Hacker News Reader

Comment by scarface74 | Hacker News Reader

Everything I know about economics tells me that anytime that you artificially put price floors and price ceilings on anything - including wages - there are unintended consequences. I don't think they should have raised the minimum wage at all. Let the market decide what a fair wage is.

On the other hand, I do care about other people and think that people who are willing to go to work everyday deserve some minimum amount of money. I don't know what that minimum should be.

How do we square that circle? Increase the Earned Income Tax Credit and come up with a way to allow businesses to distribute the credit back to their employees just like we have a way now for employers to take payroll taxes.

Historically, raising the EITC has been popular among Republican and Democratic presidents. Giving more to the poor - who will definitely spend it - does a lot more for the economy than giving it to people who already have enough.

View on HN

One thing I am curious about is what really would happen if we had no minimum wage. Anchoring bias is a pretty well known phenomenon. If you have a "cheap" item priced at $10, an "economic" item priced at $15 and an "expensive" item at $20 and they are functionally the same. People will choose the middle item.

I wonder if something similar is happening with wages. Because of the minimum wage, a business owner can hire someone to the minimum wage, or something slightly above, without too much thought other than knowing they can afford it generally. So the minimum may be artificially "sticking" wages lower than what they may otherwise be. Of course this is all conjecture and I have no kind of proof for this.

Also, while minimum wage laws are almost universally praised, they (along with a lot of things in the US) have a pretty sad history. https://mises.org/blog/racist-history-minimum-wage-laws

Minimum wage laws are not universally praised, those from the Austrian economic side would disagree with that statement. The minimum wage is as bad as licensing for hair wraps, it is a program to drive undesirables out of a market.

I said "almost" because I happen to be a person who pretty strongly agrees with Austrian economics. I'd think that linking a mises.org article might hint at that pretty strongly.

> One thing I am curious about is what really would happen if we had no minimum wage.

For what it's worth, Switzerland has no minimum wage.

Another author who advocates for the removal of the minimum wage is Thomas Sowell, primarily because he views it as enforcing racism (similar reasoning as the link you referenced).

But I'm not sure about this line of thinking. We already do have this in that we have a hidden economy of undocumented workers, and while the lack of a MW provides more work, it also creates different tiers of society, and there is quite a lot of lock-in that perpetuates the cycle.

I could see us abandoning the minimum wage, but only if we make sure to foster the capitalist flexibility with incentives and protections to ensure that flexibility doesn't lead to a race to the bottom.

Reply on news.ycombinator.com