Minimum Wage destroys jobs--again!

[shanek]

Geeez, Shane, you didn't even look at that wiki page, did you? The EXACT same statement can be made by those who disagree with you. While you may not like that fact, there it is. Again, it is intellectually dishonest to ignore those studies, trumpet those that support you and make the claim in the title of this thread.

Yeah, well, you can find lots of studies that support homeopathy, too. We're talking about something that is not contested in economic circles. We're talking about something that is taught in basic economics classes. Denying it is like a creationist denying evolution.

 

[corplinx]

The state of Florida disagrees with this thread title:
But, I guess I can understand why a company like, oh, ExxonMobil, who had nearly $40 billion in profit last year, might balk at paying its service station employees a more livable wage. If they do that - then how could they fund "experts" to minimize the warnings about global warming?

Does exxon own these stations or do small business owners who franchise? Does exxon lose money if the station has to pay the workers more or does exxon make its money from selling wholesale gas to the station and from franchise fees.

 

[Snide]

The difference is, those people chose that path, after a very long and tumultuous debate.

And people choose the MW path after very long and tumultuous debates. How high the MW should be, they disagree, but most people want it in place. So please don't tell me that it's kind of like me killing a guy to help others.

 

[strathmeyer]

And the broad question can be rephrased as this: What evidence would convince you that MW is good, or, conversly, bad?

Evidence that all my Economics teachers were lying to me when they told me it was bad. Or, conversely, either evidence that it is somehow good or a description of how minimum wage benefits anyone besides the politicians who get votes by promising people they're going to give money to the poor that magically comes from nowhere.

 

[Snide]

I am saying that MW hikes make the technology more cost-effective. You said it happens irrespective of MW; that's the part I was disagreeing with.

False. I said technology replaces jobs regardless of MW laws.

I will again take the high road and not call you a liar.

 

[E.J.Armstrong]

Better question: is it right to force the latter?

Better question: is it right to boost your profits at the expense of the poor?

 

[Skeptic]

I think someone paid a dollar a year would die of starvation rather quickly. Hence it would not be in their interest to work for such a wage (nor anybody's interest). Hence the job position would remain unfilled.

So A could either raise his wage offer, or do without. It isn't A's fault that B is poorly educated, not very smart at figuring things out, lazy, or some combo of the above. B, and everyone else, should be glad A even offers the job to begin with.

"Four dollars an hour? No? Five? No? Six? Ahh, three takers. I pick...you. Off you go!"

For the record, of course my example wasn't supposed to be realistic, but merely to illustrate a point.

The problem with your argument is that it only works this way when there is indeed significant freedom to choose on both the employer's and employee's part. All too often, instead of raising the four dollars an hour to six, the real offer is "take these $3.50 an hour or I am moving the job overseas where I can pay people $0.50 an hour."

Now, mind you, workers can flex their muscles unfairly as well (e.g., unjustified strikes). And to be honest, I am FOR sweatshops, in a way--ever since I discovered that virtually *every* country where most sweatshops existed decades ago is now prospering (Taiwan, Japan, China, Korea...) while those who, in the name of "the people" refused to be "exploited", remained behind (most of the middle east, Africa, etc.)... and that they are exploited by countries which had sweatshops 150-200 years ago.

My point is merely that your example doesn't actually work that way.

 

[Ziggurat]

Better question: is it right to boost your profits at the expense of the poor?

In many situations, yes, of course it's right. If you answer this with a categorical no, then you're basically demanding total wealth redistribution (because anything short of that is at the expense of the poor). And we've seen how well that works out.

 

[Francesca R]

Better question: is it right to boost your profits at the expense of the poor?

Yes indeed. A baker selling a poor person a loaf of bread is doing this.

 

[Snide]

In many situations, yes, of course it's right.

In what situations would that be? The only situations I can think of is when it actually is not at the expense of the poor, but rather to their benefit as well as the rich's.

 

[Snide]

Yes indeed. A baker selling a poor person a loaf of bread is doing this.

Then it's really not at the expense of the poor, is it?

 

[Skeptic]

Better question: is it right to boost your profits at the expense of the poor?

