Labour, on the other hand, can be produced at very little cost, but must be used in some manner at the time and place of production and can only be produced at a limited rate per person.
There are many goods like labor in this respect. Airplane seats on a flight. Seats in a restaurant at dinner time. Minutes of talk or megabytes of data in a cellular smartphone network.
Restaurants and air transport are notoriously competitive businesses, notorious in that the ability to lose money investing in these markets is well-storied. Maybe labor, or at least unskilled labor, is, or should be, just as notorious. We have a supply of it that it is not at all tied to demand, how many people bring an unskilled worker into the world in response to market demand?
IN the case of seats in restaurants and airplanes, and to a lesser extent cell phone minutes, much is sold below the average cost to produce it. The lowest fares paid on a flight are typically much less than half the highest, or even average fare. “Nighttime and weekend” minutes on cell plans are typically “free,” producing no marginal revenue to the cell carrier, simply given away to attract customers who might buy some daytime minutes. Restaurants will have early bird specials and charge less at lunchtime because seats are empty, and will publish coupons and groupons when their seats are empty during prime time.
And still even with these price reductions, if the market clears with too many empty seats and the price drifts down below the marginal cost of serving a customer, restaurants remain unfilled, airline flights are cancelled (putting airplanes into unemployment).
So can the unskilled have a fire sale, as it were, on their unskilled hours of labor? Not with minimum wages enforced. In the US, even unpaid internships are being attacked as “illegal exploitation” of the people who want them by the people willing to grant them.
Anyway, the fact that labor is a “good” like airplane seats, restaurant seats, and cellphone minutes, that can’t be saved to be used later, does make it harder to get full utilization of the supply. Good catch!
We have a supply of it that it is not at all tied to demand, how many people bring an unskilled worker into the world in response to market demand?
I was under the impression that this actually was the case a few centuries ago- colonial American fertility was significantly higher than European fertility.
So can the unskilled have a fire sale, as it were, on their unskilled hours of labor?
Yes, they can, and yes, throughout history, they have been; and this fire sale involves selling the labour for less than it costs to produce, where the production cost is equal to the cost of food and shelter sufficient to keep the worker and his family alive and in reasonable comfort. (Not luxury, mind you, just comfort).
This leads to clear humanitarian problems (historically, slavery was a major one), and I’m pretty sure that the entire point of the minimum wage is to avoid said humanitarian problems by making the fire sale impossible.
There are many goods like labor in this respect. Airplane seats on a flight. Seats in a restaurant at dinner time. Minutes of talk or megabytes of data in a cellular smartphone network.
You are right, there are clear and strong similarities here. There is still one important, though minor, point of distinction, and it is this; it takes several years and quite a bit of food to create a new labourer (while an entire new restaurant with plenty of chairs can be created in a mere few months, or faster if the building is already in place). This introduces a fairly major friction to the task of increasing the supply (major enough that if more labour is necessary than can be easily supplied, an employer might look to automation instead, or even go out of business).
But yes, labour is clearly the same category as cellphone minutes or restaurant seats. Which is interesting; I hadn’t realised that there were other goods in the same category...
Yes, they can, and yes, throughout history, they have been; and this fire sale involves selling the labour for less than it costs to produce, where the production cost is equal to the cost of food and shelter sufficient to keep the worker and his family alive and in reasonable comfort. (Not luxury, mind you, just comfort).
This leads to clear humanitarian problems (historically, slavery was a major one), and I’m pretty sure that the entire point of the minimum wage is to avoid said humanitarian problems by making the fire sale impossible.
It is NOT generally true that slaves were “paid” below a living wage. That would mean that healthy slaves were brought in, not fed enough to stay alive, and then died. In fact slaves were fed not only enough to stay alive but enough to breed and to feed babies, and their babies grew up to be slaves,
Slaves were not paid enough that they would voluntarily do the jobs they did. But they were paid enough to stay alive, and even to reproduce.
I am sure that many, even most slaves were in fact paid enough to stay alive (more specifically, they were probably fed and housed on the job); just not enough to stay alive in what I would consider reasonable comfort. And, in at least some cases, not at all once they were too old to work. (Some would have, I’m sure, been brought in healthy and than starved and died, through sheer incompetence on the part of the owner if nothing else; but those would have been the exception rather than the rule).
There are many goods like labor in this respect. Airplane seats on a flight. Seats in a restaurant at dinner time. Minutes of talk or megabytes of data in a cellular smartphone network.
Restaurants and air transport are notoriously competitive businesses, notorious in that the ability to lose money investing in these markets is well-storied. Maybe labor, or at least unskilled labor, is, or should be, just as notorious. We have a supply of it that it is not at all tied to demand, how many people bring an unskilled worker into the world in response to market demand?
IN the case of seats in restaurants and airplanes, and to a lesser extent cell phone minutes, much is sold below the average cost to produce it. The lowest fares paid on a flight are typically much less than half the highest, or even average fare. “Nighttime and weekend” minutes on cell plans are typically “free,” producing no marginal revenue to the cell carrier, simply given away to attract customers who might buy some daytime minutes. Restaurants will have early bird specials and charge less at lunchtime because seats are empty, and will publish coupons and groupons when their seats are empty during prime time.
And still even with these price reductions, if the market clears with too many empty seats and the price drifts down below the marginal cost of serving a customer, restaurants remain unfilled, airline flights are cancelled (putting airplanes into unemployment).
So can the unskilled have a fire sale, as it were, on their unskilled hours of labor? Not with minimum wages enforced. In the US, even unpaid internships are being attacked as “illegal exploitation” of the people who want them by the people willing to grant them.
Anyway, the fact that labor is a “good” like airplane seats, restaurant seats, and cellphone minutes, that can’t be saved to be used later, does make it harder to get full utilization of the supply. Good catch!
I was under the impression that this actually was the case a few centuries ago- colonial American fertility was significantly higher than European fertility.
Yes, they can, and yes, throughout history, they have been; and this fire sale involves selling the labour for less than it costs to produce, where the production cost is equal to the cost of food and shelter sufficient to keep the worker and his family alive and in reasonable comfort. (Not luxury, mind you, just comfort).
This leads to clear humanitarian problems (historically, slavery was a major one), and I’m pretty sure that the entire point of the minimum wage is to avoid said humanitarian problems by making the fire sale impossible.
You are right, there are clear and strong similarities here. There is still one important, though minor, point of distinction, and it is this; it takes several years and quite a bit of food to create a new labourer (while an entire new restaurant with plenty of chairs can be created in a mere few months, or faster if the building is already in place). This introduces a fairly major friction to the task of increasing the supply (major enough that if more labour is necessary than can be easily supplied, an employer might look to automation instead, or even go out of business).
But yes, labour is clearly the same category as cellphone minutes or restaurant seats. Which is interesting; I hadn’t realised that there were other goods in the same category...
It is NOT generally true that slaves were “paid” below a living wage. That would mean that healthy slaves were brought in, not fed enough to stay alive, and then died. In fact slaves were fed not only enough to stay alive but enough to breed and to feed babies, and their babies grew up to be slaves,
Slaves were not paid enough that they would voluntarily do the jobs they did. But they were paid enough to stay alive, and even to reproduce.
I am sure that many, even most slaves were in fact paid enough to stay alive (more specifically, they were probably fed and housed on the job); just not enough to stay alive in what I would consider reasonable comfort. And, in at least some cases, not at all once they were too old to work. (Some would have, I’m sure, been brought in healthy and than starved and died, through sheer incompetence on the part of the owner if nothing else; but those would have been the exception rather than the rule).