What is minimally acceptable?

[Bomb#20]

Read John Rawls.

Rawls' theory is that a society should strive to maximize the well-being of the least well-off people in the society. Who do you consider to be the least well-off people in your society? What minimum wage do you think maximizes those people's well-being?

 

[Bomb#20]

Why do we even have a minimum wage.. what is it for?

I don't think you will have any chance of figuring out why we have it and what it's for until you try to come to grips with the question I asked you at the beginning. What would you propose to do about people who don't have the ability to make an employer better off by whatever number of dollars per hour we set the minimum wage at? Are those people going to get minimally acceptable life opportunities too?

<Crickets>

Nobody seems to be willing to answer my question; looks like I'll have to answer it myself.

There has to be a set minimum wage because those in that position are not in a strong bargaining position regardless whether a business can afford to pay double or triples the minimum, many employers only pay what they can get away with, hence workers with little bargaining power are vulnerable to exploitation. It happens.

That's where unions can come into play.

Bingo. In theory there's no point in having a minimum wage law in the first place, because if unskilled workers want to be paid more than the market wage, say, paid $10/hr, then they can all simply refuse to work for less than that. They can choose their own minimum wage at whatever level they please, and nobody can make them work for less. Economically, a minimum wage is the same thing as a union of all the unskilled laborers. So asking what a minimum wage is for just leads us to the question, what's a union for?

Here's what a union is for:

The vertical axis is the wage. The horizontal axis is the amount purchased. The blue line is the supply curve -- the amount producers of labor, i.e., workers, are collectively willing to deliver at various prices. The red line is the demand curve -- the amount consumers of labor, i.e., employers, are collectively willing to buy at various prices. When the employers compete with one another and the workers compete with one another, the price and quantity tend to settle at the point where the two lines cross. When that happens, the net benefit the employers get from buying the labor is the triangular area between the red line and the black line marked "Pc" (competitive price). The net benefit the workers get from selling the labor is the triangular area between the blue line and the black line.

But the workers don't have to compete with each other. They can choose to bargain collectively instead of individually, acting as a monopoly on selling unskilled labor. If they do that, then they can collectively get a bigger benefit. They can agree among themselves to set the price of labor to "Pm" (monopoly price) instead of "Pc". When they do that, the employers reduce their labor purchase from "Qc" to "Qm". This means the total benefit the workers collectively get changes to the entire blue region in the diagram. The workers lose the lower yellow triangular area but they gain the blue rectangular area between the black lines marked "Pm" and "Pc", which is a bigger area. (The employers collectively lose that rectangle, and also lose the upper yellow triangular area, so this is pure bad news for the employers, but so what? It's not up to them whether the workers unionize.)

So far, so good. So what's the problem? Why do so many unskilled workers think they need a minimum wage, and, more generally, why is union membership down to 11%? The problem is that lower yellow triangle. The workers collectively had to give that up in order to get the bigger blue rectangle. Unfortunately, the specific workers giving up the lower yellow triangle and the specific workers receiving the bigger blue rectangle are different workers.

So when the workers try to get the monopoly price instead of the competitive price, that sets up a conflict of interest between the yellow workers and the blue workers. In effect, the blue workers are urging the yellow workers to sacrifice what they have so that the blue workers will be better off. That's a tough sell. Some of the yellow workers won't go for that. Solidarity and class consciousness and community shaming only carry so much weight against a drop in standard of living, especially when you're expected to take a personal hit for the team but your teammates won't be taking the same personal hit for you. That's one reason unions have historically had such a hard time holding their strikes together until management caves.

And this brings us, finally, the answer to our original question. Why do we even have a minimum wage.. what is it for? In theory there's no point in having a minimum wage law in the first place because unskilled workers can all simply refuse to work for less than that; but in practice they won't. So no, the purpose of a minimum wage is not to guarantee certain "minimally acceptable" life opportunities. No, it's not to ensure everyone is paid fairly. The purpose of a minimum wage is to stop the scabs from crossing the picket lines.

