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Subject: PragerU: How the Minimum Wage Hurts Young People rss

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Kelsey Rinella
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New content out of PragerU today. It's brief:

Quote:
People with different job skills and responsibilities get paid different amounts. That’s no surprise to anyone. No one thinks it’s strange for the President of the United States to earn more than the president of your local school board, after all. But it’s something that often gets forgotten in the debate about people who earn the minimum wage.

Let’s say you own a home with a large lawn and there are several teenagers in the neighborhood interested in mowing that lawn. You might pick the one who will charge the lowest price, or Ned… well, because he asked first. Because the skills needed to mow the lawn are pretty basic, you’re confident the job will be done to your satisfaction.

Now let’s say the government passes a law that says you now need to pay at least 40% more than you intended. What do you do? You might simply decide to start mowing the lawn yourself, or you might become a lot pickier in deciding who gets the job. You may switch to the person who does it with the most attention to detail, which isn’t Ned’s strong point. So now Ned is unemployed.

Well the same thing happens when the government increases the minimum wage. In accounting terms, a higher minimum wage means employees are more expensive. When this happens, business owners often lay off workers simply because they can’t afford the added expense, and it makes good business-sense to keep the most skilled employees (like our lawn-mowing scenario).

Unfortunately, it’s the lower-skilled workers -- who may need the raise the most -- who are out of the job and are often the ones hurt by the unintended consequences.


As befits a brief piece, it doesn't attempt to be comprehensive. Still, it doesn't seem unfair to point out that they're appealing to Communist sympathies to justify their opposition to a position often described as Socialist. We should feel sorry that jobs aren't going to people who need them most, but to the people who'll do them best? Seems unprincipled.
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rinelk wrote:
New content out of PragerU today. It's brief:

Quote:
People with different job skills and responsibilities get paid different amounts. That’s no surprise to anyone. No one thinks it’s strange for the President of the United States to earn more than the president of your local school board, after all. But it’s something that often gets forgotten in the debate about people who earn the minimum wage.

Let’s say you own a home with a large lawn and there are several teenagers in the neighborhood interested in mowing that lawn. You might pick the one who will charge the lowest price, or Ned… well, because he asked first. Because the skills needed to mow the lawn are pretty basic, you’re confident the job will be done to your satisfaction.

Now let’s say the government passes a law that says you now need to pay at least 40% more than you intended. What do you do? You might simply decide to start mowing the lawn yourself, or you might become a lot pickier in deciding who gets the job. You may switch to the person who does it with the most attention to detail, which isn’t Ned’s strong point. So now Ned is unemployed.

Well the same thing happens when the government increases the minimum wage. In accounting terms, a higher minimum wage means employees are more expensive. When this happens, business owners often lay off workers simply because they can’t afford the added expense, and it makes good business-sense to keep the most skilled employees (like our lawn-mowing scenario).

Unfortunately, it’s the lower-skilled workers -- who may need the raise the most -- who are out of the job and are often the ones hurt by the unintended consequences.


As befits a brief piece, it doesn't attempt to be comprehensive. Still, it doesn't seem unfair to point out that they're appealing to Communist sympathies to justify their opposition to a position often described as Socialist. We should feel sorry that jobs aren't going to people who need them most, but to the people who'll do them best? Seems unprincipled.


Offshoring provides repeated clear examples of selecting the lower skilled worker. Once corporations reach a certain size the executives are more concerned with their bonus then they are with the corporations health. By the time negative effects apply they will be at a different company anyway.

Lack of a minimum wage combined with a labor glut leads to an ugly situation that a majority of citizens have found to be worth opposing in the past. The labor glut is really a root problem.

When we have a labor glut it leads to depressed spending and severe economic dislocation for the entire society. AKA like during the Great Depression. Putting restrictions on labor to create a labor shortage is part of what helped us get out of the Great Depression. (it wasn't the ONLY part- probably not even more than 20% of the solution).

In theory having no minimum wage would help to lower inflation and turn back the dial on inflation. But in practice existing debt becomes unserviceable in this scenario.

Edited: my phone voice typing made holy hell love this post.


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Using a figure of 40% that the writer pulled out of their ass and then concluding "now that boys and girls is why minimum wages are bad" is bullshit, fake economics 101.

In actual reality minimum wages can affect unemployment. Sometimes they do, sometimes they don't, it depends on a whole bunch of related things.

