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Comment by Pyxl101 | Hacker News Reader

I've never heard a good argument to justify having a minimum wage. A lot of the people who argue for minimum wages commit the fallacy of the false dichotomy: they think that the choice is between everyone having jobs and getting paid what they're paid now, and everyone having jobs and getting paid more -- they think they can somehow legislate the latter outcome.

In reality, what tends to happen when you increase minimum wage is that businesses lay off workers. They only have so many dollars to spend on wages at current profitability levels. Seattle's minimum wage for example has caused a massive loss of jobs compared to the rest of the state: https://www.aei.org/publication/minimum-wage-effect-from-jan...

Minimum wage directly causes unemployment by making it illegal to employ people at their fair market wage. [Edit: I'd be glad to read an argument for minimum wage if someone would like to link one. The articles that I see in the news tend to engage in moralizing and lack real explanation and justification.]

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The "good argument" for having a minimum wage is that without it, wages will be pressured down, because every business on the planet wants wages as low as possible, and they generally have the means to achieve this. It has nothing to do with job creation: it's about having jobs that are not basically slavery. It's for job quality, not quantity.

Besides, you're just assuming people should be employed at "fair market wage." The political process is part of the market, and the fair market wage is determined by what is politically determined to be fair (AKA, minimum wage) just as much as it is by employers' demands. As a business, you are not entitled to a profit. Especially not at the expense of your employees welfare.

"As a business, you are not entitled to a profit. Especially not at the expense of your employees welfare."

That's funny, but true. You know what else is at least as true? No people are entitled to employment, especially at a loss to the business.

You think people are not entitled to employment? Are they entitled to survive? Are you going to be the one to break the bad news?

Let's find out what happens when you tell large segments of the population they have no right to a livelihood. I am going to wager the cost to the wealthy will be much higher than an increase in the minimum wage.

In case this is not obvious to you... to be entitled to employment (or anything) means someone must provide it. If nobody is voluntarily hiring a man, you would force someone to hire him because this man is entitled to employment?

How would you feel if I told you that there's someone I know in need of employment and YOU must hire him? Oh, and if you don't, I'll fine you or lock you up.

People were never entitled to employment. The very notion of a job as the primary mode of earning one's living was born relatively recently, some 200 years ago (then, it meant mostly manual labor). It survived the transition to information economy, but current AI progress may finally put end to it.

This is as inevitable as the appearance of middle class during the first industrial revolution. The progress cannot be stopped.

Maybe you're confusing (as many do) entitled with having the freedom to do something.

Entitled: believing oneself to be inherently deserving of privileges or special treatment

If I don't qualify in any way for a job at your business, let's find out what you say when I force you to hire me because of an argument that I'm inherently deserving of that job. I'll just sit on my butt all day, and you pay me. Sound good?

I assume everyone who argues that there's no right to employment is also arguing in favor of a guaranteed income - decoupling survival from employment.

That would be an erroneous assumption.

You're using an inadequate notion of what a "good argument" is in this context. You have not made an argument for why a price floor is necessary or desirable. I could just as easily say, "The good argument for having a maximum 'price of bread' is that without it, bread prices will be pressured up, because every bakery on the planet wants prices as high as possible, and they generally have the means to achieve it." You can say that all you want, but you haven't provided a justification that it's actually true, or that the situation warrants legislation of one interest over the other. You haven't given a justification or any consideration to the tradeoffs involved.

Do you know what happens when real countries try to impose a limit on the price of bread? Starvation. The Soviet Union tried to establish a limit on the price of bread. Since the actual cost to grow wheat, bake bread, and transport it to cities was high, the supply chain couldn't make a profit (or even break even) selling at the government-specified price. So they stopped, and mass food shortages resulted. That's what happens when you tamper with the economy. Gorbachev finally fixed the problem by transitioning away from a planned economy to a free market: http://www.nytimes.com/1990/05/23/world/evolution-in-europe-...

