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You are attempting to understand the impact of a minimum wage from from an intellectual perspective but the map is not the territory. Just as having low taxes and few public services intellectually makes more sense but in reality reduces the quality of life in society, so it is with having a minimum wage. Compare the US and counties like Sweden for evidence.

You assume that the minimum wage is there to protect incompetent people but the reality is that when you treat someone badly like that, day in and day out, it destroys their self-esteem. You sound like you have grown up in a high self-esteem environment and probably can't relate to the poor mentality. It is a trap, it is created by the environment people grow up in and changing is difficult. For evidence, try changing your mentality and see how easy you find it. Most people tend to stay in one place in terms of their mindset for their whole lives, whether they are rich or poor.

If you honestly think that being paid a wage so low that you don't have enough money to bring yourself out of poverty is better than being unemployed, I have trouble not calling you delusional. Why should anyone have to work two or three jobs just to (barely) survive? How is this better than welfare for those who can't and a wage which results in living above the poverty line for those who can? How can you not understand that this would greatly increase crime? Think about it, imagine it - you're unemployed and have an opportunity to work 16 hours a day and you'll still starve or you could start selling drugs or robbing people or swindling money, which would give you enough to live on.

Honestly, your whole attitude reeks of ignorance. Go spend some time with people who live in chronic poverty, try to understand what they're going through and you'll be able to get around this.

You are attempting to understand the impact of a minimum wage from from an intellectual perspective but the map is not the territory. Just as having low taxes and few public services intellectually makes more sense but in reality reduces the quality of life in society, so it is with having a minimum wage. Compare the US and counties like Sweden for evidence.

Funny thing about comparing the US and Sweden, the US has a minimum wage and Sweden doesn't. What Sweden does have lots of, though is a lot of re-distributive taxation[1]. If you go and look at actual real world economists instead of the caricatures that make it into our political debates in the US you'll find that most of them are actually democrats, and many like progressive income taxes, welfare, etc. But despite the fact that most of them like government spending, pretty much none of them like the minimum wage. You could say that Sweden is exactly how your typical democrat economist would run a country if they could, with Singapore being the conservative equivalent.

[1] Ok, their taxation structure is less progressive than the US's, but they spend much more of their taxes on services instead of, say, fighter planes so in practice its more re-distributive.

I would argue that Sweden does have a minimum wage since, from wiki - "There is no minimum wage that is required by legislation. Instead, minimum wage standards in different sectors are normally set by collective bargaining." I think that having a government lobby for your interests is the same as a collective doing so.

Looking at countries with no minimum wage, or, to put it another way, no formal organisation(s) to lobby for the rights of workers, it is clear that the results are less than savory (hint: the only country this applies to is North Korea) - http://en.wikipedia.org/wiki/List_of_minimum_wages_by_countr...

I think that the core issue is that the majority of people expand as much as they can until something stops them, which is why formal agreements are necessary at this stage of humanity's development. Few people are conscious enough to act fairly in the absence of law. I think that the long term solution to creating a society where a minimum wage is not necessary is education and a culture of personal development. When people stop outsourcing their morals to authority, they will make the right decisions.

Along these lines, it doesn't fit to equate unpaid internships to serfdom. Serfdom involves effectively permanent, near total servitude to a landowner for most aspects of life. You don't travel. You don't get educated. You don't have upside. You can't escape. You're screwed. An unpaid internship is not at all like this. Unpaid internships are not "essentially a form of serfdom".

No, but that's how serfdom started - through voluntary servitude.

The point isn't to equate 21st century Europe or US with pre-19th century Russia. The point is that serfdom is a form of voluntary servitude which people entered into out of desperation. Likewise, nobody works for free (outside of charitable work) unless they are desperate (or they are rich kids, and don't need to care). Companies exploit this through unpaid internships - assuming they can get away with it.

Saying "you're free to walk away" is not a moral argument; if the only way a young person can find work is through doing voluntary servitude then they are stuck in that position until they do so.

Minimum wage laws exist for a number of reasons. If people don't get enough from employers, who pays ? The welfare system, i.e. the rest of us. So employers can exploit the system to boost their profits. Second, how does it fail to protect people ? Since when did a living wage for a day's work become a controversial issue ?

"Since when did a living wage for a day's work become a controversial issue ?"

You're joking right? Have you seen any of the immigration reform/debate over the last 5 years in the US? One of the primary arguments is over the availability of labor so cheap that not even prisoners will take the jobs.

