Do you think we should have a Federal Minimum Wage?

You’re right – capitalism doesn’t work.

If you look at pages 6 through the end of the document (I read it cover to cover), you’ll see that the CBO says the following:

1) their estimates are uncertain and based on various assumptions (p. 6)

2) raising minimum wage would increase demand for goods and services (i.e. business would be better) for a while (p.8)

3) there is a 33% chance that employment loss would be 0 (not 1.4 million) (top of p. 9)

4) pay for existing workers would go up (p.9)

The bottom line of this report to me is that:

-yes there will be some effect
-its size and magnitude are not yet known
-there are some pluses and some minuses

So it’s rather a nuanced prediction, not a ‘sky is falling’ report

Since when do Republicans care about unemployment?

Yes! Multiple reasons. If we got rid of the federal minimum I feel confident some employers will try to pay people $3 an hour. They will go as low as they can.

Severely underpaying employees leads to extreme discontent, which means unions can come in, voting gets more extreme, more chance for straight up socialist or communist leaders, you will have more poverty, which in America can translate to more crime, more death, more desperation.

Too many states will function like the third world without a federal minimum.

About raising the federal minimum, I currently support $12.

If people on the higher end of the pay scale weren’t making so much we wouldn’t need a very high minimum, but the upper middle class and the wealthy inflate prices so everyone needs more money to have any buying power.

Oh, now we care about deficits?

The Federal Minimum wage is not new; it has been around for over fifty years.

There is a demonstrated drop in people needing food assistance and other assistance from a higher minimum wage.

The $54 billion over ten years is three orders of magnitude less than the cost of the Trump tax cut’s effect on the deficit.

There is no consensus on what effect a $15 minimum wage would have on the economy.

The cost of living in each State can be calculated to determine the minimum wage required to beat poverty.
Good article in 2020.
https://www.thebalance.com/living-wage-3305771

As @hello321 states, the minimum wage is a remedy only in the same sense as hurricane relief or vaccinations in the midst of a pandemic. The minimum wage only serves as temporary relief in offsetting the slow “disaster” of inflation. In view of this, it is criminal that the minimum wage is not elevated to keep pace with that relentless disaster.

The need for a minimum wage has been conventional wisdom since it was first passed in 1938 at $0.25 per hour.

Especially now, with most health insurance tied to employment, it is absolutely necessary to prevent exploitation of workers who need to stay at a particular job to maintain coverage for themselves and their families.

Almost every dollar of a minimum wage worker’s take home pay goes directly into the economy, to buy food and pay rent/mortgage and utilities.

Other than benefitting some individuals, how exactly does the country fare with a federal minimum wage?

As I stated above, almost every dollar of the minimum wage goes directly into the economy, benefiting local businesses small and large.

A federal minimum wage can prevent negative wages Like -$0.01 or worse. Slavery or worse. People should be allowed to volunteer. I worked for free at a convenience store for a year, until I was officially hired for $6.50 a hour. I was already trained so I started at a higher pay of $0.50 a hour over starting wages of $6.00.

I think that the federal government should leave the minimum wave issue to each State. The States are all different and one minimum wage does not fit well for all.

When I was 16 years old back in 1967, California had 2 minimum waves. One minimum wave for adults and another minimum wage for workers under 18 years old. On my first job I was a 16 year old pan washer in a cafeteria I got $1.00/hour and adult Mexican workers there washed the dishes and silverware for $1.35/hour. I was very happy to make all that money working my ass off. HA!

A Federal minimum wage helps protect workers from being cheated by unscrupulous employers.

@gondwanalon A federal minimum doesn’t prevent the states from having a higher minimum. That’s how it is now, some states use the federal minimum some cities and states it’s higher.

Current minimum wage here in Massachusetts is $13.50. It will increase to $14.25 on Jan 1st, 2022, and then it will increase to $15.00 on Jan 1st 2023.

There is a federal minimum wage of $7.25 per hour.
The current proposal of $15 was popularized by Bernie Sanders,, but he wanted this to be a gradual raise over several years.
I think minimum wages should be handled county by county. It’s ridiculous to think someone in areas that are inexpensive to live should make as much as one living in expensive areas.

