Rocket Bomber - article - snark - So here's what I think about a proposed minimum wage increase


So here's what I think about a proposed minimum wage increase

filed under , 13 February 2013, 14:07 by

So this graph shows up on Reddit:

…from some smarty-pants who took Econ 101 and thinks the minimum wage is a bad idea. Nothing wrong with the math, or the graph, or the economics (necessarily) – but it posits that any proposed minimum wage increase (or any minimum wage at all) is necessarily going to be above the actual market price for labor.

Here, let me fix that for you:

IF wages were, I don’t know, being artificially suppressed by evil corporations attempting to maximize profits (a practice they engage in while Also keeping current wages stagnant and simultaneously demanding even more productivity ‘gains’ from already overworked employees) then, surprise, we would still be seeing artificially-induced unemployment.

The redditor used this for his post headline, “Dear Mr. President: price floors create surpluses. Raising the minimum wage = raising the cost of employment = you’re killing jobs. I know you don’t think laws apply to you, but—like gravity—the laws of economics are true whether you believe in them or not.”

Dear redditor & folks who agree with him: Employers unwilling to pay market rates for labor = people who need work but won’t work a crap job for a crap wage = jobs that go begging.

Take the agricultural industry: The only way they can fill the job for the wage they’re willing to pay is to take advantage of the most desperate, i.e. illegal immigrants, who will live in poverty and even put up with abuse for a few dollars they can send home to their families. If picking crops paid $15 an hour, college students who needed the money would spend their time off of school in the fields. Heck, some might skip class for a week to pick, given that harvest seasons are (necessarily) short.

Food would be more expensive, you say? I thought we believed in letting market forces determine prices, not in using policy decisions (a workforce of illegal immigrants is a government policy choice, one that is being debated now) to artificially manipulate markets?

The ‘Price Ceiling’ in this case is not an absolute requirement imposed upon the entire economy by the government, it has become a tenet taught in business schools and uniformly adopted by every employer. Because they can. Because they’re bastards, and money matters more than people.


[chart source]

I think a minimum wage increase is overdue. Yeah, so prices for some goods and services would go up. Fine. Let them go up. I’ll pay an extra buck for that unhealthy fast food hamburger, and I’d also be fine if there wasn’t a dramatic price difference between food grown on massive industrial farms and fruits and vegetables that are grown locally and sustainably. And why would aggregate food prices have to go up when there is plenty of money and corporate profits could come down?

Agriculture is only one industry, but the one most reliant on the cheapest unskilled labor. Say what you want about burger-flippers, fry cooks, cashiers, shelf stockers, and warehouse workers – the skills involved are not valued, but they are still skills. Look down on your janitor all you want, but he knows how to do his job. The guy working the line at the neighborhood bar and grill likely has a more technical (and more impressive) skill set than the bozos who sit in offices and bet on stocks all day.

I think a minimum wage increase is overdue, because I also think wages have been artificially kept low for at least two decades for no other reason than corporate greed, the pursuit of profits, and the need for some at the top to make the rest of us miserable. I don’t know, maybe it is only possible to enjoy millions of dollars of personal wealth if you can live in the high castle and look down on the pain and suffering of those less fortunate?



Comment

  1. Actual empirical study of the impact of modest increase in state minimum wages in border areas, side by side with states with lower minimum wages, have show no detectable loss of employment. When your model and reality contradict each other, its your model that loses the fight. In this case, the demand curve for unskilled labor does not have any substantial inward and outward swing for changes of the size that we are talking about … any lost employment from individual employers at a given level of demand for their product seems to be offset by increased demand for goods and services from the better paid minimum wage workers.

    As far as the “if they paid $15 an hour” … I’ve seen that with my own eyes. In the Australian Tablelands, the cotton farmers need people to hoe weeds in the middle of the summer ~ and its hot as anything in the Australian Tablelands in the summer.

    And so they pay enough to get people to show up to do it, and people do it. Yes, including college students doing it in the summer time to earn some extra money.

    As far as the uninformed graph … here’s one from a macroeconomist who has actually studied the data. At the macroeconomic level, economy-wide demand for labor is more like this:

    http://bilbo.economicoutlook.net/blog/wp-content/uploads/2013/02/Figure_11_15_The_Generalised_Curve.jpg

    Comment by BruceMcF — 17 February 2013, 12:40 #

  2. Let me just insert the graphic, for the 90% of people too lazy to click a link:

    Thanks for the comments!

    Comment by Matt Blind — 17 February 2013, 14:12 #

Commenting is closed for this article.



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