Minimum wage - leads to price increases more regressive than sales tax, only 35% of the benefits go to those under 2x poverty line

[Nice Squirrel]

Again, there is nothing "conservative" or "liberal" about supply and demand curves with respect to prices. You are attempting to politicize something that isn't argued about.

If you have some great alternative to supply and demand curves that explains the world better than the last few centuries of thinkers have been able to do, please bring it forward.

- - - Updated - - -

Yeah, except they actually do teach supply and demand in the first week of Econ 101 so there's no fallacy.

I'm not sure why you take particular pride in being entirely ignorant of basic economics. It's not an impressive achievement.

Yeah, stayed beyond the first week in the course and know a little more about that over simplistic model of supply and demand they use to teach the basic concepts.

Excellent. So if Chicken sells for $3 per pound and the government decrees no one may sell Chicken for less than $10 per pound what happens to the supply and demand for chicken?

Hit me with that advanced stuff you learned.

Depends on the current retail price and the perception of the potential buyers. This was something that was brought up in the 1990s with the economy destroying luxury tax on boats costing over $100,000. Demand increased despite the aggregate price increase, but we are not discussing chickens or boat. We are discussing larger more complex systems. The kind that exist in reality. I apologize if this is too complex to fathom.

I said the current market price was $3. And once you have shown me your non-simplistic techniques on this example we can move on to more complex systems.

Like I said this depends on the perception of the potential buyers. Or are you assuming consumers are 100% rational? Because if you are I have some magic chickens to sell you.

 

[Nice Squirrel]

Re: bolded

From  Supply and Demand

We find:

At least two assumptions are necessary for the validity of the standard model: first, that supply and demand are independent; second, that supply is "constrained by a fixed resource". If these conditions do not hold, then the Marshallian model cannot be sustained. Sraffa's critique focused on the inconsistency (except in implausible circumstances) of partial equilibrium analysis and the rationale for the upward slope of the supply curve in a market for a produced consumption good.^[19] The notability of Sraffa's critique is also demonstrated by Paul A. Samuelson's comments and engagements with it over many years, for example:"What a cleaned-up version of Sraffa (1926) establishes is how nearly empty are all of Marshall's partial equilibrium boxes. To a logical purist of Wittgenstein and Sraffa class, the Marshallian partial equilibrium box of constant cost is even more empty than the box of increasing cost.".

Enjoy.

What bearing does that have on what we are discussing here?

I thought you are arguing that supply and demand (and price... oops third variable, complex system alert) as taught in the first week of Econ 101 reflects reality?

 

[ksen]

Again, there is nothing "conservative" or "liberal" about supply and demand curves with respect to prices. You are attempting to politicize something that isn't argued about.

If you have some great alternative to supply and demand curves that explains the world better than the last few centuries of thinkers have been able to do, please bring it forward.

- - - Updated - - -

Yeah, except they actually do teach supply and demand in the first week of Econ 101 so there's no fallacy.

I'm not sure why you take particular pride in being entirely ignorant of basic economics. It's not an impressive achievement.

Yeah, stayed beyond the first week in the course and know a little more about that over simplistic model of supply and demand they use to teach the basic concepts.

Excellent. So if Chicken sells for $3 per pound and the government decrees no one may sell Chicken for less than $10 per pound what happens to the supply and demand for chicken?

Hit me with that advanced stuff you learned.

Depends on the current retail price and the perception of the potential buyers. This was something that was brought up in the 1990s with the economy destroying luxury tax on boats costing over $100,000. Demand increased despite the aggregate price increase, but we are not discussing chickens or boat. We are discussing larger more complex systems. The kind that exist in reality. I apologize if this is too complex to fathom.

I said the current market price was $3. And once you have shown me your non-simplistic techniques on this example we can move on to more complex systems.

Like I said this depends on the perception of the potential buyers. Or are you assuming consumers are 100% rational? Because if you are I have some magic chickens to sell you.

When we buy chicken there's usually a plethora of prices to choose from, not just one price.

 

[fromderinside]

Re: bolded

From  Supply and Demand

We find:

At least two assumptions are necessary for the validity of the standard model: first, that supply and demand are independent; second, that supply is "constrained by a fixed resource". If these conditions do not hold, then the Marshallian model cannot be sustained. Sraffa's critique focused on the inconsistency (except in implausible circumstances) of partial equilibrium analysis and the rationale for the upward slope of the supply curve in a market for a produced consumption good.^[19] The notability of Sraffa's critique is also demonstrated by Paul A. Samuelson's comments and engagements with it over many years, for example:"What a cleaned-up version of Sraffa (1926) establishes is how nearly empty are all of Marshall's partial equilibrium boxes. To a logical purist of Wittgenstein and Sraffa class, the Marshallian partial equilibrium box of constant cost is even more empty than the box of increasing cost.".