If everyone wants to complicate this with issues surrounding cost of living, etc, maybe it would be easier to simply set the federal minimum wage as a percentage of the CEO or highest-paid employee’s pay. Let’s say 50% of CEO pay. Sound good?

@hello321 Or a share of the profits? Like when the naval ships paid a share of the profits from whaling.

@RedDeerGuy1: “Or a share of the profits”

And a share of the profits. Definitely.

Every country on the planet should have a minimum wage so employees are not exploited and taken advantage of.

@SQUEEKY2 And a world wide universal basic income.

If people have to work for a wage they cannot live on then what you have is slavery, not employment so yes, if companies won’t pay a reasonable wage then it should be mandated.

You have a fundamental misunderstanding of how the economy works.

“Anyone who’s ever run a business knows, that hiring more people is a course of last resort for capitalists. It’s what we do if, and only if, rising consumer demand requires it.”
-Nick Hanauer (source)

A business simply doesn’t hire additional workers to stand around and do nothing because labor costs are low. If nobody earns enough to afford goods/services, then companies will fail no matter how cheap the available labor is. Don’t believe me? Take a trip to Somalia where labor is dirt cheap and regulations/worker protections are non-existent. That’s the literal manifestation of the utopian vision of a laissez-faire capitalist wonderland at work. Or look back into the US’s own history of the Guilded Age, the company store debt slavery and the Great Depression that followed to understand why we have these laws in the first place.

Yes.

I think your question is unfortunate. The point of a minimum wage IS to benefit people. People. Not figures and statistics, but the human beings that are the country you speak of. In my job, I work with individuals who are working fulltime and cannot make ends meet. I know people personally for whom this is true. Some of these people are members of my family. It’s about feeding children. It’s about clothes and housing and healthcare for people by any margin possible. I don’t know how much volunteer work you do, but the true answer to your question lies within any work that you have or will do with homeless shelters, with community services centers, and food banks, and emergency resource centers. After you’ve worked with people who live in housing that appears unfit for human habitation, then you’ll know (or remember if you’re currently doing this work) that an extra $8 per day equates to meals that would have been missed or an electric bill that can be paid. That is the benefit, and it’s worth it.

There is a fundamental failure in the understanding of too many of us when it comes to recognizing what should be glaringly obvious—poverty wages in a land of extraordinary affluence is about as clear cut an example of enforced evil as you are likely to devise. It matters not one bit whatever excuse one may derive for it, to tolerate it without protest is an affront to any concept of equity or fair play. But that is the design, and of course, those who understand the design have the crushing advantage.

@give_seek How does raising the minimum wage help the 1.4 million people who lose their livelihood?

@Dutchess_III Congratulations! You made it!

@gorillapaws I agree hiring people to just stand around is not done. This is true whether the minimum wage is $15 or $7.25 per hour. However, if you raise the minimum wage artificially, you make it harder to hire anybody at all, even for real work. No less an authority than the Congressional Budget Office has come to this conclusion.

@flutherother You can mandate what you want. If you take no steps to reduce the supply of labor, the wage shall be what it shall be…

@RedDeerGuy1 And a free house, free college and free health care. While you are at it, let’s throw in a free car and free gas.

@SQUEEKY2 A worker needs an employer. Most employers in this country are relatively small businesses. A small business owner takes tremendous risks to make a dream come true. Part of the risk is availability of workers. If the workers become so expensive as to shake the already shaky economics of the business, perhaps the business will not be started.

@filmfann You actually make some sense. Let’s cancel him!

@JLeslie Whether a wage is mandated by the feds or the state makes zero difference to an employer. If the employer can afford it, s/he will pay it. If not, the employer will look for lower-priced alternatives. Fortunately, the Democrats make many alternatives available.

@crazyguy so what does that mean an Employee does not deserve a wage he/she can at least live from?

@RedDeerGuy1 What exactly entitles a worker to a share of the profits of a business? Did s/he start the business? Did s/he invest any capital in the business? Is s/he indispensable to the business?

