> Based on the normal distribution of worker skills there will aways be plenty of people earning just minimum wage
Why? Wasn't the wage you made supposed to be based on the value you added? Or has that argument gone out the window?
I really don't see any reason why there ought to be a normal distribution of wages. Also, the wages are not distributed that way at all, it's a power law distribution, relatively large numbers of people make little money and relatively few people an enormous amount.
> but you can't infer that far more people are earning $6/hour at a $6/hour minimum wage than would be earning that wage if no minimum wage existed.
Sure you can. That's unassailable logic. Every person earning minimum wage is a datapoint that you can use as evidence. How many people do you suppose are earning minimum wage right now?
> Such large scale market inefficiencies would not last for long.
In countries without minimum wage they last up to today, in countries with they lasted up to the moment that minimum wage was introduced.
> Surely some workers would be paid somewhat less without minimum wage, but surely more people would be employed, gaining skills and experience, etc.
Right. You mean "would be locked in to wages below subsistence level without much chance of improvement". Gaining skills and experience doing what? Flipping burgers? Checking out at the register?
> Who really knows what the impact of this would be on various industries over time.
Shareholder value would increase :)
> The modern world has done away with low skilled manufacturing jobs (which might have been the first run on a ladder to more skilled jobs) and replaced hundreds of thousands of workers with a far smaller number of robots.
You must live in a different world than the one where I live. Where I live we've outsourced those manufacturing jobs to places where there is no minimum wage and there is a disregard to job safety and public health. And in more than just a few cases where there is no age limit for full time work either.
> Imagine a world in which people could be hired for $2 per hour (where that's all their skills were worth).
Imagine a world in which people could be hired for $7 per hour (where that's all their skills were worth).
We already live in that world.
So firms do take advantage.
> Firms do not "take advantage" any more than workers do.
Right. Workers have yet to take advantage of their employers in a single instance, whereas employers have historically abused their workers routinely and still do so today in many places, and would do so in many more given the chance.
The worst thing a worker can do is to strike. And that is - in most places - a government protected right. Coincidentially, most of the places where you can't legally strike also don't have a minimum wage.
Really, I can see a lot of advantages to Capitalism but there are limits to what it can achieve and if it was a perfect system then we wouldn't need minimum wage, and we wouldn't need unions either. In the real world, unfortunately, we need both.
Capitalism is like democracy, it's not perfect but it seems to be the best we've got. Hopefully in the longer term it will turn out that we can and will do better.
Then, on top of all that there is one more factor. The minimum wage sets the base level for all other wages. There would be a tremendous knock-on effect from removing the minimum wage. When minimum wage was introduced everybody benefited (well, except for the highest segment, maybe).
I don't disagree that people should be able to earn a living wage. However it is supply and demand that sets wages (in the absence of a minimum) and so if you are arguing that the minimum wage sets the "floor" you are proposing some fairly mind boggling demand side effects.
Your view also defines workers and firms as adversaries with no shared interest in improving worker productivity (ability to add value). Aside from pure manual labor (for which workers might be whipped to increase productivity and for which virtually no intellect or interest is required) all firms would benefit from improving the human capital value of their labor force.
Strikes are a legacy of the days when work was simply straining one's muscles against the earth or repetitively doing stitching, stamping, etc.
Unions, too, are a legacy of the days when you could be replaced by any willing person ready to step in and earn your wage. Today, Unions are granted additional power (beyond the market power they would have just via collective bargaining) and they essentially impose a tax on certain firms. I'm not anti-union... they serve an important purpose, they just shouldn't have any extra power beyond collective bargaining. New hires shouldn't be forced to join, etc.
In my view, minimum wage laws have a few negative effects:
- they drive low wage work into the black market where there are no protections against abuses.
- they limit employment opportunities for those whose ability to add value is lower than minimum wage... such people become wards of the state, terminally unemployed.
- They make subsidized training arrangements infeasible for low end workers.
- They draw a sharp distinction between employed an unemployed. It would be far more accurate to determine that a person needs $3/hour of support from the state b/c they can only reliably pull in $4 per hour. In today's world, that person is unemployed or is constantly fired after it becomes obvious that he/she is not fit for minimum wage work.
