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  1. #601
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    Almost. But not quite.
    Then it is a flawed analogy since those instituting a poll tax (or literacy test) do make such a declaration.
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  2. #602
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    Maybe I have mischaracterized Sharmak's args. For that I apologize.
    No need of course. At this point I've been talking to him for something like 550 posts, that has to bear some insight into his position I would hope. Nor would I expect you to have waded through the last 100 or so to get that insight. I think your interpretation is reasonable because it is the one that is often discussed, and the one that I think progressive policy advocates are more explicit about.


    Quote Originally Posted by Ibelsd
    To be clear, though, I don't want to defend minimum wage.
    :-) Believe me, there is no part of me that thinks you want to defend minimum wage.


    Quote Originally Posted by Ibelsd
    What I am saying is that if your value system, the primary goal, is egalitarianism, then a minimum wage makes sense. In particular if you believe that equalitarianism should be applied to those who are employed and don't mind unemployment for certain demographics. This is kind of the argument I hear from progressives except they generally aren't willing to publicly admit (certainly not politicians) that any tradeoffs exist. Still, I think the tradeoffs are secondary to them as they seek to reach a specific outcome.
    You are certainly right here for many, many Progressives imo. It is also common (and this applies to people across the political spectrum to be fair) for them to not include the "missing man syndrome." IE you don't include the effect you don't see. In this case, the wage egalitarianism would back fire as some portion of people's wages go to $0. But, rarely does anyone think of unemployment like that (unless they happen to be laid off) so we don't include them in that measure.

    My initial take is that they are ok with there being increased unemployment in those demographics because either a) it never occurs to them or b) when it does it is ok because there is a presumption of a government program to help them, maybe even an "opportunity" to open up a new program. What is your take? What drives the acceptance of that unemployment?

    Quote Originally Posted by Ibelsd
    In terms of the Google example, it is an idea I am playing around with. It is not well formulated yet. It is based on a sense I have of the market and I am looking to either validate it with objective evidence or dismantle it. So, I have read your arguments and I am going to sit on them for a bit.
    Totally fair, and I hope I didn't come off as too much of a rain cloud at a parade in my response [I have a tendency to do that]. I'd be happy to chat through it a bit more with you somewhere seperately. There is certainly something there related (imo) to consolidation.

    Quote Originally Posted by Ibelsd
    Let me ask, what values are you seeking with employment?
    Very valid question. My view, unfortunately, suffers from being not particularly good at associating metrics with. Metrics assume a shared goal that I'm not sure is really there. For example, we could interpret the drop off in hours worked by millenials as a result of a bad economy. But that doesn't always seem to be the case. It also seems to be the result of them wanting more flexible working arrangements and valuing time off more than previous generations. So, for them, the lower hours worked metric is better than if it were higher.

    Broadly, I am looking for the maximum number of planners within the labor market (to blatantly plagerize F.A. Hayek). The number of people working or the specific wages worked are interesting metrics and I think we should pay attention to them, but they are definitely secondary (in my personal view) to the chance of individuals to make unrestricted labor choices for themselves. I see this as an extension of the freedom of association and disassociation.

    With that said, it isn't necessarily a bright line distinction. I am open to arguments for interventions (such as retraining opportunities to reduce transitional unemployment), but the above is the working presumption I'm generally starting with.

    Did that answer your question? I think I might have rambled a bit.

    Quote Originally Posted by Cowboy
    I'm asking just for clarification, shouldn't this be those who pay a minimum wage instead of impose.
    Let me see if I can clarify Prof. Boudreaux's point here. Impose is definitely the correct verb rather than pay because Prof. Boudreaux is referring to those advocating for the law (an imposition) not referring to employers.

    What Prof. Boudreaux is saying is that those who advocate for a minimum wage are setting a "minimum value" for those who want to come to a job. Just like those who did the same things, but with coming to a poll. IE that there is no market for those who are offering a value level lower than that mandatory minimum. Just like there was no voting station for those who brought less money to the polling place than the mandatory minimum.

    His point is about those who advocate to abolish that market are relying on the same mechanism used to limit voting through a poll tax. This argument is a riff on a whole class of illustrations about the minimum wage often used by economists. IE you can't say a minimum wage doesn't have the effects described in the OP and argue that cigarette taxes (or sin taxes more broadly) work. Or that a carbon tax would work. Or that cap and trade would work.