@kritiper Any mandated expense gives an employer two choices. If the employer can afford it, s/he will pay it. If not, s/he will look for a cheaper alternative. Fortunately, with unchecked illegal immigration, there are many cheaper alternatives.

@gondwanalon I think that government should not be in the business of mandating any business expenses, whether they vary by state or not. Worker wages should be (indeed they are) set by supply and demand. Why do you think a gardener is much cheaper in California than say Detroit?

@crazyguy The federal minimum should be the bare minimum in America. It would be taking into consideration states with very low costs of living like MS or AL or even rural parts of IL. The states or cities can impose a higher minimum if need be. If you just leave it up to the state the Republicans will run amok and pay close to nothing like they do now anyway, but we want to fix that. The South might still have separate seating in restaurants and water fountains for Blacks if the fed didn’t step in. Sometimes the fed needs to step in.

@RedDeerGuy1 When I was a student in England, I came to the US on a summer work/vacation. I got a job at an Oregon cannery at the minimum wage of $2.10 per hour, which, to me at the time, was very generous. By the time the job started, the wage had gone up to $2.45 per hour. Even more princely. And totally undeserved.

@Strauss You say: “almost every dollar of the minimum wage goes directly into the economy, benefiting local businesses small and large.” Should we make the minimum wage $20? Do I hear $25?

@crazyguy Should it be $7.25? I think that is what it is. Higher?

@crazyguy ”...However, if you raise the minimum wage artificially, you make it harder to hire anybody at all, even for real work.”

I’ll just refer you to this rebuttal:

The cornerstone of trickledown economics is the claim that raising wages kills jobs. You’ve heard it so many times it’s become a truism, but there’s no economic evidence for this. There is no empirical evidence for this. The minimum wage has been raised 22 times in our nation’s history. Unless our economy was in recession, employment always goes up after a minimum wage increase. Why? Because that’s how capitalism works…

Why is raising the people at the bottom wages supposedly bad for the economy while the people at the top wages have gone through the roof , and very little is ever said about that?

the effective nationwide minimum wage, (the wage that the average minimum wage worker earns), was $11.80 in May 2019.

Source: https://en.m.wikipedia.org/wiki/Minimum_wage Look under the US section.

This to me is just another wedge issue where Americans could easily agree on something but choose to let political leaders turn us into pawns on a chessboard fighting and doing the same dance. Republicans talk about getting rid of the minimum or leaving it where it is. Democrats talk about $15 or even $20. It’s already about $11.80 according to the article. Just go to $10 or $12, do something, so the Black guy in Alabama stops getting paid only $7.25. Here’s information by state just scroll down a little to the spreadsheet. https://www.paycor.com/resource-center/minimum-wage-by-state

@elbanditoroso I am so glad you read the link from cover to cover. I had not. Now you shamed me into reading it.

I have the following comments:

1. The report is extremely thorough, examining the impact on all areas of the federal budget. While you would expect that, I was totally blown away by items like:
Effects on Spending for Nutrition Programs
Effects on Spending for Social Security
Effects on Other Mandatory Spending
Effects on Discretionary Outlays for Wages of Federal Workers
and
Effects on Net Spending for Interest

2. As I expected, you have mis-stated the aspects of the report that may bolster your case. For instance, the line that you used from Page 9 reads as follows:

“CBO estimates that there is a one- third chance of that effect’s being between about zero and 1.0 million workers and a one-third chance of its being between 1.0 million and 2.7 million workers.” You stated: “there is a 33% chance that employment loss would be 0 (not 1.4 million) (top of p. 9)”. The reason I checked this particular statement of yours is that CBO cannot estimate probabilities for a specific number, just a range.

Obviously the estimates are based on “a set of assumptions”. Since the CBO is trying to model human behavior under a different set of laws, assumptions are necessary.

You made another statement that seems hard to believe. You said: “raising minimum wage would increase demand for goods and services (i.e. business would be better) for a while (p.8)”. I did not find any statement on Page 6 about goods and services. There is a statement on Page 8 that, to me, says the direct opposite of what you stated:

“Higher wages would increase the cost to employers of producing goods and services. Employers would pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, would lead consumers to purchase fewer goods and services. Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels.”