By allowing the price of bread to rise significantly, bakers and bread suppliers could finally turn a profit (i.e., not take a loss) selling bread, and so they began to do so. This is how the market forces of supply and demand lead to efficiency and achieve the right outcome. For example, if a crisis happens, then food becomes scarce; when food is scarce, people are willing to pay a high price for it; and because people are willing to pay a high price, this creates an incentive for people to go to extraordinary lengths to provide food there and reap the benefit of that high price.

If you establish a price floor, then you're tampering with the economy in a complex way. You had better be prepared to reason about the economic deadweight loss (e.g., unemployment, shortages) that will result, and you should be prepared to provide a thorough justification for why the benefit of that legislation justifies the cost you're imposing on the economy through deadweight loss.

Equating jobs to slavery is an outrageous argument, and disingenuous. Slavery is the act of taking away someone's freedom and forcing them to work for you without choice. Jobs are a free market - anyone is free to work a job that's offered to them, or not. They can quit and look for a better alternative. That is the market pressure that forces wages up: if employees have a better option, they'll take it.

>You have not made an argument for why a price floor is necessary or desirable.

I'm pretty sure that's all I did. Your inability to see that is on you.

>"The good argument for having a maximum 'price of bread' is that without it, bread prices will be pressured up, because every bakery on the planet wants prices as high as possible, and they generally have the means to achieve it." You can say that all you want, but you haven't provided a justification that it's actually true, or that the situation warrants legislation of one interest over the other.

No. You have provided that justification. You just said what the justification for maximum price of bread is. But those businesses don't have the means to achieve maximum bread price. And if bread was being sold for billions of dollars per slice, the price almost certainly would be regulated down. For exactly the arguments you've made: without it bread becomes absurdly expensive.

>The market forces of supply and demand create pressures both up and down on wages, and an equilibrium between them is what allows markets to be efficient.

Efficient at what? Efficient at reaching equilibrium. Not efficient at meeting the goals of society, which involve complex moral and political conditions not captured or measured by any market.

>Equating jobs to slavery is an outrageous argument, and disingenuous.

It is not. Especially with wages being systematically driven down to below what is necessary for survival. The minimum wage was created because there were real problems caused by not having it. Negative wages have existed in a "free" market.

> I could just as easily say, "The good argument for having a maximum 'price of bread' is that without it, bread prices will be pressured up, because every bakery on the planet wants prices as high as possible, and they generally have the means to achieve it."

You could certainly just as easily say that, but there's an obvious reason why it isn't true: so long as there are multiple suppliers and it's possible to produce bread in quantities sufficient to more than supply the population, each supplier can benefit from undercutting the prices offered by the others and capturing a larger share of the market, and this drives down prices to relatively near the cost of production. (As for the case when it's not possible to produce enough bread, take a look at the history of rationing during wartime and why it existed.) This argument simply doesn't apply to the comment you're replying to.

A race to the bottom only happens with fungible goods, where any price differential is sufficient to completely dominate purchasing logic. There is a very broad spread in the quality of bread, and people's purchasing decisions are heavily weighted by product marketing.

That rather depends on how much people can afford to spend on bread. At least here in the UK, there's been a massive rise in the popularity of discount supermarkets like Aldi and Lidl which sell their own off-brand products that's gone hand in hand with the economic crisis. Also, it doesn't require a complete race to the bottom to ensure that bread is available at a reasonable price and the existence of premium brands doesn't cause non-premium bread to disappear.

> Do you know what happens when real countries try to impose a limit on the price of bread? Starvation. The Soviet Union tried to establish a limit on the price of bread.

Too simplistic. France had significant limits on bread prices until 1987, and starvation did not ensue.

http://www.lesnouvellesdelaboulangerie.fr/propos-des-regles-... (in French) was the best summary I could find, and it's not very detailed. But it does mention that from 1978 "prices could be freely selected by each producer" (so were not before), but with (from 1979 until 1987) various limitations such as maximum prices, agreed increases, no-price-change-allowed, etc.

True, every business on the planet wants wages as low as possible. This is, of course, correct.

