Eliminating the minimum wage (The effects Good or Bad)

[prolog]
I am a programmer. I believe that one of the things that's been pushing the industry is non profit organizations that create standards such as the W3C standards for web development and design. This being said, I believe this method should be applied in economics and should general eliminate regulations.

I want people's opinions on the effects of eliminating the minimum wage. I believe the good would out weigh the bad even if we stayed in a monetary policy. This is the effects that would happen if we did it my way.

A business owner standardization would be created that sets rules on how business should be conducted. This standarization would be maintained and managed by a non profit organization that monitors the effects of the market, and standards would change based on the positive and negative effects of the market. Such as minimum wage. This non profit organization would create a certification for business owners to obtain. This standardization would also be a reinsurance to the employee and consumer that the certified company goes by the best business standards. Lets say the industry standard was $2 dollars an hour for minimum wage. All businesses would certified would have to place a modifier on their current salaries that would lower the current minimum wage, to a pay scale of $2 dollars a hour. Businesses by this standardization would also have to mark down their prices that meet the new middle class minimum wage. All businesses such as rental, real estate, restaurant, auto, would have to meet to these standards. In general, cost of living would drop.

Couldn't this alone bring back thousands and thousands of jobs because employers could afford to pay more workers.

Someone tell me the pros and cons and what can be done to improve on this idea.

 

Why bother? Minimum wages reduce inefficient wage differentials, with evidence of both positive productivity effects and reductions in equilibrium unemployment. Its a simple correction for market failure

 

anyone who would even dream of abolishing the minimum wage has never worked for it

 

Minimum wage has almost eliminated the "no experience required" job. Therefore, the real winner from minimum wage is trade schools and college.

The losers, the unskilled that have to pay for additional education. More difficult for those that didn't finish public school, a point supported by the unemployment numbers.

 

A rather uncunning comment given the use of sub-minimum wages for training, plus the fact that the theoretical and empirical evidence against you

 

Why would we want to get rid of minimum wage? That would just promote more immigration.

I do not want to bring any more poverty into my country. Everyone should either be paid a decent wage or they shouldn't be allowed to live here.
As for the argument that lowering the minimum wage would give jobs to the young, old, and retarded . . . NO, it wouldn't! These jobs would just go to immigrants, like many of these jobs already have!

Do you really want people to live in your country who do not even earn enough to take care of themselves?

The biggest problem right now is low wages (and least relative to the high cost of housing), not so much unemployment.
In fact, much of the problem of unemployment is caused by low wages; people are just not willing to do jobs or get training to work for low wages. So I think getting rid of the minimum wage would just make unemployment worse.

 

I'm happy minimum wage is working well for you, here in the US, the result is a huge bubble of unemployed youth.

 

You continue to peddle myth. Meta-analysis will confirm that employment effects tend to be either insignificant or small and positive

 

Which myth, that there are unemployed youth?

 

Going for spurious blubbering now are you? Didn't see that coming!

 

You are so cute when you try to be obnoxious.

Where is your proof that minimum wage doesn't effect youth / inexperienced employment? Aren't you going to reference some obscure peer reviewed journal. You do realize "peer review" isn't all that significant, don't you?

 

I'm much more Anglo-Saxon when I'm being obnoxious

First, how come you're so clueless of the evidence? Second, we've actually seen publication bias in favour of showing disemployment effects. Its only the innovations in econometric techniques and evolution in labour theory (to explain phenomena such as the irrlevance of the law of one price) that has ensured a shift away from that nonsense.

 

Evidence?

16 to 19 years 24.05%
20 to 24 years 13.62%
25 to 34 years 8.72%
35 to 44 years 6.81%
45 to 54 years 6.49%
55 years and over 6.25%

Unemployment is based on those looking for work - there is no evidence that the inexperienced aren't worth minimum wage?

Of course there are publications that say just about everything. So?

 

First, capitalism tends to mass unemployment naturally. Its something orthodox and hererodox economics agree on (not surprisingly, given unemployment data). Second, you have not isolated minimum wage effects. Of course there are multiple factors that impact on unemployment. Minimum wages tend, however, to increase employment.

You'd have a point if, say, I was offering some crackpot supply side dogma. I've referred to tthe review of the empirical evidence. That review is inconsistent with your viewpoint. You can either go for conspiracy theory or, adopting rationality, change that viewpoint

 

Still no links.

