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Should there be a government mandated minimum wage?

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Barry 3 July 2015 08:22 AM
73%

The MW reduces poverty. The 2014 CBO report made a very conservative estimate that a modest increase in the federal minimum wage would lift about 900,000 Americans above the poverty line, and other studies have made much higher estimates.

In response, MW way opponents argue that the MW raises unemployment. However, meta-analysis of empirical studies doesn't support this view.

For example, in 2009, Hristos Doucouliagos and T. D. Stanley - both PhD economists who are published experts in meta-analysis (they literally wrote the book on the subject, har har har) - "conducted a meta-study of 64 minimum-wage studies published between 1972 and 2007 measuring the impact of minimum wages on teenage employment in the United States. When they graphed every employment estimate contained in these studies (over 1,000 in total), weighting each estimate by its statistical precision, they found that the most precise estimates were heavily clustered at or near zero employment effects."

(I'm quoting John Schmitt's excellent overview of the debate; pdf link.)

Doucouliagos and Stanley concluded, "Two scenarios are consistent with this empirical research record. First, minimum wages may simply have no effect on employment... Second, minimum-wage effects might exist, but they may be too difficult to detect and/or are very small." Here's their graph.

The MW does some good by reducing poverty. The claimed harm of the MW - increased unemployment - appears to be minor or nonexistent. Given that, not only should there continue to be a MW, but it should be moderately increased.


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melian 3 July 2015 11:40 AM
77%

I also believe that whenever possible we should use empirical evidence. However, suppose someone makes the following objections to this study:

1) There are meta-studies that claim there is no effect of raising minimum wage on unemployment. There are meta-studies that claim the opposite. Given that the former claim is more counter-intuitive (after all, raising prices does generally reduce the demand), why should we trust it more than the latter?

2) Suppose modest raises of minimum wage indeed have weak effect on employment. How do we know it is the best way to lift people out of poverty? There are countries (e.g., Singapore and Switzerland) which have no minimum wage but have low unemployment, high standards of living and few people living in poverty. Should not we try to copy some of their policies instead?


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Barry 3 July 2015 12:53 PM
76%

1a) If one study finds "MW raises unemployment," and another study finds "no evidence that MW raises unemployment," then - all else held equal - we should not make policy decisions based on the belief that the MW raises unemployment. A finding that is not consistently supported by the best empirical studies, is not a reliable finding, and therefore not a good basis for policy.

1b) However, the paper you link to is a literature review paper, not a meta-analysis. There's a big difference. The meta-analysis I linked has MUCH more statistical power than any of the papers cited in the literature review, and therefore should be given more weight.

1c) The meta-analysis I linked to used much better methodology than most of the studies emphasized in the paper you linked.

By and large, the papers said to be "more reliable" in your review paper are making state-level comparisons: So if ... read more


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Fwiffo 17 July 2015 07:18 AM
56%

You are arguing in 1) that if there is empricial evidence pro and con (in equal measure) we can use the intuitiviness of claims as a tie breaker as to what to base our policies on. I don't find this compelling. If the emprical findings are inconclusive that means other methods of argumentation must be used not that the option with better prior wins.

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melian 9 June 2015 12:56 PM
73%

Whenever possible we should base our decisions on real data rather than theoretical speculations. In this case the statistics from different countries shows no obvious benefits of adopting minimum wage. In fact, several countries with low poverty levels and very high living standards have no government mandated minimum wage. By contrast, countries with the highest minimum wages (relative to the GDP per capita) are among the world poorest.


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DanielLC 10 June 2015 12:36 PM
62%

Correlation does not imply causation. Richer countries have less need for minimum wage. How do you know it's not how rich the country is that causes the minimum wage and not the other way around?

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melian 10 June 2015 03:33 PM
74%

Causality direction is indeed debatable. But while correlation does not imply causation, but the absence of correlation does imply the absence of causation.

I think, as a general rule, the burden of proof should be on those who want to create a new legal restriction rather than on those who oppose it. So if minimum wage laws are not correlated with any real positive effect, there is no reasonable justification for them.