That's my point - why is it a controversial issue ? How did we go so low ?

It's creeping in slowly here in Ireland. That's why I spoke up.

"Saying "you're free to walk away" is not a moral argument; if the only way a young person can find work is through doing voluntary servitude then they are stuck in that position until they do so."

I disagree. My unpaid jobs have always been much more accommodating when I leave - they realize they're not paying me so they don't give me a hard time at all. It's more of an attitude of, "We knew this day would come. Good luck, and if you need references or anything feel free to ask." My paid jobs have generally been a bit more stubborn, like leaving insulted them.

Also, many unpaid internships give at least enough experience to have something to talk about in a job interview. I know my unpaid work was critical in landing a paid internship in January. While some people may take advantage of students and the poor work environment, you can't make a blanket statement and say every unpaid internship is unequivocally bad.

You completely missed my point.

If unpaid internships become the norm, that is it becomes expected that a person has to perform a period of unpaid work as some kind of apprenticeship, then they will be forced to do so if they want a paid job at the end of it.

So I might walk away from an unpaid internship, but I'll still need to work unpaid in another internship until at such point employers deem that I've done my time.

Therefore the individual has no choice but to accept unpaid work - regardless of which company they happen to be working for.

It's a bad precedent that needs to be stamped out.

Your argument applies equally well to any screening procedure - e.g., college degrees.

Do you believe that requiring/favoring people with college is also a bad precedent that needs to be stamped out?

I think the value of a college degree as a screening procedure is in fact dropping. The potential value of college education is still high, but the piece of paper doesn't really give any insight into what value the student took. All it shows is that the student payed the fee (and probably is in debt) and put in his/her time.

It is. But because it's not enshrined in law it'll be enforced by the market.

What skills do you really mean to ask for? If you waste time asking for things you think imply those skills other people will be out-recruiting you.

    If people don't get enough from employers, who pays ?

I have a couple of problems with this, and will do my best to explain my reaction, but am not entirely happy with clarity.

I think you're making a static view of the world, and are not considering the dynamic of the system. Legislation like the minimum wage has an effect on the economic systems that you apply it to. It changes the numer and nature of employers, and the number and nature of employees.

It's impossible to measure the opportunity cost, but we can talk about the sort of costs we'll be taking. There are potential businesses that would exist if they could pay less than they do. This would create greater economic activity in general, and skill development. Both of these things which would feed back into stronger businesses and ultimately demand for labour, higher wages, lower tax.

The Internet should offer us awesome opportunities to reduce knowledge asymetry coming from labour being misallocated, or taken advantage of. Consider a version of linked-in that was oriented around networks that tried to offer and make contracts. You could see who worked with who, and then the contracts that were on offer. I doubt Linked-in will go in this direction - it would piss off recruiters. It'll happen though.

    Since when did a living wage for a day's work
    become a controversial issue ?

Outside of America, questioning this is one of those "things you can't say".

A politician who made these arguments in I'm putting is remarkable to survive at all, and definitely hated for life - Thatcher is the obvious example. The last change of power in Australia was caused by exactly these issues. Chile is lining up to have it out on these lines in the next year and will be interesting to watch.

The caricature of the right wing leader who's out to screw the workers to help the big end of town is like honey to the mindset of people who see themselves as victims, and who don't recognise that they are in control of their own fate.

There's always a labour movement party (run by teachers, lawyers and party workers) in there reminding people that they are victims, pushing those images, and suckling on the milk of votes that this easy play delivers.

Except in American - a country where labour flexibility and entreprenerialism are central to the culture.

Another evil I forgot to mention about minimum wage earier is the trap effect. Imagine your effective wage is worth less than minimum wage, but you've managed to land a dead-end job making minimum wage. Now you have a disincentive to refocus on something that would make you more valuable than minimum wage.

That pattern repeats at other levels of the economy. You sometimes see areas of government, banks or protected "national champion" businesses dominated by people who don't do much but also don't make trouble. They're keeping a low profile because the employer is able to pay too much because of the luxury of its legislative protections. Left unchecked, the good staff (who care about what they do) gradually leave for other gigs, and you get overrun by pretenders.

>Another evil I forgot to mention about minimum wage earier is the trap effect. Imagine your effective wage is worth less than minimum wage, but you've managed to land a dead-end job making minimum wage. Now you have a disincentive to refocus on something that would make you more valuable than minimum wage.