    One of those two positions could be true, but not both at the same time. Likewise, you can't say that a poll tax kept poorer (mostly African Americans) from voting (and it did) and say that the minimum wage won't keep those poorer in skills from working. Its the same mechanism.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions. -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  3. #603
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Let me see if I can clarify Prof. Boudreaux's point here. Impose is definitely the correct verb rather than pay because Prof. Boudreaux is referring to those advocating for the law (an imposition) not referring to employers.
    Right, that was all that I was asking. The imposers intention is not that productivity of said employee rise, just their wage. You could argue, and I believe that you just did, that the employer wants productivity to rise.

    Regardless, with a poll tax there is a clear intent.
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  4. #604
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    Right, that was all that I was asking. The imposers intention is not that productivity of said employee rise, just their wage. You could argue, and I believe that you just did, that the employer wants productivity to rise.

    Regardless, with a poll tax there is a clear intent.
    I am responding even though I think Squatch should be the primary respondent. Mostly, I want to make sure my own interpretation is correct. It is always good when we don't assume to know.

    You are right Cowboy, the imposers are not explicitly demanding higher value. What Squatch is quoting is an explanation of how wage mechanisms actually work. He is using the analogy of a poll tax. If you agree that a poll tax reduces voting, then why? The author suggests money is representative of value. If you increase the value required to perform some action, then you should get less of that action. If wages are set to some minimum value, then we are going to increase the value that workers will be expected to bring and, by extension, you'll get fewer workers. This isn't by design or by conspiracy. It is by necessity. If you disagree with this premise, then you have to explain what is the value of money itself. If it is just paper with arbitrary numbers, then why do we accept it all? So, the people insisting on a minimum wage are imposing a minimum value on the market. If an employer doesn't think he can get X value from a worker then it does not make any sense to hire that worker. Well, if you increase the wages from 10 to 15 dollars per hour, then all those workers whose value is in between 10 and 15 dollars will find themselves unemployed. This speaks nothing of the previously unemployed group of those whose value is less than 10 dollars per hour. It isn't an employer imposing this minimum value. It is the employer reacting to the wage demand and reconciling it with his interests to stay in business. That's my understanding of it anyhow and, of course, I could be wrong.
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  6. #605
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    Right, that was all that I was asking. The imposers intention is not that productivity of said employee rise, just their wage. You could argue, and I believe that you just did, that the employer wants productivity to rise.

    Regardless, with a poll tax there is a clear intent.
    Ibelsd's response is correct. Intent isn't relevant because the comparison is about effect, not intent. Both policies have the same effect because they rely on the same mechanism, a barrier to entry.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions. -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  7. #606
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Both policies have the same effect because they rely on the same mechanism, a barrier to entry.
    I'll tentatively agree with that. The barrier however, originates in different places in each example. For the poll tax it originates with the imposer. For the minimum wage it isn't the intender who creates the barrier - they just want people to be paid more and it is the employer that won't (for whatever reason) and causes the hurt in your threads title.
    "Real Boys Kiss Boys" -M.L.

  8. #607
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Ibelsd's response is correct. Intent isn't relevant because the comparison is about effect, not intent. Both policies have the same effect because they rely on the same mechanism, a barrier to entry.
    So, I think what CB SHOULD be arguing and he is too caught up in blame and pointing fingers to see the argument, your analogy is only true if we assume the market is working optimally. If the workers are actually earning less than their value due to, let's say external or even psychological factors, then it may be a valid policy to artificially increase minimum wage. For example, if the economy grew by some random number I'm pulling out of my butt, 10% but worker wages only increased by 2% AND this difference isn't due to production, but human nature explained as follows:
    If I have a workers making $10/hr and the economy grows by 10%, then workers, on average, should see a 10% increase in wages. However, we know people will almost never demand 10% raises and companies won't generally feel required to provide them. So, in a sustained period of economic growth, we could see wages lag far behind expectations. Consider growth rates over 10 years of 1%, 5%, 2%, -.5%, 4%, etc. However, the minimum wage remains at the same value. Previous minimum wage earners have received raises that far under-perform market growth (around 2-3%). This drives little upward pressure on wages above minimum wage. In other words, the market isn't optimal. It is skewed. Not because anyone is mean or cruel. It is just kinda human nature and how wages and raises work. So, maybe it is reasonable to suggest, every so often, we need to prime the wage pump and bump up the minimum wage.