And color me shocked that the writer either doesn't know or decides not to mention that the aim of minimum wage laws is simply to raise wages. Some unemployment can be a cost of that. Rational economists would query whether it's worth it rather than just say its bad.
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Kelsey Rinella
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myopia wrote:
Using a figure of 40% that the writer pulled out of their ass and then concluding "now that boys and girls is why minimum wages are bad" is bullshit, fake economics 101.

In actual reality minimum wages can affect unemployment. Sometimes they do, sometimes they don't, it depends on a whole bunch of related things.

And color me shocked that the writer either doesn't know or decides not to mention that the aim of minimum wage laws is simply to raise wages. Some unemployment can be a cost of that. Rational economists would query whether it's worth it rather than just say its bad.


Yeah, I mean, I get the need to simplify when you're trying to present bite-sized pieces of complex issues. So I don't expect this person to talk about everything, and that's fine. What kind of sucks is that this feels like presenting a small piece of a larger argument as a way of suggesting that the rest of the argument works similarly, when it REALLY doesn't. I don't disagree with the point that higher wages increase the value of selective HR policies, and that this hurts worse workers. But it's so very partial that it seems like deliberately ignoring the factors which offset that cost.
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maxo-texas wrote:
... Once corporations reach a certain size the executives are more concerned with their bonus then they are with the corporations health. ...

It's not just size. An innovative company like Intel still stays healthy; the CEO is a tech guy. Many companies, especially commodity companies, put accountants in the CEO position, leading to short-sighted, penny-wise, pound-foolish decisions.

I'm not sure it's been noted in RSP, Walmart raised wages to at least $10 in February, following the examples of highly rated stores Trader Joe's and Costco.

More than 1.2 million Walmart employees will get a raise this Saturday [CNN]
How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More [NYT]
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Tall_Walt wrote:
maxo-texas wrote:
... Once corporations reach a certain size the executives are more concerned with their bonus then they are with the corporations health. ...

It's not just size. An innovative company like Intel still stays healthy; the CEO is a tech guy. Many companies, especially commodity companies, put accountants in the CEO position, leading to short-sighted, penny-wise, pound-foolish decisions.


The difference between someone that understands the business and wants to grow it and someone that doesn't is pretty huge. A lot of big company problems come from total lack of judgement, because the brass is unable distinguish between a good and a bad idea: It's all the same for them. As companies grow, sometimes we see the lack of discernment 2 levels above the rank and file, and then the game is over.

This is a big reason why, when possible, one should pick employment in a growing company that still has people in charge that might understand what the company does, and how to make it better.
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prager u sux
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Tall_Walt wrote:
I'm not sure it's been noted in RSP, Walmart raised wages to at least $10 in February, following the examples of highly rated stores Trader Joe's and Costco.

More than 1.2 million Walmart employees will get a raise this Saturday [CNN]
How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More [NYT]

It's called efficiency wages.

Efficiency wages aren't the same as minimum wages.

The latter is enforcing a certain wage whether it's efficient or not.
 
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single sentences wrote:
prager u sux


And, furthermore, Carthage must be destroyed.

I jest, but these reminders that discussing Prager U aren't endorsements of it have value. But, having access to more than one sentence, I prefer to make that point with more supporting arguments (hopefully also pointing the way to various options for principled conservatism which don't have the flaws of Prager U).
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rinelk wrote:
As befits a brief piece, it doesn't attempt to be comprehensive. Still, it doesn't seem unfair to point out that they're appealing to Communist sympathies to justify their opposition to a position often described as Socialist. We should feel sorry that jobs aren't going to people who need them most, but to the people who'll do them best? Seems unprincipled.


No, it's entirely true. What we have in most if not all developed countries is an alliance between the middle-class and the upper lower-class. Minimum wages and equivalent arrangements makes income deciles 5 to 9 better off at the expense of decile 10 (who don't get to work as much as they would like since they're often "illegally incompetent"), decile 2-4 (who pay higher prices on lawn mowing and everything else with a sizable labor component) and decile 1 who gets lower returns on their investments (unless, of course, these are in shipping companies, automatization and every other type of business for which domestic labor costs is a plus).

On average, minimum wages are good for overall income equality. But the least productive members of society are sacrificed for this end. So instead they are bought-off by welfare, to keep them on Team Left. Problem is that welfare has a way of perpetuating the lack of productivity. Also, when minimum wages are high, welfare payments must be high to match, and when welfare payments are high, they must be combined with some sticks to keep productive workers out. These sticks (humiliation, workfare, bureaucratic paternalism) add further disutility to the poorest.