There are plenty of incentives to make better than minimum wage. Minimum wage doesn't exactly net you a luxurious quality of life. On one hand, it makes sense that if you allow the purchase of labour to be completely subject to the rules of supply and demand, information about what is needed where and most efficiently will spread through the network of economic activities. But labour has several disadvantages when compared to other commodities. Focusing on just one, it is expensive and time consuming for a person to upgrade the kind of labour they can provide. Education isn't cheap, and you have to support yourself while you obtain it. Being able to earn minimum wage while going through school helps to open up the opportunity to learn more valuable skills for many people. Unless your intention is to leave people from disadvantaged economic backgrounds out in the cold and allow their difficulties to propagate from generation to generation, there needs to be some mechanism to level the playing field, if only a little. My own tendencies would be towards even more socialist measures than just the minimum wage, but at least it puts a floor on how bad things can get.

    Being able to earn minimum wage while going through
    school helps to open up the opportunity to learn more
    valuable skills for many people.

Yeah, that makes sense. Minimum wage gives those who have it a better opportunity to improve their situation than if they didn't have it, opposite to what I said in previous.

If people don't get enough from employers, who pays ? The welfare system, i.e. the rest of us.

If a potential employer chooses not to employ someone, who pays? The welfare system.

For either low pay or no pay, low value workers will require welfare. I don't see how this is a valid argument for a minimum wage.

Well, the employer gets cheap (or even free) labour - and therefore higher profits - paid for by the taxpayer. In essence, the employer is exploiting the system as much as any "welfare queen".

Sure, workers on minimum wage may receive benefits - but they would require less benefits than if there was no minimum wage.

"In 2004, a year in which Wal-Mart reported $9.1 billion in profits, the retailer's California employees collected $86 million in public assistance, according to researchers at the University of California-Berkeley. [...]In 2004, Democratic staffers of the House education and workforce committee calculated that each 200-employee Wal-Mart store costs taxpayers an average of more than $400,000 a year, based on entitlements ranging from energy-assistance grants to Medicaid to food stamps to WIC—the federal program that provides food to low-income women with children."

http://motherjones.com/politics/2009/01/america-195-week

And this is with a minimum wage.

Bull. The store didn't create the problem. The numbers may be correct; the conclusion is yellow journalism.

The store may even help alleviate the problem, by providing Some income for these people.

Its not very clever to ask WalMart to just pay these people more; how about UCBerkely show some sincerity and pay them themselves?

The numbers are the only thing that's quoted. The conclusion is that if they paid lower wages, the amount of government support to employed people would rise unless those policies were changed also. Government support paid by taxes, including the taxes of those who work at UCBerkeley.

The statement was squarely that it cost the public money to have WalMart in our town - they expressed it as the cost per WalMart.

For example, they could have expressed how much is Saved the public per WalMart. They didn't express it that way. Because it made a more sensationalist article the other way.

People made unemployed by the minimum wage require more benefits than they would if they could be gainfully employed at (e.g.) 50% of minimum wage.

There is no empirical evidence that introducing a minimum wage causes job losses on a scale where the increase of unemployment benefits would outweigh the benefits of its introduction.

The whole idea that the minimum wage causes unemployment is a myth that is based on incorrect labour market models.

There is little good empirical evidence about the minimum wage, period. I'd have a hard time showing any harm, and you'll have a hard time showing any benefit.

That's because the minimum wage is usually set at such a low level that it applies to very few workers (<1.5M in the US, as of 2007), so very few natural experiments are available.

http://www.bls.gov/cps/minwage2007.htm

I'll give you one natural experiment, however. A min wage hike in American Samoa caused unemployment to increase by at least 6% (= 2041 workers fired by Chicken of the Sea / (65k American Samoans x 52% labor force participation rate)).

http://washingtonexaminer.com/node/127791

In fact, allowing employers to pay less than minimum wage alleviates burden on the welfare system--not only do they have to pay less to support the impoverished wage-earner, but they are actually working in the economy and generating wealth, increasing the tax base that the welfare system draws on.

Since when did a living wage for a day's work become a controversial issue?

It's a question of producing wealth. The value of a day's work depends upon the worker, but you can't seriously expect a business to pay someone more than the amount of wealth they create for them. If it's a fundamental human right to have a certain level of income, pass a law providing for a guaranteed minimum income and let businesses pay the market rate. It makes no sense to expect businesses to operate as charities.

when someone describes a politician they don't like as a "fascist" it's disrespectful to the memory of people who are squashed under tanks and who are taken in the night by state agents, raped and murdered.

