Why Low Minimum Wages Kill Jobs and Crush Living Standards for Everyone

Miscellaneous Current Events
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This simply isn’t true these days. A fifth of the workforce here in the UK earn less than the living wage, and as such, only survive because incomes are topped up via tax credits and housing benefits. That’s a fifth of the workforce that have no choice but to work the hours that are necessary to survive.

Exactly, they don’t have to (always) work to survive. They get government assistance. If they get laid off, they get unemployment insurance. They get food subsidies etc etc. If their wages drop, they usually qualify for even more free stuff (in the present world we live in). You can’t say that this category of people will work more when they are paid not to work.

The “living wage” include luxuries like recreation. It is BS. Poverty statistics are arbitrary unless you count the people who actually die of starvation.

This ignores the fact that most people don’t have access to either start-up capital or land upon which they can be self-suficient. Both of these things - the claim that people can choose between leisure and work, and the claim that if wages are low they can leave the labour market to self-subsist or be independent - these are claims have not been true for hundreds of years. The acts of enclosure and the highland clearances made sure of that long long ago.

That whole topic is about land, so yah to that part. That is why unjust land claims are bad. That is a huge problem in the UK from what I have read. But you don’t need start up capital to work on your own. Capital is the result of work after all. Go to unowned land and pick fruit or fish or whatever. Or offer your services on the street to wash windows or whatever. That is a bit different than a regular job. But most people have some capital and could farm (for example) if they wanted to. Anyway, this is indeed a side issue.

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Exactly, they don’t have to (always) work to survive. They get government assistance. If they get laid off, they get unemployment insurance. They get food subsidies etc etc. If their wages drop, they usually qualify for even more free stuff (in the present world we live in). You can’t say that this category of people will work more when they are paid not to work.

This kind of proves my point though. For labour supply curves to slope upwards it requires that people have an alternate means of supporting themselves other than via work. In this case you highlight government assistance as providing that role. Not that I accept the notion that living on benefits is a desireable lifestyle as the media and politicians portray. Benefits only just allow you to survive. They are not a lifestyle choice, whatever people say. They are a last resort that people do all they can to avoid.

The “living wage” include luxuries like recreation. It is BS. Poverty statistics are arbitrary unless you count the people who actually die of starvation.

Nonsense. From the link provided:

“The London Living Wage is defined as ‘the threshold at which people can live above the poverty level in London with sufficient safety net to also provide for quality of life’”

The tools for calculating the living wage outside of London are provided by the Minimum Income Standard (MIS) research project based at Loughborough University and funded by the Joseph Rowntree Foundation. The MIS provides a well researched measure of how much a worker needs to earn to avoid the effects of poverty, such as ill health, poor levels of child development and social exclusion.

And you assert that someone earning below this amount will decide to work even fewer hours if their wage drops further? Really? This is the behavioural respose you expect?

But you don’t need start up capital to work on your own.

Yes. You do. Even if it is a small amount, you need money to make money.

Go to unowned land and pick fruit or fish or whatever.

Unowned land? Please tell me where this can be found.

Or offer your services on the street to wash windows or whatever. That is a bit different than a regular job. But most people have some capital and could farm (for example) if they wanted to. Anyway, this is indeed a side issue.

And how many window cleaners do you think the market can sustain? How much income do you think that would generate? How many hours do you think a person would need to be doing this perday in order to pay the rent, gas, electricity, phone bill, council tax, etc etc? More hours than in a job? Fewer hours? Remember, this is the point I am making; regardless if your employed or self-employed, a drop in your hourly income means more hours of work required to continue living. Not less.

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This kind of proves my point though. For labour supply curves to slope upwards [in a given area] it requires that people have an alternate means of supporting themselves other than via work [in that given area].

With my clarification, sure.

Nonsense. From the link provided: […]

Your quote does not list the expenses that are used for the calculation. It does not disprove the fact that recreation is included. The following quote does prove what I have asserted.