Labor unions have never been champions of the disenfranchised. The original unions organized skilled workers against the rest of the proletariat. The Left's relationship with the poorest has always been contentious. Already Marx warned us about the "Lumpenproletariat", the class below the working class, a "dangerous class" from which the conservatives (and later, fascists) find their blacklegs and foot soldiers. ("Knock the crap out of them. I'll pay the legal fees.")

The alliance between the middle and upper-lower class is a natural one, and has characterized much of the developed world, especially in Europe, Scandinavia in particular. The opposite alliance, between the lowest and the upper classes, is less pretty. Trump is the best it has delivered, which says a lot.

So minimum wages, and other efforts to boost income equality by distorting market forces at the expense of the poorest, are a dead end.

When it was Sanders vs Clinton, I decided to for the first time in my life donate to a political campaign outside my own country. With credit card in hand, I went to Sanders' campaign page. But it put me off immediately. The main message was: "Everybody who works 40 h/week should have decent living standards" or something like that.

FU Sanders. Everybody should have decent living standards, period.

Let Ned mow the lawn. And if you think he's too poor, then let's give him money. For existing. But let us not restrict his choices.
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Kelsey Rinella
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Quote:
Also, when minimum wages are high, welfare payments must be high to match…


Why?
 
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Before a minimum wage was introduced here, businesses complained about how it would cause every bad thing imaginable, in particular increasing unemployment. When it was, the effect on unemployment was not measurable, it was zero within measuring error. Now in part that was because it was set at a low level, with an age taper. But the complaints were over it at that level.
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Mondainai wrote:
But it put me off immediately. The main message was: "Everybody who works 40 h/week should have decent living standards" or something like that.

FU Sanders. Everybody should have decent living standards, period.

Sure - but you have to remember the context. For some Americans that Sanders statement might be considered crazy talk, way to the left of any sane person.
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hyperbolus wrote:
I think Prager U may be appealing to a younger crowd given the subject and the short length of the video. So this is far from a serious discussion on the subject.

TLDR: The "market" itself can manage to determine a "fair" price for a good or item to a reasonable degree without government interference that would require increased government spending and also importantly restricting freedoms to it's citizens.


Your first point is well-taken, but your values shouldn't change based on who you're talking to. Presentation, sure, maybe emphasis, but if you think Communism is bad, you should never appeal to it, even when talking to children (much less youngish adults). That's my point--Prager U is where I've been directed to find a good example of arguments for conservative principles. This piece utterly abandons that goal, arguing instead merely for conservative results. It explicitly disavows the sort of market-based thinking you just used--what they're complaining about is that young workers depend on the illiquidity of the labor market, and that a minimum wage causes employers to be more likely to choose the best employees.

That not only betrays free-market principles to acknowledge one of the ways markets deviate from our idealizations of them, it also does so while ignoring far more important market friction in just the way you do. The minimum wage was introduced during a period in which it was obvious that the market doesn't set a fair price, because the labor market is very rarely very free. Most people face very large costs to seeking the best rate their labor can command, because moving across the country (or the world) is expensive in both time and social capital. So the price of labor is predictably and universally lower than it should be, left to markets alone.
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hyperbolus wrote:
rinelk wrote:

That not only betrays free-market principles to acknowledge one of the ways markets deviate from our idealizations of them, it also does so while ignoring far more important market friction in just the way you do. The minimum wage was introduced during a period in which it was obvious that the market doesn't set a fair price, because the labor market is very rarely very free. Most people face very large costs to seeking the best rate their labor can command, because moving across the country (or the world) is expensive in both time and social capital. So the price of labor is predictably and universally lower than it should be, left to markets alone.


The standard Friedman response is that if prices are "unfair" then government intervention is likely at work. So a minimum wage would only be needed if other government interventions are at work creating monopolies or other price fixing. It is very similar to the argument that socialism will work but it needs to have all the correct systems in place to make it work. Free markets will regulate themselves only in a completely unregulated environment.

Friedman would be very opposed to Trump's economic protectionism. Friedman also would have thought the companies that created the 2008 crisis should have "died". Essentially allowing the monopolies to be broken up by after having failed. I don't know if he would have been prepared to take the "leap of faith" and let the credit crises resolve itself without government intervention.

It is too bad he died 2 years before that. But I am almost certain he would have blamed 2008 on too much regulation not on a lack of it.


