Many economic experts, ignored by this article, consider no minimum wage to be the optimal level.
You're (likely deliberately) omitting a ton of context as well as presenting a bad faith argument in general. Of course there were no minimum wage increases prior to the minimum wage. I also suspect there was no highway funding increases prior to the New Deal, does that in turn mean we shouldn't fund infrastructure now?
> Many economic experts, ignored by this article, consider no minimum wage to be the optimal level.
I'm sure they do, economic experts are the only ones who still think trickle-down economics is a good idea. Our economy is exploding, and our current problems are far more social, so maybe we should be listening to the sociologists and put the economy on the back burner for right now?
Not trickle down, but Laffer (the guy the Laffer curve is named after) worked for Donald Trump in his 2016 campaign, and currently blames Barack Obama for the Great Recession.
Laffer's curve is 100% real, it's also 100% irrelevant to real world economics. It's as though after explaining about relativity and why it's impossible to accelerate an object with mass to the speed of light, a physicist turned around and told you that therefore they are confident that it's impossible to move at more than a walking pace and so Olympic sprinters don't exist. And then an entire political party pretended to believe them because it would make very wealthy people even richer. The analogy breaks down there actually I guess. Also the part where loads of people die in miserable poverty, that's not really in the physicist analogy either.
You seem to have misunderstanding about economics and sociology. It seems you think (I am guessing) economists only care about economy growth, and sociologists know how to make social improvement. This thought appears also embedded in other comments.
It is wrong in many levels: 1) economists care about social improvement in general, not just in economics indies. However, many times economics indies are the best measure of general social improvement.
2) sociology is not supposed to be a discipline about making social improvement, before it's taking over by far left scholars.
3) sociologists usually do not know how to make social improvement in general. sociologists seem to understand the problem facing specific group of people, and they seem to know specific methods to make specific improvement, but they usually do not know how to make social improvement in general, because their social change program also never include cost analysis, and also never address side effects, unintended consequences, etc. They may know how to improve the life of a few people, but all their analyses do not care what cost to the rest of the world.
4) our economy is "exploding" in America
There was no highway funding before the New Deal because there were no highways.
There were wages in 1790. They chose not to implement a minimum wage, but they could have if they wanted.
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Regarding "trickle-down economics", this isn't a real term anyone actually argues for. It's a sneer term created for the purpose of strawmanning libertarian economic positions to make them easy to attack. Not sure why this became such a meme, or how so many people seem to not realize that they're attacking an Emmanuel Goldstein. But it would be good if you stuck to criticizing positions that real people actually hold.
You're talking about roads.
These are not the same thing and I think you're playing dumb about it (or at least I hope so).
In that context, you could look at the data on inequality and still make a principled argument as to why a federal minimum wage is undesirable.
put otherwise - some people are working 2-3 jobs in order to feed, house, and clothe their children and it still is not enough. i have no ears for any principled argument in favor of the current state of things.
There's a lot to be proud of but there's also a lot to be ashamed of.
Under both the articles of confederation and the current constitution (with and without amendments), the idea of limited federal government was not personal freedom, but state's freedom (eg. powers not given to the federal government are given to the states).
Arguably, the strenthening of the federal government led to more constitutionally protected individual rights, as it led to the bill of rights being interpreted as restricting states as well.
Every State I have ever lived in had their own unique minimum wage laws. The Federal government is more like the EU, much of its policy function is to harmonize the laws of the States. Americans have almost no interaction with the Federal government; the laws they live under, the taxes they pay, and the social programs available to them are almost always specific to the State.
if you don't at least pretend to be Christian, or if you're say, gay, or like abortions, you lose access to many charitable funds, reducing your individual liberty when the rubber hits the road
Does this mean growing, shrinking, improving, or failing? I have seen people argue for each of these points right now, and I think they all believed their own arguments.
DJIA grows: yay that means things are good!
Outstanding student loans grow: The bubble is about to burst!
Medical bills and insurance premiums are hampering everyone: Shrug
I think that sometimes some people forget that actual people with families are impacted by their decisions.
Consider a case like grocery store baggers. A position which has been devastated because it's become too expensive to justify, even though it's something everyone would still like to have.
Stuff like that are great first jobs for teenagers and functions as a low-risk way for them to get introduced to the work force. Learn about money, working with customers, getting to work on time, etc. Useful skills down the line and gives them some spending money in the meantime.
It’s never been easier to discover and apply for new jobs. That is to say, the transaction costs of changing jobs has never been lower.
In a competitive market with low transaction costs of changing jobs, an employee will achieve their highest wage on the open market based on their skill set.
Based on this theory a minimum wage sets a minimum skill level or value proposition a worker must present in order to be entitled to employment. Anyone who performs below that level is denied a job by the Federal minimum value proposition law.
The higher the minimum value proposition of a worker, the higher functioning / more productive individual workers must be, and the fewer people need to be employed.
So the theory is that a minimum value regulation directly hurts the people who are capable of providing the least value. Is it the best thing for society for the least productive workers to be legally unemployable?