Enjoy.

What bearing does that have on what we are discussing here?

My post related to your bloviate that the principles for supply and demand curves are not in dispute. Obviously if the presumptions don't hold the curves are kinda suspect donchano.

 

[dismal]

Again, there is nothing "conservative" or "liberal" about supply and demand curves with respect to prices. You are attempting to politicize something that isn't argued about.

If you have some great alternative to supply and demand curves that explains the world better than the last few centuries of thinkers have been able to do, please bring it forward.

- - - Updated - - -

Yeah, except they actually do teach supply and demand in the first week of Econ 101 so there's no fallacy.

I'm not sure why you take particular pride in being entirely ignorant of basic economics. It's not an impressive achievement.

Yeah, stayed beyond the first week in the course and know a little more about that over simplistic model of supply and demand they use to teach the basic concepts.

Excellent. So if Chicken sells for $3 per pound and the government decrees no one may sell Chicken for less than $10 per pound what happens to the supply and demand for chicken?

Hit me with that advanced stuff you learned.

Depends on the current retail price and the perception of the potential buyers. This was something that was brought up in the 1990s with the economy destroying luxury tax on boats costing over $100,000. Demand increased despite the aggregate price increase, but we are not discussing chickens or boat. We are discussing larger more complex systems. The kind that exist in reality. I apologize if this is too complex to fathom.

I said the current market price was $3. And once you have shown me your non-simplistic techniques on this example we can move on to more complex systems.

Like I said this depends on the perception of the potential buyers. Or are you assuming consumers are 100% rational? Because if you are I have some magic chickens to sell you.

When we buy chicken there's usually a plethora of prices to choose from, not just one price.

Oh, good it's more nitpicky avoidance instead of dealing with actual questions.

- - - Updated - - -

Re: bolded

From  Supply and Demand

We find:

At least two assumptions are necessary for the validity of the standard model: first, that supply and demand are independent; second, that supply is "constrained by a fixed resource". If these conditions do not hold, then the Marshallian model cannot be sustained. Sraffa's critique focused on the inconsistency (except in implausible circumstances) of partial equilibrium analysis and the rationale for the upward slope of the supply curve in a market for a produced consumption good.^[19] The notability of Sraffa's critique is also demonstrated by Paul A. Samuelson's comments and engagements with it over many years, for example:"What a cleaned-up version of Sraffa (1926) establishes is how nearly empty are all of Marshall's partial equilibrium boxes. To a logical purist of Wittgenstein and Sraffa class, the Marshallian partial equilibrium box of constant cost is even more empty than the box of increasing cost.".

Enjoy.

What bearing does that have on what we are discussing here?

My post related to your bloviate that the principles for supply and demand curves are not in dispute. Obviously if the presumptions don't hold the curves are kinda suspect donchano.

Sorry that doesn't help me understand the relevance. What exactly is your argument?

Feel free to take a shot applying your economic arguments with that chicken example I asked about earlier.

 

[Loren Pechtel]

You perfectly well know that's not what we are saying.

It seems to be the point that you are trying to make. Profits disappear, people become unemployed, Palin becomes President. Pretty much economic armageddon.

You're trying to avoid actually addressing the issue.

Actually, that'd be you. According to the 2000 paper, the cost for the poorest quintile for the year due to cost increases from the wage hike was $84 a year. So costs did go up, but not by much. And no notable link shows employment dropping noticeably due to a hike as well... mainly because fewer employees means less opportunity for more money.

And how much did their income go up by, though?

 

[Loren Pechtel]

Worker A: No minimum wage hike, but has benefits
Wage $7.50 (40 hrs a week -> $1200 a month)
Health Care $600
Paid Vacation/Sick Time (2 weeks a year -> $50 per month ($600 lost labor over 12 months))
$1850 a month cost to employer

Worker B: $7.50 an hour, goes to part time
Wage $7.50 (25 hrs a week -> $750 a month)
Health Care $0
Paid Vacation/Sick Time ($0 months)
$750 a month cost to employer


Worker C: $10.00 an hour, full time
Wage $10.00 (40 hrs a week -> $1600 a month)
Health Care $600
Paid Vacation/Sick Time (2 weeks a year -> $50 per month ($600 lost labor over 12 months))
$2250 a month cost to employer

Notice what actually is costing the most here? Where the savings are via going to part-time? It benefits companies to hire more part-time workers than full-time workers because it saves them a mint in health care and benefit costs.

Which is why I have been arguing for pro-rated benefits for all workers--a system in which companies are encouraged to hire part-timers or perma-temps is bad for the average person.

- - - Updated - - -

There should be no minimum wage. There should be guaranteed minimum income, implemented as tax refund to all. The infrastructure is already there in the tax system.