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Dahlen 20 June 2015 04:26 PM
71%

The economic effect of minimum wage laws is divergence of the wealth of the lower classes -- some people will lose their jobs while others, whose employers are more compliant and less profit-hungry, can now rest assured about a stably higher wage. The key variable here is the elasticity of the demand for labour. If policymakers can reasonably get enough quantitative data on labour demand elasticity, then they should have the information necessary to estimate the expected net benefit of implementing a minimum wage. Right?


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Silent Cal 8 July 2015 03:43 PM
68%

The minimum wage is a form of the Copenhagen Interpretation of Ethics. If you employ a poor person, you are responsible for their poverty; if you had used a robot instead, or just not expanded your business, you'd have clean hands.

If we as a society don't want there to be poverty, we should take collective responsibility and help out via transfer payments/welfare/EITC/UBI.


On the other hand, there's some evidence the MW works better in practice than in theory.


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melian 8 July 2015 07:58 PM
72%

But would not such payments also be a form of the Copenhagen Interpretation of Ethics? Welfare payments go to poor people we can observe in our society, i.e. people that still have higher living standards than an average person in many developing countries.

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Silent Cal 10 July 2015 12:11 PM
72%

I think it's a mix of group selfishness and Copenhagen ethics. To the extent it's the latter I oppose that too.

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Fwiffo 17 July 2015 07:10 AM
58%

What is the relevant better course of action not taken?

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Fwiffo 17 July 2015 07:08 AM
52%

If you employ a poor person he is not free to accept potentially better paying jobs. On the other hand if you use a robot the person is usable for other tasks.

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DanielLC 5 May 2015 12:00 PM
65%

A minimum wage could help get money for people who don't make much, but only by increasing the number of unemployed people who don't get anything at all. It also means there's less incentive for good working conditions, since any employees that leave may not be able to find jobs elsewhere.

If you want to make sure poor people have money, just give everyone some money.


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ChristianKl 5 May 2015 04:10 PM
64%


A minimum wage could help get money for people who don't make much

Why could? There already a minimum wage in the US and most of Europe.

If this question is about whether a minimum wage should exist, it's about whether the present minimum wage should be removed.

Of course the fact that this comes up is because the question is vague. It would be better to have more precise questions.

Back to the topic:
I don't think that it's clear that removing the minimum wage at the height it has in the US or various European countries creates large amount of jobs.

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DanielLC 5 May 2015 10:21 PM
59%

I think minimum wage is usually below the market rate for untrained labor, so for all intents and purposes, it might as well not exist.

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DanielLC 8 June 2015 03:47 PM
65%

Minimum wage is a price floor. It increases the price of untrained labor, but it lowers the demand increasing unemployment. It also increases the supply, which means that there will be more competition from people who don't really need the job. It makes it difficult for people with less experience to get jobs, leaving them permanently unemployed. If you want to help the poor, just give them the money. This decreases incentives to get rich, so give everyone else money too. It's not really a big deal to give money to the people you're taking it from. And you don't have to give them enough to live off of. Just to make sure that, in addition to what they can earn, it's enough.

Unfortunately, an unconditional basic income isn't politically feasible. Not in the US at least. The choices are minimum wage and no minimum wage. I suppose I can try to change welfare a bit, but I don't think it will be sufficient. I don't know if minimum wage would be worth it. It's possible it would decrease the average income if you count the unemployed as getting zero. You'd have to know the elasticity of demand for untrained labor.


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melian 8 June 2015 07:02 PM
73%

If you want to help the poor, just give them the money.


In the future, robots might make low-skill workers (and at some point even high-skill workers) redundant and this idea could become more feasible. For now, though, welfare system creates a demoralized underclass. Also, giving poor people money without any strings attached creates a long-term demographic problem. Due to differences in fertility rates, the ratio of welfare receivers to tax-paying population will increase at the exponential rate.


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DanielLC 10 June 2015 12:27 AM
64%

> For now, though, welfare system creates a demoralized underclass.

It always has and it always will. You can make the poor suffer less, or you can give them more incentive to work. There is no way to get both.

If you don't want to help the poor, then don't. Normally I'd consider this a perfectly good place to discuss that, but there's already another thread for wealth redistribution. The question here is, given that the government does decide to redistribute the wealth, is minimum wage the way to go?