I am certain, @elbanditoroso, that your research was adequate. However, you have expressed your research through a biased prism.

“Biased prism”

Hello pot, meet kettle.

@crazyguy This podcast episode goes in depth with problems with the CBO report.

@JLeslie “This to me is just another wedge issue…”

I couldn’t disagree more.

America is in an unsustainable death-spiral with wealth and income inequality growing worse every day. There are no examples in history of a society surviving while maintaining so much concentrated power in the hands of a very small number of people. In every historical case this leads to a failed state/violent revolution, or a police state. If we continue on the current trajectory and maintain the status quo, with a token minimum wage increase, this problem of concentrating power in a small number of hands will continue to get worse.

I would argue that all issues NOT focused on addressing income/wealth inequality are the real wedge issues (e.g. culture war stuff) that are dreamed up by billionaire-funded political think tanks (neoliberal left and right), designed to distract us as a nation from issues that might unite the bottom 90% and hurt said billionaires wallets.

What’s needed is economic policy ($15 minimum wage, progressive taxation, public investments in the middle class) that not only stops the widening gap, but REVERSES the trend to get back to a healthier distribution of wealth and income that we had decades ago (note it’s always going to be unequal, but the DEGREE of inequality is historically unprecedented). If we don’t do this, and try to water things down, we’re not going to address the core problem and we’re going to see leaders even worse than Trump. Remember that nobody thought it could get worse than Bush 2.0.

$15 was the compromise, we don’t need to compromise on the compromise.

I was looking up Medicaid parameters in Florida. Florida voted in a wage hike to $15. It starts this year with $10 if I remember correctly. At $10 full time a lot of people will be kicked off of Medicaid possibly, friending on what they were making before. Hopefully, they are changing Medicaid qualifications as the minimum increase. So far I haven’t heard anything. I guess they can switch to ACA and then the fed is paying instead of the state I guess.

Medicaid is subject to the laws of the ACA like all insurance providers are. It has nothing to do with who foots the bill.

@gorillapaws I agree that raising the minimum wage is but another bandaid designed to skirt the REAL issue. Galloping inequality itself is but a consequence of the entrenchment of the ruling class at the levers of power. Raising the minimum wage will never be enough because it is a remedy applied AFTER people are desperate. Such solutions are always short of those which avoid the necessity to begin with. There will be no solution to the inequality problem until the people who own the country are compelled to pay their share toward its upkeep.

@Dutchess_III I’m not talking about that. I’m talking about being eligible for Medicaid based on income.

That varies by state. It’s not a federal program.

I know. I said Florida. It might be the case in more states than Florida.

No.

I think states need guidelines. The Federal minimum wage just means states can not pay less than the Federal minimum wage. Other than that they can pay whatever they want.

@crazyguy What exactly entitles a worker to a share of the profits of a business? Did s/he start the business? Did s/he invest any capital in the business? Is s/he indispensable to the business?

The owner can decide this if he/she wants. It might help drive profits to have everyone too have skin in the game, and a piece of the profits. Someone must have done an experiment to see if sharing the profits makes more money from motivated workers? It would save us a lot of trouble if we can find a link to the research.

I acted as if I had skin in the game and I worked harder and for free longer as If my efforts had an effect on my profits. I stayed longer than I would as if I had a say in the outcomes. I became night manager of a convenience store by leaning how to do everything for free while I was on vacation from high school. I acted like I owned the place and I took care of my volunteer position. I got hired on the spot after my high school grad.

I got ahead by pretending that I owned the place and showed up a hour early and stopped shoplifters and did the best that I could. I was told not to concern myself with the plights of millionaires, but It was the only way that I could see myself getting ahead.

I wonder if a business can get ahead by having a reward system for workers who want to work harder. I think giving a worker skin in the game is empowering.

If a worker can grind 50 hours in Final Fantasy, or Legend of Zelda game, would they make more productivity if they had a way to make money while having fun?

@crazyguy And a free house, free college and free health care. While you are at it, let’s throw in a free car and free gas.

The argument for and against it is introduced In George Orwell’s 1984. If it is about sharing everyone could have almost everything that they can dream of.

