I see it as a means of restricting employers from employing people at disgustingly low pay where the pay does not come close to their labour.
It might create more job spots but they would be lower income on average. Wouldn't that thereby reduce the motive to get off of welfare?
Labor is a commodity like any other. The government imposing price controls on commodities does not change what those commodities are actually worth, nor how much businesses can or will pay for those commodities. All the minimum wage does is deprive people of jobs and raise the costs of other goods and services. In other words, it makes poor people poorer.
Labor is a commodity like any other. The government imposing price controls on commodities does not change what those commodities are actually worth, nor how much businesses can or will pay for those commodities. All the minimum wage does is deprive people of jobs and raise the costs of other goods and services. In other words, it makes poor people poorer.
Price floors create deadweight loss, which decreases efficiency. Besides, I have no problem with people actually being paid what they're worth. It's not like employers can just charge whatever they want, and expect people to flood the offices with applications to work for 2 dollars an hour. An individual's acceptable wage should, and usually does, compare to a living standard. Do you think you're going to find people making 7 dollars an hour in Los Angeles or New York City? Nope.
Minimum wage is just a Democratic political tool to garner votes from the lazy and uneducated.
Ok, something is not making sense to me here.
Lets say that in society XYZ, the minimum life expense (barring no major accidents, medical issues, or other big life changing things) is $200 a week in the local currency. Person X gets a job at $5 an hour, because that is the minimum wage and he is able to live a basic lifestyle.
Tomorrow, his place of employment closes down (lets say the owner dies and noone wants to buy the business) and there has been employment law changes that remove any minimum wage. Person X is now only able to get a job at $3 an hour since that's what employers now offer for the job he is skilled to do. He has no choice but to either take it or starve (which he will eventually do anyway at that wage). (Planet XYZ is a libertarian model world, so there is no assistance for the poor except for a few charities that don't really do anything in a large enough scale to make a real difference, like we had in the 1920s or previously)
I fail to see how this would make people less poor.
Also, minimum wage only impacts a very tiny portion of the whole labor market. The effects on price and demand are negligible if non existent.
Because instead of making $3 an hour they would earn $0 an hour. Of course it makes them poorer.
Goldenboy I've had this argument with you already and you keep advancing the same arguments that should have been debunked when I brought up the Broken Window fallacy. Remember you mentioned elevator boys being put out of work by some law, forcing new buildings to provide automatic elevators? You thought that this plan was genius because it forced the elevator boys to find other jobs (probably producing for some other human want). However, I mentioned that the reason elevator boys were used was because they were cheaper than the automatics. I then speculated that this would cause a shortage of housing because this would mean that building a new complex would require a greater investment, hence less construction. So I ventured the idea that it was better for the elevator boys to be working there than to do other things just by the mere fact that they were doing that. It was the best possible job for them at the time. Furthermore, it made buildings that much cheaper so that housing was cheaper for everyone. This makes people that much richer because they can use that money for other goods that suit them more.
This is the same with full service gas stations. The people working there were at the best possible job they could get, otherwise they wouldn't be there. If it was more profitable to have those capital investments you alluded to, then why weren't entrepreneurs doing that? After all, if the investment was worth it, wouldn't their profit have been higher than the full service gas stations? It seems that most people valued the full service and its price more than the capital investments and their price.
Minimum wage only increase productivity when you blind your eyes to the cuts in productivity it causes. Notice that in all of this I did not even mention the fact that minimum wage certainly does cause unemployment. Even without this factor you already have a loss. The Broken Window Fallacy destroys the myth that a minimum wage is a good thing.
Also, you don't need perfect competition for this to be true. Not in the slightest. People will always do what satifies them most. You don't need perfect competition for that; it's a basic tenet of human action.
I have nothing to add to this, you nailed it.Labor is a commodity like any other. The government imposing price controls on commodities does not change what those commodities are actually worth, nor how much businesses can or will pay for those commodities. All the minimum wage does is deprive people of jobs and raise the costs of other goods and services. In other words, it makes poor people poorer.
Sure, when you ignore the cost to production which affects all of us.
I see it as a means of restricting employers from employing people at disgustingly low pay where the pay does not come close to their labour.
It might create more job spots but they would be lower income on average. Wouldn't that thereby reduce the motive to get off of welfare?
Inflation entirely and everywhere a monetary phenomenon. It is productivity that keeps prices in check, not the other way around.
Static analysis to explain a dynamic effect fails! Not only are capital intensive goods created, designed, etc..., but other aspects of labor are made necessary to create the plants that build the machines. For future reference, there is a great difference between static and dynamic cost structures.
Lol, if you could identify an income effect from the absence of the mw, the debate would have ended generations ago.
Capital requires investment, which is is not anywhere near the risk adversity of say low wage labor.
News flash: it is actually cheaper to produce labor intensive goods in a high cost of labor country than say China. Why?
Still harping about the rational being? Come back when you have caught up with the times.
Why are you ignoring the Broken Window Fallacy with this red herring?
Stating that US labor is more productive than the lower paid chinese labor is not a red herring. It proves your notion that the minimum wage destroys productivity to be false, which makes sense.
What three things contribute to long term economic growth (aka an increase in total factor productivity)? Physical Capital, human capital, and technology. I believe goldenboy cited 2 of these in his discussion of the effects of the minimum wage.
No, it doesn't. Minimum wage is not the only difference between China and the US. Just because we are more productive with a minimum wage does not mean that minimum wage has no effect on productivity.
I mean, I could easily say that we are productive despite the minimum wage. So why are we so productive? Access to capital, education, etc.
Minimum wage puts people out of work, so that means there is less savings.
This decreases physical capital and human capital. Does it increase technology? Maybe in some areas, but it decreases in others (you'll get more automatic elevators, but you'll have people spending less in those other industries now because housing is more expensive, so those industries will see lower technological improvement).
So like I said, we're productive despite it, not because of it.
It does have an effect on productivity. Research shirking and labor turnover rates, and how they correspond to wages; then get back. :lol:
So the absence of a wage floor does not encourage the utilization of resources to low skilled labor? Fascinating!
At the low end of wages, savings is (for the most part) non exist ant.
So let me get this straight; housing is more expensive due to gains in productivity and efficiency? Again, fascinating.
Nobody said we were productive because of a minimum wage. Up to a certain parameter, it helps induce capital investment at the expense of low skilled, low wage labor. Using a human being as opposed to a machine or a skilled human being achieves efficiency?
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