It's not a zero-sum game: that if someone is rich, someone else must be poor. (That's the mistake Marx made). The poor today in the USA are a lot less poor than most people were 100 years ago, and that is very much due to free enterprise.

Stephan Leacock lampooned the "greedy capitalists who exploit the poor" idea with his short essay, "How to Make Money on the Back of the Poor".

You see, you buy land next to a city. You buy the land in the direction the city is going to grow. Do not but it in the direction the city is not going to grow.

Then you wait for the city to grow.

After a while, your land's value goes up. Then you sell it, and--voila!--make a profit on the back of the poor.

 

[Francesca R]

Then it's really not at the expense of the poor, is it?

No, I agree.

 

[Ziggurat]

In what situations would that be? The only situations I can think of is when it actually is not at the expense of the poor, but rather to their benefit as well as the rich's.

If a business could sell a loaf of bread for $1.50 to a poor person and make a $0.50 profit, then not selling the bread to that person at $1.00 and no profit is taking a profit at the expense of that poor person. That is the way I read E.J.'s question, though he's free to correct me about what he meant. I suppose it's possible to read it instead as benefiting the poor person if he's still willing to pay the $1.50 (since he wants the bread more than the $1.50 he's paying), but if you read "at the expense of the poor" that way, then there are damned few cases where companies do increase profits at the expense of the poor, and pretty much no market mechanism for doing so.

 

[Francesca R]

if you read "at the expense of the poor" that way, then there are damned few cases where companies do increase profits at the expense of the poor, and pretty much no market mechanism for doing so.

Well legally a business can impose many externalities on the poor (and the rich) which are a true uncompensated expense and which boost the businesses profits. So this is "right" insofar as it is permitted. In many cases it is also "right" in utilitarian terms. But a lot of cases it is probably "wrong" ethically in the eyes of many people—but there is no mechanism enforced to extract compensation.

I'm sure there are some such negative externalities that are disproportionately loaded onto the poor, but I can't come up with any now.

 

[shanek]

And people choose the MW path after very long and tumultuous debates. How high the MW should be, they disagree, but most people want it in place. So please don't tell me that it's kind of like me killing a guy to help others.

Well, please don't tell me that forcing people into unemployment to suit your Socialist agenda is helping others. And there are plenty of people who disagree. 116 House members voted against the MW increase.

 

[shanek]

False. I said technology replaces jobs regardless of MW laws.

Regardless = without regard to. Exactly the same thing. And it's not true; I gave an example where the job replacement would absolutely happen with regards to the MW.

 

[shanek]

Better question: is it right to boost your profits at the expense of the poor?

Who's doing that? The market determines the equilibrium wage. If a company tries to boost profits by lowering the wage below that, then they'll find themselves without a sufficient pool of workers to choose from.

 

[CFLarsen]

Guess you've never heard of "weasel words."

You have had no problems using the term yourself:

Claus, once again, you are wrong, wrong, WRONG. Check out "Two Cheers for Sweatshops" by Nicholas D. Kristof and Sheryl WuDunn, New York Times, 9/24/2000. Here are a couple of excerpts:

Hmmm.....let's scratch the surface here, shall we?

House Passes Increase in Minimum Wage to $7.25
Thursday, January 11, 2007

The House yesterday overwhelmingly approved the first increase in the federal minimum wage in nearly a decade, boosting the wages of the lowest-paid American workers from $5.15 to $7.25 an hour over the next two years.

The 315 to 116 vote could begin the process of ending Congress's longest stretch without a minimum-wage increase since the mandatory minimum was created in 1938. In the past decade, inflation has depleted the value of the minimum wage to the lowest level in more than 50 years.

Verified by the...oops....Economic Policy Institute.

Something shanek didn't tell you. Or, didn't know, because he didn't bother to check.

 

[Chaos]

Yeah, well, you can find lots of studies that support homeopathy, too. We're talking about something that is not contested in economic circles. We're talking about something that is taught in basic economics classes. Denying it is like a creationist denying evolution.

Uh... no.

Sorry, but basic economics classes aren´t all there is.

In fact, basic economics classes teach models depicting an ideal state which does not and cannot exist - and which economist know and admit does not and cannot exist.
The models exist only as baselines, in order to explore what effect the real and in most cases unavoidable distortions have on the market.