Minimum Wage Response: Part One- The Clarification
Well I lost the last half of my response, but the first half is worth getting up. Here you are:
So this is a little unorthodox but I typically need challenges to fully develop my ideas and reach an appropriate consensus, so I am going to respond to a comment to my entry on minimum wage. To minimize clicking it is below:
"Now some stick to the minimum wage because a recent study showed that a raise in the minimum wage had no effect on employment. However a subsequent study showed that a drop in employment does occur, it just happens before the minimum wage law goes into effect."
And another subsequent study showed the previous subsequent study to have 1) an absurd conflict of interest and 2) a demonstratable apparent bias in its data sampling methods. Notably, they didn't actually sample any data; they were handed a data set from an anti-wage-floor think tank, which refuses to disclose their sampling methods.
Unless you're referring to another study enitrely. Then I got nothin'.
I dont buy the economic arguments against minimum wage. Assumptions that wages are efficient and elastic; that employees can just easily quit their jobs and find new ones; that monopsonies dont exist. These are the opposite of the truth. Bullshit assumptions do not scientific reasoning make.
So now my response: First of all, I should have cited the studies I was referring to. This was just lazy on my part and this may clarify some of the commentator’s concerns (who I will now refer to as Mr. C). David Card and Alan Krueger, of UC Berkley and
Now two studies came out with responses to the Card and Krueger study, first, Daniel Hamermesh of the
-Mr. Alec
posted by Alec Brandon @ 10:47 PM
4 comments
4 Comments:
Alright, much to say.
First, your point on cartels, now although it seems like a grave harm for something like this to happen, it is incredibly unlikely. This is because if four companies band together, then all four of those companies have a massive incentive to cheat, pay slightly more than all other three and get much better workers as a result. This is why cartels do not happen in general, with OPEC as the glaring exception (although that is different considering it is a limited resource and also OPEC nations tend to cheat quite a bit on their "mandated" limits). I mean, hypothetically this is something that could happen to every worker, no matter their position. So for example, why don't universities all band together to screw over their professors? Well first answer is one would cheat, because that would give them an excellent advantage in wooing students to study there and also pay more money to do so, thus everyone cheats.
But the second reason why Universities would not do that is because many jobs are transferable (ie secretaries are not limited to only jobs in finance) on top of that, the jobs that are not transferable, are ones that are typically very high paying, because the company is reliant on an excellent product from those employees. But this is besides the point.
Now your third arguement (then i'll get to your second): so lets apply this example to a typically low paying job, namely, waiter. Now in your example restaurant A and B are going to get excellent waiters, or just plain better waiters than C and D. As a result, restaurant A and B will do much better. The owners of C and D will have no choice but to raises wages in an attempt to improve service and thus improve sales.
So then you say that, well workers skill is probably not important in the first place, especally in low paying jobs. But I beg to differ, because although "skill" may not apply to such workers, other intangibles do. So if McDonalds has its choice between a crack addict who steals from the store or a nice teenage girl who works hard and shows up on-time, who will it go with? From this we can also find that this nice teenage girl, if she applies to jobs at McDonalds, Wendy's, Burger King, etc. will get her pick of the job, over all the crack addicts applying for jobs at the same time. Now who will she work for, the one that pays her less or more. The answer is obvious.
Now your second arguement, equilibrium wages are not constant. They change based upon what the demands of a living wage are. If McDonalds is paying me below my living wage, I am going to go find another job, and if I am a good employee or McDonalds wants good employees, then they are going to have to give me more money, or I'll ditch them. But more importantly, the equilibrium wage changes every second, there is no "magic wage" as you say there is. Companies just want to maximize profits, as do workers, and in doing so an equilibrium wage is found.
Now to some veiled arguements you make towards the end. You make reference to how if secretaries are not paid enough, no one will care and they can be easily replaced. This is not true. Secretaries are like any other job, there are good ones, and really shitty ones. Good ones make good money, more often then not, shitty ones don't make much money. If I had a secretary, a good secretary, I would not ditch her, if her replacement was like...gefner.
Last, I completely agree that we ought to provide a living for people that otherwise could not have one. But the minimum wage does not accomplish that, also there are other mechanisms by which that is possible, the Earned Income Tax Credit is a great start, and one that does not cost jobs for the sake of a supposed moral conscience.
As to the matter of 95% vs. 100% (which was a great little closing, the ole, even if you are right, is it that worth it--I use that one so much in debate), I think it is better to have 100% working for a reasonable wage instead of fewer people working for a "more" reasonable wage. Especially when other, far more effective solutions exist to solve labor inequalities (that minimum wage does nothing to solve).
-Mr. Alec
PS You better not be going away, have a great time and I'll see you on the flip side.
Your arguements on minimum wage all assume the workers are living in a town or city with many companies vying for employees. What about all the workers in the more rural area of america where job opportunities are scarce, there is an oversupply of capable workers and most employers are small businesses. Or towns with one major employer. In addition, what about the impact of illegal immigrants.
They can move. No one has an indivisible right to have a great well paying job wherever they wish to live. I could move to North Dakota after I graduate college, get a small house, and then demand for employers to move to North Dakota and employ me, but that would be stupid.
Now if an entire industry dies in a town or city, like in a place like Flint, Michigan, then I do think the government should assist in getting people training for new jobs or money to move, but anything else is just destructive in the long run.
-Mr. Alec
I'd like to say something if I may...
The minimum wage bchat thus far has been largely based on economic models which rely on assumptions (competition between employers, low transactions costs to change jobs, etc.) and require testing.
I think it is more important to first decide which issues have the most economic significance. There are towns in the US where a large employer (or large colluding employers) push down wages. In that town, the lack of employer competition may be the most economically signficant issue to justify a minimum wage law. There are cities and states in the US that are experiencing low or negative economic growth. In those places, high unemployment may be the most significant issue to oppose a minimum wage law.
BUT! There are 7 million illegal immigrants in the US. The ONLY reason they are here is that corporations have discouraged federal enforcement of immigration laws. Should low-wage workers in the US be angry that corporations cause large numbers of foreigners to enter the US and lower their wages? Find someone who is poor, who has struggled to find work to provide the basics for their family, who has been educated to believe that the US system is fair. Ask them the question.
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