"How much human capital is consumed by low productivity enterprises leveraging the immobility/lack of choice present in impoverished workers? If workers had mobility/safety would they move to higher productivity work?"
"Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers?"
Labor prices only exist in a free market so long as there are sufficient regulations to prevent exploitative labor arrangements and starvations. Theoretical arguments centered on bid/ask spreads don't quite apply in a world where there are life and death consequences to the market not clearing.
I'm not sure I follow. How does the government "subsidize low productivity employers"? What does "low productivity" employers/work even mean?
Factory A is a high productivity (per employee) employer and factory B is a low productivity employer.
Yes, B employs a lot of people but in a certain sense it is also wasting their productive lives.
Re: subsidies, if you pay workers very little their income may be supplemented by government assistance such as food stamps. Some employers rely on this in the sense that many of their employees would not be able to afford to live without this assistance.
Some people believe that the clearing price for labour would be higher without this assistance (because the pool of people willing and able to work without it would be smaller). This does seem a fairly logical matter of supply and demand. However since it seems inhumane to cut off that support they generally advocate raising the minimum wage to incorporate the subsidies that would be provided instead.
The government isn’t subsidizing low productivity employers, its subsidizing people whose labor isn’t valued in the market. Mostly, those subsidies go up if people aren't employed compared to where they would be if they were employed at low wages, so the employer is subsidizing the government support system, not vice versa.
The government benefits from increased employment, even if some subsidy must be provided.
Those two things can be true at the same time!
However the subsidies distort the labour market and incent low productivity labour.
One question is whether raising minimum wage beyond the subsidy level would cost more in increased unemployment than the value of the subsidies provided.
That's a deeper question about labour market structure and demand, and the answer might be different in different places and times.
We can tell the difference between high productivity / low wages and low productivity / low wages because the latter will tend to shed jobs on subsidy withdrawal while the former will tend to pay more.
Workers with high productivity but low wages (let's say, in an factory where the owners make a lot but the employees are easily replaceable) are still a good deal at a legislated higher price, the owners just get less of the surplus.
Another way to think about it is that while productivity doesn't set wages, it represents the ceiling of what you'd be able to pay. Those marginal, low productivity, "can't afford to pay you more" jobs are what you lose when you remove subsidies (or increase minimum wage).
Hence, subsidies targeted at low wage earners disproportionately incent low productivity labour.
We're not all forced to work jobs that pay less than a living wage, in dangerous or dehumanizing conditions, without benefits like retirement or health care, with the possibility of being terminated without warning by an algorithm. But cutting off unemployment benefits leaves many people with few, if any, other choices.
This is a wonderful Asimovian ideal. Alternative future: we automated many people out of jobs and they are left in the cold because we don't prioritize re-training and social services.