Poll: Minimum Wage

[.Shane.]

Not really, spurious just means not genuine. Let's say you take 5 data points for two variables (x,y) and you find out that they seem to follow a linear relationship. It could be that through small sample size and random chance you came up with this apparent correlation, and after taking further points you find no true correlation. That would be an example of spurious correlation without intentful deception.

I understand. Wow, we both know English. Congrats.

You're misreading me. I didn't they there was a causitive relationship, just a correlation. Yes, before you or JH wants to insult my intelligence again, we all know the difference between correlation and causation. That's not the issue. I see now its a matter of disingeniousness.

cheers

PS I am not an economist, but I know someone who is! I've heard they even have one a' them, what are they called? College "captains"? "majors"? where you can get good book lernin about them numbers things.

 

[EdwardTking]

I believe in the minimum wage.

If you don't have one, then I am certain that unscrupulous employers would again, as they used to, take advantage to drive down their payroll costs, if necessary forming a local cartel and even by hiring thugs to intimidate and murder trade unionists.

The workers used to have to work longer hours and became tired and thereby inefficient and thereby according to their employer justifying the low wages.

Long hours, poorly trained and tired workers have more accidents; the
injured workers are sacked and the rest of the community pays the cost.

Very low paid workers rely on charity, family, second jobs or welfare to get by from day to day.

This results in the profits of the very low paying employers being cross subsidised by others. Why should we, or the more reputable employers, pay taxes to boost low paying companies profits? This distorts the economy.

Furthermore if pay is very low, employers may be very inefficient in their use of their workforce. One of the consequences of the minimum wage was that employers who found themselves facing a payroll rise were forced to be more efficient in using those staff they had. I.e. like cutting out unnecessary process or employing staff when the customers were about or investing in automation to remove drudgery and/or training their staff properly.

Someone previously working 10 hours a day inefficiently would benefit by for example working, perhaps 6 hours a day for the same overall pay and productive output.

This can result in improvements for all; customers, employers and workers.

I find the arguments against a minimum wage here are entirely spurious.


There is however of course the very legitimate question
as to what the minimum wage should be.

 

[JerichoHill]

Granted I haven't looked at this thread w/ a fine-toothed comb, so if I missed this I apologize...
(A)-You missed this. I wish you would have read the thread. I stated "the minimum wage does not, in the evidence, appear to have any negative (or positive) effects on the economy.
(B)-A minimum wage is a price floor. Look up a price floor on wiki, or a textbook, or something. You'll see that a price floor only matters when the market clearing price is lower than the price floor. Otherwise, the floor has no effect.

What also I fail to see mentioned is: the whole "let the market take care of it" thing -- many economists recognize that the labor market is not a free market -- you aren't really free not to work, which gives employers an advantage -- a minimum wage puts the worker and employer on slightly more equal footing.
--Not if the minimum wage doesn't actually help anyone. In its current form, the minimum wage doesnt do anything. We as economists know this. I, through my training, dont like the fact that the MW could distort the economy (I am a free trader in the smith/galt sense)


Lastly, the MW is not a purely economic issue. And people cannot be measured like you can, say, ingots of pig iron or some other commodity. To many variables to account for.
--You'd be suprised how easy it is to account for people with just a very few number of variables. It is our arrogance that makes us think that we're so much more complex than we actually are. Individually, yeah we're tough to predict (but possible). Grouped together, its a piece of cake.

(given a great computer, knowledge of modeling, and time, and donuts)

 

[betazed]

Personally, I am not entirely clear about this minimum wage thing(and I have not read the whole thread - only the first 5 pages). I see the social problem (as brought forth by De Lorimier and I see the economic pov of Jericho Hill. So I have a question for everyone who supports minimum wages?

Would you also support minimum support prices for say sugar producers, rice producers etc?

Logically, you must because that is exactly the same as minimum wage - a minimum support price for labor. One group sells a factor of production (the wage earners) and the other group sells products (sugar, rice etc.).

If you don't then IMO, your support of minimum wage is not entirely rational. If you do then are you aware of what happens in markets with artifical support prices?

 

[EdwardTking]

Personally, I am not entirely clear about this minimum wage thing(and I have not read the whole thread - only the first 5 pages). I see the social problem (as brought forth by De Lorimier and I see the economic pov of Jericho Hill. So I have a question for everyone who supports minimum wages?

Would you also support minimum support prices for say sugar producers, rice producers etc?

Logically, you must because that is exactly the same as minimum wage - a minimum support price for labor. One group sells a factor of production (the wage earners) and the other group sells products (sugar, rice etc.).

If you don't then IMO, your support of minimum wage is not entirely rational. If you do then are you aware of what happens in markets with artifical support prices?

Yes, but it is not quite the same.

There are a number of unique problems with supporting minimum prices for agricultural commodities. Firstly if you pay the wholesalers, they may not pass that on to the farmers. Secondly support prices may result in excess supply. Thirdly farmers may invest on the basis of an average rate of return and by allowing them to have both the benefits of a minimum price (when markets are low) and bonanza prices (when markets are high) that may overall result in cross subsidising excess profits. Fourthly determining what the minimum support price may be is difficult and fifthly it is difficult to determine for how much produce should a farmer be able to claim the minimum support price.

 

[betazed]

Are you sure all of the above are not applicable to MW?

Secondly support prices may result in excess supply.

MW may lead to more people in the labor market than need be. Maybe a person who would rather study instead flips burgers (hypothetically speaking)

Thirdly farmers may invest on the basis of an average rate of return and by allowing them to have both the benefits of a minimum price (when markets are low) and bonanza prices (when markets are high) that may overall result in cross subsidising excess profits.

Well, that is precisely what you are doing here too. Profits in your example correspond to wages in MW. In the farmer scenario, farmers benefit at the cost of the consumer, in MW the wage earners benefit at teh cost of business. Why is one fair and the other not?

Fourthly determining what the minimum support price may be is difficult

Determining MW is not?

and fifthly it is difficult to determine for how much produce should a farmer be able to claim the minimum support price.

The entire amount obviously. Since you get your entire hours sold at MW.

Basically, price distortion for the farmer leads to inefficient allocation of resources and a disparity between what the farmer should get in money and what he actually gets. Looks to me that you agree that this is not right. So why should price distortion in wages - which lead to inefficient allocation of labor and a disparity between what a person should earn and what a person actually earns - not be equally wrong?

 

[EdwardTking]

Betazed:

While there are indeed similarities between MW and MP, there are differences.

For example if the MP of sugar is set too high and wide, a farmer may employ more people to increase production on the side and the excess sugar may be dumped by the government. However if the MW obtained is higher, then people need to work fewer hours to cover their living costs, and will likely work less and in any case their working hours can not exceed 24 hours a day.

It is also necessary to consider the purpose. If the purposes are to prevent poverty of employed workers and self employed farmers, then there is no reason why the MW can not be limited to 8 hours per worker per day and the maximum MP limited to a total of maybe e.g $10,000 dollars per farmer pa.

Determining what the MW and MP should be and the other rules associated with them is very difficult and it is impossible to remover all distortion effects.

However I believe that, if properly thought through, then the benefits
of MP and MW, outweigh their disadvantages.

Am logging off for the night.