I know this is veering off-topic, but I think it's worth pointing out that not every instance of the word "fascist" is disrespectful and to deny people the right to use it is just as destructive as when it is misused by people who don't properly understand what it means.

In many cases it is still appropriate and it should be used to call a spade a spade. For example, many European countries have political parties that are directly descended from the fascist political parties of the 20th century (e.g. [1]). They retain their objetives, ideals and often even their signature salute. There are several politicians in government right now that I personally dislike and that I describe as fascist because that's exactly what they are. Fascist politics existed for decades before WWII and they continue to exist decades after.

[1] http://en.wikipedia.org/wiki/People%27s_Party_%28Spain%29

Reductio ad Hitlerum: http://en.wikipedia.org/wiki/Godwin%27s_law

Well, in this case, I eschewed Germanic examples! But you can consider it a reductio ad Francum if you like (and if my Latin grammar isn't too terrible).

More examples: http://en.wikipedia.org/wiki/British_National_Party

My rule of thumb on whether it's appropriate to call someone fascist: would they label themselves as such? "Fascism" is a notoriously hard to define term -- there was never a "fascist manifesto" the way there was for communism.

Life is too short to argue with someone about what their political beliefs should be called. The British National Party is a bunch of wrong-headed jerks regardless of whether they're "fascist" or not, and every moment you spend arguing with them over whether they're really "fascist" is a moment you really should be arguing with 'em about why their policies are stupid.

It traps people with low skills out of work

What exactly are these skills they lack that are needed in order to get work? Putting together a sandwich? Stacking boxes of food on a shelf? Putting dishes on a table and collecting them after they've been used?

There appears to be quite a lot of people that lack the basic skill needed to work: follow simple instructions.

For example, in the streets in the UK we have signs saying things to the effect "don't litter", "don't let your dog crap here", etc., and there appear to be lots of folk that can't even get that right.

Anecdote: my elderly aunties friend is about 50 and mentally disabled; her speech is very difficult to understand and she has problems with anything beyond simple concepts. Her memory doesn't appear to work well. Until recently (her mother died and she's no longer capable of doing the work) she worked in a department store cafe clearing tables and doing some cleaning - she did the work set as long as it was clearly communicated and she did it with a smile. I'd guess that any member of the population that can stand and dress themselves could have done that job.

It's not much of a life clearing tables.

Things like showing up on time every day, not goofing off, and not being a dick to the customers are what distinguish valuable employees at that level.

"for which I was paid one gravis ultrasound ACE. I think I ended up better on the deal than the owner, but it was a close-run thing. ... Another time I was contracted to do a job for an oil company. It took me a month to do something that would now take me a day, and the end result was so bad that they got no return on investment of the the AUD 300 they paid me for the job."

You're undervaluing yourself.

Even if you did absolutely zero work that doesn't mean the company that "hired" you got zero value out of you.

They probably got some social benefits from having you around, making the place you worked at less lonely, and perhaps making some people at the company feel better about themselves for hiring an intern or gave them an opportunity to teach (which can help the teacher as well as the student). You probably also gave the other employees ideas and feedback, and may have tested some of the work they did (essentially acting as part of QA).

All of that is worth more than a cheap sound card or 300 AUD.

Along these lines, it doesn't fit to equate unpaid internships to serfdom. Serfdom involves effectively permanent, near total servitude to a landowner for most aspects of life.

Uh, wage slavery? How much of a person's salary is spent just on the basics such as food and clothing and gas and education?

The minimum wage is a horrible stain on a free society. It traps people with low skills out of work and cements them into an underclass that's much more difficult to break out of. It prevents business that are operating on the edge from continuing to operate. It's a classic example of do-gooders riding in and creating damage.

This is how the system is structured; there is a permanent underclass that will accept any wages. Even more educated people will lower their wage expectations when the economy appears bad. This means that companies can get cheaper labour at any time to pick up slack or as replacements if their current workers get too uppity and demand a living wage.

it locks out people who are in a worse situation - unempployed.

Unemployed is only bad if it means starvation or homelessness. In a socialist, communist, or anarchist society unemployment would be okay. Unemployed workers wouldn't starve, they would still be allowed to live, and they could take part-time jobs/unpaid internships and learn new skills without worrying about making ends meet.

There are much better avenues that would be cheaper and have more positive effect on people: basic risk, valuation and business skills being taught in early high-school, television campaigns that encourage people to think about how their labour is used, what they could do to make themselves marketable. Mechanisms to get people speaking English more effectively. Lower taxation. Effective technical colleges.