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Fwiffo 13 June 2015 10:47 AM
59%

You are assuming next to 0 social mobility. Last time I checked poverty wasn't that strongly heritable trait.

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Fwiffo 13 June 2015 10:45 AM
58%

No minimum wage with all of the low earnes on public support is de facto really close to basic income. People have a base part that is not dependant on the place of employmjent and another part that is somewhat dependant on place of employment.

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DanielLC 13 June 2015 08:40 PM
65%

Public support discourages you to make enough money to get off of public support.

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Fwiffo 22 June 2015 05:45 PM
65%

Greeks knew of steam machines. However as they had cheap supply to slaves they didn't see any economical applications to it. The industrial revolution had to wait for a time where those jobs were deemed too lowly for a man but fit for a machine. By setting a minimum wage we would in effect setting a bar on how trivial jobs humans are okay to be used for. If we don't seriously try to use a big part of the population for our species spesific trait of intelligence we will never properly tackle the details on how to make it work.


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ChristianKl 24 June 2015 08:09 AM
68%

I don't think we have any problem in Western countries with lack of people trying to replace low wage labor with robots.
Even China invests a lot of resources into replacing low wage labor with robots.

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Fwiffo 24 June 2015 08:48 AM
57%

When everybody was working in a farm involved in the production of their own food we didn't have unemployment.

If in Dwarf Fortress I have idlers it means I can start new megaproject. Idlers means excess working power. Unemployment is a resource and not a problem. When we free people from tedious manual labour they are free to pursue more abstract and desirable needs. But then we have to be okay with people using their time like that. The problem we are facing is that we are running out of reasons to hand over money to people.

Sitting on the couch all day understandably shouldn't net anyone much but it isn't much better to come up with busy work just for the jobs doer to get paid for it. It would be nice if the job actually accomplished something. If a person does a job with next to nothing in wages that is kind of like society being pretty ambivalent wheter that job gets ... read more


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Fwiffo 9 May 2015 10:02 AM
60%

People should able to live decently via legimate income (as opposed to criminal income). It is good to use ones capability to further society. Having jobs where the main focus is to find an excuse to pay a wage to the worker is in danger of not really being a true benefit for anyone. But on the other hand it would not be good if market mechanics greated a position where people using their capability to further society didn't get an income to live a decent life.

There is a problem that a person that is only marginally embloyed often doesn't get official recognized as unemployed and loses unembloyment benefits but doesn't make enough money to support a lifestyle grander than with benefits. That is it doesn't make financial sense to accept job opportunities.

One solution I have seen proposed is that of basic income. Everybody is given enough money to maintain their bodily metabolism. If they accept any jobs on top of that it doesn't cause any of their benefits to be withdrawn. Then there is no pressure for a job to pay enough for a living and being jobful is always financially preferable to not taking a job. This makes small jobs make sense. If there is big minimum wage small tasks are supressed beyond financial compensation. Poor people would also not be tied to a wage-slave niche. Enterpreneours and those whos contribution is more indirect or takes a long time would be more free to try things out. However the basic pay should not be enough that it would be a satisfying experience.


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Fwiffo 13 June 2015 11:31 AM
58%

If we are using a market to allocate our collective efforts it would be important to check that the market provides what we want from it.

If we are interested in letting everybody live a decent life based on their personal income then we ought to make sure that those kinds of jobs are available.

Now the issue is to know theorethically what would be a bad state of the economoy to have, then how to correctly detect it and how to effectively steer away from it.

If a person isn't making enough money to buy basic neccecities that surely is a good sign that the scheme isn't working for them. However that requires defining "basic neccecities" that is what can person be deprived and still be non-problematically poor. For example my goverment has recognised that in this day and age everybody ought to have reasonably priced internet connection. This has practical ramifications in having internet providers be required by law to only take similar level prices for people that live far from cities when the infrastructure to build it doesn't necceseraly make sense at the same price point (ie they would probably rather not have them as customers as it is awful lot of work for little to no gain or even loss). This offcourse raises city internet prices but its a value choice that cities will not get internet on the expense or regardless of the rest of the land.