However it boils down to power. If only a few had everything than you would have power over someone else, or many someone’s.

Well employers often offer profit sharing as an incentive for new employees.

@RedDeerGuy1 Kudos to you for being a superb employee – the kind an employer dreams about.

However, I noticed in your post that there was no requirement for the owner to reward you. If there were, the employer might have objected to some of your efforts.

That is the point I keep trying to make on this board and others. Any employer will gladly pay whatever is dictated by supply and demand. But no employer will pay more than dictated by supply and demand unless there is a legally enforceable requirement.

Last I checked, there were no employer sanctions in the bill.

@gorillapaws Wealth/income inequality is indeed the basic problem that most people (including Republicans) would like to address. I think the differences between the Parties boil down to one word: sustainable. The Democrats believe that they are helping by offering one-time handouts, while the Republicans want to pull up the lowest classes by giving them opportunities.

In order to see the accuracy of what I am saying, all you have to do is look at the status of black people under Democrats. A good reference is:
https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/

White people have a net worth (wealth) of about 1o times that of black people. The ratio has been as low as 6 (1995), but never higher than 10. Interestingly the rate grew in the Obama years from just over 7 to just over 8!

I agree with you 100% that the tremendous inequality needs to be addressed. Otherwise sooner or later, society will implode.

And what opportunities would those be? All I’ve seen out of Republicans in my lifetime is the asinine notion that somehow the poor will prosper if we let the rich have more.

@crazyguy …no employer sanctions in the bill.

That’s because there already enforcement of minimum wage laws on the books.

From the Enforcement page of the Department of Labor Website:
Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,000 for each violation.

@Strauss The problems are as follows:

1. No large scale employer will knowingly violate the minimum wage laws.
2. However, they will definitely look the other way if a subcontractor does, without flaunting the violation.

Subcontractors are subject to the same labor laws as the larger employers. And most workers, under normal circumstances, will not work for below minimum wage.

Even if an employee is hired as an other-than-hourly position, such as commission or piece work, their pay must be the equivalent of the minimum wage.

@crazyguy Competition sometimes is insidous. If one person stands because his view is blocked, then the person in the back row needs to stand to see. Eventually everyone needs to get higher and higher to see. Preferably without destroying the spirit of improvement of goods and services.

There needs to be a regulatory body to stop some forms of compation. Like bribery or going too low a wage, or crimes, prostitution ect.

@crazyguy “That is the point I keep trying to make on this board and others. Any employer will gladly pay whatever is dictated by supply and demand. But no employer will pay more than dictated by supply and demand…”

This is a false conclusion, derived by extrapolating from a oversimplified classical economic model that itself is based on false assumptions and simplifications. Employers pay their workers what they can negotiate. This wage is mostly unrelated to their value.

As the balance of power has shifted away from unions towards a concentration in the hands of fewer, larger companies that have a stranglehold on our political process, we have seen wages stagnate for a generation, despite massive productivity gains over the same period.

A minimum wage change ISN’T a one time handout. It’s an ongoing measure designed to boost full-time workers out of poverty, where they can participate as consumers, taxpayers and have a higher likelihood of their kids succeeding in the economy in the years to come.

@crazyguy The law of supply and demand is better applied to goods and services than people, who are after all the citizens of the country. If a country isn’t run for the benefit of its own people then what is it good for?

@crazyguy I’m glad you brought statistics into this. It’s estimated that raising the minimum wage would bring 900,000 people out of poverty. I don’t think anyone would believe that’s a bad thing. One way to resolve the issue would be if those making $9.00 per hour could move from being impoverished, to poverty, to earning a livable wage by a collective effort of lowering the millions and billions of dollars paid to shareholders, CEOs, and the like whose means of earning money is on the backs of people making $8.00 per hour. That’s one way to address the issue without the numbers of people you mentioned having to lose their employment.

@give_seek …millions and billions of dollars paid to shareholders, CEOs, and the like…

GA! Excessive executive salaries are also driving up the cost of insurance and medical care+

@Strauss You said: And most workers, under normal circumstances, will not work for below minimum wage.

