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comment by wasoxygen
wasoxygen  ·  2153 days ago  ·  link  ·    ·  parent  ·  post: Basic Income Means Basic Freedom

    You're also flat out wrong about minimum wage. It helps a lot.
I am not so sure. Here is another talking point emitted by wild-eyed libertarians when they are not screeching about the gold standard and "ending the Fed":

When something costs more, people buy less of it.

This hypothesis is not hard to back up with a high school economics textbook, and I think there is a bit of an onus of explanation on the person who argues that there is a special exception when the "stuff" is labor and the "people" are employers. If you have ever comparison shopped for car repair, plumbing, or lawn care you are experienced with this price sensitivity.

There are arguments to be made for special exceptions, using terms like monopsony, but they require a good deal more nuance than relying on the textbook demand curve.

I think we have to be especially careful in certain situations when the benefit of some thing is visible and obvious, but the downside is obscured or invisible. It's very easy to see a new stadium and celebrate it, walk in it, cut ribbons for it, and sell the naming rights for it. It is very difficult to see the costs -- distributed and dispersed as they are through an entire district's tax structure: a can of Pringles removed from a shopping bag to keep the total under $20, forty cents instead of sixty left in a tip box, a homeowner with a property tax bill a tenth of a percent larger.

Even if we do struggle mightily to imagine all these tiny costs, it is easy to dismiss them as trivial. Yet in total they equal the significant cost that it takes to get the benefit of the stadium. The shopper may value the stadium's existence more than his Pringles, but it is likely that no one thought to ask.

Here's the classic text: Ce qu'on voit et ce qu'on ne voit pas

So it is wise to be on the lookout for hidden costs. In the case of minimum wage, the downside is easy to imagine -- reduced employment prospects for low-skilled workers -- but devilishly hard to measure. Here kleinbl00 provides a study, one of the many on both sides of this controversial subject, which states that "City minimum wages don't hurt the employment prospects of low-wage workers."

The study looks at city-based minimums in San Francisco, Santa Fe, and Washington, D.C. Rather awkwardly, the authors recognize that in one of the three test cases, minimum wage caused no benefit as well as no harm, because D.C. used a low minimum of $5.25 per hour. This solves the problem posed by the jeering libertarians: "If minimum wage is so great, why not make it $100 per hour?" Obviously, making labor too costly will cause it to be underconsumed -- fewer jobs. As we reduce the number from $100 per hour to something closer to the market rate, we reduce this effect, to the point where it becomes small enough to be lost in the error bars of salary surveys. We can't be sure there is no effect on consumption until the minimum reaches the market rate, at which time there is no benefit either.

In practice, the legal minimum wage is always $0 -- that is what you earn if you cannot provide enough value to an employer to cover the cost of a (legal) salary. (Which motivates the basic income discussion.)

So minimum wage benefits those it benefits -- the ones who enjoy a higher wage. (Surely no one thought this was in dispute!) A large enough increase would even justify a claim that "It helps a lot" if you are doing benefit analysis instead of cost-benefit analysis. Minimum wage also imposes costs, not only in the reduced willingness of employers to spend more for the same labor, but also in the likely outcomes that employers will modify non-monetary benefits, rely more on automation, or outsource to compensate.

One sometimes finds the rather incredible claim that employers will simply "absorb" the costs of higher wages without making any adjustments, as if they won't notice the change. Peculiar then, that the primary punishment for wage law violations is a fine.

    I got my first after-school job in 4th grade, and held one or more through matriculation of college. The one summer I wasn't "working" I was mixing in the clubs 50-70hrs a week while also pursuing 20 credits… it didn't feel like "work" because I was being grossly underpaid.
I don't think I am going out on a limb to suppose that kleinbl00's 4th grade job, like my summer lawn-mowing gigs, was paid below minimum wage. I only made pocket money, but crap jobs in high school gave me something to do besides watch TV and convinced me that I sure didn't want to be cutting grass as a career.

FLSA already has exemptions recognizing that certain classes of workers -- like babysitters, farmers, and "Homeworkers making wreaths" (?) -- would be more harmed than helped by minimum wage. Do we want to assume that this list was compiled with the neediest prospective workers in mind (think: inner city minority teenager looking for a starter McJob)?

    About minimum wage, it doesn't really help too much.

    Only someone not on the minimum wage would say such a thing.

Exactly.

Thanks to everyone for their comments on this interesting and important subject. I don't mean to be rude by referring to kleinbl00 in the third person, but I assume he ignored me as well as muted me when I made bold to ask him for evidence on another statement, and went so far as to entertain myself looking up factoids like the Pope's alleged income of $200 million (or is it $0?).





kleinbl00  ·  2150 days ago  ·  link  ·  

You are ignored and muted because you view antagonism and snark as civilized debate. When your antagonism was objected to, you doubled down. When your questions were answered, you changed questions. You aren't debating, you're snarking, and you're not worth my time.

The only reason you're reading this (because I didn't bother with your screed beyond skimming it) is so that you can be absolutely clear as to why you will receive no further responses from me.