I understand that this is the standard Friedman response. That response only applies when the assumptions behind markets apply. I'm not asking you to trust me that they don't--you know they don't. So what good does it do to identify the classic Friedmannian response? It's not regulation which makes it expensive to move to a new job, it's the difference between reality and market theory abstractions.
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Yes, we can decrease the ever-widening income gap if only we can pay workers less! That's the ticket!

Fuck PragerU. It's a dumpster fire of rightwing videos, most of which are wildly misleading and based on lies.

However, their video about the cause of the Civil War is really good and quite accurate. They, like any organization with an ounce of sanity, agree that it was fought over slavery. Credit where credit is due.
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rinelk wrote:
Quote:
Also, when minimum wages are high, welfare payments must be high to match…


Why?


Because you can't argue that "XX $ is a bare minimum for a decent living standard" and then don't offer something proportional to that to those without work.

Also, in order to keep up the lowest wages, you have to "bribe" the least productive workers into passivity. If you don't, then for every cent you increase the minimum wage, you'll have more workers and more companies willing to trade labor off the books. It's like OPEC - unemployed workers are paid to sit on their oil.

And this passivity is what concerns me the most. Ideally, it should be used for education. It's the traditional Nordic model - those too incompetent to reach above the minimum wage should be paid to get schooling until they do reach above the minimum wage.

However, such schooling is very expensive, if it is to be effective. In reality, what we have over here, is a large share of the population withering away in programs which serve no other purpose than to keep them off the labor market. Also, not just labor is denied when on welfare, you also can't start a company or study something outside your designated program or doing anything meaningful at all. Because if you could, then more people would do it instead of working and paying taxes, and the system would become even more expensive, and it's already expensive enough to give us the world's highest taxes.

This is why I don't like when politicians like Sanders look at Scandinavia as some kind of role model. Yes, high minimum wages are a quick and easy way to get a better income distribution. But it has long-term negative consequences for the same.
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Mondainai wrote:
rinelk wrote:
Quote:
Also, when minimum wages are high, welfare payments must be high to match…


Why?


Because you can't argue that "XX $ is a bare minimum for a decent living standard" and then don't offer something proportional to that to those without work.


Sure we can. We're Americans, we're basically fine with layabouts getting screwed. If the minimum wage lets you live decently, welfare should keep you alive and able to get off welfare, but it needn't be comfortable. The U.S. has the political will to be assholes.
 
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[q] But it has long-term negative consequences for the same. [q]
Does it have significant unavoidable consequences?

If we compare Scandinavian countries (with high minimum wages) with USA (with low minimum wage) do we find that those in the lowest deciles of incomes are worse off in Scandinavia or USA?

If those negative effects are unavoidable then I'd expect to see them magnified in Scandinavian countries.
 
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[q="Pinook"]
Quote:
But it has long-term negative consequences for the same. [q]
Does it have significant unavoidable consequences?

If we compare Scandinavian countries (with high minimum wages) with USA (with low minimum wage) do we find that those in the lowest deciles of incomes are worse off in Scandinavia or USA?

If those negative effects are unavoidable then I'd expect to see them magnified in Scandinavian countries.


I think that on average, the poorest in Scandinavia are a lot better off materially.

But if we compare refugees, they are a generally better off in the US. They come and don't know the language, but are able to learn while working for small wages. Over here, you're a lot more likely to get trapped in welfare. The way the system works, you have to jump straight from benefits to a full-time job in order to net one cent. And few employers will give a fixed full-time contract to someone who don't know the language very well, and has spent the last couple of years doing nothing (apart from the "education").

Also, a consequence of us having this system for half a century means that simple jobs have been rationalized away. They're automatized or simply not there - customers and companies are accustomed to labor-saving practices. In most grocery stores you check out your goods yourself etc.

This would be fine if profits were duly taxed and distributed among everyone unconditionally. But they aren't. You get welfare conditional on you confirming to certain rules, which often are that you work anyway as an "intern", but get welfare instead of salary, meaning that the de facto minimum wage is a lot lower than stated. And you feel inferior because it isn't a "real job", but keep working because you need to survive and because your bureaucrat says that this might lead to a real job, but when the internship is over, the company finds another tax-funded intern, and you get another internship and are still on welfare.

Materially, you're probably better off over here than in the US. But it comes with the feeling that you're a second-class citizen that can't choose where to go in the morning. You don't have agency to say "I refuse to slave here, I'll slave for another employer".