On the other hand, every employee on the planet wants her wage to be as high as possible. This is also obviously true.

This creates law of supply and demand. Google can't hire a decent software engineer for, say, $30000/year, because other companies will immediately offer more, and supply of talented software engineers is quite limited, even globally. But unskilled labor can be hired for much cheaper, as supply is nearly limitless.

I don't know, they don't teach this stuff anymore in high school / colleges, or what?

How does this contradict the parent comment?

Minimum wage obviously doesn't affect Google engineers, it affects the unskilled labor with near-limitless supply that you have mentioned. The idea is to prevent that kind of labor from becoming basically slavery.

Slavery is forced labor. I don't see anything forced here. Salaries for unskilled labor are driven down by lack of demand for unskilled labor, and nothing can be done about that.

What can be done is adjusting employees' skills to the areas where demand is still high. Coding bootcamps are one obvious possibility, but there are others. Everyone can learn new things.

You, personally, can help these people, too. Hire an Uber (I am sure it helps many people survive; I had my share of tough times, and I'd sure could have use it as some source of income; unfortunately, it was before Uber was a thing where I live). Buy something on Etsy. Spend money locally. Etc, etc.

If you have to accept a pitiful wage in order to barely subsist, that is effectively forced labor. In practice, the only alternative is to starve. Which is why a labor market without basic income or some other kind of safety net is not a free market at all.

Not everyone can learn everything, but even if that were possible, if everyone in the world knew e.g. how to code decently, coding would be a minimum-wage job too. There is just not enough demand for jobs to make everyone valuable, and automation is just making this more pronounced.

This is why world population growth is dramatically slowing down (not exponential, not even linear — it is now sublinear, and expected to stop completely around 2050).

"a labor market without basic income or some other kind of safety net is not a free market at all"

No, you're just redefining "freedom". It does not mean "freedom from consequence from choices". It means "lack of compulsion to make particular choices".

>Salaries for unskilled labor are driven down by lack of demand for unskilled labor, and nothing can be done about that.

The workers can unionize and strike until their demands are met.

Unless, of course, you have something forced, like Pinkertons to beat up striking workers.

>"it affects the unskilled labor with near-limitless supply that you have mentioned."

That "near-limitless" supply is the actual problem. Horrible as it may sound, but we're already talking about people and people's labour as a resource.

Unless you allow the market to regulate the supply, you'll always have an imbalance. In fact, we make it worse by letting it get to this point. If we were to let the market work on it's own now, with no government interference, people would probably be dying in droves from starvation (assuming charity doesn't help them along).

Attempting to make everyone's life not miserable (with e.g. minimum wage laws) skews the market and allows individuals to have (or have more) children than they would if they were living in a tough market. If occurring naturally, this sort of effect would be very subtle and not be a cause for misery. But, since we've already propped up a large population that would not have occurred ordinarily, we're stuck in a situation where outcomes are unthinkable.

I'd even argue that it's a self-reinforcing cycle at this point. The over-abundant supply pushes the wages down, making the situation even worse were it not for welfare/minimum-wage hikes. I think as a society, we have a moral obligation to wean this tap off, minimizing the harmful effects as the market adjusts while at the same time removing the perverse incentives that caused us to get to this point in the first place.

This seems wrongheaded in the face of overwhelming evidence that fertility rates are strongly negatively correlated with income and quality of life.

The trouble with supply and demand is that people can't exactly stop eating for a few months if they can't find work that pays as much as they'd like, so as long as there are more people who need jobs to eat than there are jobs it can't do much to stop the downward pressure on wages - which in turn means that it's in business owners' interests to make sure this is true. (Why do you think there's really so much pressure to cut welfare in countries like the US?) If anything, decreasing prices could increase supply as people are forced to work multiple jobs in order to afford food and shelter.

You think that high minimum wage will somehow magically create more jobs? Could you please explain this entertaining possibility?

No, where do you get that idea from?