 

[DBT]

The problem is disunity between workers. Unions have been losing membership in Australia for decades. Consequently each job applicant faces management alone, with very little if any bargaining power, the applicant just told ''this is the rate of pay for your job'' with the implication 'take it or leave it'

 

[bilby]

The problem is disunity between workers. Unions have been losing membership in Australia for decades. Consequently each job applicant faces management alone, with very little if any bargaining power, the applicant just told ''this is the rate of pay for your job'' with the implication 'take it or leave it'

Which is a big problem for the worker - negotiating alone, the risk to him is not getting the job, with a consequent income of zero (or whatever welfare he can claim); while the risk to the employer is not filling the job, with a consequent labour availability of n-1, where n is the number of workers already employed in that job. So if there are 9 workers, and the company is looking for a tenth, they are only risking a 10% shortfall from their ideal; while the candidate is always risking 100% (unless there is close to full employment, but that's not been the case for over 50 years).

 

[Philos]

The problem is disunity between workers. Unions have been losing membership in Australia for decades. Consequently each job applicant faces management alone, with very little if any bargaining power, the applicant just told ''this is the rate of pay for your job'' with the implication 'take it or leave it'

Which is a big problem for the worker - negotiating alone, the risk to him is not getting the job, with a consequent income of zero (or whatever welfare he can claim); while the risk to the employer is not filling the job, with a consequent labour availability of n-1, where n is the number of workers already employed in that job. So if there are 9 workers, and the company is looking for a tenth, they are only risking a 10% shortfall from their ideal; while the candidate is always risking 100% (unless there is close to full employment, but that's not been the case for over 50 years).

Folks,

It is rarely mentioned that there is a union of employers. If a private sector employee gets Bolshie and is sacked, the grapevine can kick in and other relevant employers get the name. I have been present when such phone calls were made.

A.

 

[Malintent]

Bomb is on the right track, in my opinion... The reason that this thread is about what is "minimally acceptable" and not, "what should minimum wage be", is because this is a foundational question about what it means to (and how to) ensure there is a standard for quality of life...

 

[bilby]

Bomb is on the right track, in my opinion... The reason that this thread is about what is "minimally acceptable" and not, "what should minimum wage be", is because this is a foundational question about what it means to (and how to) ensure there is a standard for quality of life...

Assuming that we could agree on a minimum acceptable amount of money needed to live, we would be determining the minimum 'no strings' welfare payment, not the minimum wage.

Unless we are happy for unemployed people to just die in a gutter somewhere, for the misfortune of being amongst the group with no employment when the music stopped.

While there are more workers than there are jobs, society has a duty to provide the unemployed with at least the minimally acceptable amount.

 

[untermensche]

It was Richard Nixon who proposed a negative income tax to ensure a minimum yearly income.

Conservative did not mean "in total service to the very rich" in his day.

 

[Malintent]

Bomb is on the right track, in my opinion... The reason that this thread is about what is "minimally acceptable" and not, "what should minimum wage be", is because this is a foundational question about what it means to (and how to) ensure there is a standard for quality of life...

Assuming that we could agree on a minimum acceptable amount of money needed to live, we would be determining the minimum 'no strings' welfare payment, not the minimum wage.

Unless we are happy for unemployed people to just die in a gutter somewhere, for the misfortune of being amongst the group with no employment when the music stopped.

While there are more workers than there are jobs, society has a duty to provide the unemployed with at least the minimally acceptable amount.

I was thinking in terms of a minimum wage to support a "minimally acceptable standard of life".. and more interestingly, what that standard of life should be expected to be.

Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it.

 

[bigfield]

I don't think you will have any chance of figuring out why we have it and what it's for until you try to come to grips with the question I asked you at the beginning. What would you propose to do about people who don't have the ability to make an employer better off by whatever number of dollars per hour we set the minimum wage at? Are those people going to get minimally acceptable life opportunities too?

<Crickets>

Nobody seems to be willing to answer my question; looks like I'll have to answer it myself.

I argued that minimum wage ought to be replaced by UBI here:

IF we are to agree that this minimum pay for minimum work should be something that can provide a certain standard of life for a certain number of family members. beyond that, what is that methodology for calculation, and upon what should it be based?

If the minimum wage must provide for the basic needs of a household, then it is just a crude method for outsourcing the welfare state to private employers, and should be abolished.

Wages should not be tied to cost of living at all. A household's basic costs should be paid by a basic income, while additional costs such as dependents should be paid by parent/guardian/carer payments.

