Once again politicians and pundits are calling for increases in the legal minimum wage. There are a few economists who have been leading the charge for higher minimum wages. Some of these economists have obvious ideological leanings. Some others do not but are very confused about how to read the evidence concerning jobs and wages. FULL ARTICLE
Source link: http://archive.mises.org/4987/mythology-of-the-minimum-wage/
Mythology of the Minimum Wage
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Cosmin: you really, really, need to read Man, Economy, and State, and learn a little bit of economics.
Sure thing. It’s on my to-do list. How is that relevant to anything here anyway? Are you saying it contradicts what I’ve been saying? ‘Cause if it does, it’s wrong!
M.E. Hoffer,
I am aware of call centers, so that may have not been the best example. But I worked at a pizza place as a delivery boy for many years, so I can probably provide some insight as to why NONE, repeat NONE, of the major pizza chains take advantage of these call centers.
For one thing, someone needs to be on-hand to take walk-in orders. The phone-answerers are ideally trained for this task as well. In addition, walk-in customers like to deal with a real live person, so this task may not be outsourcable. Also, the phone people occasionally do various minor additional duties (labelling boxes, replenishing the food on the “make-line”, etc.). Also, some customers want pizzas that are so highly customized and/or need to give such specific directions for delivery, that it is easier to have people on hand for this communication.
A similar case could be made for the delivery driver. An on-site delivery person can get the pizza out the door immediately after it finishes cooking, thereby meeting a delivery time guarantee, for example. Also, the delivery driver gets very familiar with that store’s particular delivery area and its regular customers, thereby speeding up the process even more.
And this is just one example from one business …
While I agree that there is a lot of persistent brainwashing by the State, I find it hard to believe that this business model is an example of that type of brainwashing. Employers are COMPLETELY free to use your model. The state does not require that businesses have a heirarchy or use hourly-wage-based labor. If it was truly a superior system, many of the businesses that currently use the “heirarchical model” would have switched to your model LONG LONG LONG ago. Again, they are free to do so. The fact that the business model I described persists, suggests that there is a very good reason for its existence.
Cosmin said;
“I say government ideally shouldn’t impose a minimum wage. When it does, it impacts, as this article and most of you have pointed out, on the supply of jobs…
…Government impacts on the demand of jobs very much by limiting the opportunities for self-employment. It does so in many ways, like, for example, intellectual property laws, or enforced certification…
…A real solution, though, would be for government to butt out completely.
Cosmin, that’s the coolest thing you have said here yet!
But I have to agree with those who point out that the way to level the playing field for the disadvantaged is not to break the legs of all the other competitors, but for the government to refrain from breaking anyone’s legs in the first place…
Vince, that’s not only the coolest thing, but also the first thing I said!
We all seem to agree that government should refrain from breaking anyone’s legs. That part is settled. But what happens when it doesn’t refrain? If it breaks someone’s legs, must it let the second individual run around the now crippled one, free to stab him from all directions? Or must it break his legs too, to even the playing field? This part of the debate rages on…
P.S. – for those of you who find the task of reading the books on the Mises site daunting, may I suggest the following:
Purchase a premium text-to-speech program with “AT&T Natural Voices”. Then copy the text of these books into the program and create an MP3 file. Then you can listen while you drive or work around the house. I even bought wireless headphones for late-night and outdoors listening (they were only $35 including shipping!).
Now I’m “reading” free Mises.org books (i.e. “For a New Liberty” and “Man Economy and State” are available in PDF for free here) and articles all the time. Multitasking.
Cosmin,
I think you are confused as to whose legs are being broken here.
When the government raises the minimum wage, EVERYONE suffers. The entire population is deprived of the capital (goods and services) that would have been produced had this unemployment not taken place.
Employers are harmed somewhat, in that their business models are limited to using only certain types labor, i.e. labor that costs more than $X.
Employees are harmed if the minimum wage price exceeds their productive ability. They are fired.
As I attempted to show above (see my posts from May 8, 1:30PM, and May 7, 10:25PM), hourly-wage earners and the heirarchical structure that you and M.E. Hoffer don’t seem to approve of, is likely to persist for some time. I believe it is a logical business model for some businesses.
Given that situation, the necessary effects of a minimum wage are undeniably bad for everyone.
Universal leg-breakage.
Fred,
That’s a cool idea re: AT&T Natural Voices & Articles, et al.. I know, for myself, too much screen time doesn’t improve “anything”.
As far as the Emps/Cannon Fodder/Consumers are concerned, I still think they’re a grave risk to Liberty, or the return thereof. Past that, they can organize, or be herded, any which way they care to be. Their brand, though, I won’t wear.
Cosmin, above, states, well, ideas very similiar to my own.
The State corrupts. It is so prevalent, it corrupts us all. Nick, above, asks when do we Do something about it? A fine Q. That so many of us fear losing, that which is in direct contradiction to one of the basic tenets that launched the original experiment of Liberty: “No taxation without Representation”, our current “wealth”, nothing but a burlesque of debt for those who have yet to arrive, should give us pause.
Others of us, who attempt to quiet the disquiet of their quietude, in pretending they’re some latter-day Gen. GW, cagey in their calculated retreat, miscalculate how near their cage is: They/We are in it.
Others of us, suggest, that if but for a mere rock upon which Freedom can reign, conviently forget that such rocks, already passed over, probably see no rain.
This Q, for some reason, has come up a couple of different times fairly recently. Mr. Preston has spoken, I believe, with knowledge, about those who are most likely to take serious the cause of disobedience to, and the contraception of, State power.
Who here can make palatable the injustice that we all see? Who here gets their crank turned earning Federal Reserve Not(e)s? We know the nature of that beast, do we not feel defrauded?
Are we realy, really, afraid that a double-coincidence of wants is actually more difficult to solve than differential equations? Get Real, Purdue, right now, could replace 5% of the demand for Bernanke’s Buck with it’s own Cluck.
Truly, I think we fear that we have Too Much to gain.
Vince, what’s your take ?
Clarifier,
The Nick, I referred to was posting on the “to rule is to destroy” thread, my error.
But raising the minimum wage RAISES the going market rate. Remember, supply and demand are only part of the equation. Government can force a minimum wage, and therefore force minimum wage shops to choose to raise their prices or go out of business, and be replaced by someone who does raise their prices. Either way, if there is a demand for the product at the going price, people will buy it, if not, then they will purchase less raw materials, and the price of raw materials will go down, making the entry level price to open a business go down. Supply+Demand+Government=happy people
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