Why do you think minimum wage laws exist? It's because at one point in our nation's history, businesses implicitly colluded to set wages low. They have more power in wage negotiations than workers do, because there are generally people who can afford to do unskilled labor for very small amounts. Businesses got greedy and took that too far, offering people wages far beyond a minimum standard of living. So in response, the people voted to set a minimum that would prevent corporations from being outright exploitative.

The same thing could happen today. Google engineers will always be paid a lot of money, but the average McDonalds workers could see their income fall way below the national average cost of living. Whether the minimum should be $5/$10/$15 is up for debate, but without businesses would have an unfair amount of bargaining power.

Collusion to suppress wages is already illegal. All you're saying is that you don't have any faith in the government to prevent collusion. Which is a whole separate issue.

Or maybe the poster doesn't have any faith in businesses to do the decent thing by their workers. Which is a whole separate issue.

The other problem is that today we have labor gluts, particularly of the unskilled variety. Automation reduces the need for workers, those workers become economic outcasts with no influence to have their needs satisfied by capitalism, and the ownership class does not create demand for more unskilled labor - they want founders and professionals who can grow their wealth, that is what they demand.

If you drop the minimum wage you do not need collusion to see real wages for jobs drop insanely low, ironically because those who can live off other income will work them when there is no other easy way to earn additional income - IE, those with wealth will work for less because their life does not depend on that income providing their base needs, which already are in many places more than what the minimum wage offers already (ie, living wage).

We don't have labor gluts at all. In the US working mothers struggle to find child care for their children, houses go uncleaned, and productive people drive themselves to work.

That's a situation of labor scarcity, not a labor glut.

No, we have a labour glut (unemployed people) and a jobs glut (work not being done) at the same time. In other words, a market failure -- caused in part because for work which is valued at less than minimum wage, the market can only function by evading minimum wage laws.

Well, childcare, house-cleaning and car driving have potential costs far in excess of the cost of wages - if someone steals your stuff or damages your furnishings whilst cleaning your house, or crashes when they're driving you to work, or injures your kids, that can be hugely expensive. Also, getting someone else to drive you to work is really inefficient - it means that two people are stuck in a car being unproductive for the entire drive rather than one, plus the driver probably has to drive back afterwards.

If you offered sufficiently high wages to do those jobs, you would find plenty of people willing to do them.

A labor glut does not necessitate me being able to ask for someone to mow my lawn for one cent and having someone volunteer. You have a labor glut when the availability of living wage work declines below the working population who need to earn such a living.

That's fine - the point is that people aren't obsolete and work is available. People are just unwilling to do the work.

That's not an argument in favor of a basic income - a basic income just increases the incentives for laziness and makes the labor scarcity worse. (10% or so in the Canadian experiments.)

Basic income gives the poor bargaining power in wage negotiations. It would require cultural adaptation, but I know of few individuals whose whole needs can be satiated by just having food and shelter. People still want things. They take out insane loans, mismanage their money, and even sacrifice those base necessities to possess things. We have a strong consumer culture, and UBI can take advantage of that to reduce suffering and empower workers more to actually negotiate with employers rather than it being a one sided conversation with your only failsafe being an undesirable minimum wage.

I highly doubt making labor more scarce, when we are in such a glut (and continued automation will perpetuate and expand the glut) would actually cause any real harm to the economy. We already pad economics with millions of ghost jobs that exist solely because the marginal loss in productivity and efficiency having unnecessary workers is less than the cost of having mass destitution and social instability.

A glut is when the supply is available to anyone who wants it and additional supply goes unused.

We've already established that we have the exact opposite problem. Our national infrastructure is crumbling because no one is fixing it. Skilled women stay home with their children because child care is unavailable. Homes go uncleaned, nails go un-manicured, etc, because no one is available to do these things.

If we reduce the labor supply by 13% (what was done during the Mincome experiment) that only makes these problems worse. For comparison, the great recession cut labor supply by 5%.

https://decorrespondent.nl/541/why-we-should-give-free-money...

As you note, people want things - if we cut the labor supply we have fewer things to go around.