 

[Bomb#20]

I argued that minimum wage ought to be replaced by UBI here:

Yes, sorry, by "nobody" I meant "no minimum wage advocate". I'm in general agreement with the folks here arguing for UBI/negative income tax.

But I wasn't actually criticizing the minimum wage, only the typical arguments for it. After all, maybe sometimes stopping the scabs from crossing the picket lines can be a good thing for a government to do. Depending on the slopes of all those lines and the shape of the diminishing returns curve for money, a case could be made that making most workers better off, at the expense of "the group with no employment when the music stopped", actually increases total human happiness. Trade-offs like that one are a Utilitarian's speciality. I'm not Utilitarian; but if we collectively decide to go down that road we really shouldn't kid ourselves about what it is we're doing.

 

[bilby]

Assuming that we could agree on a minimum acceptable amount of money needed to live, we would be determining the minimum 'no strings' welfare payment, not the minimum wage.

Unless we are happy for unemployed people to just die in a gutter somewhere, for the misfortune of being amongst the group with no employment when the music stopped.

While there are more workers than there are jobs, society has a duty to provide the unemployed with at least the minimally acceptable amount.

I was thinking in terms of a minimum wage to support a "minimally acceptable standard of life".. and more interestingly, what that standard of life should be expected to be.

So was I.

Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it.

So what happens to those who cannot find 35 or 40 hours of work in a given week? How do they manage on an amount that we just calculated must be less than the minimum acceptable amount?

Is it suddenly OK for someone who can't find work (and in a society without full employment, that must happen to someone, no matter how industrious and committed people are) to live at an unacceptable standard? That can't be true, by definition.

Or is the solution to put up signs warning pedestrians not to trip over the rotting corpses of those who couldn't find a job, (and their families)?

 

[Malintent]

So what happens to those who cannot find 35 or 40 hours of work in a given week? How do they manage on an amount that we just calculated must be less than the minimum acceptable amount?

It is a fair question, but not one I intended to delve into here. I would participate in your thread on that topic, if you were inclined to get into it. Your question might be "should a minimum wage require employment", or some such. I'm looking for a basis from which a fair minimum wage can be calculated (not necessarily to calculate it, but to understand the philosophy behind it). should minimum wage pay for 19 children, two cars, a boat, and a 12 bedroom mansion on the bay? Or, should it only pay for 1 McDonalds happy meal per day and a fresh cardboard box to sleep in? From that premise a methodology can be discussed.

Whether or not a person should be employed to enjoy a "minimally acceptable" existence is another conversation.

 

[fromderinside]

So what happens to those who cannot find 35 or 40 hours of work in a given week? How do they manage on an amount that we just calculated must be less than the minimum acceptable amount?

It is a fair question, but not one I intended to delve into here. I would participate in your thread on that topic, if you were inclined to get into it. Your question might be "should a minimum wage require employment", or some such. I'm looking for a basis from which a fair minimum wage can be calculated (not necessarily to calculate it, but to understand the philosophy behind it). should minimum wage pay for 19 children, two cars, a boat, and a 12 bedroom mansion on the bay? Or, should it only pay for 1 McDonalds happy meal per day and a fresh cardboard box to sleep in? From that premise a methodology can be discussed.

Whether or not a person should be employed to enjoy a "minimally acceptable" existence is another conversation.

So why did you write

"Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it."

?

 

[Loren Pechtel]

No they were displaced by capitalists willing to exploit.

That is all.

People like to exploit others for their own gain.

That explains the hold of capitalism in a nutshell. It is held in place by force.

And how were they forcefully displaced????

They have simply changed as people saw the old ways didn't work. Communism causes freeloading.

And how were they forcefully displaced???

It was called the Industrial Revolution.

It was the enslavement of millions. Many were children.

Get a calendar!

The Kibbutzim were long after the Industrial Revolution.

And the industrial revolution didn't cause child labor. It simply moved it from the farm to the factory. I've seen plenty of kids running roadside produce stands selling what the family farm produced.

- - - Updated - - -

If the boat people had been fleeing from what the U.S. did then they wouldn't have waited until three years after the war ended. They were self-evidently trying to get away from the communists. I suspect they would have preferred the North Vietnamese had never invaded their nation.

