stay at home moms while the kids are in school.

Shameful an adult needs to take a job away from a child. I'm not kidding, I've seen 40 year old paperboys, LOL. Adults knock on the door wanting to know if they can mow the yard now. But, nobody wants to clean up the dog poop out back for me. Why? Nobody THAT hungry yet? Begging is more respectful?

Minimum wage laws only hurts kids.

 

[OohPooPahDoo]

I have a question. Isn't a good thing to not make it easier for people to get shitty paying jobs
and instead of working in a job were they produce $1 in goods an hour they should find a job that actually contributes more production?

If you are referring to the very low skill worker to which I have been referring to this whole time, then the answer is NO, because it will result in their unemployment.

Let me try and explain it a different way. There is a labor pool of people all with different skills. Firms hire these people and pay them an amount slightly less than what that worker will produce. This goes for people who make $100 an hour or $10 an hour or $1 an hour. The firm will only hire the person so long as they make a profit off of that labor i.e. $110 revenue per hour for the $100 dollars in costs for labor. The firm makes a profit of $10 dollars.

Firms need different types of labor. Some need high skill workers like the guy who is making $100 per hour , some need low skill workers like manual laborers.

Now say a firm needs very low skill workers (like handing out fliers or pamphlets) they will only hire workers so long as they can make a profit off of the transaction of hiring them. If the cost of hiring that worker is higher than the revenue that they will receive from hiring then they won't hire. If LaborCosts>revenue from labor, the firm won't hire.

Another way of looking at it...
Say there are 10 people that are willing to work for a given amount of money. There is one firm willing to hire those 10 people for that price because it will result in a profit. Then suppose someone comes in and says that the firm isn't allowed to hire those workers for the agreed upon price and that it must be a higher price. There are three results that will occur.

1. either the new cost of labor will still be cheap enough for them warrant hiring the 10 new laborers thus reducing revenue but still resulting in a profit (this is what minimum wage laws intend to achieve)
2. It will not be profitable to hire any of the 10 new workers because the costs of hiring exceeds the revenue= no new hiring= 10 workers still unemployed
3. some range within these two results. i.e. it is profitable to hire 5 of the 10 workers but after that marginal costs become greater than marginal revenue.

Are you going to connect this to real world data at some point?

 

[ThinkCritically]

Really so you think an apple is the same thing as human being....
Yes that does sound incredibly stupid.

you can attempt to follow or you can get sarcastic that is your choice...

The thing about your point is that all the evidence contradicts it.
I have a hypothesis about how minimum wage helps the economy you have one about how it hurts the economy; both are logically sound; the only difference is that in reality my hypothesis is the one that plays out.

I never mentioned anything about the macro economy in any of my posts. I am simple making a statement about cause and effect in regards to setting price floors in the labor market. Maybe it does help the macro economy, I never said it didn't. But what I am saying is that minimum wage benefits comes at the expense of the poorest of the poor.

Except that that is not how it plays out in real life. Firms don't pay people based on how much money those people make for the firm; they usually pay as little as possible in order to pad their own pockets.

this is true. firms pay the least amount that they can in order to increase profits as much as possible. This is especially true for low skill entry level jobs (the ones that we have been discussing)

This is evident by the fact that education attainment and productivity of minimum wage worked has increased by 50% despite a significant drop in their real wages.

I feel your frustration here...I don't like that real wages are flat over the past 40 years either. The cause of this is completely related to this thread. Firms seek the lowest wage for labor so they all outsource or just move away. Its called Capital flight. If low skill labor was more affordable in the US then firms would hire here. As long as labor is not as affordable in the USA firms will continue capital flight behavior.

All of this is objective.

You want to know my opinion? IT SUCKS, and there isn't much we can do about it. Unless you want to go back to mercantilism, but that didn't go so well in the end.

 

[ThinkCritically]

That's a scientific theory. Its certainly a reasonable theory but has it actually been tested? What empirical evidence is there of this?

Social Sciences regarding a population the size of the US cannot be tested empirically unfortunately.