I think nobody thinks that it would okay to leave somebody earn 0.01$ a full working day. However what is the lowest that is okay? The price level of the combined basic neccesities is one answer. Now the problem is that if somebody offers a full time job under that sum. Some might say that this will not get offered. However this means to argue why labour would be such a good that it didn't occupy ever this price level. Theorethically any good could be priced as anything given the right conditions. Why would the conditions for low wages never occur? One could also say that even if they did occur banning that economy state wouldn't do any good. Economics would still happen in that state and the question is how to best go about it. However markets tend to experiment with things. If things are allowed somebody will try it. That is one argument why to ban really low wages. We know that those will only result in outcomes that we don't want. So we don't want economies to grow on assumtions we are trying to eradicate. Then if we moved people away from underpaid jobs we would also have the additional problem of partial economical downsizing. In the same way opening a murder service is not an okay demand to try to meet even if there would be a demand to be met. We would like everybody to have basic neccesitites. If they have jobs that can't buy them then either they don't receive them or we have to get them otherwise than having them buy them for themselfs. Neither sounds terribly fun so just lets not go there.

Off course if the market tries to exploit humans at unaccetable prices you could try to fix it by having other activities than exploiting humans to be way more profitable. This is similar to that if people are stealing food maybe it's not a issue of people being immoral but that their metabolic needs are not being met. Thus beefing up police forces would just turn the search for calories even more brutal. On the other hand Rome chose to provide free entertainment and bread to keep the populace especially non-brutal. But who is responcible if the economy isn't efficient enough? Not all people establish their place of employment on the market. They rather walk in on a set table only then work waiting to be done with all the infrastrutuce to make it possible already in place. Whos responcibility is it to provide that infrastructure if it isn't there or it is underperforming? Does the person walking in on the table have a right to complain if the table is of poor quality? Do persons that have already found a place in a table have any responcibilitites to those that haven't?


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ChristianKl 15 June 2015 10:26 AM
68%

I think nobody thinks that it would okay to leave somebody earn 0.01$ a full working day.
I don't think a pro-bono lawyer is doing anything wrong when he earns less than 0.01$ for a full working day. Money isn't the only reason to work.

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Fwiffo 22 June 2015 05:07 PM
56%

No laywer does 100% pro-bono. They make their living in the non-pro-bono cases. I also understand that it's the decision of the laywer/their firm to take the case and whether to pro-bono it. It can be likened to volunteer work. Doing in profession volunteer work is good in that it benefits from specialization. But it still does fit my pretty general wording.

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VoiceOfRa 13 June 2015 11:22 PM
61%

> However that requires defining "basic neccecities" that is what can person be deprived and still be non-problematically poor. For example my goverment has recognised that in this day and age everybody ought to have reasonably priced internet connection.

Do you agree with your government's claim?

> I think nobody thinks that it would okay to leave somebody earn 0.01$ a full working day.

But it's okay to leave somebody earning 0.00$ for a full work day?

> We know that those will only result in outcomes that we don't want.

So instead we'll wind up with outcomes we like even less, like them having no job.

> In the same way opening a murder service is not an okay demand to try to meet even if there would be a demand to be met.

I don't see your analogy. Murder is not okay whether or not anyone is paying you for it. Whereas working is perfectly okay, you just object to people working if they are being paid between $0.00 and the minimum wage (exclusive).

> Off course if the market tries to exploit humans at unaccetable prices you could try to fix it by having other activities than exploiting humans to be way more profitable.

What do you mean by "exploit"? The poor person is better off taking the (low wage) job then not taking it. Otherwise, he wouldn't have taken it.


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Fwiffo 22 June 2015 05:36 PM
58%

I find it a good decision, yes. We can develop electronic social services that can drive down bureacrazy and there is no excuse that information or connection opportunities would be available.

For 0.00$ if you still have job duties you are essentially a slave. If you do not have job duties you can use your time for example food scavenging. Even in a urban environment it is quite likely that you end up with more nutrition with garbage diving than working to 0.07$ and then buying your food for a week. We don't think that garbage diving is a good use of humans and the louzy job is economically even more useless than that so clearly we need a better use for people, right?

Even if you are a slave you usually are provided nutrition, some rudimentary healthcare and accomendation. If you have a bad job and have to in addition to provide yourself with nutrition, apartment and healthcare ... read more


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