Have you checked the wage demands of newly arrived illegal immigrants?

@Strauss I should have included this in my last answer, but I missed it. You also stated: Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,000 for each violation.

You are absolutely correct. However, how do you think the illegal immigrants are making a better living in this country than in their own?

@RedDeerGuy1 I accept the faults of ‘competition’. However, can you think of a better system?

@gorillapaws Employers pay their workers what they can negotiate. This wage is mostly unrelated to their value.

Do you think that supply and demand may have an Impact on so-called value?

I agree with your last paragraph. Minimum wage is definitely not a one-time handout. And I agree workers that can score the raised minimum wage will be better off. However, the poor slobs who lose their jobs, all one million+ of them, will not be so fortunate, will they?

@flutherother The law of supply and demand applies to all trade, whether you like it or not. Hiring an employee for a defined wage is a form of trade.

@give_seek Every minimum wage employee that loses his/her job is losing it for one of two possible reasons:

1. The employer figures out the job is no longer needed, either because the employer will take on additional responsibilities, or the employer figures out a less labor-intensive means of running his/her business.

2. The employer hires somebody else for the job, probably an illegal immigrant.

Any attempt to enforce the minimum wage law on illegal immigrants will result in massive unemployment among the illegals.

@Strauss and @give_seek You guys are sure socialists in the sense that you think entrepreneurs’ success should be shared with the workers. That is exactly why truly socialist countries find a shrinking pie very soon, when entrepreneurship dries up.

Here’s the deal. The minimum wage is in truth a mechanism devised to give capitalism the illusion of being a workable system. It is in fact one of an ever increasing number of gimmicks engineered to prop the system up. Technology now renders a system based on greed self destructive. If the goal for success is now to eliminate the workforce, who is it that is to be our consumers? So what we see is the rise of socialism because frankly there is no other choice. The shift of responsibility for the public welfare falls ever more heavily on the government as it assumes ever more of the burden of supporting individuals for which there is no employment rendering a livable wage. The growing problem of homelessness is merely a reflection of the government’s inability to keep up with the ruthless dictates of a system dumping workers as fast as it can. We have reached a point where the working poor are now an epidemic. A large percentage of homeless people and folks living in cars have actual jobs, and those who don’t have decided that they are better off begging than slaving for crumbs. And they’re right! One way or another, the government must feed them, because starvation in a land of opulent affluence cannot be tolerated.

@crazyguy You keep repeating “illegal immigrants taking jobs” which has been demonstrated as bullshit many times over rtes years.

”...2. The employer hires somebody else for the job, probably an illegal immigrant.”

The immigration status of a worker does not excuse the employer from paying the Federal minimum wage. And if they get caught, the employer pays a fine and has to pay back wages to the employee.

@zenvelo I cannot bother checking in which state you live; in California, we have many, many illegal immigrants who have good jobs.

@crazyguy I live in California also. You are still making a bullshit statement. Most of those jobs are ones that citizens will not take.

But even if they are undocumented, the employer still has to pay minimum wage.

@crazyguy “Do you think that supply and demand may have an Impact on so-called value?”

The classic economic model you’re extrapolating to the labor market has several fundamental flaws.

The first is that it assumes all participants in an economy are homo economicus. In actuality, people aren’t perfectly rational economic agents. You can’t substitute one laborer for another and expect them all to behave in the same way. Making these assumptions is useful to simplify the math for various economic theories. This is similar to how a geometrist might assume the thickness of a Cartesian plane is 0 even though no such surface exists in reality. It’s a convenient and useful fiction, but if we modeled our simulation of roads with the assumption of 0 thickness and perfect flatness, we’d get inaccurate results with regards to stopping times of a vehicle compared to the real world.

The second is that it assumes that the market is efficient (i.e. the efficient market hypothesis). This is not backed by empirical data. Furthermore the labor markets can be distorted by oligopsony and even monopsony in some areas (e.g. when Walmart moves into a town, receives special economic favors from local government and pushes out all local competitors). There is also issues with the elasticity of demand for labor that distorts the market. Unskilled minimum wage laborers have limited opportunities to relocate to better labor markets, furthermore because healthcare is tied to employment in the US, the health and basic welfare of their family is in jeopardy in any negotiation for increased wages. The balance of power is so heavily shifted in favor of large employers that workers cannot “walk away” and seek alternative employment like they could if a pair of jeans was too expensive. This dynamic has emperically suppressed real wages which haven’t risen in decades, despite large growth in worker productivity over the same period of time.

