Minimum Wage destroys jobs--again!

[Merko]

Let me inject some more of what Adam Smith had to say on the subject.

"What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little, as possible. The former are disposed to combine in order to raise, the latter in order to lower, the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it. In all such disputes, the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks, which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year, without employment. In the long run, the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and, one may say, the natural state of things, which nobody ever hears of."

How very little has changed during the centuries.

 

[Snide]

I'm not in manufacturing, nor am I a Chinese Socialist. Does everyone who proposes any standardized program or balance in the approach get tagged a socialist?

Heck, I was just making arguments on sub-issues of the general MW debate, and was told, with nothing to back it up, that I had a "Socialist agenda."

 

[Darat]

Let me inject some more of what Adam Smith had to say on the subject....snip...

How very little has changed during the centuries.

Yeah but everyone knows Adam Smith was a socialist.......

 

[cafink]

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.

If this is indeed the case, then there should be no need for a minimum wage law. Anyone for whom unemployment is better than "exploitation" can simply choose that better option--no employer can force someone to take a job he doesn't want. If, however, someone chooses low-paying "exploitative" work over unemployment, that person obviously does not agree that unemployment is the better option (for himself, at least). It is not the business of the government to tell him otherwise.

 

[quixotecoyote]

If this is indeed the case, then there should be no need for a minimum wage law. Anyone for whom unemployment is better than "exploitation" can simply choose that better option--no employer can force someone to take a job he doesn't want. If, however, someone chooses low-paying "exploitative" work over unemployment, that person obviously does not agree that unemployment is the better option (for himself, at least). It is not the business of the government to tell him otherwise.

Problem is, that with any labor pool of sufficent size, wages are competitive in a downwards direction. If I'm paying $3/hr and you're paying $2/hr and there's enough laborers to go around (which is the case in most of the scenario's we're discussing), then you have no incentive to raise wages while I have every incentive to lower them. The MW is necessary to ensure that something resembling a living wage (MW =/= LW) is available.

This is in addition to the point that if we are operating in an 'all things being equal' mindset, it's better to be laid off than quite because you're eligible for benfits you would otherwise not get. So while it might be better to be unemployed them exploited, it's not always better to quit than be exploited if there aren't other employers willing to pay fair value for your labor.

 

[burnvictim77]

Problem is, that with any labor pool of sufficent size, wages are competitive in a downwards direction. If I'm paying $3/hr and you're paying $2/hr and there's enough laborers to go around (which is the case in most of the scenario's we're discussing), then you have no incentive to raise wages while I have every incentive to lower them.

This is only true if you don't care about the quality of the labor you get, which is rarely the case. If you can pay slightly more get better labor, you will. Won't you?

 

[Thanz]

"The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it."

How very little has changed during the centuries.

And yet, how much. Now there is specific anti-trust legislation against employers and enabling legislation for Unions that make it much much easier to form a union.

 

[Ziggurat]

This is only true if you don't care about the quality of the labor you get, which is rarely the case. If you can pay slightly more get better labor, you will. Won't you?

That depends. In cases where the value of the labor is highly sensitive to its quality, then it's frequently worth paying more for better labor. In case where the value of the labor is barely sensitive to its quality, then it's often better to go quite cheap with that labor. The value of brain surgery is VERY dependent upon the quality of the labor. Stacking toilet paper rolls? Not so much.

 

[burnvictim77]

That depends. In cases where the value of the labor is highly sensitive to its quality, then it's frequently worth paying more for better labor. In case where the value of the labor is barely sensitive to its quality, then it's often better to go quite cheap with that labor. The value of brain surgery is VERY dependent upon the quality of the labor. Stacking toilet paper rolls? Not so much.

But you pay $2 an hour and you get the sort who stack toilet paper rolls something like 1/4 as quickly as if you'd pay $3. This is a made-up example, but this type of thing can be seen in practice all over the place, especially in retail. Now, some employers won't care, but some will, making a competitive market with room for people with zero job skills at the lower end.

 

[Snide]

But you pay $2 an hour and you get the sort who stack toilet paper rolls something like 1/4 as quickly as if you'd pay $3. This is a made-up example, but this type of thing can be seen in practice all over the place, especially in retail. Now, some employers won't care, but some will, making a competitive market with room for people with zero job skills at the lower end.

THe problem is that, even though you admitted the example was made up, it is far from reality. The difference between quality of labor for that type of labor tends to not be so much.

 

[burnvictim77]

THe problem is that, even though you admitted the example was made up, it is far from reality. The difference between quality of labor for that type of labor tends to not be so much.