Social and cultural participation

Allowances for recreation and social participation were based on a selection of activities tailored by groups for different household types and including various recreation opportunities (meals out, cinema, pub, etc.), sports or gym use (with participants often mindful of the need for people to be able to choose to maintain a healthy lifestyle), hobbies and educational activities. Amounts were allocated for recreation and social participation based on the type and frequency of the activities in which the groups thought different household members might typically participate. All budgets also allow for a one-week budget holiday in the UK. In terms of cultural participation, the budgets include amounts for celebrating Christmas or an equivalent festival, and for birthday presents for friends and family.

http://www.minimumincomestandard.org/downloads/Reports/launch/mis_for_britain.pdf

Yes. You do. Even if it is a small amount, you need money to make money.

What proof do you have? Logically, capital is the result of work. It is the saved product of labor. If capital were necessary to create capital, it would never have been invented!

Unowned land? Please tell me where this can be found.

Yah, I know. I don’t disagree with you. There is plenty of land that is owned legally, but not legitimately. Land comes to be justly owned by homesteading it. Any land that you see that is not homesteaded is (morally) open for people to make use of. But our political rulers do not allow this.

Remember, this is the point I am making; regardless if your employed or self-employed, a drop in your hourly income means more hours of work required to continue living. Not less.

Sure, if you make one assumption: that you value another unit of wage more than a lost unit of free time. This assumption will only hold true for some people.

But if you are right, what is the implication of this? Surly increased competition for employment will create new employment opportunities. Wouldn’t the market adapt and approach maximum economic efficiency?

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This kind of proves my point though. For labour supply curves to slope upwards [in a given area] it requires that people have an alternate means of supporting themselves other than via work [in that given area].

With my clarification, sure.

So now you’re assuming people can simply get a higher paid job elsewhere if they wish?

Nonsense. From the link provided: […]

Your quote does not list the expenses that are used for the calculation. It does not disprove the fact that recreation is included. The following quote does prove what I have asserted.

I wasn’t trying to disprove that recreation is included. I was contesting the claim that people would give up a basic standard of living (Yes, that includes recreation) for more free time if they are already below the living wage level. The mistake economists make is that they conflate time not spent working with ‘leisure’, which is just plain false. You can’t enjoy your free time without an income; you can’t get an income without working; and so leisure is not a substitute for work. You need work before you can get leisure.

What proof do you have? Logically, capital is the result of work. It is the saved product of labor. If capital were necessary to create capital, it would never have been invented!

Ever wanted to become a plumber? An electrician? A heating engineer? How much money do you think it takes to train yourself to be able to do these things? How much money do you think is needed to buy the tools necessary? What about money for the supplies you will use up on your first job? Capital may result from work, but work needs to be mixed with capital in the first place to do so.

Yah, I know. I don’t disagree with you. There is plenty of land that is owned legally, but not legitimately. Land comes to be justly owned by homesteading it. Any land that you see that is not homesteaded is (morally) open for people to make use of. But our political rulers do not allow this.

True.

Remember, this is the point I am making; regardless if your employed or self-employed, a drop in your hourly income means more hours of work required to continue living. Not less.

Sure, if you make one assumption: that you value another unit of wage more than a lost unit of free time. This assumption will only hold true for some people.

Like I was saying above. The utility you gain from free time is a function of your income, and your income is a function of your labour-time. An increase in the amount of free time, if your hourly wage stays the same, is a reduction in the utility of that free time.

But if you are right, what is the implication of this? Surly increased competition for employment will create new employment opportunities. Wouldn’t the market adapt and approach maximum economic efficiency?

Of course, a lower wage will increase the quantity of labour demanded, but if I am right that the quantity of labour supplied also increases, then still we face the possibility of either permanant involuntary unemployment, or a subsistance wage economy in which people are working till they drop.

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Think of it this way. Leisure is a good that has to be bought with money. If you’re on a low income you can’t afford to buy as much.

