Minimum Wage

[VforVoluntary49]

As we all know, in his State of the Fatherland (sorry, Union) address Obama proposed a minimum wage increase to $9 an hour. I think just about everyone on this site (or the vast, vast majority) understands the economic fallacies packed into this one and any minimum wage so that's not what I really want to bring up. But I saw an online poll about this that really struck me-70% of people in the poll supported the increase and only 30% opposed it. The reasons in the comments are the same ones we here every single time any of us debates this with anyone (rising cost of living, can't raise a family on this, richest country in world, fat cats need to give up some of their insane profits yada yada) and it was just so disheartening to read. When you have a small community of people (such as FDR, a few personal friends) who understand these things, it is even more striking when looking out into the public and realizing just how far society is from changing for the better, and in fact many days it feels like it is changing for the worse by the minute.

I think much of the minimum wage debate goes back to children not being able to delay gratification and not seeing past the immediate benefits/consequences of their actions, and is simply compounded by the horrifying lack of true economic education in this country (also, I think we should all chip in to buy Obama and Congress each a copy of "Economics in One Lesson", they desperately need it).  But my question is, what is the course we should take? It honestly truly feels like the days of Atlas Shrugged, and debating these things and arguing these things with people who are afraid of you and think you are evil/heartless/don't care about anybody but yourself, who don't even realize that you care about the future of this country and people than they can imagine is just simply so difficult and feels so fruitless, and it also feels like by debating these issues it is simply giving our sanction. I sometimes wonder if we are at the point where we should just let it go, and let the system eat itself.  If it is truly pointless to try to convince people in general, to show them the truth and simply keep our eyes open for those who are nearly their themselves and simply help them get over the hump.  It feels like by arguing and trying to fix things, we are like Dagny and our energy to try to change things and fix the system is just pouring our energy into it to sustain it even longer. The minimum wage argument has been destroyed a hundred times over, by Mises, Hayek, Friedman, Rothbard, Sowell etc. and yet 70% of Americans (at least in this poll) are for AN INCREASE-when they don't even understand any of the economics surrounding it.  When I first realized the truth about these things (basically everything we discuss at FDR and Stef discusses) I wanted to run out screaming it for anyone to hear, because I felt that if I only said the truth people would realize it and come rushing to listen, and I could not understand how people could be so blind. Now I can see even more clearly and I just wonder if we should continue fighting or if we should be like Galt and just withdraw our sanction from a system that does not even acknowledge our presence, except to deride, mock and spit on us...

[Metric]

I sympathize with your sentiment -- it's a basic test of economic sanity when you're effectively talking about banning low-skill workers from working, and seeing 70% support for it is sort of like watching natives crap in their own villiage water supply.  At some point you definitely feel the urge to withdraw from people with that mindset.

[stigskog]

A way to make people think a bit might be to argue strongly for a $25 minimum wage. You might even get a left wing statist arguing for a lower minimum wage for once.

[Arius]

Right now, the minimum wage is the lowest it has been since the 40's, relative to the costs of living (in actual purchasing power).  If you would like to advance the moral argument that's fine, but minimum wage which is lower. relative to the cost of living, has actually overseen the biggest decrease in employment in the last three generations.  Over the last thirty years, millions of people have become unemployed as the minimum wage has dropped in relative purchasing power.  It's all just a show...$9 an hour is still too little to live on.  That's $982.8 a month.  Realistically, that's just enough to make rent and eat.  Hell, a studio apartment, in any city, costs at least $500 a month (I know, I've looked).  That doesn't include any incidental costs like utilities, maintenance, transportation, work clothes, or a social life.

 

[VforVoluntary49]

But your argument implies a need for a minimum wage, especially in adult markets. Example-a family with one worker making $9 an hour yes will only make around $1000 a month. If it were say market price (maybe 6 as a simple example) then perhaps two people in family would be employed instead of 1 and the family could bring in 1500 instead if 1000. Also you are conflating cause and effect to a degree- you are missing all the effects and distortions on the economy that an artificially high minimum wage causes which can contribute to higher costs, higher prices and a higher cost of living. 

[VforVoluntary49]

 

A way to make people think a bit might be to argue strongly for a $25 minimum wage. You might even get a left wing statist arguing for a lower minimum wage for once.

 

Oh trust me I do use that as often as possible. It seems that the next move on their part tends to be either a)to argue that we need a government imposed floor (which is simply a price control) and that bureaucrats/politicians are omnipotent in this area and know exactly what the price of labor should be and b) that no one should be "forced" to work for a substandard wage and that they have welfare, ss, unemployment etc for those people and I usually don't have the time/strength/intestinal fortitude to attack those issues as well at the same time. It's like trying to climb Mt Everest in a day

[Arius]

Carter and Nixon tried that "rising wages cause inflation" argument.  Only one thing causes inflation: increases in the size of the money supply relative to the available quality of products.  If the minimum wage were $25, it would not result in a penny of lost purchasing power... unemployment maybe, but not lost purchasing power.  