Third is that the classical economic model assumes that markets naturally trend towards a stable, equilibrium state. This is also not consistent with reality. History has shown that laissez-faire capitalism, without the enforcement of controls and regulations designed to suppress the aggregation of power in the markets and foster rigorous competition, trend towards a consolidation of wealth and power over time. The model is unstable and unsustainable without exterior forces compelling competition.

Is supply and demand a useful fiction? Sure, but understand that it’s not appropriate to apply an oversimplified economic model to our present labor market situation. It was never intended to be used in this way. I would argue that if things worked the way people are claiming the classical economic model is supposed to work then Somalia would be a global superpower and the Nordic countries would be completely destitute. We also wouldn’t have seen the massive transfer of wealth from the bottom 50% of Americans to a handful of oligarchs. The model doesn’t match reality. Our economy is much more complicated than Econ 101 in reality. People aren’t homo economicus, the efficient market hypothesis is false, and markets aren’t stable.

@crazyguy Just have this idea out for inspection.

Maybe the government decides what to pay as a salary, and money comes from the government. That way the businesses are free to work and not be involved in deciding the wages of employees, and can focus on day to day working of their businesses?

Just an idea.

@zenvelo Most of those jobs are ones that citizens will not take. You do not think citizens will take the jobs of house painting, carpentry and dry walls?

He’s referring to backbreaking harvesting work, not carpentry and dry wall.

@RedDeerGuy1 In other words, all employees are equal?

@crazyguy No. You can argue your case to your specially trained assigned worker, based on need and merit. All employers are equal. Not employees. You need not have to ask your boss for a raise.

Maybe a 50/50 paid from boss and government. The exact amount can be tweaked. From 50% to 100% or %0.

@RedDeerGuy1 “Maybe the government decides what to pay as a salary, and money comes from the government.”

That was basically the model of the Soviet Union. It was an abysmal failure.

The only difference in your proposal seems to be this -

“That way the businesses are free to work and not be involved in deciding the wages of employees, and can focus on day to day working of their businesses?”

Seems like you want business to remain private, lapping up all the profit while completely unshackling them from any responsibility to their employees. The costs of running a business will be totally on the public dime, while the public sees none of the profit. At least the Soviet model had the honesty that all industry was controlled and operated by the state. Somewhat similar to China today, only China has a much more capitalist streak. State capitalist, but capitalist nevertheless.

@gorillapaws You state: “people aren’t perfectly rational economic agents”. I agree 100%. Therefore, rarely does a company hire wholesale; generally each potential employee is interviewed and fit to an open position in the company. However, what I said: “The law of supply and demand applies to all trade, whether you like it or not. Hiring an employee for a defined wage is a form of trade.” is just as valid. Unless, of course, you are talking about the rarefied air of the corporate suite. Even when you are looking for a Sales VP, his/her compensation is based on supply and demand of highly qualified people.

You also state: Unskilled minimum wage laborers have limited opportunities to relocate to better labor markets. Again I agree. However, the same dynamic applies to the employer. S/he cannot hire minimum wage people and move them.

You also state: Third is that the classical economic model assumes that markets naturally trend towards a stable, equilibrium state. So let us disrupt the markets with an endless supply of hungry, desperate illegal immigrants!

You are making one of my points by your final statement: I would argue that if things worked the way people are claiming the classical economic model is supposed to work then Somalia would be a global superpower and the Nordic countries would be completely destitute. Precisely. The reasons that does not happen are twofold:

1. Somalia is way behind the rest of the world in technology.

2. The Nordic countries can and do hire the needed number of employees from the countless Somalia of this world.

@RedDeerGuy1 So you substitute assigned worker for superintendent or boss?