And what is your point exactly? You seem to be trying to argue against minimum wage laws by pointing out some of their theoretical disadvantages - but when you are confronted with the disadvantages associated with getting rid of them (driving down wages for everyone else for instance) - you side-step and take the attitude you're only here to provide facts and not take sides.

Unless you are making minimum wage you really would not be effected, so I wouldn't say that it would drive down the wages of everybody... just those who are not worth minimum wage.
So the trade off is ...those who are not worth minimum wage will receive a wage that they are worth, while those who are unaffordable to hire due to minimum wage will be hirable.
And yes I am here to provide facts or at least well founded theories based upon basic economic principles. You want me to take a side? Isn't it obvious from the OP

 

[OohPooPahDoo]

That's a scientific theory. Its certainly a reasonable theory but has it actually been tested? What empirical evidence is there of this?

Social Sciences regarding a population the size of the US cannot be tested empirically unfortunately.

And what is your point exactly? You seem to be trying to argue against minimum wage laws by pointing out some of their theoretical disadvantages - but when you are confronted with the disadvantages associated with getting rid of them (driving down wages for everyone else for instance) - you side-step and take the attitude you're only here to provide facts and not take sides.

Unless you are making minimum wage you really would not be effected, so I wouldn't say that it would drive down the wages of everybody... just those who are not worth minimum wage.
So the trade off is ...those who are not worth minimum wage will receive a wage that they are worth, while those who are unaffordable to hire due to minimum wage will be hirable.
And yes I am here to provide facts or at least well founded theories based upon basic economic principles. You want me to take a side? Isn't it obvious from the OP

I'm sorry but if you can't present any real world data to back your theories then your theories are completely worthless and all of what you've said thus far is worthless.

 

[Widdekind]

minimum wage increases result in increased productivity

more productive workers are more valuable to employers; they will (tend to) be paid more. Ergo, workers who are paid more will (tend to) be more productive. Ipso facto, when you eliminate low(est) paying jobs (via minimum wage), you eliminate the low(est) productivity workers; the mean-average productivity, of still-employed workers, therefore increases.

the book "how to lie with statistics" deals with such mathematical manipulations -- by artificially restricting attention, exclusively to higher-paid workers, you artificially "prove" that worker-productivity has improved. That is utterly, totally, completely, and entirely non-valid -- if you are claiming to calculate a statistic, reflective of an entire economy (e.g. "worker productivity"); then you must include all people part of that economy (i.e. "worker productivity" must include, not only the "some" who are still employed, but also the under-employed; and the un-employed). Minimum wages, economically a "minimum price for labor", increase unemployment; unemployed people have zero productivity; their unemployment reduces overall worker productivity.

Only by "cooking the books", calculating productivity only for employed persons; and then citing the "tip of the employment iceberg" as representative of "the entire economy" (including those who are "under the minimum wage water line"); can you falsely conclude, that eliminating (low paying) jobs; and driving (low skill) workers into unemployment; is (by mathematical 'magic') "good" for an economy.

(economics is "money matters"; money is prosperity is life; people "ought" to be less tolerant, of Deceptions, involving human prosperity & life.)

 

[ThinkCritically]

I have a question. Isn't a good thing to not make it easier for people to get shitty paying jobs
and instead of working in a job were they produce $1 in goods an hour they should find a job that actually contributes more production?

If you are referring to the very low skill worker to which I have been referring to this whole time, then the answer is NO, because it will result in their unemployment.

Let me try and explain it a different way. There is a labor pool of people all with different skills. Firms hire these people and pay them an amount slightly less than what that worker will produce. This goes for people who make $100 an hour or $10 an hour or $1 an hour. The firm will only hire the person so long as they make a profit off of that labor i.e. $110 revenue per hour for the $100 dollars in costs for labor. The firm makes a profit of $10 dollars.

Firms need different types of labor. Some need high skill workers like the guy who is making $100 per hour , some need low skill workers like manual laborers.

Now say a firm needs very low skill workers (like handing out fliers or pamphlets) they will only hire workers so long as they can make a profit off of the transaction of hiring them. If the cost of hiring that worker is higher than the revenue that they will receive from hiring then they won't hire. If LaborCosts>revenue from labor, the firm won't hire.

