If you don’t pay that buck o’ five, who will?

Hey, dudes, I’m a minarchist…Andy’s the crazy anarcho-capitalist. I am, however, thinking that the blog is in need of some sort of lefty exorcism:

THE POWER OF MILL COMPELS YOU, THE POWER OF MILL COMPELS YOU!

You’re right, Andy… people would be much better off without government. Who’s up for the Revolution?

Anyone?

Here is an example. Say there are 10 workers making a total of $1000/mo equally between them. Now lets say they make min wage of $10 (each work 10 hours) and it increases by 10%. Now the business owner sells something with a price elasticity of greater than 1, like most businesses do. The wage increase cannot be passed on to the consumer. If the business was perfectly competitive, an increase of 10% in wages yields a decrease of 10% labor purchased. So how does that help poor people? What min wage laws do is transfer income from those who become unemployed to those who still have a job.

Do you like it because it sounds good? You feel good when you say people should make more money? I want people to make more money too, but I refuse to use violence to make that happen. And it is laws and violence that destroy wealth creation.

“Any economist worth their salt understands the limitations inherent in using abstract models to understand something as dynamic and unpredictable as economic activity…”

Quite. Still, don’t let that keep you from explaining how we can solve poverty by just requiring wages to be higher. If only someone had thought of this sooner!

You are right, democracy doesn’t always make the “right choice.” What the 40-some percent of Americans who vote want often flies in the face of common sense, let alone economic theory.

Tell you what. Why don’t you show me the one country that has never had a minimum wage where you would most like to live and work. Put differently, why do the largest economies all have minimum wages? Why is there no great historical example of a “free market” benevolently ordering society without the active participation of government? Any economist worth their salt understands the limitations inherent in using abstract models to understand something as dynamic and unpredictable as economic activity… just as any political scientist worth their salt understands the difference between critical discourse and propaganda.

If the real point is there might not be a min wage, then isn’t that a good point? Yes, that is the point - all current economic research says that min wage does not help the poor, so if it doesn’t achieve its own goal, why keep it?

Dang those greedy capitalists stealing all the money! They are hiding it in their bellies…we must go cut it out of them and spread the money to the proletariat and when everyone has everything they need that was stolen from them, we will live in eternal bliss.

As Alfred Nock says, “You can’t tell someone something they don’t already ‘know’.”

http://www.cbpp.org/8-31-06inc.htm

Surely this doesn’t account for the common practice of having multiple part-time jobs… I haven’t yet found a number that tells me how many jobs the average part-time employee has.

“Minimum wages curb employer-provided training opportunities for low-wage workers and may reduce educational attainment for some at-risk groups.”

Huh? So this means that the basic 7-11 training is going to make you want to drop out of school? “Well, I guess now that I know how to make the Slurpy machine work, I’m on easy street… guess I’ll drop out of community college.” Oh, and the “may-for some at risk groups” language is not wildly convincing.

At the end of the day, your only real point is that there might as well not be a minimum wage. If this is such a great idea, why are all the states passing increases? What don’t they get?

Only about half of the people earning the minimum wage are adults; the rest are teenagers and young adults, many of whom come from relatively affluent families. According to this paper from the Clinton-era Department of Health and Human Services, only about 30% of the people receiving minimum wage live in families near or below the poverty line . . . a result that is hardly surprising, since the overwhelming majority of minimum wage workers worked less than twenty hours a week–so much less that the average workweek for all minimum wage workers was less than 10 hours in 1998. This would suggest that most people working at minimum wage are supplementing their studies, or their spouse’s income, rather than trying to support themselves with such a job. So in order to get to the relatively small number of people who need the money, we provide a subsidy to the 71% who do not. This is not very efficient social policy.

Even worse, there is evidence that whatever job losses there are fall disproportionately on minorities and women, the groups most likely to be dependant on the minimum wage to support themselves. So there is a real possibility that the minimum wage is a subsidy to affluent workers at the expense of the poor workers it is supposed to help. Or, as the HHS paper sums up the moderate consensus on the minimum wage:

* A disproportionate share of minimum wage workers are teenagers and most do not live in poor families.

* A sizable portion of minimum wage workers are poor parents.

* Negative employment effects, if any, appear to be slight and are difficult to detect.

* Minimum wages curb employer-provided training opportunities for low-wage workers and may reduce educational attainment for some at-risk groups.

* Moderate minimum wage increases will not reduce poverty rates.

Pay close attention to that second-to-last point. Another little-considered downside of minimum wage increases is that employers who are forced to pay higher wages often find ways to get it out of their employees in other ways; as Tyler Cowen pointed out.

You’re right you’re not going to win this argument, because it’s a failure and the min wage has been disproven to help the poor increase their income. What if all I did was post on this blog all day, and I worked really hard at it and I searched youtube for funny clips for everyone but alas, made not a dime? Sure, many think I may “deserve” to be compensated, but it’s clear that no one would feel that my services warrant compensation if no one contributed anything to me.

You tell me santorum, what should the min wage be? If a higher min wage is better in your unsupportable opinion, how high? $10/hr? $50/hr? Why not? More is better right? What criteria do you use to know that the min wage is too high, let alone too low?

Next you’ll be telling us that people choose to contract HIV.

Timothy, you went too far. This is the line where your arguments turn from logical and evidence-based to prejudiced and unfounded. People can’t respond to this kind of statement with anything but more unloading of emotional crap.

He needs to go pick berries. Displace some illegal aliens.

Continue …

If the minimum wage is below the going market rate (which in many cases it is) the thing constitutes a useless price floor, so what’s the point of having it? And, really, you’re going to have to raise it a hell of a lot [PDF, Pg 5] to make it a generally effective price floor [insert usual disclaimers and caveats here].

The other issue is that it’s a remarkably bad poverty fighting tool, being that the vast majority of people earning the minimum wage are not supporting themselves on it: they’re mostly middle class teenagers, so they reap most of the gains from any increase. The EITC is a much better poverty fighting tool, so if fighting poverty is your concern expansion of the EITC is a much, much better place to start. I’ve long been in favor of Megan McArdle’s tax plan. Negative income tax for the working poor, zeroing out around $30k a year, eliminate all other income subsidies, eliminate all tax deductions. If you want to agitate that the government has a duty to help those without much human capital, fine, but a higher minimum wage isn’t really a good way to achieve your stated goal.

And if you can find me somebody earning $5.15 an hour at a Nashville Taco Bell who is 1) English-speaking 2) Literate and 3) Over the age of 25, I’ll be pretty surprised.

I know I can’t win this argument, especially in this forum but still I’ll plug away.

Arguments against raising the minimum wage, universal health care, and other federally funded benefits to the poor always seem to come from the people who don’t need them. Show me someone making $5.15 an hour in Nashville Taco Bell that will agree with your statements, Timothy.

We should at least be able to agree that the federal minimum wage isn’t keeping up with inflation, making it tougher to live on $5.15 an hour than it was, oh, 1997 when it was last raised. I’ll bite: what practical reason is there *not* to kick it up to at least $6?