    In the above example, then, we wouldn't expect a value gap and, therefore, wouldn't expect a significant impact on unemployment. In fact, we would probably be adding value to the market by giving people more economic power. Conceivably a win-win.
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  10. #608
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    I'll tentatively agree with that. The barrier however, originates in different places in each example. For the poll tax it originates with the imposer. For the minimum wage it isn't the intender who creates the barrier - they just want people to be paid more and it is the employer that won't (for whatever reason) and causes the hurt in your threads title.
    Well the effect is what is important here. It isn't the motivations that matter much when we are looking at inner-city poverty rates, its the actual cause of those poverty rates.

    And I'm not sure your second section is correct. If Ibelsd and I live in Seattle and I ask him to do a 1 hour task for me for $5.25 and he agrees; it isn't either of us that has created the barrier, its the imposer of the minimum wage (the city in this case).



    Quote Originally Posted by Ibelsd View Post
    If the workers are actually earning less than their value due to, let's say external or even psychological factors, then it may be a valid policy to artificially increase minimum wage.
    That's a good point and I agree. What those factors are is an interesting discussion. The only real major one I've discussed is Monopsony power and I think the mechanisms in your example are generally of either the monopsonistic or institutional inertia (which sometimes gets lumped into monopsony as well) categories.

    IE, if the economy grew by 10% it would take a while for the wages of workers to catch up because of what Keynes called 'wage stickiness;' you have a contract for some period of time at the current wage rate so it probably won't adjust as the economy grows, but in more structured bursts as you renegotiate or find a new job.

    Monopsony power largely doesn't exist in the US, however those kind of lags in wage translation are very real. And (getting to what I mentioned with Sharmak) what is more concerning to me, is that those gains are often translated into non-wage costs such as benefit cost increases and compliance cost increases. So if 8% of the 10% of growth is caught up in filing the 50 new annual forms the County, City, State, and Federal Government demand you fill out, the worker won't see that in their wage, but it is still a cost associated with labor.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions. -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  11. #609
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Well the effect is what is important here. It isn't the motivations that matter much when we are looking at inner-city poverty rates, its the actual cause of those poverty rates.

    And I'm not sure your second section is correct. If Ibelsd and I live in Seattle and I ask him to do a 1 hour task for me for $5.25 and he agrees; it isn't either of us that has created the barrier, its the imposer of the minimum wage (the city in this case).
    You're saying he would refuse to do the same job for $15? Or wouldn't go next door to where he could get $15 for his same hour?
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  12. #610
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    That's a good point and I agree. What those factors are is an interesting discussion. The only real major one I've discussed is Monopsony power and I think the mechanisms in your example are generally of either the monopsonistic or institutional inertia (which sometimes gets lumped into monopsony as well) categories.

    IE, if the economy grew by 10% it would take a while for the wages of workers to catch up because of what Keynes called 'wage stickiness;' you have a contract for some period of time at the current wage rate so it probably won't adjust as the economy grows, but in more structured bursts as you renegotiate or find a new job.

    Monopsony power largely doesn't exist in the US, however those kind of lags in wage translation are very real. And (getting to what I mentioned with Sharmak) what is more concerning to me, is that those gains are often translated into non-wage costs such as benefit cost increases and compliance cost increases. So if 8% of the 10% of growth is caught up in filing the 50 new annual forms the County, City, State, and Federal Government demand you fill out, the worker won't see that in their wage, but it is still a cost associated with labor.
    I agree with most of this. Certainly, if state/federal regualtions eat into the production of employees by causing employers to spend more time per employee on things like reporting, then that would be a counter to any positive effects of min wage.

    Still, and it sounds like you agree, we may need a min wage, or, at the least, it is reasonable to believe that, in some circumstances a min wage is a positive regulation on the economy. If you agree in principle, then it becomes a matter of what the wage should be. In addition, it is reasonable to have policies that increment the min wage over time.
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

  13. #611
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    You're saying he would refuse to do the same job for $15? Or wouldn't go next door to where he could get $15 for his same hour?
    I'm not sure where you got that idea. I'm saying that Ibelsd and I have an agreement for him to do a certain job for a rate we both agree on. The only reason that deal isn't made is that someone else has come in to create a barrier. His willingness to take more (and my willingness to pay less) are completely irrelevant to why the actual deal we both agreed upon didn't happen.



    Quote Originally Posted by Ibelsd View Post
    I agree with most of this. Certainly, if state/federal regualtions eat into the production of employees by causing employers to spend more time per employee on things like reporting, then that would be a counter to any positive effects of min wage.