The supply and demand of labor does not care what people need - it does not care at all that mothers want childcare, or the citizens want better roads. All that matters is if that mother or if the citizenry are willing to pay for it.

Predominantly most of that is due to the labor glut driving down median incomes and leaving people with less economic negotiating power to get the things they want done.

It isn't appropriate to talk in absolute figures of reducing labor supply. That is one side of an equation without considering the other. UBI would generate tremendous real demand for cheap housing, cheap healthy food, and all manner of amenities that can fit in that universal budget. Those demands would be met, because everyone than has the economic negotiating power equal to their UBI as a minimum, rather than today where many people have no (unemployed) or negative (indebted) negotiating power at all and thus have no effective economic influence at all.

It is always about supply and demand, and to only talk about economics in terms of one or the other is to argue for an intended outcome rather than seeking out the best possible one.

If there were actual demand for childcare, the going rate of childcare workers would continuously rise as capital fought to be supplied by limited demand. The rising prices would create incentive for people to enter that labor force. That does not happen because real economic demand does not exist at those levels - it is not an actual labor shortage if all you want is childcare workers at minimum wage. If I want rocket scientists at minimum wage, I cannot claim there is a shortage of rocket scientists period if they are not willing to take the lowest possible payment I can give them.

There is a shortage of something when the real supply cannot meet demand at sustainable price points. Are Nannies expensive? Yes. Is that not a sustainable cost? Absolutely not, Nannies are a valuable commodity, and those that can do a good job should be paid for the scarcity of their skillset. The reason there are not more Nannies is not because of some incredibly bullshit argument about how "nobody wants to do the job, we would pay them anything, but people just refuse to act rationally economically" it is because nobody is willing to pay anyone sufficient wages to justify the career pivot into the discipline.

And that relates back to my central argument for UBI - our economy prioritizes the work "worth doing" as a central tenant of capitalism. All a UBI does is potentially drop out the labor force of the work being done now that is the least worth doing to begin with.

But TLDR, fundamentally, it is important to recognize that in capitalist economies, demand is not people wanting something (better roads), it is the money willing to be spent on the supply. So if nobody will supply the money to build better roads at rates construction workers are willing to take, you do not have a shortage of construction workers, you have a shortage of funds to pay for better roads and thus you are not generating enough demand for them.

We have a demand problem, not a supply problem, as long as major corporations are hoarding money and the stock market is at all time highs, capital is out there. There is just nothing the controllers of that capital actually want that anyone who isn't working now could supply.

Conversely, if there was an oversupply of labor prices would come down. Note that I said labor is scarce, not that there is a shortage.

The fact that prices remain high suggest people are choosing not to work, not that their labor is worthless and they can't find any job. Why do we need a BI if labor is valuable and people are merely lazy? Why do we want to make a scarce resource even scarcer?

What prices are high?

One important, central consideration must remain that labor is local. Surely some cities in the US have a labor shortage, and the worse it gets the more financial pressure it puts on the unemployed elsewhere to somehow manage the opportunity cost to immigrate. But the workforce participation rate is at a twenty year low, it is below 1960s levels before women even entered the workforce en masse, and it is continuing to decline.[1]

I'm also curious who is "lazily" not working, and somehow still eating and sleeping under a roof. And then I'd also argue that if you can find people that are refusing to work minimum wage and instead prefer to be homeless, that is probably because they have no negotiating power in wage relations because... there is a glut of labor. If there is work to do, that is valuable, prices will rise to find supply. If the prices will not rise, then you do not have actual demand, you have desire. Money is the only thing that speaks in economics.

[1]http://www.cnsnews.com/news/article/susan-jones/record-94610...

In the macrospective economy, I would like to see evidence of unsupplied demand at the minimum wage for child care or construction workers. My father works construction, and there is a tremendous glut of foreign laborers in our area (Eastern PA) that drive wages down straight to the minimum with no benefits. There is a shortage of skilled labor in the industry, but only because the hiring practices of firms has prioritized the unskilled cheap workers and thus drove talent westward. So now there is a shortage of skilled workers, but only at non-competitive pay rates that the skilled workers left because there was a labor glut, with firms simultaneously unwilling to raise rates back up to attract them back.