The minimum wage is a horrible thing, just like the corporation, regulatory agencies, compulsory public school, farm subsidies, government managed titles, taxes, state-run fiat currency, federal and state bonds...... There's a huge list.  My only point is that at $9 an hour, the minimum wage will still be lower (in terms of purchasing power) than it was in the 70's.  Like everything else the President says, it's just for show.  There's no reason to "Go Galt" because the speech maker tries to pander to the public.

Did you hear him try to talk-up Race to The Top?  The entire program added exactly .03% to the federal education budget (it couldn't have been less significant to educational outcomes)... or what about the repeal of don't ask don't tell?  10% of the population is gay.  2% of the population serve in the military.  The repeal effects, at most, .2% of the population.  It's completely trivial (very few in the military care who is or is not gay), but the media treats it like it matters.  If there is one defining characteristic of Obama's presidency, it's talking a great deal about doing very little.

 

[LV Agorist]

 

 

A way to make people think a bit might be to argue strongly for a $25 minimum wage. You might even get a left wing statist arguing for a lower minimum wage for once.

 

Oh trust me I do use that as often as possible. It seems that the next move on their part tends to be either a)to argue that we need a government imposed floor (which is simply a price control) and that bureaucrats/politicians are omnipotent in this area and know exactly what the price of labor should be and b) that no one should be "forced" to work for a substandard wage and that they have welfare, ss, unemployment etc for those people and I usually don't have the time/strength/intestinal fortitude to attack those issues as well at the same time. It's like trying to climb Mt Everest in a day

 

I work for an education company and we have an internal social networking site to discuss business, but off topic discussions regarding public policy do arise. I've brought up the minimum wage issue in detail, finding some vehemently opposing our views despite near total economic ignorance. I try to foster discussions from the agorist perspective to sway those people capable of critical thought, letting the lemmings show their ignorance to a company of 40k employees.  

 

Recently, I started a thread on inflation, with some claiming public debt is not an issue, because we can just print money to pay for the debt. One person even offered that a trillion dollar coin would not be inflationary because it would not be circulated. I returned with the suggestion that, like an insanely high minimum wage, why not mint enough trillion dollar coins to cover the debt entirely, or even double it to create a surplus? The discussions tend to go dead there. 

 

I am finding that the best way to refute a bad idea is simply to exacerbate its effects. If a little intervention is good, a lot must be great!

[Arius]

I am finding that the best way to refute a bad idea is simply to exacerbate its effects. If a little intervention is good, a lot must be great!

Since a swimming pool full of water will drown me rather than cure my thirst, all water must be bad?  Alternatively, since a glass of water will cure my thirst, a swimming pool full might cure cancer?  I think that logic sinks all ideas.

 

[Hsien Seong Cheong]

Using minimum wage to protect the poor in a statist economy is like gobbling down painkillers and refusing to acknowledge that your leg is broken.

Another argument you could make to minimum wage supporters is the following:

Let's say I'm a hopeful business start-up that could only possibly afford to employ 3 unskilled (but trainable!) high school leavers at $5 an hour to get off of the ground.

Has this wonderfully altruistic piece of equality loving legislative genius done either:

A. Prevented me from exploiting 3 vulnerable poor people.

or

B. Prevented a small business entering the market and lost 3 high school leavers their potential first steps on the rungs of the career ladder.

Of course, people who do not base their positions on reason and evidence will just be angry that you are exposing their beliefs as falsehoods, but hopefully a bystander will think "Well, that libertarian guy had a really good point and the other guy was just an asshole about it. Maybe I should look into this."

For all libertarians out there losing the will to debate, remember this:

We don't stand up to a bully to convince the bully that he is wrong. We stand up to a bully to show the bystanders that he is alone in his aggression and has no place among virtuous people.

[DoubtingThomas]

 

I am finding that the best way to refute a bad idea is simply to exacerbate its effects. If a little intervention is good, a lot must be great!

Since a swimming pool full of water will drown me rather than cure my thirst, all water must be bad?  Alternatively, since a glass of water will cure my thirst, a swimming pool full might cure cancer?  I think that logic sinks all ideas.

 

Except we have a pretty good idea of how ineffective the minimum wage has been and it's nothing like the trumped up hyperbolic example you've invented as a straw-man argument.

The two proposals here are quite simple.

a. Minimum wage helps workers

b. Minimum wage does not help workers

Since we know that the minmum wage eliminates jobs at the wages below the arbitrary minimum and since we know that unemployment figures indicate that there are FAR more workers (or potential) workers below that threshold than above it; we can comfortably state that nothing like a minimum wage (essentially price fixing in reverse) can be good for workers. It can certainly, as with all state programs, benefit those lucky few who happen to land on fresh federal spending; however, their number will be a small fraction of those unemployed due to the state action.

