Let's discuss the minimum wage

Drewdad, I agree with what you open the thread with.

Similarly, price controls accomplish the opposite of the desired effect in the long run, by dampening supply, thus causing more demand than the supply can fulfill, thus driving prices up over what they would have otherwise been under normal market prices.

Politics does not lend itself to free market analogies real perfectly. Occasionally a rotten product is sold by fraudulant advertising, plus remember many rotten politicians are elected when the promise the citizenry everything they want. It boils down to the character of the citizenry and their wisdom and perception. Remember, Hitler was elected.

How does the minimum wage dampen supply?

Cycloptichorn

Cycloptichorn wrote:

How does the minimum wage dampen supply?

Cycloptichorn

Great question, but the minimum wage is the opposite of a price control, because it sets a minimum price, not a maximum price, so the effect is the opposite of price controls, so your question should read: "How does the minimum wage cause a glut of supply?" That is an easy answer, because it causes more people to be satisfied with minimum wage jobs than would otherwise be satisfied with a job that paid less than an artificially set minimum wage. Without a minimum wage, there would be a smaller pool of people seeking the low end jobs, thus the employer would have to pay more to get people to do the work.

As I've said many times however, the artificial minimum wage is probably at or near what the market would otherwise dictate, so we are not seeing extreme effects as described, but if the minimum wage was increased to $15.00, then you would see more of effects as described. The effect is gradational, in proportion to the minimum wage levels as compared to what the real market value of the wages would otherwise be.

All of this is simple common sense as applied to free market economics.

So, without minimum wage laws, employers would be forced to pay minimum wage due to a lack of people trying to get the low-paying jobs?

I think you really underestimate just how low minimum wage is, Okie. Going up to $7.25 an hour pretty soon. A 40-hour week of that comes out to $290 a week, or $1160 a month - before taxes.

You realize that it is entirely possible that the minimum wage actually helps employers and producers keep costs down, by giving them a accepted and mandated low pay rate that they can stick to?

Cycloptichorn

Cycloptichorn wrote:

So, without minimum wage laws, employers would be forced to pay minimum wage due to a lack of people trying to get the low-paying jobs?

Yes, I think that is reality in a free market.

Quote:

I think you really underestimate just how low minimum wage is, Okie. Going up to $7.25 an hour pretty soon. A 40-hour week of that comes out to $290 a week, or $1160 a month - before taxes.

Thats why I think the law is essentially superfluous, except for a few jobs at the margins of the economy. I think most jobs would demand at least $7.25 in a free market anyway, so the law is close to being useless, except politicians (mostly Democrats) can say, " I care, I did something," when in reality they did nothing of importance at all.

Setting a minimum wage is akin to setting a minimum price for gasoline, such as $3.00 per gallon. Work is a commodity in a free market.

Quote:

You realize that it is entirely possible that the minimum wage actually helps employers and producers keep costs down, by giving them a accepted and mandated low pay rate that they can stick to?

Cycloptichorn

You might have a point there, at least for some jobs.

Drewdad, you seem to be arguing that there would be less illegal immigration with minimum wage, because the lower wages made by our own home workers would act as a disincentive for people to come. I cant' agree that this is a wise position.

Cycloptichorn

I think minimum wage says: everyone's contribution is important. Here's the absolute least that we think is okay to pay somebody for doing work for you. Even if you don't think their job is as important as others, it's still important enough that the person should be able to scrape by in our society by doing their job.

There's also the inflation question: if the lowest wages (typically taken by unskilled workers) don't raise with inflation, then the poorest people in society become that much poorer....

Cycloptichorn wrote:

I think minimum wage says: everyone's contribution is important. Here's the absolute least that we think is okay to pay somebody for doing work for you. Even if you don't think their job is as important as others, it's still important enough that the person should be able to scrape by in our society by doing their job.

Like I said, I agree with that principle; there is dignity in labor. But the actual effect is not that intended. By setting a low-water mark for labor, you also set a threshold at which automation becomes economical.

Cycloptichorn wrote:

There's also the inflation question: if the lowest wages (typically taken by unskilled workers) don't raise with inflation, then the poorest people in society become that much poorer....

I don't think you can legislate prosperity. The road to higher wages through skills and education.

You ignore the fact that there are certain segments of our society who A) don't have the mental capabilities to rise to higher jobs, or B) don't want to. This doesn't remove the validity of their employment, or the necessity of it, in the slightest, and they should be able to scrape by anyways. Adjusting the minimum wage for inflation isn't 'legistlating prosperity,' it's acknowledging that our money is worth less than it used to be, and we need to re-adjust our lower boundaries accordingly.

the vast portion of America's wealth, which is generated by all of us, flows to the few at the top, shortchanging the middle class and leaving millions of hard working Americans - many working two or three jobs - in poverty.

So, without minimum wage laws, employers would be forced to pay minimum wage due to a lack of people trying to get the low-paying jobs?