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An increase in minimum wage will help left wing policy and cultural paradigms - this is truth by definition. ANyone who supports it will be a good left winger, as that is what is relevant to the actor when they make judgments based off of social signals. If it “helps the economy” it is best translated as “helps theleft wing economy” - which is irrefutable. Other than that, one simply can’t throw these factors into any mathematical system or formula.

The point is, it’s a subsidy - and a third party in a two party setting still has no intelligible clue what the fuck he is doing or saying when he tries to manipulate things in any other context. It’s just another egoist feeding his own ego.

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So now you’re assuming people can simply get a higher paid job elsewhere if they wish?

Yah. That is the very nature of migration. People might out-migrate, retire, take time off, get help from family/charity/welfare, reduce their spending, or do more than 1 of the above.

You can’t enjoy your free time without an income; you can’t get an income without working; and so leisure is not a substitute for work. You need work before you can get leisure.

And you can’t enjoy your income without free time.

But we aren’t talking about unemployed people. You are arguing that working people below some income threshold will mostly prefer to work more when their wages drop. You are saying these people value an extra unit of wages more than a lost unit of free time. There is just no way for us to know that without empirical study. Value is subjective. I know plenty of people (admittedly from a distance) who prefer poverty to working. And I know plenty of people who feel the opposite.

Capital may result from work, but work needs to be mixed with capital in the first place to do so.

That is incorrect by definition. “Capital is distinct from land in that capital must itself be produced by human labor before it can be a factor of production.”

An increase in the amount of free time, if your hourly wage stays the same, is a reduction in the utility of that free time.

Not necessarily. If that were true, people would never take vacations or retire early.

Of course, a lower wage will increase the quantity of labour demanded, but if I am right that the quantity of labour supplied also increases, then still we face the possibility of either permanant involuntary unemployment, or a subsistance wage economy in which people are working till they drop.

Why hasn’t that happened in the current recession?

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The more people working producing goods, the more goods there will be, lowering the price of goods so that people with lower wages are better able to afford them.

As a society builds capital and wealth, even the lowest wage earners become much wealthier than their predecessors.

As we’ve seen with high minimum wages here in the US: increased unemployment and reduced goods production at higher prices. It’s a myth that only developing countries, like China, have labor cheap enough for factory production. The truth is, we aren’t allowed to hire at the rates that would encourage this.

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The problem is not with minimum wages per se.

The problem is with nationwide minimum wages.

If a county or affluent distric wants to set it’s minimum wage to $25/h it might be a good thing for the people already there.

It means less low income jobs being created there like petrol stations and wal-marts. And that might in turn create less incentives for high density middle lower class housing, leaving the plots to be developed as condos or open spaces. Less working class people hanging out in those neighborhoods which is undoubtly pretty good for the people living there.

The residents might be happy with that, even if they have to pay more to their own servants, as salary and transportations costs.

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So tired of clueless politicians with their idiotic monopoly on law-creation :expressionless:

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Less working class people hanging out in those neighborhoods which is undoubtly pretty good for the people living there.

Quite right. One must certainly do one’s utmost to keep the riff-raff out.

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I was just pointing out one of the possible economic incentives for pushing higher minimum wage laws.

Another is to avoid competition from blacks and other minorities willing to work for lower wages, a reason that according to Thomas Sowell was overtly presented when they introduced these laws during the great depression.

These are pretty good reasons why somebody would rationally support minimum wage laws. Under such circumstances those laws would net a positive benefit toward a few groups, so its nature to expect some sort of political mobilization in order to get them passed.

Maybe these laws do not fit the ideological predispositions of so called libertarians, but that’s usually a negligible point of contention when it comes to getting laws passed in practice.

Libertarians, perhaps by virtue of their own anti-political ideology, are not politically organized enough and therefore barely exert any pressure.

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Maybe these laws do not fit the ideological predispositions of so called libertarians, but that’s usually a negligible point of contention when it comes to getting laws passed in practice.

Who knew?

Libertarians, perhaps by virtue of their own anti-political ideology, are not politically organized enough and therefore barely exert any pressure.

Blame the…