Sure you can. That's unassailable logic. Every person earning minimum wage is a datapoint that you can use as evidence. How many people do you suppose are earning minimum wage right now?
Technically, to demonstrate that, you'd need to demonstrate that the minimum wage level is an outlier in the overall wage distribution. That should be very easy to see if we had a histogram of how many people earn a given wage, but my Google-fu is failing me on that point.
There are two things an employer can do when considering an employee who they would prefer to pay less than minimum wage: either pay minumum wage, or don't have that employee. There's some cutoff as to which choice the employer makes. You can guess one way, as you do, and most minimum wage earners would be substantially harmed by the removal of the minimum wage. You can guess the other way, as grandalf does, and most current minimum wage earners would be either entirely or near entirely unaffected. Without numbers, either one is still a guess.
Keep in mind that in increase or decrease of the minimum wage will affect all wages higher than minimum wage, with a more pronounced effect on the lower end of the scale.
Minimum wage is 2% of the workforce for full-time employees, a much larger percentage when looking at part-time employees. Minimum wage is also usually found to be associated with either the young, the old or the uneducated, in other words, those that have a bad negotiation position.
It's a good start, but it's based on total income. So, someone with two minimum-wage jobs adding up to (say) 60 hours per week will appear above someone with a job paying twice minimum wage who only works 20 hours a week. That's not what we're looking for if we want evidence that minimum wage is increasing the wages of many on the low end of the scale.
Unfortunately, this happens to be what the census bureau tabulates, which makes it hard to find the data we're actually looking for.
Why? Wasn't the wage you made supposed to be based on the value you added? Or has that argument gone out the window?
I really don't see any reason why there ought to be a normal distribution of wages. Also, the wages are not distributed that way at all, it's a power law distribution, relatively large numbers of people make little money and relatively few people an enormous amount.
> but you can't infer that far more people are earning $6/hour at a $6/hour minimum wage than would be earning that wage if no minimum wage existed.
Sure you can. That's unassailable logic. Every person earning minimum wage is a datapoint that you can use as evidence. How many people do you suppose are earning minimum wage right now?
> Such large scale market inefficiencies would not last for long.
In countries without minimum wage they last up to today, in countries with they lasted up to the moment that minimum wage was introduced.
> Surely some workers would be paid somewhat less without minimum wage, but surely more people would be employed, gaining skills and experience, etc.
Right. You mean "would be locked in to wages below subsistence level without much chance of improvement". Gaining skills and experience doing what? Flipping burgers? Checking out at the register?
> Who really knows what the impact of this would be on various industries over time.
Shareholder value would increase :)
> The modern world has done away with low skilled manufacturing jobs (which might have been the first run on a ladder to more skilled jobs) and replaced hundreds of thousands of workers with a far smaller number of robots.
You must live in a different world than the one where I live. Where I live we've outsourced those manufacturing jobs to places where there is no minimum wage and there is a disregard to job safety and public health. And in more than just a few cases where there is no age limit for full time work either.
> Imagine a world in which people could be hired for $2 per hour (where that's all their skills were worth).
Imagine a world in which people could be hired for $7 per hour (where that's all their skills were worth).
We already live in that world.
So firms do take advantage.
> Firms do not "take advantage" any more than workers do.
Right. Workers have yet to take advantage of their employers in a single instance, whereas employers have historically abused their workers routinely and still do so today in many places, and would do so in many more given the chance.
The worst thing a worker can do is to strike. And that is - in most places - a government protected right. Coincidentially, most of the places where you can't legally strike also don't have a minimum wage.
Really, I can see a lot of advantages to Capitalism but there are limits to what it can achieve and if it was a perfect system then we wouldn't need minimum wage, and we wouldn't need unions either. In the real world, unfortunately, we need both.
Capitalism is like democracy, it's not perfect but it seems to be the best we've got. Hopefully in the longer term it will turn out that we can and will do better.
Then, on top of all that there is one more factor. The minimum wage sets the base level for all other wages. There would be a tremendous knock-on effect from removing the minimum wage. When minimum wage was introduced everybody benefited (well, except for the highest segment, maybe).