If you want to argue that ~some~ minimum wage helps, by some fluke, more than the absence of one. I would strongly urge you to evidence that claim with some economic data.

[Arius]

Since we know that the minmum wage eliminates jobs at the wages below the arbitrary minimum

If it were perfectly enforced, that would be the case.  I think the millions of people who work under the table *coughmecough*, those in salaried positions who average less than the minimum wage, salespeople working on commission, and servers at restaurants would argue that the minimum wage has no effect on their employment situation (for ill or for good).  I mean, just as a matter of perspective, we're only talking about a few million people, not the whole country.  You, me, we aren't effected at all by changes in the minimum wage....Actually, I benefit from restrictive and exclusionary labor laws.  The harder it is to hire people legally, the more under-the-table opportunities emerge.

It's not like there are legions of people, wandering the streets, crying "If only I had fifteen cents an hour more skill I could find employment".  If your too low-skill for the minimum wage, you work all-cash, under-the-table.  It only prices people into grey labor markets, not into starvation.  People go around inconvenient laws.

 

a. Minimum wage helps workers

b. Minimum wage does not help workers

 

c. The minimum wage helps some and hurts others.  All workers do not share some common agenda or circumstance.  It's Marxist nonsense to claim they do.  We'd really need to narrow-down exactly who these "workers" are.

If you want to argue that ~some~ minimum wage helps, by some fluke, more than the absence of one.

I don't know that I'd want to argue that.  Do you mean in a perfect world?  Were that the case, I'd definitely want no minimum wage.  However, we don't live in a strict liability world...We live in a world of taxes, corporations, state-controlled courts, and fascism.  I really can't say if the minimum wage actually works against the overkill anti-person bias of the state.  My instinct is that it doesn't, but I really don't know.  The purpose of the minimum wage is, as it has always been, to price children and immigrants out of the labor market (it does both quite well).  In this particular case, it is also to help the government pay off all those Social Security folks.  Don't forget: every dollar of increase in the minimum wage translates to additional hundreds of millions, if not billions, in payroll taxes.

 

 

[Alan C.]

There are two major problems with the minimum-wage:

1. It violates property rights by imposing a negative servitude.

2. It makes it a crime for a person to work in the employ of another if his marginal revenue product is below the minimum-wage.

Another significant problem, which isn't so apparent, is that it deprives people of opportunities to apprentice.

[Rick Horton]

Having a minimum wage doesn't make any sense. It's going to make all prices higher anyhow, and the people that made 9 bucks an hour before, are now making minimum wage, unless they get a "raise"  and a LOT of the time that doesn't happen. So it's a pay cut for people who worked their way up to 9 bucks an hour. Lets say min wage is 7.50. You started your job at 7.50 hr. You worked a couple years and now you make 9 bucks an hour. You just received a 1.50 pay cut per hour now that you're back down to min wage. Will your boss give you 10.50 an hour to compensate. No. Probably not. So prices increase, your pay "really" decreases, and jobs hire fewer people. I swear it's unbelievable that raising the minimum wage gets votes, but it still works!!! It's proof that most people don't want or care about truth. Most people are totally brainwashed by either religion, or politics. 

[Jax]

Just as an aside regarding the despair the OP felt when he saw that 70% of people support an increase in minimum wage: online polls are completely useless because of massive selection biases.

[VforVoluntary49]

Just as an aside regarding the despair the OP felt when he saw that 70% of people support an increase in minimum wage: online polls are completely useless because of massive selection biases.

 

Thank you for the reassurance, yes I don't really think the poll represents America as a whole (id cry myself to sleep if it did; plus i saw one later that was more 50/50) but at a time when it feels like the argument for a minimum wage should be as dead as belief in a 6,000 year old earth, to see even 70% of even just 50 or even just 10 biasedly selected people support the argument is pretty disheartening. More it felt like just one small shadow of the big problems it represents. 

[DoubtingThomas]

 

 

If it were perfectly enforced, that would be the case.  I think the millions of people who work under the table *coughmecough*, those in salaried positions who average less than the minimum wage, salespeople working on commission, and servers at restaurants would argue that the minimum wage has no effect on their employment situation (for ill or for good).  I mean, just as a matter of perspective, we're only talking about a few million people, not the whole country.  You, me, we aren't effected at all by changes in the minimum wage....Actually, I benefit from restrictive and exclusionary labor laws.  The harder it is to hire people legally, the more under-the-table opportunities emerge.