But the workforce participation rate is at a twenty year low...

This confirms what I said - people don't want to work. Workforce participation rate = (working + seeking work) / population.

I'm also curious who is "lazily" not working, and somehow still eating and sleeping under a roof.

People on public assistance. Millions are exploiting lax standards in disability programs: http://apps.npr.org/unfit-for-work/

The vast majority of poor people (75% or so) don't work and are not seeking work yet have consumption of approximately $20k/year/consumer unit. Where do you get the idea that people will be homeless if they don't work?

In the macrospective economy, I would like to see evidence of unsupplied demand at the minimum wage for child care or construction workers.

It's pretty easy. Offer child care for $7.25/hour and see if anyone tries to hire you.

> This confirms what I said - people don't want to work. Workforce participation rate = (working + seeking work) / population.

The majority of the decline in participation is not some magical "nobody wants to work anymore" because people are on average poorer than they were 30 years ago. If...

> People on public assistance.

This is true, then losing workforce participation of millions would cripple our economy if productivity were actually related to peak utilization of human labor. I do recognize the increase in social security disability participation, but 9 million does not make a near 20% drop in participation rates. It is certainly a contributing factor, though.

> It's pretty easy. Offer child care for $7.25/hour and see if anyone tries to hire you.

If there were unfilled positions I would find them online on job sites, but I'm not finding examples. Additionally, remember that 7.25 is not a living wage in many areas, and people have to make the moment to moment decisions whether working at or near minimum wage is worth it if you are still insolvent doing it versus seeking more lucrative income with that time.

> Where do you get the idea that people will be homeless if they don't work?

My mother was effectively days away from homelessness last year, she quit her job in 2012, did not seek additional employment for two years, by being a property owner was ineligible for most welfare, and was being forclosed on for property tax collection. We got to experience the real options she had on where to live - there was no public housing available for at least 18 months, she might have been eligible for subsidized rent but she was not going to get free money for living and the process to get social security disability is not as easy as people on HN like to make it sound.

Here is another thought - if people are dropping out of the labor force and using welfare as a substitute, UBI is in every possible way superior. Social security disability is a disincentive to work, because you lose benefits if you do. The same thing happens at every welfare cliff in the current broken system. I argue personally for UBI because of the negotiating power it gives workers, the capacity for it to normalize the cost of labor against the human cost it incurs rather than exclusively the rarity of the skills necessary to perform it, the normalization of economic stability enabling people to be more entrepreneurial, the extreme amount of social stability it would create to correct for growing wealth inequality, and the extreme simplification of an out of control welfare state bureaucracy.

But obviously valuable work is not going undone. If there were valuable work to be done that nobody were doing, I or any other active market participant would weigh whether pivoting to in demand jobs were out there was economically worth it, and capital really wanted it done, it would raise the price to find someone to do it.

If the marginal value of labor is as low as it must be to prevent the rapid expansion of wage offerings for work done, it means the work not being done as little or no marginal value according to the wills of capital, and we aren't actually losing any economic efficiency having people drop out of participation because the work they would have done, if any, would have been of negligible significance.

You can revoke laws. In fact, this whole discussion is basically about revoking minimum wage laws. How useless of an argument would it be to say "paying less than minimum wage is already illegal, so we can revoke the anti-collusion laws?"

Why isn't this same story true with, say, the price of bread or gasoline?

>Why do you think minimum wage laws exist?

Minimum wage laws make no sense economically, but they make a lot of sense politically. That's why minimum wage laws exist.

The average McDonalds worker will very soon be a robot.

Already everywhere in Europe, there are order-taking kiosks in McDonalds, each one replacing at least two workers. Fast, convenient, never demanding a raise, never joining a union. Pure win.

The good news is that society already survived this kind of economic transition, no less dramatic: moving from manual labor to automated manufacturing.

The bad news is this transition required a world war and temporary export of working class in China (the latter won't happen this time). There are almost no unemployed at wartime.