So your solution is to train people to become effective human resources for businesses to consume? That doesn't help. We already do that.

You're saying that workers need to learn how to be better workers so that they can prosper. You're saying that they should make themselves as appealing to businesses as possible and somehow, you're assuming that this will give them higher wages. The only reason people get higher wages is because they demand them either through a union or through an informal agreement with other workers that they won't work for less. This is true in the IT industry and is one of the reasons why IT workers don't see a need for a union. We all have agreed never to work for a shitty wage. We know that we can just take our skills elsewhere or start our own company or whatever because we stand up for ourselves.

When I chose a job that pays $x+y instead of $x, it's not because of an "informal agreement" with my fellow workers, it's because I'm a selfish guy and would rather have $x+y than $x. If all I could get was a shitty wage, I'd certainly take it over nothing (or start my own business, or learn more skills.)

There's no such informal agreement at all, only individuals who know that they can earn better elsewhere. In other words, a market. The key to this is that IT workers actually generate enough wealth for their employers that it's worthwhile to pay us well. It's completely different from a union (which is basically a cartel).

Unemployed is only bad if it means starvation or homelessness.

Psychological studies indicate that unemployment is bad even if you can still live comfortably. (A reliable stream of anecdotes for extreme variants of this observation comes from lottery winners.)

The thing is, HN is a very startup- and hacker-centric community. One of the properties of a hacker is that they always find something to occupy themselves with, even when they don't have a formal day job.

Most people are not like this. Once they're out of a job, they don't really know what to do with themselves. This causes them a lot of stress and unhappiness.

Over time, they will convince themselves that they are actually happy in their welfare-dependent unemployed state. We humans can so easily fool ourselves.

The truth is that for most people (but probably not for many of the HN-type) unemployment causes a lot of psychological suffering.

>If your labour has value then you can find work that pays you a rate for it (except for minimum wage - more about this shortly). You have the opportunity to expose yourself to experience by doing internships. If you don't have anything better to be doing, then it's a win-win situation for you and the person you're doing internship.

That only works in an absolutely frictionless labor market. Meanwhile, in the real world, there are many sources of friction - location being the most prominent. If you have valuable skills, in say, graphic design and the one print shop in your town shuts down, then it doesn't matter how good you are as a designer - you're not going to get a job. Through the '90s, it didn't matter how good a machinist you were - if you lived in the Detroit area, your employment prospects were poor, just because of the glut caused by hemorrhaging auto industry.

>There is an argument in favour of minimum wage, and it's this: some people are too incompetent to be capable of standing up for themselves, and these people would be easy to take advantage of for malicious bosses, of which there are no shortage. The minimum wage is a blunt force mechanism that aims (and fails) to protect this set of people. The reason it fails is that in protecting low-wage employed people, it locks out people who are in a worse situation - unemployed.

Nice job with that straw-man. Unfortunately, the argument you cite bears no resemblance to the actual reason we have a minimum wage. The reason we have a minimum wage is that historically, its the lack of a minimum wage that has created an underclass of people in poverty that don't have the resources to increase their station in life. All throughout the 1800s and early 1900s the US tried to be your minimum-wage free utopia. The results were horrific. We had a permanent underclass of (usually immigrant) tenants living in squalid conditions. If you want to regress to 1890s-era working conditions, then yes, by all means repeal the minimum wage.

Lacking a minimum wage also hurts the economy. Without a minimum wage, the number of consumers for any good beyond basic food, clothing and shelter products would be drastically cut. History has shown that without outside incentives, employers will pay only the minimum needed to keep their workers alive (and sometimes not even that). A minimum wage ensures that there is a bottom in the race to the bottom for wages.

>The minimum wage system is a mechanism designed by the elite to allow that elite to paper over things and sleep at night pretending they're doing the right thing. It hurts the people it claims to protect.

If that's the case, then why do the elites always protest vociferously every time the minimum wage is raised? There are massive lobbying efforts by big business every time the minimum wage issue comes up for debate, despite the fact that there is no economic evidence whatsoever that the presence of a $7.25 minimum wage has had a measurable impact on employment.

Without a minimum wage, the number of consumers for any good beyond basic food, clothing and shelter products would be drastically cut.

Unlikely. Very few employees in the US make exactly the minimum wage, which is why it's true that minor increases have close to no effect.

There are massive lobbying efforts by big business every time the minimum wage issue comes up for debate

True, for example WalMart lobbies in favor of minimum wage increases. Out of concern for low-income workers, or to raise business costs for their competitors? Hmm...