Another way of looking at it...
Say there are 10 people that are willing to work for a given amount of money. There is one firm willing to hire those 10 people for that price because it will result in a profit. Then suppose someone comes in and says that the firm isn't allowed to hire those workers for the agreed upon price and that it must be a higher price. There are three results that will occur.

1. either the new cost of labor will still be cheap enough for them warrant hiring the 10 new laborers thus reducing revenue but still resulting in a profit (this is what minimum wage laws intend to achieve)
2. It will not be profitable to hire any of the 10 new workers because the costs of hiring exceeds the revenue= no new hiring= 10 workers still unemployed
3. some range within these two results. i.e. it is profitable to hire 5 of the 10 workers but after that marginal costs become greater than marginal revenue.

Are you going to connect this to real world data at some point?

When Adam Smith wrote "The Wealth of Nations" he didn't give any data or statistics, but his ideas were founded upon economic observation. I am taking the same approach. Besides, no one has run an experiment which tests my hypothesis. Econometrics has been used to show correlation between minimum wage and macro economic performance (which only proves correlation not causation i.e. economy was improving anyways regardless of minimum wage increases), but no study has been conducted to show that minimum wage decreases employment. It would be hard to prove, for the same reasons it is hard to prove that minimum wage increases improve the economy. What I do know is that price floors lead to "dead weight loss" and there isn't a single economist that would say otherwise.

 

[inALIENable]

minimum wage increases result in increased productivity

. . . more productive workers are more valuable to employers; they will (tend to) be paid more.

Today though productive means smart. Brains over brawn. It's no longer an issue of how many sprockets can a bunch of whiny union workers make in an hour on the manufacturing line. Rather, it now means can you increase the efficiency of the nesting software my new non-whiny robots use so we can make more sprockets per resource unit.

"What?" <---- that's our problem

 

[ThinkCritically]

I'm sorry but if you can't present any real world data to back your theories then your theories are completely worthless and all of what you've said thus far is worthless.

Adam Smith or Karl Marx for that matter never once gave statistics to back their theories. So if you choose to reject solely because I don't have data then that is your choice.
One more note...I know how to run econometric models and produce statistics....and let me tell you something, you can make it say WHAT EVER YOU WANT. The data is only as good as the model, theory, and integrity of the person conducting the experiment. Even then...you are likely to reach a number that isn't fully accurate. So if you only believe econometric outputs, then you will inevitably believe many different things surrounding the same topic, because for each one of those economic studies that are produced using econometrics there are a hundred other ones that reach different conclusions.

 

[Widdekind]

Who Earns Minimum Wage? A Statistical Profile

as observed in PPs, minimum wage workers tend to be young, high-school-level educated, rural, in part-time "miscellaneous odd jobs":

Most minimum wage earners are young...

Most minimum wage earners work in food service...

Most minimum wage earners never attended college...

[many minimum wage earners work] part-time...

Less educated persons, blacks, women with young children, and workers who reside outside of urban areas are much more likely to have such minimum wage careers.

 

[Widdekind]

Today though productive means smart. Brains over brawn

low-skill jobs are the easiest to "mimic" with machines; and the first to be displaced by machines. Minimum wages, for human labor, incentivize businesses to employ machine labor, which does not "demand over-priced pay".

 

[OohPooPahDoo]

If you are referring to the very low skill worker to which I have been referring to this whole time, then the answer is NO, because it will result in their unemployment.

Let me try and explain it a different way. There is a labor pool of people all with different skills. Firms hire these people and pay them an amount slightly less than what that worker will produce. This goes for people who make $100 an hour or $10 an hour or $1 an hour. The firm will only hire the person so long as they make a profit off of that labor i.e. $110 revenue per hour for the $100 dollars in costs for labor. The firm makes a profit of $10 dollars.

Firms need different types of labor. Some need high skill workers like the guy who is making $100 per hour , some need low skill workers like manual laborers.