Still, it's probably better, as of now. But it shouldn't be the chosen direction for a progressive leftist American politician. At the core, it's about redistribution. So redistribute directly. Don't take the detour through the wage mechanism and screw up the labor market. You'd only speed up the automatization that makes low-productive workers useless.
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myopia wrote:
Using a figure of 40% that the writer pulled out of their ass and then concluding "now that boys and girls is why minimum wages are bad" is bullshit, fake economics 101.

In actual reality minimum wages can affect unemployment. Sometimes they do, sometimes they don't, it depends on a whole bunch of related things.

And color me shocked that the writer either doesn't know or decides not to mention that the aim of minimum wage laws is simply to raise wages. Some unemployment can be a cost of that. Rational economists would query whether it's worth it rather than just say its bad.


Really? You criticize a short video less than 2 minutes long because it doesn't explain what you also fail to explain? What you offer is:

Quote:

it depends on a whole bunch of related things.


I think the video was easily X100 more informative than your offering.

The question to ask, well questions, about minimum wage are pretty easy

- does it promote automation or less people working unskilled jobs?

- How many people make careers from minimum wage jobs?

- How many people use minimum wage jobs as a jumping off point to learn the basics of having a job?

- should a regional effect +/- of raising the minimum wage be considered the baseline for all economic situations, regions, states, economic situations, nations, ideologies, etc.?

I'm pretty sure I'm the only person who has posted here who has started and run small businesses where I employed people at low to medium wage levels. Looks to me like a lot of people ranging from lawyers to WTF are chiming in as if they somehow have special insight into the subject due to their self-anointed special insight super power. I'll answer what I believe is best for the American situation not any other nation... mainly because I don't really care what Sweden or the UK does.

* I believe the ideal minimum wage is $0.00 per hour. I started working 20-40 hours a week in 1963 at .40 cents an hour and within 2 months I had located another job doing the same kitchen work starting at .52 cents an hour. When I left that job 18 months later I was making $2.00 an hour. Oddly enough, I still have the W-2 slips to prove it. Minimum wage, had it been let us say .75 cents in 1963 would have cost me a lot of money. I think that's pretty easy to see. So $0.00 per hour is the best starting point for anyone except special cases.

* Since you have Google and an internet connection you can no doubt educate yourselves about the important question of whether any sizable percentage of people who start at minimum wage end up retiring 45 years later having spent 45 years making whatever the lawmakers mandated they ought to make. Do you know anyone like that? Seriously, think about people including you, friends, family, etc., who started their working life at a minimum wage job. I'd wager that is better than half of every single person you know, probably closer to 80%. How many of them now, today, are still living and perhaps supporting a family at minimum wage?

Which means the best way to look at whether minimum wage is a deterrent on people and hiring (As I believe) or not may be to discover for yourselves how many people leave minimum wage employment every year (or reporting period) and move on to better, higher earning jobs? That's the key to the argument of mandating low pay based on the assumption that some majority of families are living off $8 or whatever an hour.

* Conclusion. Make it $0.00 per hour, maybe phase that in, encourage small biz to hire unskilled workers and teach them the basics and deal with the special cases like disabled workers, etc. with grants, federal/state aid, job training, etc.

But having only created a few hundred jobs in my life and knowing for a fact that not a single one of those several hundred people I created jobs for now works for minimum wage I'm not sure my input has any value at all.
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hyperbolus wrote:

I am very happy with my balance sheet but that is neither here nor there. If I am going to "educate myself" I will read what Milton Friedman or Thomas Sowell have to say on the subject. Not you.


Correct. I even mentioned that in my post. But you must have some interest in what regular people have to say, right? After all, you're here with the other regular people. I've read about 6 of Sowell's books and am hazy on whether he ever specifically addressed minimum wage laws. Maybe has, I may check myself, later. Probably not though because I'm pretty sure I'm right.
 
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Mondainai wrote:
rinelk wrote:
Quote:
Also, when minimum wages are high, welfare payments must be high to match…

Why?

Because you can't argue that "XX $ is a bare minimum for a decent living standard" and then don't offer something proportional to that to those without work.

I think your argument is a bit off. You're offering two choices:

1. $X/hr + satisfaction of working - commute costs - time - stress.
2. $Y/month - social stigma.

These are completely different offerings that will appeal to different people.

Mondainai wrote:
However, such schooling is very expensive, if it is to be effective.