Unlikely. Very few employees in the US make exactly the minimum wage, which is why it's true that minor increases have close to no effect.

Keep in mind how many products are imported from third world countries that have poor labor standards & low wages. The current US lifestyle is heavily subsidized by this cheap labor. Additionally here in the US there is often abuse with illegal immigrants who make well below minimum wage & work in poor working conditions.

Intriguingly enough, without outsourced jobs from first-world countries, economic development in the third world would be even slower and labor standards poorer due to the lack of employer competition.

Are you implying a chicken and egg scenario whereby a third-world needs a first-world before it can become a first world? Going by that logic there should have never been a first world country in the first place. Who was the United States' United States?

Much of the third world is the way it is due to a history of instability, violence & repression, not necessarily a lack of well to do business men looking for an opportunity to avoid having to deal with pesky ideals such as labor regulation.

While it's great that Chinese have the option now of working 12+ hour plus days 6 days a week instead of going off & dying in a rice patty field, somehow I doubt philanthropic philosophy is the reason business goes to China.

"Who was the United States' United States?"

Great Britain.

This however is not applicable to every developing country, here in South America the majority of foreign companies are here because of the local market potential and not generally to produce here and send to another place in the globe, this happens mainly because of the existence of China and India that are more cost effective for this type of market than industries in South America.

4.9% of US pop. working at or below minimum wage is hardly insignificant.

http://www.bls.gov/cps/minwage2009.htm

They are all teenagers or part-timers.

You are misreading. It's 0.8% of the US population and 4.9% of hourly (i.e., nonsalaried) workers.

Ah, yes, thanks. Still, I doubt 3.6 mil workers is an economically ineffectual number.

I can't speak for the whole economy, but when I was making $4.75 and the minimum wage increased from $4.25 -> $4.75, it had an effect on my morale (when i saw no increase).

    Through the '90s, it didn't matter how good a
    machinist you were - if you lived in the Detroit
    area, your employment prospects were poor, just
    because of the glut caused by hemorrhaging auto
    industry.

In that setting you have to do one or more of retrain, move somewhere else, start your own business. Except the presence of a minimum wage makes two of those three more difficult than it would otherwise be.

    there is no economic evidence whatsoever that the
    presence of a $7.25 minimum wage has had a measurable
    impact on employment.

That's hardly surprising, as you can't reliably measure any economic effect in a complex economic system because there's no mechanism for getting a control.

But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.

What you had to say about history of minimum wage in America is interesting, I'll read up on that.

>In that setting you have to do one or more of retrain, move somewhere else, start your own business. Except the presence of a minimum wage makes two of those three more difficult than it would otherwise be.

Without savings, how do you pay for retraining? Without savings, how do you pay for relocation? Without savings, how do you start a new venture of your own? Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings? Without a minimum wage, wages for the lowest skill jobs get driven down to starvation wages. At those rates, its very difficult for people to accumulate enough capital to make the necessary improvements to their situation.

>But your logic is attractice. We'll just move the minimum wage up to a thousand dollars an hour. We can all be rich together.

Right, and while we're at it, we can move the top tax rate right down to 5%. The extra money freed up will generate so much economic activity that government will end up making money in the long run.

Without savings, how do you pay for retraining?

One common method is to work for free for a short time, until you gain the skills necessary to perform a new job.

Without a minimum wage, how does a person on the very bottom of the social scale accumulate savings?

By reducing consumption.

Where I live, the GDP per capita is about 40x lower than the US. The top 5% tends to have a standard of living comparable to the bottom 5% of the US. The savings rate is 20%, compared to +/- 2-3% in the US.

One common method is to work for free for a short time, until you gain the skills necessary to perform a new job.

Luckily food, shelter & transport is free too.

Where I live, the GDP per capita is about 40x lower than the US.

Where exactly do you live & what is the quality of life for those at the bottom?

I live in India. The quality of life at the bottom here in India is terrible, but that's irrelevant. I'm comparing the US poor to India's top 10% (lets not even discuss India's middle class).

The average poor household in the US has 2 rooms per person, a car or two, air conditioning, and all sorts of consumer goods.

http://www.census.gov/prod/2008pubs/h150-07.pdf

I recently visited a family in Bandra (one of the poshest suburbs of Mumbai). They had 0.75 rooms/person, no AC, an inconsistent and undrinkable water supply, no car and a single bathroom about half the size of any in the US (i.e., no separated shower stall). My understanding is that this is fairly typical for their strata.

