Tag Archives: minimum wage

A note on minimum wages and monopsony power

Source: Cafe Hayek
by Don Boudreaux

“The existence of monopsony power supplies the only theoretically credible condition under which a minimum wage can possibly improve the well-being of low-skilled workers without harming any of them. Of course, however, claims that monopsony power is in reality rampant enough in the United States to justify minimum-wage legislation are incredible. These claims fail the smell test. But — and here’s the point of this post — to the extent that temporal or geographic pockets monopsony power might arise in reality, once source of such power might well be minimum-wage legislation itself.” (12/06/17)


God knows (but government doesn’t)

Source: Cafe Hayek
by Don Boudreaux

“Of course reality is riddled with individual situations, spread out across locales and time, when wages for some workers could be forced up by an all-knowing god without inflicting harm on any of those workers — that is, with all of the costs of the higher wages paid for by their currently too-powerful employers. Reality is also, no doubt, riddled with individual situations in which wages are, by the same standard of perfection, too high: in such situations god could force down the wages of those currently too-powerful workers and thereby improve the economic welfare of employers and consumers. Indeed, reality is riddled with all manner of imperfections that god could correct in order to increase human welfare. But government isn’t god.” (09/29/17)


Minimum wage proponents continue to believe in free lunches

Source: Cafe Hayek
by Don Boudreaux

“[W]hile fewer jobs for low-skilled workers is a chief and especially unfortunate result of minimum wages, it isn’t the only negative result. Many other responses to minimum wages are possible instead of, or along with, reduced employment opportunities. My colleague Dan Klein offers some examples: the extent and difficulty of work duties grows; flexibility in employee scheduling declines; fringe benefits and on-the-job training decrease; lockers, free food, and other amenities for workers are cut; workplace safety, comfort, and amiability decline.” (09/26/17)


Target to increase its minimum hourly wage to $15 by the end of 2020

Source: Chicago Tribune

“Target Corp. said Monday it is raising the minimum hourly wage for its workers to $11 starting next month and then increasing it to $15 by the end of 2020. The company said the move will help it better recruit and retain top-quality staff and provide a better shopping experience for its customers. The initiative is part of the discounter’s overall strategy, announced earlier this year, to reinvent its business, including remodeling stores, expanding its online services and opening up smaller urban locations.” (09/25/17)


The failure to pair workers with work

Source: The Anarchist Shemale
by Aria DiMezzo

“Ridiculous amounts of work are going undone in the United States. Bridges and road signs are covered in graffiti, streets are littered with trash and refuse; storefront windows are smudged with fingerprints and streaks of rain, buildings need to be repainted, countless yards need to be cut, and statues and monuments throughout the nation are covered in bird droppings and graffiti. If you simply begin looking for it, you will see thousands of things, just on your daily commute to work, that need to be done — things that could be done. Things that, you would think, someone would be willing to pay to have done. … If there is work to be done, why isn’t it being done? The answer is just as simple: the Minimum Wage.” (08/01/17)


Seattle’s minimum wage supporters ignore the facts

Source: Ludwig von Mises Institute
by Andrew Syrios

“In what has become a running joke amongst those skeptical of the claim that minimum wage increases have no effect on unemployment, a recent report by the Employment Policies Institute showed that 174 of the 184 co-sponsors of a bill to raise the federal minimum wage to $15 an hour hired unpaid interns. My personal favorite example of this type of this is when the Freedom Socialist Party, which was pushing for an even more ridiculous $20 minimum wage, posted ads for new employees offering $13 an hour.” (07/26/17)


Minimum wages: Short rejoinder to Geloso

Source: Notes On Liberty
by Nicolas Cachanosky

“Geloso correctly argues that different employers react in different ways. It is expected, for instance, that a larger employer such as a fast-food chain would have more options to make a marginal adjustment when there is an increase in minimum wages. Of course, I agree, but the point I’m rising is about where jobs will be lost first (not the specific mechanism in each employer). Geloso flips my example and argues that a small diner has more (in relative terms) to lose by letting go one out of two employees than a fast food joint that has to let one employee go among maybe ten thousand. By letting one employee go, the small employer loses a larger share of its output. Therefore a small employer would be more inclined to keep all of his labor force and cut costs on another front (less hours work in average doesn’t cut it, that’s like a shared unemployment that would also cut output down). A large employer like a fast food chain, however, can let one out of ten thousand employees go because the loss in output is not that significant.” (07/09/17)


Illinois’s $15 per hour minimum wage proposal is just “pie in the sky”

Source: Heartland Institute
by Nancy Thorner

“Illinois’ legislators proposed a $15 per-hour minimum wage bill, to be realized by 2022, under the assumption that it would benefit workers at jobs that were never meant for heads of households in the first place, but instead were often entry level job for teens. Did it ever occur to lawmakers that the unfunded mandate would mostly be imposed upon small businesses, that the wage increase would set into motion a push to raise the wages of others who were at or near to the $15-per-hour wage level, and that if businesses are unable to find money in their budget to pay for the wage hikes, robots, which don’t have to paid either benefits or salaries, will take the place of humans?” (07/03/17)


Why Seattle’s minimum wage law is now destroying wages

Source: Acton Institute
by Dylan Pahman

“The first phase raised Seattle’s minimum wage from $9.47 to $11 per hour in 2015 with relatively no negative effect on unemployment or hours worked. So why is the second phase different? According to Ben Casselman and Kathryn Casteel at FiveThirtyEight, ‘In high-cost Seattle, not many workers earned less than $11 an hour even before the law took effect.’ … The point where minimum wages become relevant is where they are no longer below the labor market’s natural equilibrium, where supply freely meets demand. The difference between the first and second phases of the Seattle Minimum Wage Ordinance demonstrates this basic economic reality. Fixing prices on anything will have no effect so long as the price is below what buyers and sellers would freely agree to on their own anyway. However, when that is not the case, we end up with supply surpluses.” (06/28/17)


Seattle surprise: When you raise prices by government diktat, people usually buy less

Source: Reason
by Nick Gillespie

“Three years ago, the city of Seattle voted to raise its minimum wage to $15 per hour, in the name of human decency and basic fairness. The minimum wage went from $9.47 to $11 per hour in 2015, and then to $13 per hour in 2016. Similar policies have been enacted or considered in countless other cities. Critics argued that boosting wages by bureaucratic diktat rather than increases in worker productivity or market demand would lead to fewer hours and fewer jobs for low-income and low-skill workers. Now what The Washington Post calls a ‘very credible’ study from researchers at the University of Washington’s School of Public Policy and Governance finds that the critics were right. … The findings may surprise progressives who believe that the only limit to increasing pay for workers is the greed and selfishness of business owners, but they don’t come as a surprise to people who recognize that the law of supply and demand can’t be abolished by city councils.” (06/27/17)