They were not fleeing communism for the bliss of capitalism.

They were fleeing horrible conditions because the US attacked their nation and destroyed everything. Destroyed their crops their land and their livestock.

If the US had not invaded South Vietnam and attacked North Vietnam these people would not have left.

Once again, get a calendar!

it's already been pointed out the timeline--if it was the war that caused them to leave it would have happened earlier.

 

[Malintent]

It is a fair question, but not one I intended to delve into here. I would participate in your thread on that topic, if you were inclined to get into it. Your question might be "should a minimum wage require employment", or some such. I'm looking for a basis from which a fair minimum wage can be calculated (not necessarily to calculate it, but to understand the philosophy behind it). should minimum wage pay for 19 children, two cars, a boat, and a 12 bedroom mansion on the bay? Or, should it only pay for 1 McDonalds happy meal per day and a fresh cardboard box to sleep in? From that premise a methodology can be discussed.

Whether or not a person should be employed to enjoy a "minimally acceptable" existence is another conversation.

So why did you write

"Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it."

?

I apologize, but I fail to see the incongruity between my statements that you quoted.

 

[fromderinside]

So why did you write

"Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it."

?

I apologize, but I fail to see the incongruity between my statements that you quoted.

You left two points open which you could have addressed by; 1. adding the link to adequacy of minimum income and calculated minimum wage and 2. suggesting one should not be expected to be employed to receive the minimum amount.

See. It is not another conversation. You just formed your answer sloppily.

 

[untermensche]

Get a calendar!

The Kibbutzim were long after the Industrial Revolution.

And the industrial revolution didn't cause child labor. It simply moved it from the farm to the factory. I've seen plenty of kids running roadside produce stands selling what the family farm produced.

Children were not turned into slaves on the farms.

They worked hard, along side the adults. The same hours the adults worked.

The Industrial Revolution turned millions of children into the slaves of adults that abused and prospered off their misery.

It was misery on a massive scale.

And it shows capitalism for what it is. A sick exploitative system that creates misery.

Of course today we live under capitalism that has been changed by the blood of unions.

Unions have made capitalism somewhat bearable.

But the system can easily sink into it's sick nature when government control is loosened.

As we see in places all over the Western Hemisphere. The Western Hemisphere, the South, is filled with the misery created by capitalism. As well as a minority living well off this mass of misery.

 

[Loren Pechtel]

Get a calendar!

The Kibbutzim were long after the Industrial Revolution.

And the industrial revolution didn't cause child labor. It simply moved it from the farm to the factory. I've seen plenty of kids running roadside produce stands selling what the family farm produced.

Children were not turned into slaves on the farms.

They worked hard, along side the adults. The same hours the adults worked.

The Industrial Revolution turned millions of children into the slaves of adults that abused and prospered off their misery.

It was misery on a massive scale.

And it shows capitalism for what it is. A sick exploitative system that creates misery.

Of course today we live under capitalism that has been changed by the blood of unions.

Unions have made capitalism somewhat bearable.

But the system can easily sink into it's sick nature when government control is loosened.

As we see in places all over the Western Hemisphere. The Western Hemisphere, the South, is filled with the misery created by capitalism. As well as a minority living well off this mass of misery.

Goalpost alert.

I said "child labor". I didn't say "slavery". Although other than the fact that they're working for their parents how was it not slavery?

And you can't seem to tell the difference between capitalism and corruption.

 

[Malintent]

So why did you write

"Reflecting that in a minimum wage would just be some math... whatever that amount is divided by 35 or 40 hours per week... as I see it."

?

I apologize, but I fail to see the incongruity between my statements that you quoted.

You left two points open which you could have addressed by; 1. adding the link to adequacy of minimum income and calculated minimum wage and 2. suggesting one should not be expected to be employed to receive the minimum amount.

See. It is not another conversation. You just formed your answer sloppily.

You may be misunderstanding the topic, and therefore the context of my statements... I am in no way implying that minimum wage PROVIDES minimally acceptable living, nor am I debating the necessity (or not) of employment being a prerequisite to minimal standards of living.

The point of this thread is to explore how one would calculate a minimum wage, IF minimum wage was is supposed to provide that (and what "that" is). If you want to discuss capitalism in general, then I am sure it will be an interesting conversation, somewhere else