They are in the top 5% (roughly) of India. If Indians can save 20% of their income, so can Americans.

Your description of "poor" sounds more like "Working Class" or "Lower Middle Class" in the USA. Often these lifestyles are supplied due to easy credit.

Sheltered poverty in the USA means studio apartment, no a/c, no car, no laundry facilities on site, dangerous neighborhood, little to no public transport.

You also have dirt poor poverty which people commonly refer to as "trailer trash", where you have communities of poor people living in trailers wasting away their lives with poor choices & poverty.

Then you have the destitute poor which are those that live on city streets, eat a charity kitchens & often have drug or mental health problems.

I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance. Often the US poor don't have money to save because they bought an A/C, fixed their car, had to see a doctor or payback a loan they took out the week before to make ends meet. That or they live with subsidized housing & utilities and are given a tiny amount of welfare/food stamps which is lucky to last to the end of the month.

My definition of poor is the US government standard definition. My description is merely a factual description of people meeting the government's definition, according to the census. 75% of the poor do have a car (25% have two or more), 66% have 2 rooms per person, and just over half have AC.

Go read the census article I linked to.

If you wish to claim the government's definition of "poor" is overly broad and includes huge numbers of people who are actually middle class, I agree with you. But that simply means there are far fewer poor people in the US than we currently believe.

I will say that the poor in the USA do have it better than the poor in India, but that's mainly due access to government assistance.

No, it's due to wealth, plain and simple. Take away government assistance and virtually all Americans still have more than $1200/year to live on.

a tiny amount of welfare/food stamps which is lucky to last to the end of the month.

If that were true, poor Americans would not be fat.

75% of the poor do have a car (25% have two or more), 66% have 2 rooms per person, and just over half have AC.

Firstly AHS has a disclaimer that it overestimates poverty levels. This can inflate who falls into the "below poverty levels". Also the AHS is counting totals, yes someone may have A/C but that doesn't mean they have a car or 2 rooms per person. Someone could have two rooms & a car that breaks down often, but no A/C. Someone could have all 3 and someone else could have 0. Also the AHS mentions that 11% of those below poverty don't have safe drinking water & 20% live in a neighborhood with serious crime.

Also rooms per person & A/C & a car may not illustrate quality of life. You could look at Brazil having a rooms per person ratio which is much better than India, but your life would still suck if you lived in the slums.

Let's just say that being poor in the US poor isn't a picnic. But I don't think that India is a picnic either. The poor in each country faces a different set of problems. Just because the US poor have more money than the poor in India doesn't mean they don't still face serious problems. Like the saying goes "More money, more problems".

No, it's due to wealth, plain and simple.

Is the US just magically wealthy? Where is wealth derived from? How does a country like India become wealthy?

Take away government assistance and virtually all Americans still have more than $1200/year to live on.

...and cost of living in the USA is exactly the same as in India?

I agree that the government overestimates poverty levels. It's a much smaller problem in the US than most people believe.

Rooms per person, A/C and car may not illustrate quality of life, but they are consumption. If the Indian upper middle class can reduce consumption and live without such luxuries in order to save 20% of income, so can the US poor.

Air conditioning & a used car are actually rather low in cost compared to housing, shelter & food in the USA. Also alternatives are not always cheaper. A bus pass can be $90/mn compared to $50/mn for insurance & $50/mn for gas with a car. Air conditioning is often built-in or is a $100 initial outlay.

Also again comparing the US to India is not an exact science.

http://www.mckinsey.com/mgi/mginews/bigspenders.asp The next two groups—seekers, earning between 200,000 and 500,000 rupees ($4,376- $10,941), and strivers, with incomes of between 500,000 and 1 million rupees ($10,941-$21,882)—will become India's huge new middle class. While their incomes would place them below the poverty line in the United States, things are much cheaper in India. When the local -cost of living- is taken into account, the income of the seekers and strivers looks more like -$23,000 to $118,000-, which is middle class by most developed-country standards.

Perhaps not having clean drinking water makes other aspects of life cheaper in India. Does clean drinking water matter? Yes. But maybe not having clean drinking water is the trade off you make for being able to save 20% of your income?

Also there are very few places here in the US that are going to let you work for free to learn about the system works & then either hire you on or give you skills that are transferable elsewhere. Employers do not like desperation & want people who have qualification that match what they're looking for. They'd rather pay someone who knows what they're doing than waste their time on someone who's desperate for a job & is actually going to cost them money while that person subtracts from others while learning things.