Use minimum basic income to level the playing field between employer and employee so they have more equal bargaining power, and so the employee isn't desperate.

Down the road I agree with this. I don't think the economy is ready for it yet, though.

 

[DBT]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

 

[Axulus]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

And greedy consumers who go for the lowest price goods and services, and someone desperate enough to sell it for virtually nothing, a race to the bottom that creates a society of greedy consumers and serfs who provide for them, with everything flowing to the consumers...or not.

You've never imagined there is an equilibrium point?

Furthermore, as has been discussed elsewhere, this is the same old "labor theory of value" fallacy: if it were true, we'd see profits concentrated among those companies that utilize the most labor and pay the least. Except we don't see profits flowing to labor intensive industries and low wage industries in greater proportions. The Great Contradiction that is an inconvenient truth for leftists.

 

[DBT]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

And greedy consumers who go for the lowest price goods and services, and someone desperate enough to sell it for virtually nothing, a race to the bottom that creates a society of greedy consumers and serfs who provide for them, with everything flowing to the consumers...or not.

Not to mention that there are some business managers who are willing to undercut their competition by lowering prices to the point of running everyone's profits into the ground.

You've never imagined there is an equilibrium point?

Furthermore, as has been discussed elsewhere, this is the same old "labor theory of value" fallacy: if it were true, we'd see profits concentrated among those companies that utilize the most labor and pay the least. Except we don't see profits flowing to labor intensive industries and low wage industries in greater proportions. The Great Contradiction that is an inconvenient truth for leftists.

Regardless of where the cuts are applied, it is the fundamental nature of business practice to reduce costs in order to maximize returns....which places the most vulnerable members of society at risk of exploitation (there being countless examples of this) hence the need for government to step in and protect vulnerable workers by legislating a liveable minimum pay rate.

 

[ksen]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

And greedy consumers who go for the lowest price goods and services, and someone desperate enough to sell it for virtually nothing, a race to the bottom that creates a society of greedy consumers and serfs who provide for them, with everything flowing to the consumers...or not.

You've never imagined there is an equilibrium point?

Furthermore, as has been discussed elsewhere, this is the same old "labor theory of value" fallacy: if it were true, we'd see profits concentrated among those companies that utilize the most labor and pay the least. Except we don't see profits flowing to labor intensive industries and low wage industries in greater proportions. The Great Contradiction that is an inconvenient truth for leftists.

Despite the rhetoric corporations aren't really people and so can't be serfs.

 

[Loren Pechtel]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

In some places there are no minimum wage employees because the market clearing price is higher than that.

 

[DBT]

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

In some places there are no minimum wage employees because the market clearing price is higher than that.

Which places, and why?

 

[Loren Pechtel]

In some places there are no minimum wage employees because the market clearing price is higher than that.

Which places, and why?

Places with a booming economy and a high cost of living. I'm not sure there are still any but there have been in the past.

 

[DBT]

Which places, and why?

Places with a booming economy and a high cost of living. I'm not sure there are still any but there have been in the past.

You mean very low unemployment levels, employers competing for the services of suitable employees?

 

[Canard DuJour]

That's going to depend on how much the quantity demanded decreases with price. With fewer other alternatives (due to the marginally profitable ones shutting down), demand is going to be less elastic in response to the price. You can sell fewer units but make more money with a higher price. You are acting like that is an impossibility.

Oh I'm certainly not. Where demand is inelastic the MW-necessarily-causes-unemployment argument fails. And where demand is inelastic, it's unlikely that suppliers are on the margin of profitability.

Now it might be that the raised production cost makes the lower price unprofitable. Marginal businesses will have to up their prices or fold, and may fold anyway if there aren't consumers willing to pay the higher price. But that

(a) doesn't mean all MW raises are passed directly to consumers, and

Not directly, but part of it is indirectly due to the market dynamics I've explained.

But not necessarily and certainly not all of it.

(b) doesn't necessarily make consumers worse off. If the raise is around the point where employees need welfare and charity, others were already paying the difference for stuff they weren't willing to buy at its true cost.

But those paying the welfare and charity are by and large the wealthiest in a progressive taxation system. Those buying products produced by minimum wage labor is everyone, but much more heavily concentrated on the poor and low income (as these goods/services tend to be cheaper, and such goods make up a much larger share of their total income). Hence the regressive nature of the minimum wage.

Perhaps, if you assume all costs are passed on to consumers and ignore knock-on effects in the labour market. Otherwise I doubt it. Regardless, any argument that MW as an ill-considered alternative or supplement to welfare fails because that isn't the intention. Nearly the opposite.