 

The fact millions work under the table is a testament to how ineffective the minimum wage is at its stated goal. I suppose if you are looking at it from the angle: the more opportunities go under the table, the better, then you have a strong point. That said, I don't think you were at all clear about following this logic.

 

c. The minimum wage helps some and hurts others.  All workers do not share some common agenda or circumstance.  It's Marxist nonsense to claim they do.  We'd really need to narrow-down exactly who these "workers" are.

 

I adimit to the literal fauxpa of using the loaded term "worker;" however I did not miss pointing out that the few do benefit at the expense of everyone else. The people who benefit will be those with a political connection, probably organized labor, family ties to the state, and special interest who are deeply imbedded in the growth of the state. The unaffiliated, and necessarily the least skilled, will loose.

 

I don't know that I'd want to argue that.  Do you mean in a perfect world?  Were that the case, I'd definitely want no minimum wage.  However, we don't live in a strict liability world...We live in a world of taxes, corporations, state-controlled courts, and fascism.  I really can't say if the minimum wage actually works against the overkill anti-person bias of the state.  My instinct is that it doesn't, but I really don't know.  The purpose of the minimum wage is, as it has always been, to price children and immigrants out of the labor market (it does both quite well).  In this particular case, it is also to help the government pay off all those Social Security folks.  Don't forget: every dollar of increase in the minimum wage translates to additional hundreds of millions, if not billions, in payroll taxes.

 

I do understand your meaning; however, I don't think your figures add up. An increase in minimum wage translates into fewer jobs. Absent the inflation rate, that would mean fewer payroll taxes. Furthermore, as you mentioned, immigrants and children work under the table regardless. If you were to argue, as you did before, that driving more of the population into the grey market is desireable; even at the cost of increasing government power and influence, then this paragaph not supporting that thesis.

[Rob_Ilir]

I thought that the minimum wage was when the coercioncosts more than the loot.          

[Arius]

I do understand your meaning; however, I don't think your figures add up. An increase in minimum wage translates into fewer jobs.

Fewer jobs in the future, more money now.  Remember, the Federal Government funds 20 and 30 year debt with 90-day bonds.  It's not exactly the most forward-thinking organization.  Raising the minimum wage causes a sudden jump in payroll taxes and, over the course of several years, prices some labor out of tax-paying, hourly work.  Benefits now, costs later (it's the defining characteristic of all legislation)...shortsightedness

I think you've mistaken me for someone who is in favor of a minimum wage, that simply isn't the case.  My point is that the rhetoric of calling the law "minimum wage" (and acting as-if it had anything to do with a standard of living) is to distract people from its actual purposes: pricing children and immigrants out of the labor markets, repaying state-affiliated unions, periodically bumping-up the payroll tax, and placating the howling masses by demonstrating the state's good intent toward its citizens.  I was trying to illustrate that the law and a living wage have nothing to do with each other.

Anyway, the minimum wage only prices hourly labor out of the market.  When the law was first enacted, "hourly" and "factory" were synonymous.  If any employer actually saw the minimum wage as a problem, then all their employees could be paid as contractors.  Assuming those employees were willing to make substantially less than the minimum wage.  No benefits, no payroll taxes, no minimum wage.  It's not a very effective price floor, because there are a dozen substitutes available.

Here's the one you should really think about.  There aren't labor cops who go around to every business and make sure everyone is paid at least the minimum wage.  W-2s don't include information about hourly rates.  How do you suppose the law is even enforced?  Let's not forget: we're talking about the same government that loses billions annually because they can't match projects' and debt lifespans (something a Subway franchisee can do).  Imagine if you bought a house using a series of thousands payday loans, rolling-over the interest each time, and you'll understand how incompetent the organization is.  These people aren't smart or competent enough to enforce labor regulations.  The answer: employees turn their employers in.

[Rick Horton]

 

I do understand your meaning; however, I don't think your figures add up. An increase in minimum wage translates into fewer jobs.

Fewer jobs in the future, more money now.  Remember, the Federal Government funds 20 and 30 year debt with 90-day bonds.  It's not exactly the most forward-thinking organization.  Raising the minimum wage causes a sudden jump in payroll taxes and, over the course of several years, prices some labor out of tax-paying, hourly work.  Benefits now, costs later (it's the defining characteristic of all legislation)...shortsightedness

I think you've mistaken me for someone who is in favor of a minimum wage, that simply isn't the case.  My point is that the rhetoric of calling the law "minimum wage" (and acting as-if it had anything to do with a standard of living) is to distract people from its actual purposes: pricing children and immigrants out of the labor markets, repaying state-affiliated unions, periodically bumping-up the payroll tax, and placating the howling masses by demonstrating the state's good intent toward its citizens.  I was trying to illustrate that the law and a living wage have nothing to do with each other.