> By reducing consumption.

If you're making minimum wage, there's not much consumption to be lowered. Rent, transport, and food will eat it all up (and then some).

> If you're making minimum wage, there's not much consumption to be lowered. Rent, transport, and food will eat it all up (and then some).

Rent, transportation, and food are consumption. If they're eating up everything and then some, find a way to lower them. Move in with your parents if you have to, or share a place with friends. Learn to love rice, beans, and potatoes. Walk or take the bus. There are lots of options.

(This isn't abstract theory; I'm presently living on not much more than minimum wage, and I have a wife and kid.)

If you're making minimum wage, chances are you're already riding the bus, eating rice, beans, and potatoes. Chances are also pretty good that your parents and friends are in a similar financial situation.

How many minimum wage earners have a MS degree like you?

> If you're making minimum wage, chances are you're already riding the bus, eating rice, beans, and potatoes.

This is true of very few of the minimum wage and less earners I've been friends with over the years. (I apologize, I don't have broader statistics than "people I know".)

It's amazing how little money you can get by on if you're willing to really cut back. I don't think it takes an MS degree to figure out how.

That only works in an absolutely frictionless labor market. Meanwhile, in the real world, there are many sources of friction.

Yes there is friction, but how does that effect whether internships are a good idea? By far the biggest source of friction in technology hiring is the lemon problem[1], and internships actually help get around that by providing references. You could credibly argue that unpaid internships are a good idea only in highly frictional labor markets.

As to location, well, if there aren't any jobs in your industry locally there won't be any internships either, so that's a distinction without a difference in this discussion.

[1]http://www.joelonsoftware.com/items/2005/01/27.html

The minimum wage is a price floor, and like any price control, there's exactly two ways it can effect the economy: it can result in a shortage of labor or it can have absolutely no effect. At $7.25 it's closer to the "absolutely no effect" side of the spectrum--I've seen high turnover, low wage jobs priced above that due to market forces alone. There might be paid apprenticeships that are priced out of the market by the minimum wage, but that's speculative.

The entire rest of your post is frankly nonsense--it's clear you've never actually learned anything about economics, because most economists concede that the minimum wage doesn't really do much to help anyone, and if anything, only increases unemployment.

History doesn't back you up on this--the 19th century was a materially poorer time in the sense that less wealth was being created to begin with. While large numbers of immigrants lived in poverty, they voluntarily chose to live in those conditions because it was the best opportunity they had. If there was a minimum wage above and beyond the value their labor could legitimately produce, they wouldn't have had that opportunity and they would have been materially even worse off. More to the point, there is still a permanent underclass of immigrants living in poverty and earning less than the minimum wage in this country. When the relevant wage and immigration laws are enforced on that population, the net effect is that they're forced to live in the impoverished countries they voluntarily chose to escape from.

As for the rest of us, our recourse is to legitimately generate more wealth than the cost of our wages and benefits so that we remain profitably employed. The majority of the American population is doing this just fine without the government coming in and setting our wages for us.

Maybe a minimum wage policy has a wider remit than "the economy." Why bother with any regulations, or indeed employee rights at all? As for your arguments about immigrants - people may migrate to live "the American dream", but how many people's situations are actually improved?

Maybe a minimum wage policy has a wider remit than "the economy."

That doesn't make much sense to me. The consequences of a minimum wage law are purely economic, on the people as a whole and on the employers and employees affected by that law, as well as on the people who aren't employed due to that law.

Why bother with any regulations, or indeed employee rights at all?

Some regulations are helpful; some aren't. I'm just talking about the minimum wage.

As for your arguments about immigrants - people may migrate to live "the American dream", but how many people's situations are actually improved?

That question is for them to answer. If they don't find their conditions improved, they're free to return home. (Obviously, I'm setting aside cases of human trafficking and so forth--that's an entirely separate issue, and I think we both agree that human trafficking is wrong.)

It's fine to have no minimum wage, but then you need strong unions to ensure people get paid what they're actually worth. If you leave it up to the employees they will be at too much of a disadvantage.

Companies do everything they can to prevent market signals on what wages are worth so they can rip people off. Couple that with the fact that many people who are technically very good are not good at negotiation. A strong union (i.e. not what the US has) can help with these problems.

"There's a temptation in politics to see patterns and then fit language to it that kind of fits"

...

"The minimum wage is a horrible stain on a free society."

Maybe not taking your own advice here?