A Fascinating Minimum-Wage Experiment Is About to Unfold

The problem is the definition of "basic necessities".

Imagine that functional immortality becomes a possibility. Does it fall into the "basic" tier or the "luxury" tier. Drawing those lines is precisely what we are doing everyday with politics.

After researching more into the subject I have come to the following conclusion:

Raising Minimum Wages marginally has no effect on employment rates, only when the increase in pay can be tolerated by employers by absorbing the increased cost by increasing prices, reducing higher paid employee's wages, reducing employee turnover costs, and reducing profitability.

The end result is a smattering of higher priced goods, lower paid managers, and less incentive to start a business relying on low skilled workers. Also, you can throw in some lower job turnover as well, since the cost of losing your job is greater.

Of course, the next question is, when is "marginal", no longer "marginal"? Is it $15/hr, $20, $50? At some point, alternative methods to manual labor will become cheaper (such as dropping $100k upfront for a burger making robot). Once we hit that point, things will get ugly fast.

That's one possibility, yes. But if you think that Walmart, for example, is just going to roll over and accept decreased profits without trying to finagle a way out of it, you might want to think again. See below.

> won't somebody think of the poor Waltons

Who said they would be taking the hit? In fact, they're much more likely to figure out some way to have either their customers or the other companies in their supply chain take the hit.

I wasn't saying it "needs" to be increased. I was saying that, if it doesn't increase, the value of whatever the workers are doing doesn't increase. So any increase in their wages means an increase in what they are being paid, relative to the value of what they are producing. Someone else has to make up that difference by accepting a decrease in the the value of what they are getting, relative to what they are paying for it--either they pay more for the same product, or they pay the same as before but get a product of less value.

> stop acting like wealth redistribution is "robbing"

Wealth redistribution in itself is not "robbing". I redistribute wealth every time I buy something.

What is "robbing" is wealth redistribution disguised as something else, so the people whose wealth is being taken don't know it and don't make a voluntary choice to give it up.

A million things skew the labor market away from the theoretical: people are irrational, information is wildly asymmetric, wages are sticky, there aren't an "arbitrarily large number of firms", the factors of labor (people) aren't liquid or mobile, etc.

To pick 'price floor' from the long list of things that distort the labor market while ignoring the rest is strange enough that I chalk it up to politics any time I hear it.

So, you end up with places like Australia and Switzerland where wages are high, but everyday costs are very high. I would be shocked if this didn't end up happening in the US.

Ultimately, do we want a two-class society, or do we want something more egalitarian (Brazil vs Germany)? I know which one I prefer living in!

1) The average age of a minimum age worker is 35, and 88% are not teenagers. So no, the example in your first line should not be "you're some teenager", it's "you're a parent working two jobs and still on food stamps". http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html

2) Talking about the cost of goods doubling is straight-up fear-mongering. Walmart set their minimum wage to $9, so raising it to $15 wouldn't even be doubling if minimum wage labor was literally their only cost of business. That's not even close to true, of course, but let's be generous and assume it's 1/3 of their sales minus CGS (~120B, so 40B). Their sales were ~500B last year, so with literally no other changes, they would only have to raise prices by 5% to go to $15 minimum wage.

In most cases the cost of labor is not a large percentage of the purchase price. When the cost of labor is doubled, passing this on to the consumer will not double the price. In many cases it won't even be close.

>A land value tax is said to be a progressive tax, in that the tax burden would fall on landlords and cannot be passed on as higher costs or lower wages to tenants, consumers, or laborers.

The stereotype of rich landlords hoarding money is a falsehood. Every landlord I know here either makes a very modest income or loses money because of shady tenants and the incredible amount of pro-tenant legislature they take advantage of. In Chicago, an eviction takes 6-12 months.

Are you guys going to take these laws off the books then? You can't have it both ways, really. Poor urban areas have enough abandoned buildings as-is without punishing landlords further. If you make rental properties a poor value proposition then squatting takes over. We've seen this a million times. Landlords, are unfortuantely, an easy target for politicians looking to score voting points from the non-land owning rabble.

What needs to happen is the exact opposite, via eliminating repossession of residences in bankruptcy or otherwise breaking the financial abstractions that create the never ending positive feedback in housing prices. Then we can finally have a housing correction and people will be able to buy homes instead of only renting them from banks. Labor will then have more bargaining power and wages will raise naturally.