Anyway, the minimum wage only prices hourly labor out of the market.  When the law was first enacted, "hourly" and "factory" were synonymous.  If any employer actually saw the minimum wage as a problem, then all their employees could be paid as contractors.  Assuming those employees were willing to make substantially less than the minimum wage.  No benefits, no payroll taxes, no minimum wage.  It's not a very effective price floor, because there are a dozen substitutes available.

Here's the one you should really think about.  There aren't labor cops who go around to every business and make sure everyone is paid at least the minimum wage.  W-2s don't include information about hourly rates.  How do you suppose the law is even enforced?  Let's not forget: we're talking about the same government that loses billions annually because they can't match projects' and debt lifespans (something a Subway franchisee can do).  Imagine if you bought a house using a series of thousands payday loans, rolling-over the interest each time, and you'll understand how incompetent the organization is.  These people aren't smart or competent enough to enforce labor regulations.  The answer: employees turn their employers in.

 

 

Ahh... Great observation.

[Andersfilosof]

 

 I think the millions of people who work under the table *coughmecough*, those in salaried positions who average less than the minimum wage, salespeople working on commission, and servers at restaurants would argue that the minimum wage has no effect on their employment situation (for ill or for good).  I mean, just as a matter of perspective, we're only talking about a few million people, not the whole country.  You, me, we aren't effected at all by changes in the minimum wage....

 

At the last place I worked, the starting pay was $9/hour and it was more than the $8 minimum because the work was very long, repetitive, and in a 36-degree cold room, which is not the nicest environment to work in.  If the $9/hour minimum wage law passes, that company will either have to raise that starting pay up to $10/hour to sway the people who would rather work at McDonalds but need the extra money and hours, or leave it at $9/hour, which means that there is almost no advantage to choosing that place to work at over any other unskilled work.

 

 

It's not like there are legions of people, wandering the streets, crying "If only I had fifteen cents an hour more skill I could find employment".  If your too low-skill for the minimum wage, you work all-cash, under-the-table.  It only prices people into grey labor markets, not into starvation.  People go around inconvenient laws.

 

And what is your purpose in stating these facts?  We're all aware that people go to great lengths to make money when they are kept from doing so legally, but what does that have to do with the moral or practical validity of the minimum wage?

 

[DoubtingThomas]

 

 

Fewer jobs in the future, more money now.

 

It doesn't take much time to eliminate low-level positions; I don't think that payroll tax revenue the year following a minimum wage increase would be higher than previous unless there was a significant bubble somewhere in the economy being inflated.

 

I think you've mistaken me for someone who is in favor of a minimum wage, that simply isn't the case.  My point is that the rhetoric of calling the law "minimum wage" (and acting as-if it had anything to do with a standard of living) is to distract people from its actual purposes: pricing children and immigrants out of the labor markets, repaying state-affiliated unions, periodically bumping-up the payroll tax, and placating the howling masses by demonstrating the state's good intent toward its citizens.  I was trying to illustrate that the law and a living wage have nothing to do with each other.

 

I did note that you appeared to be making this point at the start of your second post; however, as I further went on to indicate: the rest of your post really did not back this.

 

Anyway, the minimum wage only prices hourly labor out of the market.  When the law was first enacted, "hourly" and "factory" were synonymous.  If any employer actually saw the minimum wage as a problem, then all their employees could be paid as contractors.  Assuming those employees were willing to make substantially less than the minimum wage.  No benefits, no payroll taxes, no minimum wage.  It's not a very effective price floor, because there are a dozen substitutes available.

 

I think you should look up the relavent labor laws concerning this. If it were as simple as you make it out to be, rational employers everywhere would have 100% of their employ as contractors.

 

Here's the one you should really think about.  There aren't labor cops who go around to every business and make sure everyone is paid at least the minimum wage.  W-2s don't include information about hourly rates.  How do you suppose the law is even enforced?  Let's not forget: we're talking about the same government that loses billions annually because they can't match projects' and debt lifespans (something a Subway franchisee can do).  Imagine if you bought a house using a series of thousands payday loans, rolling-over the interest each time, and you'll understand how incompetent the organization is.  These people aren't smart or competent enough to enforce labor regulations.  The answer: employees turn their employers in.

 

Of course it's loosely enforced; however, that doesn't mean the hammer of the state cannot come crashing down on a business who violates it. Even if the odds of being caught are low, if the punishment is draconian enough, there's very little reason to build something as demanding as a business upon such a foundation.

[Arius]

 

And what is your purpose in stating these facts?  We're all aware that people go to great lengths to make money when they are kept from doing so legally, but what does that have to do with the moral or practical validity of the minimum wage?

 

The minimum wage is not a price floor.  It is immoral, obviously, but to focus on the economic argument (which the historical data does not support)  is to miss the point.

