Typo, I think: "The places where poor households buy from are also disproportionately the places where low-income workers consume." should be "The places where poor households buy from are also disproportionately the places where low-income workers WORK."
But how accurate is this? From a quick Google I came across "spatial mismatch theory", which demonstrates that low-income households often live far from job opportunities, making it less likely that these workers both shop and work in the same locations no?
The whole “monopsony power” argument is a bit hokey too. What does the extent of monopsony power depend on at the end of the day? 1) number of firms in the market, 2) job heterogeneity and 3) costs of entry. I think it’s really hard to argue that the low wage labor markets, like fast food have low number of firms (there’s McDonald’s burger kings etc everywhere), high job heterogeneity (fast food jobs are cookie cutter jobs, a McDonald’s job is basically same as BK job) or high costs of entry (buying a franchise is relatively cheap).
I have no doubt that there are labor markets with lots of monopsony power (market for academics and, apparently for nurses in Sweden). But low wage fast food ain’t those.
Historically, minimum wage laws have been championed because 'sweated labour' is repugnant. Furthermore, monopsonistic employers would be induced to increase employment and a deadweight loss would be avoided.
However, repungnancy markets can be tackled directly while low wages in jobs taken by people with other income streams were never repugnant at all. Thus, students or retired people or spouses of high earners can enjoy certain types of jobs where MRP is low.
Currently, a local minimum wage could be part of a 'Tiebout model' designed to deter residency of low MRP individuals. In other words, if we don't want less skilled people (or those paid less because of racial characteristics) to settle in our midst, we insist wages be higher than equilibrium.
Let's say that a $5 wage hike ($10,000 annually) results in a total loss of $20 billion to the economy. Find the number of workers positively impacted by the wage hike (workers who cannot be fired due to demand, nor can their numbers be reduced). Let's say it's 1% of the working population, so something like 1.6 million people receive an extra $10,000, making their net benefit $16 billion, but the wage hike also induces a total economic loss of something like $20 billion (just to give a random similar round number). So the net loss is $4 billion. So instead of passing the minimum wage hike, the government could instead print $4 billion dollars and practice wage augmentation, a kind of reverse tax.
In order to get my figures to be realistic, is there a direct estimate of the cost of minimum wage we can cite per dollar?
Doesn’t arguing that minimum wages don’t benefit a company’s profitability kind of sidestep the point that workers need a living wage to stay alive?
Is the argument that survival of the company is more important than the lives of the employees?
Or is it that workers need employers more than employers need workers because AI could replace them more efficiently if companies were required to match humans’ increasing survival expenses caused by companies’ ever expanding profits?
Did I miss the part where profits depend on consumers staying alive or even wanting to?
I don't think Decker's points are about the company's profitability. Instead, Decker argues that minimum wages aren't a good way to benefit the poor and/or low-income workers—several of his arguments are about how minimum wages can benefit relatively higher income or wealthier people at the expense of lower income or poorer people.
At the end, he says that it's best to increase cash benefits for low-income workers or the poor. If you want redistribution, you should support minimum wage if and only if you don't think it's politically feasible to increase those benefits.
Typo, I think: "The places where poor households buy from are also disproportionately the places where low-income workers consume." should be "The places where poor households buy from are also disproportionately the places where low-income workers WORK."
But how accurate is this? From a quick Google I came across "spatial mismatch theory", which demonstrates that low-income households often live far from job opportunities, making it less likely that these workers both shop and work in the same locations no?
The whole “monopsony power” argument is a bit hokey too. What does the extent of monopsony power depend on at the end of the day? 1) number of firms in the market, 2) job heterogeneity and 3) costs of entry. I think it’s really hard to argue that the low wage labor markets, like fast food have low number of firms (there’s McDonald’s burger kings etc everywhere), high job heterogeneity (fast food jobs are cookie cutter jobs, a McDonald’s job is basically same as BK job) or high costs of entry (buying a franchise is relatively cheap).
I have no doubt that there are labor markets with lots of monopsony power (market for academics and, apparently for nurses in Sweden). But low wage fast food ain’t those.
Historically, minimum wage laws have been championed because 'sweated labour' is repugnant. Furthermore, monopsonistic employers would be induced to increase employment and a deadweight loss would be avoided.
However, repungnancy markets can be tackled directly while low wages in jobs taken by people with other income streams were never repugnant at all. Thus, students or retired people or spouses of high earners can enjoy certain types of jobs where MRP is low.
Currently, a local minimum wage could be part of a 'Tiebout model' designed to deter residency of low MRP individuals. In other words, if we don't want less skilled people (or those paid less because of racial characteristics) to settle in our midst, we insist wages be higher than equilibrium.
Let's say that a $5 wage hike ($10,000 annually) results in a total loss of $20 billion to the economy. Find the number of workers positively impacted by the wage hike (workers who cannot be fired due to demand, nor can their numbers be reduced). Let's say it's 1% of the working population, so something like 1.6 million people receive an extra $10,000, making their net benefit $16 billion, but the wage hike also induces a total economic loss of something like $20 billion (just to give a random similar round number). So the net loss is $4 billion. So instead of passing the minimum wage hike, the government could instead print $4 billion dollars and practice wage augmentation, a kind of reverse tax.
In order to get my figures to be realistic, is there a direct estimate of the cost of minimum wage we can cite per dollar?
The government already does wage augmentation: https://en.wikipedia.org/wiki/Earned_income_tax_credit#Graph,_2020
I’d like to see how much we could increase it if we exchanged it for other programs.
Doesn’t arguing that minimum wages don’t benefit a company’s profitability kind of sidestep the point that workers need a living wage to stay alive?
Is the argument that survival of the company is more important than the lives of the employees?
Or is it that workers need employers more than employers need workers because AI could replace them more efficiently if companies were required to match humans’ increasing survival expenses caused by companies’ ever expanding profits?
Did I miss the part where profits depend on consumers staying alive or even wanting to?
🤦
That was addressed in the last paragraph?
I read the whole article twice and the last paragraph a third time. All I get is one hand clapping.
I don't think Decker's points are about the company's profitability. Instead, Decker argues that minimum wages aren't a good way to benefit the poor and/or low-income workers—several of his arguments are about how minimum wages can benefit relatively higher income or wealthier people at the expense of lower income or poorer people.
At the end, he says that it's best to increase cash benefits for low-income workers or the poor. If you want redistribution, you should support minimum wage if and only if you don't think it's politically feasible to increase those benefits.