    Still, and it sounds like you agree, we may need a min wage, or, at the least, it is reasonable to believe that, in some circumstances a min wage is a positive regulation on the economy. If you agree in principle, then it becomes a matter of what the wage should be. In addition, it is reasonable to have policies that increment the min wage over time.
    The evidence seems to support the first part of this very well. That compliance costs have risen to somewhere in the area of 40% of the total cost of employment argues to me that there is a far easier remedy if we are interested in increasing wages.

    And I would definitely agree that in economies with monopsonistic power that a minimum wage has the possibility of overall improving take home pay without the kind of ramifications discussed in this thread. I'm just pretty sure we don't actually live in an economy with those kinds of monopsonistic powers.

    Merging these paragraphs there are things we could do to help reduce wage stickiness, and I think a lot of those actions are similar to ones done to decrease the cost of employment from a regulatory perspective. By reducing the barrier to hire (and to fire) we make it easier for employees to switch jobs and incur lower switching costs when doing so. That makes the labor market more competitive and decreases the period of wage contracts, allowing them to adjust to growth much faster.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions. -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  14. #612
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    I'm not sure where you got that idea. I'm saying that Ibelsd and I have an agreement for him to do a certain job for a rate we both agree on. The only reason that deal isn't made is that someone else has come in to create a barrier. His willingness to take more (and my willingness to pay less) are completely irrelevant to why the actual deal we both agreed upon didn't happen.
    Only you have chosen not to participate.
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    Only you have chosen not to participate.
    The point is:

    the Gov't stopped this business transaction by virtue of a minimum wage, not either of the involved parties "choosing to not participate".



    (Squatch is supposing he is a business/employer not some one looking to get their lawn mowed by a neighbor kid.)

  16. #614
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Belthazor View Post
    The point is:

    the Gov't stopped this business transaction by virtue of a minimum wage, not either of the involved parties "choosing to not participate".

    (Squatch is supposing he is a business/employer not some one looking to get their lawn mowed by a neighbor kid.)
    Operating a business is a privilege, not a right, Squatch also could choose to not follow the laws and be an outlaw employer. His employee might also. Let's say...work under the table for cash.

    I suppose they'd be complaining that they're being "forced" to break the law.
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  17. #615
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    The evidence seems to support the first part of this very well. That compliance costs have risen to somewhere in the area of 40% of the total cost of employment argues to me that there is a far easier remedy if we are interested in increasing wages.

    And I would definitely agree that in economies with monopsonistic power that a minimum wage has the possibility of overall improving take home pay without the kind of ramifications discussed in this thread. I'm just pretty sure we don't actually live in an economy with those kinds of monopsonistic powers.

    Merging these paragraphs there are things we could do to help reduce wage stickiness, and I think a lot of those actions are similar to ones done to decrease the cost of employment from a regulatory perspective. By reducing the barrier to hire (and to fire) we make it easier for employees to switch jobs and incur lower switching costs when doing so. That makes the labor market more competitive and decreases the period of wage contracts, allowing them to adjust to growth much faster.
    In Idaho there is a very real possibility that all of their state regulations will go poof today. Maybe it was a couple of days ago. So, if your claim is true, then we should expect a sudden massive rise in wages for workers in the state of Idaho. So, let's think about this, even if ALL the regulations don't suddenly sunset. The governor could choose to send many or all back to the legislator to renew. Is it reasonable to think workers will suddenly see 40% raises? 30%? 20%? 10? Maybe, over a long period of time worker wages will increase. An extra .5% per year, and finally 20 years later account for the removal of regulations. But, there is a huge gap until we approach that point. And to be sure, as more regulations are added, companies will likely become shy about offering higher wages very quickly. Even the belief regulations will return will force most businesses to hold back. But even if Idaho were to just come out and say, no new regs. We are going 100% reg free, we wouldn't see anything close to an immediate impact for workers. Like a pointed out earlier, companies are never going to suddenly feel obliged to hand 10 or 15% raises. Workers are never going to feel entitled to demand 10-15% wages. There is psychology at play here, as well as, other factors. I don't disagree that regulations can impact wages. What I am saying is that there are other factors we could try to account for. There is a gap between things we can quantify and justify a wage and things that are more phycological or procedural which prevent wages from equaling true value. Maybe this doesn't justify a $15 hr min wage, but it justifies a min wage and it may be higher or lower than $15/hr.
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