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Minimum Wage, Maximum Damage
This book is written in the simplest possible prose but the argument is deep and sophisticated, offering arguments you may never have heard before.
Kick off the discussion! Questions, comments, observations or elaborations? Either reply here or create a new discussion using the tag Library_Minimum Wage
Always looking for good web links for this type of discussion to show friends and family.
Would you happen to know of any off the top of your head?
Not read this yet but downloaded it this evening. Hoping it’ll shed some light on something that’s been playing on my mind lately: the possible relationship between minimum wage levels and spending power – more specifically an inverse relationship.
I wonder, in other words, whether a rise in the minimum wage which results in a rise in prices might result in lower spending power.
Clearly if there’s one rate of inflation affecting minimum wage, base price and all the other parts of the picture, spending power will remain the same, but if there’s some asymmetry due to there being more amplifiers affecting price (for some reason), spending power will go into sharp decline as minimum wage rates rise. My hunch is that this could be exacerbated further by the ‘levelling’ effect of minimum wages: contrary to what many think about a flat hierarchy, I’m generally opposed to it since in order for people to develop in their careers, they need to be able to prove themselves in progressively more demanding roles. As minimum wages rise, paybands tend to merge, often with efficiencies coming from passing responsibilities down the chain, which might sound like an opportunity for entry-level workers but in practice tends not to be: rather it tends to just mean that those responsibilities which could previously have demonstrated some competence edge now simply denote entry-level skill levels.
Sorry, rambling: I’ll read the book and hope some light will be shed but I have this nagging intuition that spending power suffers when minimum wage rates rise. A few things have been puzzling me of late and one is the price in man-hours of restaurants and take-aways. In some parts of the system, spending power is in very rapid decline, with meals costing two and three hours’ labour on the high street, whereas in other areas (typically family businesses) spending power’s remained more or less stable for the past decade or more.
I’m one of those grumpy old anuses who thinks in terms of lower prices being a good thing, rather than higher prices being some convoluted signal of social responsibility, or whatever it is our leaders take them for nowadays.
@Kory Clayton: there’s tons of great stuff on YouTube – Thomas Sowell and Milton Friedman had it covered back in the day but there’s plenty of good stuff coming out of more or less every public figure in the liberty movement (and indeed conservatives too).
> I wonder, in other words, whether a rise in the minimum wage which results in a rise in prices might result in lower spending power.
I’m not sure about the rising prices argument, but a minimum wage definitely results in lower spending power for the average person.
In my analysis this is caused by the loss of flexibility everyone suffers from in a minimum wage market. For instance, if I’m only qualified to work in the tech industry, and wages mean employers cannot take chances hiring a beginner to intermediate worker for the minimum, then pressure is exerted on the workforce to more fiercely compete for credentials and experience.
If I must compete with my current industry to remain in it, and every other industry has pressure pushed upwards in credentials, then tons of bad things happen.
Firstly I cannot jump between industries unless I’m willing to become an intern or get more education at a college. Liberals tend to point to companies as being the culprit in this matter, and say that these companies collude or simply have exceedingly high expectations. In my opinion the problem is that with minimum wages, the value indicators for an employee change. Instead of being valued for your personality and work ethic, you’re looked at for your profit over your minimum cost (now that there is one).
This also affects buying power as each industry workforce becomes an island, with only small bridges connecting them. My older relatives tell me amazing life stories about them taking on a widely varied amount of roles in their lives. The current market will have you redo major life steps to change industries like back then.
With less chaos comes more advantage. Lacking the horizontal nature of a free market, workers must compete against a more and more specialized industry.
I personally think minimum wages affect the prices of education, the hidden cost of moving between different industries as a worker, and affects the purchasing power of each working individual.
The idea that politicians should be able to determine what anybody’s labor is worth is absurd. They make millions under the table through insider knowledge of future thefts, and many of them have never actually done any real labor of any kind.
Leave the wages to be decided between the employer and the employee. We are free individuals who can decide whether or not our wages are fair. And act accordingly.