Okay, I'll tell that to Safeway, who pays more to their labor to start than Wal*mart in order to give a 'better shopping experience' to their customers. Their plan clearly doesn't work. And yet and they still have loyal customers, who, when polled, say they are willing to pay extra to get better service, better selection, and a cleaner store.

Of course, when you pay more you can be more choosey. And no one doubts this to be true. And buying labor is no different.

 

[Ace_of_Sevens]

THis does work to a degree. At my old job, I was paid $20 an hour on overtime. A new person would have started at $10. However, since I coudl work roughly three times the speed of the average fairly new person and coudl have my schedule cut back more easily, it was more in the company's interest to let their better established workers do overtime than to hire more people.

 

[Snide]

Okay, I'll tell that to Safeway, who pays more to their labor to start than Wal*mart in order to give a 'better shopping experience' to their customers. Their plan clearly doesn't work. And yet and they still have loyal customers, who, when polled, say they are willing to pay extra to get better service, better selection, and a cleaner store.

Of course, when you pay more you can be more choosey. And no one doubts this to be true. And buying labor is no different.

Agreed. But how does this anecdote negate a tendency?

 

[shanek]

Problem is, that with any labor pool of sufficent size, wages are competitive in a downwards direction. If I'm paying $3/hr and you're paying $2/hr and there's enough laborers to go around (which is the case in most of the scenario's we're discussing), then you have no incentive to raise wages while I have every incentive to lower them.

Again, absolute ignorance. You offering $3 for the job will have your pick of these people, the best of that pool of workers, the ones who work the hardest, the ones who show up on time the most, etc. Your competitor will have an incentive to raise wages to attract the better workers.

The MW is necessary to ensure that something resembling a living wage (MW =/= LW) is available.

Please define living wage.

 

[shanek]

And yet, how much. Now there is specific anti-trust legislation against employers and enabling legislation for Unions that make it much much easier to form a union.

And what was the problem in forming a union before? Who were the union-busters?

 

[shanek]

Stacking toilet paper rolls? Not so much.

They don't stack as many toilet paper rolls if they don't show up on time and do a lot of slacking off.

 

[burnvictim77]

Agreed. But how does this anecdote negate a tendency?

There is no tendency. Granted that stacking toilet paper is not a very competitive field, and their is little reason to pay more and more money to get better stackers because the return on the investment there is very slight. As jobs require more responsibility and skill, the competitive naturally increases.

Labor isn't an infinite supply, people don't just put up with any conditions, and their is a great deal of competition for worthwhile employees.

Do you have serious evidence to the contrary? I'd like to see it.

 

[pipelineaudio]

As far as labor is concerned, and I mean labor pretty far up the ladder to 100 $ a plate restaraunts, management positions in the top hotels, etc...raise the minimum wage all you want

The mexican wage will be paid in lieu of it

 

[Ziggurat]

They don't stack as many toilet paper rolls if they don't show up on time and do a lot of slacking off.

Sure, it's possible to fall off the bottom of the performance curve through laziness. But it's also pretty easy for almost everyone to reach a performance level (should they so choose) with that sort of job where increased skill stops making much difference. The best toilet paper roll stacker in the world won't produce much more value with his labor than the highschool linebacker from Hoeboken - which is certainly NOT the case with brain surgery. Another example: Burger King would never pay Wolfgang Puck much more than a highschool kid to cook burgers, because his additional skills in the kitchen won't make much difference in that job. Different jobs have different value vs. skill curves, and some curves flatten off quite a bit at a point where most workers can reach the plateau.

 

[burnvictim77]

Sure, it's possible to fall off the bottom of the performance curve through laziness. But it's also pretty easy for almost everyone to reach a performance level (should they so choose) with that sort of job where increased skill stops making much difference. The best toilet paper roll stacker in the world won't produce much more value with his labor than the highschool linebacker from Hoeboken - which is certainly NOT the case with brain surgery. Another example: Burger King would never pay Wolfgang Puck much more than a highschool kid to cook burgers, because his additional skills in the kitchen won't make much difference in that job. Different jobs have different value vs. skill curves, and some curves flatten off quite a bit at a point where most workers can reach the plateau.

But your example is ludicrous. Wolfgang Puck would never apply at Burger King, because he has outcompeted a burger flipper thousands of times over. But Joe Bob who can barely show up for work and refuses to wash his hands and Mikey, the nice mentally disabled boy who dilligently pursues his job and consistently produces quality results in a reasonable ammount of time -- these guys are ACTUALLY in competition for the job. Chances are, Joe Bob is out the door, and if Mikey can earn an extra 50 cents an hour at Micky D's, you can bet your sweet bippy he's crossing over.