 

It doesn't take much time to eliminate low-level positions; I don't
think that payroll tax revenue the year following a minimum wage
increase would be higher than previous unless there was a significant
bubble somewhere in the economy being inflated.

 

Here's the recent unemployment rate over time.  Here's everything since the Great Depression.  Here's the Federal minimum wage.  With the exception of all the 2008 "blow-up the economy" nonsense, you'll notice that the minimum wage has not been strong driver of unemployment.  Between 1975 and 1980, the minimum wage jumps a dollar, but unemployment stays flat.  Between 1980 and 1990, the minimum wage is flat and unemployment actually drops.  The bad economic effects show-up in weird places, like youth employment, or (as Alan pointed out) in the lack of apprenticeships.

 

I think you should look up the relavent labor laws concerning this. If
it were as simple as you make it out to be, rational employers
everywhere would have 100% of their employ as contractors.

 

Ah, but therein lies the rub.  Remember strict liability?  A contractor is legally responsible for any damages to property or person.  If a burger flipper at McDonald's accidentally poisons the meat, the customer doesn't have a case against McDonald's.  That customer has a case against the burger flipper.  I assure you, a guy who flips burger can't afford the level of insurance necessary to protect himself from that kind of liability.  No person, who lacks the skill required to make the minimum wage, can afford the liability of being a contractor in a menial job.  The employer can hire people as contractors, but no individual is willing to work on those terms.  You see, a business can hide behind a corporate shield, there is no legal equivalent for a single employee.  This is the core of the power imbalance in national labor markets...everyone is not equally responsible for their mistakes.

 

Of course it's loosely enforced; however, that doesn't mean the hammer
of the state cannot come crashing down on a business who violates it.
Even if the odds of being caught are low, if the punishment is draconian
enough, there's very little reason to build something as demanding as a
business upon such a foundation.

 

My point is, it isn't the state that polices labor practices.  Employes turn-in employers as a tool to keep wages high.  The minimum wage increases the level of distrust between employer and employee...that really is a shame.  Of course, that's how the law has always worked.  When it was first passed, factory workers would turn-in foremen for hiring immigrants and children at a lower wage.

[DoubtingThomas]

 

Here's the recent unemployment rate over time.  Here's everything since the Great Depression.  Here's the Federal minimum wage.  With the exception of all the 2008 "blow-up the economy" nonsense, you'll notice that the minimum wage has not been strong driver of unemployment.  Between 1975 and 1980, the minimum wage jumps a dollar, but unemployment stays flat.  Between 1980 and 1990, the minimum wage is flat and unemployment actually drops.  The bad economic effects show-up in weird places, like youth employment, or (as Alan pointed out) in the lack of apprenticeships.

 

I wouldn't argue minimum wage is more damaging to the economy than the sum of any number of other state influence, but I think we can agree the effect on entry-level and young workers is common sense and quite obviously under-reported or not reported at all by the (state) media.

 

Ah, but therein lies the rub.  Remember strict liability?  A contractor is legally responsible for any damages to property or person.  If a burger flipper at McDonald's accidentally poisons the meat, the customer doesn't have a case against McDonald's.  That customer has a case against the burger flipper.  I assure you, a guy who flips burger can't afford the level of insurance necessary to protect himself from that kind of liability.  No person, who lacks the skill required to make the minimum wage, can afford the liability of being a contractor in a menial job.  The employer can hire people as contractors, but no individual is willing to work on those terms.  You see, a business can hide behind a corporate shield, there is no legal equivalent for a single employee.  This is the core of the power imbalance in national labor markets...everyone is not equally responsible for their mistakes.

 

A politically connected business may get away with that; however, this http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-%28Self-Employed%29-or-Employee%3F is what I meant. It's a deliberate morass meant to ensnare the employer or employee; whomever the state wants to milk.

 

My point is, it isn't the state that polices labor practices.  Employes turn-in employers as a tool to keep wages high.  The minimum wage increases the level of distrust between employer and employee...that really is a shame.  Of course, that's how the law has always worked.  When it was first passed, factory workers would turn-in foremen for hiring immigrants and children at a lower wage.

 

Right. It's a bad part of a bad system.

[Nathan T_ Freeman]

 

I am finding that the best way to refute a bad idea is simply to exacerbate its effects. If a little intervention is good, a lot must be great!

Since a swimming pool full of water will drown me rather than cure my thirst, all water must be bad? 

 

No, but even a glass of water forcefully injected into your lungs will drown you.

It isn't the water that's the problem. It's the force. So let's change the original propostion from "a little intervention" to "a little violence" which is what sprale really meant, I think. 

 

[Arius]

It isn't the water that's the problem. It's the force. So let's change the original propostion from "a little intervention" to "a little violence" which is what sprale really meant, I think. 

