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Comment by namdnay | Hacker News Reader

> Minimum wages are the very textbook definition of protecting some workers at the expense of other workers, are they not

I guess so, if you assume that the total salary envelope is fixed. In which case, minimum wages protect lower-paid workers at the expense of higher-paid workers. Which is fine in of itself.

But on top of that I think we have to assume that the salary envelope has some elasticity. Maybe minimum wage increases the total salary cost, and decreases returns on capital - so helping lower-paid workers at the expense of investors. Again, why not

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> In which case, minimum wages protect lower-paid workers at the expense of higher-paid workers. Which is fine in of itself.

Um, no, actually the complete opposite. Minimum wage protects the workers who are able to get the job at the minimum wage, at the expense of those even lower-paid -- the ones who would've been employed if the wage had been less (and now are not employed).

That's certainly not considered absolute fact. There is a lot of data showing increases in minimum wage without associated increase in unemployment.

You mean those studies about Seattle airport employment zone and such small scale examples of raising the minimum wage? I don't think it applies in general, or it would be a big mistake to think that you could replicate that widely.

But maybe I'm mistaken. Maybe we don't send work offshore to lower cost countries to take advantage of wages lower than ours.

I do not mean those, no.

But maybe I'm mistaken.

Couldn't tell you. Never heard of that study. It sounds like one study among so many that all indicate the same.

Maybe we don't send work offshore to lower cost countries to take advantage of wages lower than ours.

People DO send work offshore for that reason, and you know it. Why so childish? Why such pointless passive aggression? Why come out with that kind of nonsense bullshit? Grow up and have an adult conversation.

I am, and I guess I need to spell out the point more explicitly. The point was that raising the minimum wage demonstrably affects employment by the fact that we every day choose to send work overseas instead of using people here at home at higher wages.

So the notion that raising minimum wages doesn't affect employment just doesn't hold water unless you study it in a very isolated environment, where the effects of it get washed out by the larger absorptive capacity of the broader labor market.

Northern Europe haven't had significantly more unemployment even though the labour costs and regulations are much better than in the US. How would you explain that?

That is false. Example: unemployment rate of youth in Spain for 2019 was 32.9%, the rate for same period in US was around 9%. Similar situation in other Northern Europe countries, with high unemployment rate especially among youth, as they are the most vulnerable to minimum wage laws which limit their ability to acquire skills and experience needed to move to higher paying jobs.

No. I never said anything about Spain and southern europe.

Overall unemployment isn't worse historically. Not sure why you cherry-pick youth as if it invalidates the overall stat somehow. But even that stat isn't worse historically.

You have not actually demonstrated this though. No evidence you provide won't be just as good of evidence for alternative causes of sending work overseas, like cost of living.

The point was that raising the minimum wage demonstrably affects employment by the fact that we every day choose to send work overseas instead of using people here at home at higher wages.

You're going to have to work a lot harder to prove that those two facts are related than just saying them.

Perhaps you mean that the very lowest paid jobs are those that are outsourced? Are you talking about very low-wage factory jobs, such that people in China may be paid a few dollars an hour where the same in the US would be many dollars an hour? Or are you talking about IT outsourcing, which happens at values much higher than minimum wage?

If I have to guess your arguments and make them for you, then I don't really need you in this conversation at all, I suppose.

> Maybe we don't send work offshore to lower cost countries to take advantage of wages lower than ours.

it's not like lowering the minimum wage would change this much - if the cost of living is an order of magnitude lower in a third-world country, the labour costs are going to be an order of magnitude lower too

Sure, but it happens in increments however small you want to make it -- to some subset of jobs at every ratchet of the bar.

In my country it didn't increase unemployment.

> Maybe we don't send work offshore to lower cost countries to take advantage of wages lower than ours.

Labor costs in the US are higher than in China, so this should and has happened anyway. You think it would happen to a larger degree and it could be correct. But it is a restricted perspective aside from the fact that not every work can just be outsourced to low wage countries.

Perhaps we could address offshoring by putting tariffs on countries with minimum wages lower than those in the US.

A good portion of this is manufacturing, isn't it?

A first start would be to stop subsidizing the transportation costs through the US Navy and oil subsidies/tax breaks

That is hard to measure. However, it is fairly easy to measure another likely drawback of minimum wage: acting as an anchor (or even an opposite magnet) on salary growth.

I think these are two separate discussions. Indeed the floor effect of a minimum wage can have a negative impact on very low-value jobs, that's one of the issues to be managed.