@Darth_Algar Well said, my friend. I agree 100% with most of your statements. The only way to ensure that employers have responsibility to their employees is by taking away the opportunity to hire more just like the ones who leave.

@crazyguy

Not sure that’s quite what I said.

@crazyguy So you substitute assigned worker for superintendent or boss?

Yes. It is like universal diploma exams, here in Alberta. Everyone gets a fair chance to pass/fail without help or bias from the home teacher. Some work perfectly like all multiple choice tests, and some are subjective like grading essays. Also the higher classroom mark is taken into consideration. 50%/50% split.

Maybe the employees pay can be decided by both boss and government worker. An industry average pay per career or job. The minimum wage can get paid by the government and any extra can be paid from the business, or vici versa?

In the (NHL) National Hockey league rookies can get a maximum of $800,000 for the first year and up to $40 million salary cap, if all the pay goes to the star player. They have worked it out, maybe we can see if we can have an industry specific minimum wage?

@RedDeerGuy1 I would rather have private companies duke it out for the best workers instead of government intervention.

How on earth do you accept even a motivated government worker to figure out who is who in any organization? S/he can barely figure out who is who in their department.

@crazyguy How on earth do you accept even a motivated government worker to figure out who is who in any organization? S/he can barely figure out who is who in their department.

Exactly. No more office politics, and no more back stabbing. Just plain statistics. Just the facts. reasonable productivity scales for every worker.

I am making this up as needed, from my personal experience, and what I leaned from school and news . You are welcome to add your own suggestions for improvement.

@Darth_Algar I did take the liberty of restating your answer. If you think you said something different please feel free to put it in your own words.

@crazyguy

My statement is already there, in my own words, for all to see.

@crazyguy “The law of supply and demand applies to all trade, whether you like it or not.”

It’s not a matter of “liking things,” it’s a matter of reality not matching theory. As you admit, people don’t behave as perfectly rational, self-interested economic agents. This is a mathematical prerequisite for supply and demand classical economics model to be valid in the labor market.

@crazyguy ”...However, the same dynamic applies to the employer. S/he cannot hire minimum wage people and move them.”

No, but they can choose where to locate their facilities, much easier than the potential low-wage employees can choose where to live. This shifts the balance of power in favor of the corporation negotiating for lower wages and suppresses the overall market for labor. As does many other factors such as anti-union legislation. You would surely agree that in a market with 100% union labor, the balance of power would be dramatically shifted in favor of labor (possibly to a detrimental degree)? The point is that wage isn’t correlated to value as classical economics predicts (productivity has increased dramatically, real wages have remained flat). Wages are a function of negotiating power and many other factors and can highly inefficient (in the technical sense of the word) with a large mismatch between the value and the price.

“1. Somalia is way behind the rest of the world in technology.”

Yes, but WHY is Somalia behind the rest of the world in technology? The classical model predicts that surely such a nation unencumbered by the shackles of regulation and minimum wages would rise to overshadow all other nations—It would be inevitable. They would invent the technology because the market demanded it.

The actual reason why this doesn’t happen is that the Classical Model is wrong. It’s an OVERSIMPLIFICATION that is predicated on faulty assumptions and leads to macroeconomic predictions that don’t match empirical data.

@gorillapaws I get the feeling that you are stretching the facts to suit your theory. Let me start with your last point about Somalia.

You say that per the classical model, Somalia and presumably every other country in Africa would rise to overshadow all other nations because they have no regulations and no minimum wage. I do not know which classical theory you are referring to; but common sense tells me that technology, especially AI and Robotics do better when it is worthwhile saving on labor costs. In Africa, labor is cheap, so no labor-saving technology exists.

By the way, the humongous gas leak at a Union Carbide plant in India was caused by lack of automation that was standard in more advanced countries.

As far as supply and demand not applying to the labor market, let me give you just one example. Tech wages. The reason tech wages are high is that no matter how many tech wizards the colleges turn out, there is demand for more. The same does not apply to arts majors.

In connection with location of facilities by corporations, what you say is correct. A new facility can be located wherever the company decides. However, relocating is extremely hard. Even Elon Musk was reduced to empty threats when Newsom and Company imposed extreme conditions on Tesla.