I downvoted for passive-aggressive bullshit and I don't care who knows it.

>I don't know, they don't teach this stuff anymore in high school / colleges, or what?

Sadly, they really don't. Every few generations we have a fling with collectivism and then think "Oh, so that's why we didn't do this."

>Google can't hire a decent software engineer for, say, $30000/year, because other companies will immediately offer more, and supply of talented software engineers is quite limited, even globally.

Did you somehow miss the massive wage fixing lawsuit google just recently lost? Your hypothetical wouldn't happen because google has deals with its competitors to artificially deflate wages.

I think you mightve picked the absolute worst example to defend your point

The way to stop downward wage pressure is for people to control how many offspring they have. I hear a lot of utopian talk here about leisure economies and basic incomes, but how about some utopian talk about a world where no child is ever born into a family without a plan for that child's future?

Then why do only 4% or so[1] of workers in the US make the minimum wage? Wouldn't, by your logic, far more employers pay people at minimum wage if their only goal was to pay people the lowest amount legally possible?

[1] http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...

Well, I just don't know what to say to this. Sounds like the kind of thing someone who gets paid well above the minimum wage would say.

Check out this Wikipedia article https://en.wikipedia.org/wiki/List_of_minimum_wages_by_count... and sort by Hourly Nominal in descending order. Australia, France, New Zealand, Ireland, Belgium, United Kingdom, Netherlands, Germany, and Canada all have minimum wages above the US.

All of those countries have government funded health care systems that blow the US's out of the water. All of those countries do a better job at educating their citizens.

> In reality, what tends to happen when you increase minimum wage is that businesses lay off workers. They only have so many dollars to spend on wages while remaining profitable.

The US really does seem like some strange experiment in how not to do economics and democracy.

To play Devil's advocate, most of other countries have an higher unemployment rate than the US.

That's definitely one metric of success.

Now name three others.

The US really does seem like some strange experiment in how not to do economics and democracy.

This is the exact opposite of how most people view America. If it's so bad, why do so many people want to live in the US?

If it's so bad, why do so many people want to live in the U.S.?

Annually the USCIS gets about 6 million applications (that's in total, including permanent and temporary immigration claims). That's 0.08% of all the people on Earth (not including those already in the U.S.). Is it really fair to say a lot of people want to live there?

Gallop poll says 150M people worldwide would like to move to the US.[1] The UK is 2nd with 45M.

[1]http://www.gallup.com/poll/153992/150-million-adults-worldwi...

> why do so many people want to live in the US?

The same reason why a million refugees came to Germany:

False expectations.

What people expect from the US is a country with no taxes, great economy, and the ability to become a millionaire within of months.

That’s why.

I'm sure it has nothing to do with escaping from violence or war or corruption or discrimination.

That is why the refugees flee to the western world in general.

The reason why they go to Germany over France or Austria, though, are the liberal refugee politics and the misinformation that is constantly produced by the people smugglers.

I hear what you're saying. As a means of "helping out the working class", it's stupid and simplistic: "workers aren't paid enough? Mandate they get paid more! Problem solved!"

The problem, of course, is that there are many ways to save money by screwing workers (eg worsen the working conditions) and if the market price is below the min you set, employers will just shift into those other ways.

A more robust solution -- as opposed to playing whack-a-mole over all dimensions of worker screwing -- would be to a) make their options more transparent and b) restrict supply somehow.

That's why -- counterintuitive as it may seem -- I actually think it's a step forward, what LA is considering: a system of "minimum wage OR be represented by a union" (which helps with a/b above). It gives a "release valve" for excessive minimums that allows for some market pricing while also proving a check against the things advocates really care about: worker mistreatment.

A minimum wage by itself is a clumsy fix for a more complex problem.

They only have so many dollars to spend on wages at current profitability levels.

But as a business owner, when the cost of your inputs increases, the question you're faced with is not "how can I keep my current profitability levels" (which is often not possible anyway) but "how can I maximize profit given the new environment".