 

[arkirk]

If it is a community based business, more money in the hands of the employees relates to more money available for demand. This coo coo theory completely forgets this. There are probably a lot of big non community businesses that ought to run out of steam in the supply/demand cycle because the intelligence running them is in no way cognizant of the business' end users. They tend to try to make up for their lack of business savy and social usefulness by cutting their expenses for "human resources." What a preposterous idea! Turn a man into a "resource" and expendable one at that! It is comforting to know the workers are desperate enough to work for peanuts, but it still doesn't make your business sound. So many people stand tall and salute when the image of Ronald Reagan passes them. He was a fucking union busting asshole. How could there be a "Reagan Democrat? He played in Bedtime for Bonzo. Our president should play in "Bedtime for Bibi.

 

[dismal]

Again, there is nothing "conservative" or "liberal" about supply and demand curves with respect to prices. You are attempting to politicize something that isn't argued about.

If you have some great alternative to supply and demand curves that explains the world better than the last few centuries of thinkers have been able to do, please bring it forward.

- - - Updated - - -

Yeah, except they actually do teach supply and demand in the first week of Econ 101 so there's no fallacy.

I'm not sure why you take particular pride in being entirely ignorant of basic economics. It's not an impressive achievement.

Yeah, stayed beyond the first week in the course and know a little more about that over simplistic model of supply and demand they use to teach the basic concepts.

Excellent. So if Chicken sells for $3 per pound and the government decrees no one may sell Chicken for less than $10 per pound what happens to the supply and demand for chicken?

Hit me with that advanced stuff you learned.

Depends on the current retail price and the perception of the potential buyers. This was something that was brought up in the 1990s with the economy destroying luxury tax on boats costing over $100,000. Demand increased despite the aggregate price increase, but we are not discussing chickens or boat. We are discussing larger more complex systems. The kind that exist in reality. I apologize if this is too complex to fathom.

I said the current market price was $3. And once you have shown me your non-simplistic techniques on this example we can move on to more complex systems.

Like I said this depends on the perception of the potential buyers. Or are you assuming consumers are 100% rational? Because if you are I have some magic chickens to sell you.

Still waiting for you to apply that advanced economics you say you know to my question.

As of now your "advanced economics" seems to consist of little more than putting your hands over your ears and saying "NANANANANANANANA I can't tell you anything at all about supply and demand and prices."

It would be a very odd academic discipline indeed if they handed out PHD's and Nobel prizes in a subject where they taught you in the second week it was impossible to answer even very basic questions in the subject matter. It would also call into question why they bothered to teach you you could in the first week.

 

[dismal]

If it is a community based business, more money in the hands of the employees relates to more money available for demand. This coo coo theory completely forgets this.

Yeah economists don't argue this theory because the more money in the hands of employees comes from less money in the hands of someone else.

 

[Togo]

So... why are you treating putting up the cost of labour as a market distortion, but not the putting up of a product price? Or is it just a market distortion when it doesn't fit your model?

Putting it up because the law bans selling it at a lower price is an artificial reason that distorts the market. Putting a price up (if you can) because it is required to stay in business is not.

But the effect of each is the same. An external event - say a world shortage in the supply of chicken, would have the same impact as a government making chicken harder to get. The only difference is that you are labelling one as 'artificial'. Can you explain how the artificiality of it, rather than the size, or economic impact, makes such a difference?

With no minimum wage rate as a matter of law, unscrupulous employers would have a field day, offering unlivable rates of pay on the basis of ''that's our rate of pay for the position, take it or leave it'' - and usually someone desperate enough to work for virtually nothing. A race to the bottom that creates a society of masters and serfs. The new aristocracy being the super rich (money, apparently, flows freely upwards).

And greedy consumers who go for the lowest price goods and services, and someone desperate enough to sell it for virtually nothing, a race to the bottom that creates a society of greedy consumers and serfs who provide for them, with everything flowing to the consumers...or not.

Like they have in the third world, where you have a compartively small aristocracy of consumers, and a large mass of slum-dwellers who form the serfs?

There was a lovely man from a US company that made baseballs, that was talking about moving his production facility from it's existing location in Thailand to a rubbish dump in South America, on the basis that people who live on a rubbish dump will be cheaper and more desperate. There's all the due dilligence that Nike has to go through to ensure that it's shoes are made by adults who are choosing to work, since child slave labour is so much cheaper.

The race to the bottom is alive and well. What makes you think otherwise?

Furthermore, as has been discussed elsewhere, this is the same old "labor theory of value" fallacy:

No, I don't think it is. What DBT is describing is more akin to the value-add theory, whereby economic success comes, not through paying low wages or by tightly managing rent-producing properties, but by ensuring that your workers add more value than other people's. That's why Germany, which makes engines, does better than Cambodia, which largely assembles finished products, and why so many Far East countries do well with a program of constant government interference in their domestic markets, particularly with a view to promoting high-value add industries.

If this theory were true, then we'd expect to see countries that add the most value to a manufacturing or service product doing better than those that focus on keeping wages low.