At first approximation a high minimum wage makes it more beneficial to have a (now high-paying) job, but it also makes it harder to get such a job.
Sure. But having had a higher-paying job means (or at least can mean and sometimes will) having more savings (or, more likely: some savings instead of none), which means that losing your job is a nuisance rather than a cataclysm likely to put you on the streets within a month. That seems like it might be quite a big deal in terms of employee attitude.
(Yes, of course guaranteed employment would have a much stronger effect. So, less disastrously I think, would a reasonable-sized basic income.)
Lumifer is right, and I think you are effectively confusing a law that gives you the right to work at the minimum wage with actual minimum wage laws which are instead laws forbidding you from working for less than the minimum wage.
I promise that I am not confusing those things, though of course it is possible that I am confused in other ways.
The question I think is on the table, which hasn’t obviously-to-me been resolved, is this: Suppose we substantially increase the minimum wage and wait a few years. All sorts of things may change as a result. Some people will have more money. Some people will not have jobs any more. Etc. Now, look at those people who do still have minimum-wage jobs. Are those people more or less subject to abuse by their bosses?
Maybe more, because doing the same work for higher pay means they need their jobs more and their bosses are more able to fire them. Maybe less, because they may now have more savings because they’ve been being paid better. Maybe more, because actually they won’t have any more savings but they’ll stand to lose more by getting fired. Maybe less, because being better paid will bolster their confidence and make them more inclined to stand up for themselves. Etc.
I agree (for the avoidance of doubt) with the mechanism Lumifer describes. That will definitely tend to produce more abuse. But it looks to me as if there are others that go the other way. If you have compelling evidence that they aren’t real, or that they are outweighed by the one Lumifer describes, would you care to sketch it or point to it, rather than just saying “Lumifer is right” (with which I already agreed if it means “Lumifer’s mechanism works the way he says”, and which surely needs further support if it means ”… and it outweighs all other factors”) ?
That’s not exactly true. You can volunteer for far less than the minimum wage (Some would say infinitely less) if you want to. What you can’t do is employ someone for some non-zero amount of money that’s lower than the minimum wage.
I don’t know. You’re talking about the propensity to save and—at the minimum-wage levels of income—it’s not obvious to me that it’s correlated with income.
We can throw images back and forth (“Now she has money left after buying food and she’ll put into a savings account!” vs. “Now she’ll just buy a bigger TV and fancier clothes ending with the same credit card debt!”), but I suspect that economics papers with relevant data exist. I also suspect that the results will show high variance and dependence on the prevailing culture (e.g. compare average savings rates in the US and China).
Sure. But having had a higher-paying job means (or at least can mean and sometimes will) having more savings (or, more likely: some savings instead of none), which means that losing your job is a nuisance rather than a cataclysm likely to put you on the streets within a month. That seems like it might be quite a big deal in terms of employee attitude.
(Yes, of course guaranteed employment would have a much stronger effect. So, less disastrously I think, would a reasonable-sized basic income.)
Lumifer is right, and I think you are effectively confusing a law that gives you the right to work at the minimum wage with actual minimum wage laws which are instead laws forbidding you from working for less than the minimum wage.
I promise that I am not confusing those things, though of course it is possible that I am confused in other ways.
The question I think is on the table, which hasn’t obviously-to-me been resolved, is this: Suppose we substantially increase the minimum wage and wait a few years. All sorts of things may change as a result. Some people will have more money. Some people will not have jobs any more. Etc. Now, look at those people who do still have minimum-wage jobs. Are those people more or less subject to abuse by their bosses?
Maybe more, because doing the same work for higher pay means they need their jobs more and their bosses are more able to fire them. Maybe less, because they may now have more savings because they’ve been being paid better. Maybe more, because actually they won’t have any more savings but they’ll stand to lose more by getting fired. Maybe less, because being better paid will bolster their confidence and make them more inclined to stand up for themselves. Etc.
I agree (for the avoidance of doubt) with the mechanism Lumifer describes. That will definitely tend to produce more abuse. But it looks to me as if there are others that go the other way. If you have compelling evidence that they aren’t real, or that they are outweighed by the one Lumifer describes, would you care to sketch it or point to it, rather than just saying “Lumifer is right” (with which I already agreed if it means “Lumifer’s mechanism works the way he says”, and which surely needs further support if it means ”… and it outweighs all other factors”) ?
That’s not exactly true. You can volunteer for far less than the minimum wage (Some would say infinitely less) if you want to. What you can’t do is employ someone for some non-zero amount of money that’s lower than the minimum wage.
The Obama administration is making it difficult for businesses to use non-paid interns to do the kind of work that paid employees do.
I don’t know. You’re talking about the propensity to save and—at the minimum-wage levels of income—it’s not obvious to me that it’s correlated with income.
We can throw images back and forth (“Now she has money left after buying food and she’ll put into a savings account!” vs. “Now she’ll just buy a bigger TV and fancier clothes ending with the same credit card debt!”), but I suspect that economics papers with relevant data exist. I also suspect that the results will show high variance and dependence on the prevailing culture (e.g. compare average savings rates in the US and China).
And ability. The higher your income, the more of it is somewhat discretionary and the easier it is to save more.
I agree that there is almost certainly real research on this, but evidently neither of us has read it yet :-).