Now say a firm needs very low skill workers (like handing out fliers or pamphlets) they will only hire workers so long as they can make a profit off of the transaction of hiring them. If the cost of hiring that worker is higher than the revenue that they will receive from hiring then they won't hire. If LaborCosts>revenue from labor, the firm won't hire.

Another way of looking at it...
Say there are 10 people that are willing to work for a given amount of money. There is one firm willing to hire those 10 people for that price because it will result in a profit. Then suppose someone comes in and says that the firm isn't allowed to hire those workers for the agreed upon price and that it must be a higher price. There are three results that will occur.

1. either the new cost of labor will still be cheap enough for them warrant hiring the 10 new laborers thus reducing revenue but still resulting in a profit (this is what minimum wage laws intend to achieve)
2. It will not be profitable to hire any of the 10 new workers because the costs of hiring exceeds the revenue= no new hiring= 10 workers still unemployed
3. some range within these two results. i.e. it is profitable to hire 5 of the 10 workers but after that marginal costs become greater than marginal revenue.

Are you going to connect this to real world data at some point?

When Adam Smith wrote "The Wealth of Nations" he didn't give any data or statistics, but his ideas were founded upon economic observation. I am taking the same approach.

Great.

Einstein wrote quite a bit about thought experiments, himself, but general relativity wasn't accepted as a good theory until it was verified by experiment in the real world.

When you're ready for your approach to apply to the real world - give us the data.

What I do know is that price floors lead to "dead weight loss" and there isn't a single economist that would say otherwise.

Your simplistic analysis requires that everyone making less than the new price floor when the minimum wage is hiked up lose their jobs. In reality that's simply not true. If you like I can show you real world statistics showing that people making X minimum wage do not all lose their jobs when the minimum wage is raised to X + dX.

Your analysis also fails to include the real world effect of minimum wage hikes causing employers who employ minimum wage labor to raise prices to account for the change in the wage - and in many cases - they are successful. The price of a Big Mac might be $0.25 if there were no minimum wage but then the employees making $0.50 a hour doing it would be more dependent on social welfare.

What's better - one guy making $10 an hour and the next making $0 - or both of them making $1.00 a hour? Which do you think will be less costly to social welfare systems? - You thus neglect the DWL in the social welfare that occurs as more burden is placed on it as a result of wage decreases.

 

[OohPooPahDoo]

Who Earns Minimum Wage? A Statistical Profile

as observed in PPs, minimum wage workers tend to be young, high-school-level educated, rural, in part-time "miscellaneous odd jobs":

Most minimum wage earners are young...

Yes. Ages 16-24 barely accounts for half of the minimum wage workforce - so "young" means 16-24 and "most" means 51.2% in this case.

Most minimum wage earners work in food service...

That should comfort anyone worried about minimum wage hikes affecting the prices they will pay then - as the resultant price hikes will mostly be in their discretionary spending budgets.

Most minimum wage earners never attended college...

That would be consistent with them being young.

[many minimum wage earners work] part-time...

Yes yes. Many of them work 100 hour weeks. What's your point?

Less educated persons, blacks, women with young children, and workers who reside outside of urban areas are much more likely to have such minimum wage careers.

Blacks? Well alright then, who gives a fuck?

 

[Widdekind]

What I do know is that price floors lead to "dead weight loss" and there isn't a single economist that would say otherwise.

Your simplistic analysis requires that everyone making less than the new price floor when the minimum wage is hiked up lose their jobs. In reality that's simply not true...

employers who employ minimum wage labor to raise prices to account for the change in the wage - and in many cases - they are successful...

minimum prices of commodities, including minimum prices-on-labor ([minimum] wages), statistically tend to reduce consumption of those commodities, including consumption of labor (jobs); and tend to be "passed on", down the supply "chain", to "downstream" consumers, e.g. "end consumers" of the "ultimate final product".

ergo, minimum prices/wages "trickle down" to the rest of the economy as a whole -- precisely as stated, every commodity, from "hamburgers" to "toothpaste", would (tend to) cost (at least a little) less, without (artificially imposed) minimum prices/wages