One way is to try to orient your economy around more high-value jobs, with a generous safety net for those who can't reach it. It's a very difficult question

This would be true if there were a direct line correlation between employment levels and minimum wage. There isn't. See Dube, lester, Reich.

Instead, profits take a hammering and some businesses get replaced by others with no overall reduction in employment.

If you analyze who lobbies for minimum wage hikes (labor groups) and who protests them (business) it ought to be plain as day who really gets hurt and who benefits from the narrative of "wed only hurt workers by paying them more".

> Minimum wage protects the workers who are able to get the job at the minimum wage, at the expense of those even lower-paid -- the ones who would've been employed if the wage had been less (and now are not employed).

What's the point in working if you're going to be paid in breadcrumbs?

Do we really want to race towards another Dickensian society?

> What's the point in working if you're going to be paid in breadcrumbs?

Being able to eat. "Breadcrumbs" for you or me might not be worth it, but for someone else it could be the difference between buying food that the supermarket or stealing ketchup packets from a fast food store.

People on the federal minimum wage are already struggling very hard to make ends meet. What makes you think that they'll be able to afford food on an even lower wage?

People were able to afford food in 1950, when wages were lower and poverty was rampant.

I recommend rereading “The Grapes of Wrath”, to get a taste of what poverty in this country had actually looked like, and what it actually was like to not be able to afford food. Then compare that with what currently passes as “poverty”: you get much more than that already on SNAP benefits.

I am very sympathetic to people in poverty, having grown up in it. However, let’s not pretend that poverty in today’s America is about “affording food”: everyone, no matter how poor, is able to afford food, and poverty today is less about the hunger, and more about the lifestyle you can or are forced to carry out.

In addition of assuming that minimum wage is directly correlated with unemployment, which it isn't, there's another hidden assumption here.

The hidden assumption is that lower-paid positions are less important. They aren't. There are many minimum wage positions that are more important than higher wage positions.

They're not lower paid because they're less important, they're lower paid because they're more replaceable.

So, when you force the employer to choose between not having a janitor, or paying 3.5$ more per hour, they will certainly decide to pay 3.5$ more per hour.

Assuming that there is profit, which is a good assumption as the average surplus value rate is of around 5-7%, then what will happen is that profit will decrease, and employment will stay more or less the same.

It's very important to realize that the market values replaceability, not importance.

The employer may have another choice: contract out that janitorial position to be shared across multiple companies or some other way to extract more efficiency from it.

Maybe they end up with 60-80% of the janitorial coverage that they had before.

But the janitors will still have their pay increase. It's not as if getting a contractor to do it actually decreases the amount of janitorial jobs, it actually increases them for the same amount of work. What it supposedly does is increase administrative efficiency.

They already have that choice though. Raising the minimum wage doesn't change how clean your restaurant needs to be

But on top of that I think we have to assume that the salary envelope has some elasticity.

I suspect but cannot prove; a lot of elasticity. Those graphs showing productivity and wages decoupling; all that wealth is going somewhere. It's going to rich people. As you suggest, we could "just" (ha!) change where it goes; instead of to rich people, to workers.

You would change where some of it goes. You also force companies to either not employ some people or to employ them on a basis that loses the company money every week.

Imagine someone today capable of creating $1 of variable gross profit for their employer every 5 minutes before they were paid. Under a free labor market or a $10/hour minimum wage, that employee has stable and good employment prospects. Make the minimum wage $15/hour and change nothing else and that employee is on shakier ground. Either they must hope that their employer doesn’t know their individual productivity (likely somewhat true), that there is so much money being generated elsewhere that the company doesn’t care if they lose some here, that their job is practically required structurally (no one will close their shop from 10-12 and 2-4 just because the foot traffic drops off and those hours lose some money), or that their employer feels charitable but wants to dress that charity up in work clothes.

Total wages have some elasticity. I have to believe it’s not generally beyond what is advantageous to the employer and their customers (who are paying all the wages ultimately).

Apple is making $435,000 profit per employee. There is clearly some slack there. Under your arguments, shouldn't that profit per employee be significantly smaller?

If Apple had a clear path to make even more money by expanding and employing more people, I think they would. As it stands, they’ve got expansion opportunities fairly risk-free by having millions of devs 30% working for them, so that might be their focus.

I’m not saying companies will invest right up to break even, but that they will attempt to avoid going beyond that point.

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