For example, if you're the owner of a restaurant with one or two or even four servers, you often can't fire any without significantly affecting your level of service, which could lose you even more money than you would save in salaries.

As far as I know, the literature on the subject is pretty much inconclusive, with studies pointing to a significant negative effect, while others indicate a negligible or even slightly positive effect.

If you really haven't ever heard a good argument in favor of an enormously popular economic policy that's been endorsed by hundreds of lauded and respected (even nobel-prize-winning) economists then you haven't been looking, or you're using it as a cheap rhetorical appeal to suggest you are correct without argument. I hope it's the first scenario since then you are simply ignorant and not malicious which is no crime, in which case a simple google of "minimum wage" should suffice.

In the employment "negotiation" for low-skilled workers the businesses have all of the power and the workers have none. Businesses have run a successful propaganda campaign (and sometimes employed illegal thugs to wage a campaign of violence and intimidation) against the union movement whose goal was to give workers bargaining power through collective action and boycott so they are not completely abused and exploited. Some of their successes include, for example, the weekend, which without regulation or collective action would not exist.

The union movement has mostly died and so the government forces an absolute minimum the worker can give the business in the "negotiation" which is as much of a negotiation as an offer at gunpoint is, because the government knows without it businesses would take everything and we would quickly devolve into sweatshops/de facto slavery.

There are plenty of places in the world where there is no minimum. If you want a society that runs on sweatshops and slave labor just move. Unfortunately you can't have that in a healthy free democratic society, so most western democracies have chosen the latter.

People don't have an inherent "fair market value" -- their "fair market wage" as you say is simply a measure of how much the wealthy owning class can exploit their wealth and power in an ultracapitalist system in which all of the rules favor them.

If there are fewer people with your skills, you are harder to exploit, so your wages are higher -- until immigrants are imported to remedy the efficiency problem which is your living wage.

Are you saying that business employ an excess of labor? I do not believe this is the case. I understand that higher costs hurt business -- but higher costs come in many forms. Increases in rent, in commodities. But only when the workers ask for more is it unsustainable.

I simply reject the notion that businesses employ excess labor and we will see mass lay offs as a result of the min. wage increase. If this were the case, you could point to Seattle and demonstrate but I do not think you will be able to.

That AEI stuff is BS. Totally BS. Lying with statistics.

See this fairly devastating takedown:

http://ritholtz.com/category/wages-income/

confirmation bias

Just to be clear, the article you link to, in the very first paragraph says "It’s too soon to tell for sure" which is much less certain than when you say "has caused a massive loss of jobs"

It's not surprising that a conservative think tank released a study against the minimum wage.

There are also arguments and studies concluding that the minimum wage ultimately creates jobs.

The conservative government here in the UK has put the minimum wage on a steep upward trajectory. This is not a conservative vs left-wing (or liberal as you like to call it) thing.

The more important distinction is between those who keep holding on to paid work as the main or only moral basis for deserved income and the other camp that tries to move away from that principle.

There are conservative, left-leaning and libertarian people on either side of the debate.

That may be true in the UK, but here in the States it is overwhelmingly a left-vs-right debate.

What's interesting is that those who ascribe some sort of moral (or maybe just sentimental) value to being in work are currently a majority on the left and on the right. That goes for the US as well as for Britain.

True, which is why I find it morally bankrupt for people who subscribe to that belief to then feel no moral obligation to pay a living wage.

You must be aware that "conservative" means something somewhat different in the US compared to the rest of the world. I agree that it's rather silly and exceptionalist of us, but the fact remains that Americans who identify as conservative are very likely to want to reduce public support.

I am aware of that, but I find it interesting that being for or against basic income is not an ideological constant to the same extent as many other policies.

Would slowly increasing minimum wage act as a slow (not exact) transition to basic income?

How would it do that?

Here you go: the minimum wage exists to depress rents. Rents always rise until tenants are making whatever minimal profits will keep them in business. Enacting a minimum wage law takes money from the landlord and gives it to the workers, at the same level of minimally attractive profit margins.

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