1st, consider that at the beginning college/trade school level it's one moderately priced teacher, 3x to 5x minimum wage, teaching 30 to 50 students. So, you only need to improve the students by about 10% of minimum wage to break even in a number of hours the same as the teaching time. Actually, they work 40 or 50 years, 80,000 to 100,000 hours. That's 10 to 50 times their schooling hours. So, the average improvement you need is 1% down to 0.2%.

2nd, I've modeled the situation for the actual educational institutions in California and real taxes in the US. If you give someone 2 years of junior college and 2 years of state college to get them a 4 year degree, you do not have to loan them money: the increase in taxes paid due to their higher income will easily pay for the education and interest on the money you spend teaching them. This is not based on idealized results but on average results. It's also only based on federal income taxes and doesn't include state or local taxes, whose yields would also increase.
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Tall_Walt wrote:
Mondainai wrote:
rinelk wrote:
Quote:
Also, when minimum wages are high, welfare payments must be high to match…

Why?

Because you can't argue that "XX $ is a bare minimum for a decent living standard" and then don't offer something proportional to that to those without work.

I think your argument is a bit off. You're offering two choices:

1. $X/hr + satisfaction of working - commute costs - time - stress.
2. $Y/month - social stigma.

These are completely different offerings that will appeal to different people.


Minimum wages and welfare are two types of redistribution. In a sense, they can be seen as competing methods of redistribution. But they're still both redistribution, and therefore generally appeal to people who find redistribution a political good. And since you find this correlation among voters, you also find it among politicians and parties, just like guns and abortions in the US. You don't want to lose core or fringe voters to the other side if you can avoid it (especially not in a multiparty system where there are many sides to lose to). I recommend a game of Swedish Parliament 2014 There, I've put minimum wages on the "market/planned economy" scale, but welfare and taxes on the redistribution scale. And the voter groups are highly correlated on the two scales.

Also, as mentioned, to sustain a high minimum wage, you need to passivize part of the labor force, lest they work anyway, but off the books.


Tall_Walt wrote:
Mondainai wrote:
However, such schooling is very expensive, if it is to be effective.

1st, consider that at the beginning college/trade school level it's one moderately priced teacher, 3x to 5x minimum wage, teaching 30 to 50 students. So, you only need to improve the students by about 10% of minimum wage to break even in a number of hours the same as the teaching time. Actually, they work 40 or 50 years, 80,000 to 100,000 hours. That's 10 to 50 times their schooling hours. So, the average improvement you need is 1% down to 0.2%.

2nd, I've modeled the situation for the actual educational institutions in California and real taxes in the US. If you give someone 2 years of junior college and 2 years of state college to get them a 4 year degree, you do not have to loan them money: the increase in taxes paid due to their higher income will easily pay for the education and interest on the money you spend teaching them. This is not based on idealized results but on average results. It's also only based on federal income taxes and doesn't include state or local taxes, whose yields would also increase.


Interesting. But those who don't reach the minimum wage aren't randomly selected from the population. It's the very same demographic that don't do very well in school. We already have free high school and university here, with very generous loan plans (interest so low that even rich students borrow, and invest it). If you're willing and able to get technical high school diploma and university, then all you have to do is say the word. But the unemployed are on average relatively unfit for traditional schooling, hence educating them is very expensive. It doesn't mean that they're stupid or lazy. But it means that on-the-job training might be a better alternative. And thus we have massive internship programs, during which you work for an employer who sometimes only pays a fraction of your salary, and sometimes even get paid to have you there.

What this means is that in reality, we don't have a minimum wage. What we have is one market-economy labor market for everybody above the minimum wage. And below that threshold, we have a command-economy labor market in which bureaucrats match workers with firms and decide what firms should pay and what workers should get. Efficiency level: Soviet.

Don't get me wrong: I'm all for free education and for cash subsidies to people while studying. But we already have that. And think about it: if it was as efficient as it looks in theory, then we wouldn't need minimum wages! People dissatisfied with their pay would just withdraw, get a degree, and then come back. And the competition from the education system would force up market wages naturally.

But what we get with minimum wages is false signals. It makes people underinvest in education. You see your parents drop out high school and still get well-paid jobs - house, car and trips to the Mediterranean. You do the same, but those jobs aren't there for you; they're rationalized away since paying high-skilled wages to low-skilled workers isn't a stable situation - firms adopt and invest in not having to hire. You wonder who is to blame and want your country to be great again.

Redistribution is good. But redistribution by wrecking the economy is not good, if there are other methods.
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rinelk wrote:
they're appealing to Communist sympathies


Uhm what?
 
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