What other factors impact unemployment for the young and inexperienced than minimum wage?

Your empirical evidence shows little to no harm, but does it show any significant benifit? If not, that could be nothing but statistical noise.



Lets try two thought experiments, one with no minimum wage, one with a minimum wage of US$100K per year.

With no minimum wage there would still be some unemployment, some people cost more than they generate. For the rest of us, there is a wage that is less than what we cost, and would be employed if we would work at that price (all of us working for more than minimum wage already do). Employment would be higher than with minimum wage, especially for the youth. "On the job training" would be viable again, as would the value of the employee.

With a wage of US$100K per year, any employee that could, would be replaced by automation or outsourcing. Those labor intensive companies we could live without would fail. For those we can'ty live without, the cost for their products would soar (as would that of their competitors). Given time, inflation would reduce the buying power of $100K to that of the current minimum wage.


Would outsourcing be viable, if there was a global minimum wage of US$100K per year?

 

I've done more than that; I've summarised the evidence. Note that you can't deny the existence of that evidence. You can't even refer to the shoddy old stuff, like the Brown et al articles in the 1980s

Are you being serious? Despite the existence of the sub-minimum wage and the positive employment effects, you want to ask a nonsensical question? Crikey!

In terms of unemployment effects start with the various forms (structural onwards) and then focus on specific aspects impacting on human capital investment (from the standard market failure stuff to the more specific analysis into inequality of opportunity and labour market segmentation)

Statistical noise would suggest insignificant effects are the norm. We don't find that. We do, however, find some competing effects. Dynamic monopsony, for example, leads to predicted employment gains and the elimination of inefficient wage differentials. However, other monopsonistic competitoion effects can introduce some marginal firm exit effects.

Let's not. Its childish. Instead refer to the labour theory and the empirical evidence.

Nonsensical question. Let me know when you can be bothered with reality

 

No links, no examples, just your meaningless "assurance" and lots of name calling.

Which of us is being childish?

ROTFL

 

It doesn't surprise me that you cannot respond to the post quoted. As usual, you're wasting me time. Get back to me when you know the basics of labour economics and can refer to the evidence with validity

 

Which of your words of wisdom are you referring to?

 

You cannot respond to anything with any validity. This reflects a basic knowledge deficiency in the area. You're not even aware supply and demand destroys your original comment are you?

 

Before eliminating minimum wage, one should think why it was instituted in the first place. A non-profit organization set to monitor effects of the market would be flawed since there are no guarantees that they'd be objective in their views and standards. Furthermore you'd be basically regulating prices based on standards; good luck in getting support from the US Chamber of Commerce in the effort.

That being said, if minimum wages were to be eliminated, one good thing that could come from it would be increased unionization of the workforce in America, which as I'm pro union, I'd love to see occur since most people would want to be paid fair wages based on what they feel is proper. Convincing employees to see past the veiled threats by employers if they unionize would be a challenge in some circles, but ultimately employees would benefit by having a say in the workplace.

 

I'm not anti-union, but we have to be careful when referring to them as an alternative to minimum wage protection. Unless we have a collective bargaining system which essentially provides a minimum rate across the economy, we're likely to see unions- by reinfocing wage norms- redistribute wages across workers (such that those in a strong bargaining position can benefit at the expense of others, including low wage workers)

 

I listed everything you said in this thread, there is nothing valid to respond to.

You got to be kidding. As supply increases, prices reduce to increase demand. Put in the artificial limit of minimum wage, and the demand can't be further increased, no matter the supply. That fits the data.

 

Let's not play pretend, its dull. You can't respond; thus the hissy fit.

As I said, you don't understand supply and demand. The disemployment effect is reliant on wage taking behaviour (I.e. The wage is set at market level). The empirical evidence rejects the law of one wage (I.e. The notion of a market wage). Suply and demand therefore informs us that there is wage making power (I.e. Monopsony is present; which only requires the existence of labour market f rictions, with job search leading to firms facing an upward labour supply schedule)

 

Then explain why, for those that maintained employment during the downturn, some had their wages cut (and not restored), most have seen no pay raise. For those out of work, many stay unemployed because they won't accept the wage offered.