Of course this glosses over all the inefficiencies and particularly the power imbalances that exist most dramatically at the jobs with the least skilled workers.
Companies are profitable because they can pay their employees dramatically less than the value that they produce for the company. Usually that value is a result of the infrastructure and intellectual property of the company multiplying the productivity of the worker to create the added value. But sometimes it’s simply on the backs of the workers being underpaid for the value they are personally creating.
Personally I think the minimum wage is low enough at this point where the overhead for just having the employee dominates the total cost of payroll. If there’s a cost saving to be had, it’s in lowering that overhead, not lowering payroll. This typically is achieved through reducing employment regulations in general, of which minimum wage/value is just one of hundreds or perhaps thousands.
i'm just going to venture a guess, but i suspect you have never worked as a dishwasher. this sort of overly academic language is tone deaf to the reality of working for minimum wage.
Edit: I can write an email with proper grammar, show up on time and can pass a drug test which I know now are two of the major pain points for minimum wage employers so I guess I was privileged in that regard.
Ignoring reality makes it easy to solve all sorts of problem. It simply isn't the case that, for most people, changing jobs is a low cost transaction once you take into account the costs (all of them not just monetary) of changing jobs.
If minimum wage had simply kept pace with inflation it would be > 20 dollars per hour today.
Edit - the 20 dollar amount may not be correct. I need to verify where I got it from so please research it yourself.
I just plugged in 1970's minimum wage (1.45) into an inflation calculator (I tried the first several links in Google), and it shows 9.38 in 2018. Of course, inflation varies based on different items in a basket of goods, and there are a number of things we have now that didn't exist in 1970 (cable / satellite TV, internet, cell phones, mobile internet, Netflix). On the flip side, you no longer pay an outrageous per minute fee for long distance.
Will research.
The term “transaction costs” is a reflection of the total cost to the employee, including time spent searching, applying, interviewing, potential lost wages if the new start date doesn’t match the end date, even time value for filling out the W-9. All of it.
There’s a lot that can be done on the regulatory side to reduce these costs. The really big one is probably health insurance switching costs, particularly if deductibles are getting reset mid-year.
So my conclusion is the most effective and economically efficient way to improve the conditions for low skilled workers is to reduce overhead costs and reduce transaction costs for switching jobs as much as possible.
Dialing up the legal minimum value proposition of a worker in theory does not help, and can only possibly hurt low skilled employees, if the labor market is competitive and job switching costs are zero (that is to say, in an idealized—not real-world—model).
The sugar producers, for instance, have a price floor for the goods they supply. But they have experts who know the danger of price floors, so they made sure their deal requires that the government purchase unsold sugar.
And, of course, even that doesn't prevent sugar consumers from using alternatives, hence the number of products that replace sugar with high-fructose corn syrup.
That's in keeping with the article's myopic, misleading, pandering headline that ignores over a century of pre-1938 precedent.
https://www.fastcompany.com/3052798/can-fast-food-work-ever-...
That to me is the right way to approach this (advocate for workers' interests, but leave the government out of it), but if that was ever considered in the US, a good chunk of the HN readership would go apoplectic and beg for the state to intervene.
Citation needed. It's only optimal (and in a limited sense at that) in the presence of a host of unrealistic assumptions.
https://object.cato.org/pubs/pas/PA701.pdf
(This understanding was popular enough in 1987 that even the NYTimes endorsed it in an unsigned, editorial-board opinion piece – that meaning "this is the consensus opinion of the paper's editors": https://www.nytimes.com/1987/01/14/opinion/the-right-minimum... )
Does any of that research suggest that a zero minimum wage is optimal in some sense? No. But I will grant you that raising the minimum wage might not do what we hope it would do.
Poverty was absolutely horrible before minimum wage for most workers. I can't help but think that such policies you are proposing are historical revisionism at its worst.
Edit: numbers made up to illustrate the claim, not to provide evidence. This claim is a widely accepted principle that you can find in any introductory econ textbook.
I can see why the minimum wage is such a bad idea, you are totally correct.
You can change the numbers and the details, but the general principles of microeconomics will prefer the free market every time.
So the moral of the story is minimum wage should be raised to the point where total employment is still at an acceptable level.
[0]: https://www.tutor2u.net/economics/reference/production-possi...
give the rugged individual all the relevant information (wages/benefits, available jobs, hidden risks, corporate strategy, market dynamics, etc.), and then maybe we can talk about labor market deregulation.
No minimum wage would definitely increase GDP, I don’t think there’s a lot of debate on that, but there really isn’t solid evidence or theory to know what effect it would have on unemployment. (1)
The other goal, the one most focused on by people who support increasing the minimum wage, is ensuring that minimum wage earners are making enough that they have a decent quality of life and don’t also need government benefits.
(1): It depends on the slopes of the demand and supply curves for labor and measuring those is really hard. People who want to raise the minimum wage usually claim that the demand curve for labor is relatively flat. People who want to get rid of the minimum wage usually claim that the demand curve is steeper.
Whether a job guarantee would be good idea, I don't know. But a good policy needs to be comprehensive. It shouldn't let people slip through the cracks.