Sure, any quantity of force is bad.  My point was that anything can be a negative at sufficient levels.  Simply increasing the quantity of a thing to a point where it becomes negative does not show that a small amount is also a negative...thus, water.  I'm just trying to keep logical falacies to a minimum.

In the case of the trillion dollar coin, even a single penny of debt monetization is bad.  The coin is detrimental at any dollar value.

[Nathan T_ Freeman]

 

It isn't the water that's the problem. It's the force. So let's change the original propostion from "a little intervention" to "a little violence" which is what sprale really meant, I think. 

Sure, any quantity of force is bad.  My point was that anything can be a negative at sufficient levels.  Simply increasing the quantity of a thing to a point where it becomes negative does not show that a small amount is also a negative...thus, water.  I'm just trying to keep logical falacies to a minimum.

In the case of the trillion dollar coin, even a single penny of debt monetization is bad.  The coin is detrimental at any dollar value.

 

It doesn't show it if you're unused to thinking in terms of principles, as most people are. Still, it has use as a rhetorical technique. Reductio ad absurdum is a valuable debate tool; it resonates with most people even after the initial conversation.

We aren't debating the truth value of a $9 minimum wage or a trillion dollar coin -- we're debating the best approaches to putting the ideas in other people's heads that these are invalid ideas. Demonstrating the absurdity of their logical conclusion is a good way to do so.

You can respond with "most people don't think in principles, and they will therefore argue back that when a thing is bad in excess, it's still good in moderation," and that's certainly an insightful reply. I would ask what rhetorical technique you would use when confronted with that counterargument. 

[Arius]

I try to re-frame the discussion by changing key assumptions or definitions.  Minimum wage isn't about labor versus management, it's about pitting man-against-man, and I think that's the important part to remember.  Very often people forget to look at the assumptions and definitions in an argument and prefer to jump right into the arguing.  It's funny, because the results of all arguments are decided in the assumptions and the definitions.  I don't even like to pretend that the minimum wage is about labor or business because that assumption clouds the argument.  Or, in the case of the trillion dollar coin, the name of the object "trillion dollar coin" is a subtle trick to draw focus away from what's really happening...It's not worth a trillion dollars.  It's just a bad check...made of platinum, I'll grant you that, but a bad check none the less.  It's those little assumptions that must be cut out of the argument if the truth of the matter is ever to be revealed.

I find that most talking points are crap.  "The minimum wage is a price floor", is it?  Look at other historical examples of price floors...corn, for example.  How does the government maintain a price floor on corn?  It buys all the surplus corn.  Does the government buy all surplus labor?  Nope.  Does the government eliminate all arrangements whereby one person can work for another at a rate lower than the minimum wage?  Nope.  There is both surplus labor and an opportunity to utilize that surplus.  But, if everyone thinks of the minimum wage as a price floor then there's a chance to frame the entire discussion as a labor versus management conflict, rather than what it really is.

The problem with talking in principles is that social violence is cleverly hidden in euphemisms and oddly-inappropriate labels.   (IMHO) If you really want to convince anyone of anything, you've gotta frame the entire conversation differently than the national media chooses too...  Every time I'm convinced of some new idea (or to abandon some old idea), it's because my assumptions were challenged or because new information was introduced.  I figure most thinking people probably share that condition.

[DoubtingThomas]

I didn't gather from that post how -you- would frame the argument except to say that it was "man-against-man." Could you go into more detail?

[Rick Horton]

 

I didn't gather from that post how -you- would frame the argument except to say that it was "man-against-man." Could you go into more detail?

 

Yeah, agreed. That is interesting...

[Arius]

There are two primary points which are presented as pro- and con- arguments surrounding minimum wage laws.  Pro-state leftists will argue all that "predatory capitalism" (heartless business, race to the bottom, minimum standard of living) nonsense.  Pro-state righties argue that the minimum wage increases unemployment by functioning as a price control (just read Forbes, the WSJ, or any other business publication).

When the two arguments are presented against each other, something very interesting happens.  Neither argument addresses any of the other, both make a bunch of unfounded assumptions, and neither addresses the moral argument (which is the best argument to make).  Does the minimum wage increase unemployment?  Not by any measure currently used (I admit, the data does come from the government and the measure of unemployment is questionable).  Do marginal increases in the minimum wage improve the standard of living?  Absolutely not.  Is the minimum wage a price control?  It doesn't meet the definition.  The entirety of those arguments are unsupported.

