- Incentivises Amazon to hasten roboticisation and automation
- Increases delivery costs, which are passed on to consumers
- Consequently consumers buy less, hurting sellers
- Disincentivises driver productivity (since they get the same either way)
- Removes price signal to underperforming drivers to try another profession, thus misconfiguring the labour market (not in a massive way, but still inefficient)
What a terrible trade…
This means employees can pick and choose who they work for.
When some professions pay more than others, that's an important signal to the labour force to consider swapping. It shouldn't be assumed to be meaningless or flippantly legislated away.
But now they can get paid more without swapping. Honestly, a cynic would think you're just scrambling around for any rationale to justify your ideological hatred of workers getting decent wages.
We should seek to make sense of microeconomics no differently to how Attenborough seeks to understand the natural world. To observe, analyse, explain, and ultimately try to understand what's going on. We can't infer he has a "hatred" of dung beetles because he explains their activities!
Price floors introduce distortions which reduce efficiency. It's easy to look at one tiny labour market, like NSW Amazon delivery drivers, and think it's great drivers will make more. Now consider when they go to spend that money. They will have slightly reduced range (some sellers will no longer be profitable and will cease selling), and their pay won't go as far, since they themselves will, like everyone else, be paying more for delivery.
Now for the mind blowing part: consider what happens when everyone attempts the same trick of legislating a price floor in the market for their own labour.
Now everyone's pay goes up 20% but when they go to spend it, it only goes 60% or 50% as far as it once did when markets were efficient.
This doesn't even touch on 2 other major considerations of price floors:
1. If wages are low in one profession, you must ask "compared to what?", and if the answer is another higher-paying profession, then you should consider switching. That is allocative efficiency. It's easy to overlook the gains when thinking of a few hundred workers, but across an entire populace, the gains are enormous.
2. A price floor on labour will put some people entirely out of work, since some people's marginal value will be less than the floor. As a rule of thumb, any NSW driver who doesn't produce A$37.80 of value per hour for Amazon won't have a job after the measure is fully phased in.
In the real world, there's plenty of evidence that minimum wages have a positive influence of employment, wellbeing, and allocative efficiency.
To the extent that they eliminate jobs in truly low-productivity sectors, that's actually a good thing, as those people can be moved into higher productivity sectors - you just need a welfare state that handles the income instability and retraining costs for those involved.
I mean inequality is a poor metric anyway. Absolute communism reduces inequality to zero, but it doesn't improve overall outcomes.
That incentive already exists.
> Increases delivery costs, which are passed on to consumers
Good
> Consequently consumers buy less
Good
> Disincentivises driver productivity (since they get the same either way)
Fine
> Removes price signal to underperforming drivers to try another profession, thus misconfiguring the labour market (not in a massive way, but still inefficient)
Nonsense.
Why should we care and how tough Amazon has it, if ignoring that threshold really means "yeah, we're fine with some more poverty-while-working in the society"?
Correction: keep some people out of poverty.
Higher prices -> fewer purchases -> fewer parcels being delivered -> fewer drivers required.
Drivers who were once required but aren't any more aren't pushed away from poverty, but toward it.
And that's ignoring the fact people get support when they don't have work. (Yes, Centrelink sucks in many ways, but it exists)
Given the extremely low unemployment that you referenced in another comment, it doesn't look like we have issues with fewer drivers required tbh.
a) force companies to service a minimum liveable wage and maybe pay some higher prices (or see a corporate profit margin decrease) b) pay more taxes to cover the long term social cost of a citizenry who can't afford food/healthcare/education/etc
c) Both of the above.