So, the entire discussion needs to be re-framed.  First, we gotta get away from the idea that the moniker of a piece of legislation, in any way, describes its purpose.  Sure, it is called "the minimum wage", but it isn't a true floor on the cost of labor.  You'll notice, the statement which separates the name and function of the legislation, if shown to be true, dismantles both the left and right arguments.  The discussion is not about the utility of a price floor on labor, no one has even proposed introducing such a floor.  Both assume that the legislation's nickname accurately describes it's purpose.  Once you're past the rhetoric of the legislation, you can ask the important questions.  If it isn't about a minimum wage, what is it about?  Who lobbies for the increases?  How do they benefit from changes in the law?  Who pays most of the costs of the minimum wage?  These are the questions that invite real discovery.  In the case of a debate about legislation, I find it helpful to abandon all the popularized arguments and focus on the facts.

What do we know?  The state is stupid and self-serving.  Elected officials have spent the last two years discussing a method of raising enough money to service federal debt.  The long-term consequences of legislation are not important to the government.  Now, I don't know that the reasoning behind a crazy proposal like "linking the minimum wage to the cost of living" is a scheme to increase payroll taxes.  I do know that it would have that effect (in the short run)...especially if there was a huge bubble of monetary inflation in the near future.  I don't know if anyone looked at the chart which compared the nominal and real minimum wage, but the nominal has been dropping like a stone.  Maybe I'm wrong.  I accept that possibility.  All I know is the minimum wage doesn't improve life for anyone except those affiliated with the state (and I'd challenge anyone to show me any evidence to the contrary).  It (the state) does nothing and collects more money.

It's man-against-man because the spirit of the law creates an adversarial employment environment.  If I'm a manager, I need people to not look for reasons to sue.  If I'm an employee, I need to know my manager isn't going to screw me over at the first opportunity.  Business is about trust and teamwork.  The fear that my employer will cut my hours to save a buck...the fear that my employee will file a claim against me...These things make all working environments hostile.  Labor laws engender distrust and animus between employer and employee...you see? Man-against-man.

 

 

[Rick Horton]

Thank you SO MUCH for all of that. You showed a great deal of honor and dignity in such a logical, honest response. 

[VforVoluntary49]

Framed that way I can definitely see what you mean and no both sides don't honestly argue the truth of the matter-I think that's what causes the most pain, knowing the economic and intellectual ignorance packed into someone advocating for a "minimum wage" increase. I don't think my personal frustration arises from their advocacy for the policy but the knowledge that they don't even understand all the baggage and issues surrounding what they think is a simple phrase/idea. It is man against man and 90% of Americans have no idea what is involved.

[Nathan T_ Freeman]

 

What do we know?  The state is stupid and self-serving.  Elected officials have spent the last two years discussing a method of raising enough money to service federal debt.  The long-term consequences of legislation are not important to the government.  Now, I don't know that the reasoning behind a crazy proposal like "linking the minimum wage to the cost of living" is a scheme to increase payroll taxes.  I do know that it would have that effect (in the short run)...especially if there was a huge bubble of monetary inflation in the near future.  I don't know if anyone looked at the chart which compared the nominal and real minimum wage, but the nominal has been dropping like a stone.  Maybe I'm wrong.  I accept that possibility.  All I know is the minimum wage doesn't improve life for anyone except those affiliated with the state (and I'd challenge anyone to show me any evidence to the contrary).  It (the state) does nothing and collects more money.

It's man-against-man because the spirit of the law creates an adversarial employment environment.  If I'm a manager, I need people to not look for reasons to sue.  If I'm an employee, I need to know my manager isn't going to screw me over at the first opportunity.  Business is about trust and teamwork.  The fear that my employer will cut my hours to save a buck...the fear that my employee will file a claim against me...These things make all working environments hostile.  Labor laws engender distrust and animus between employer and employee...you see? Man-against-man.

 

A wonderful response Arius. I'm not sure if it's what you intended, but my take away from your analysis of pitting employer against employee is that they would do the dance of scheduling. Someone who's costs went up 20% would find themselves scheduled for 20% fewer hours. So they'd go from 40 hours to 32 hours, and still net the same pay. (But "feel" like it was more because of the hourly increase.) If the employer can't fire people outright, he can at least schedule fewer over them at the same time. The net result is the same, but no one actually lost their job.

This would explain why increases in the minimum wage don't increase unemployment directly. They simply increase underemployment.

[Heath Long]

A little anecdote: I remember when I had a minimum wage job. Back then, it was something like $5.50 per hour. When asked, I would answer that I make minimum wage. It was an insult. When I would get a little raise, I would be happy to answer that I made $5.75, because at least my time was worth more than the minimum compensation. To only be paid the minimum that a business can get away with is not good for one's esteem. Imagine those that currently make $9.00 an hour being told that their once more esteemed position now only pays the minimum.

This is an argument for nothing. I do not belive in a minimum wage for the same reasons that I do not believe in taxation, war, or compulsory public school. I do think that an unintended consequence of raising the minimum is to have those making more than the minimum today feel a less valuable tomorrow.