[sce]

Regarding income inequality, I recommend listening to some of the speeches/debates with Bernie Sanders.

E.g. he argues that the greatest receiver of welfare in the US is the wal-Mart family, because they get even richer paying their workers so little that the workers have to live on welfare. (In other words the welfare is "paying" the workers so that Wal-Mart don't have to.) He proposes to rise the minimum wage.

https://www.youtube.com/watch?v=eYFueqv0iIQ

[clarkmoody]

Walmart employees are not compelled to work for Walmart; the employment contract is agreed upon voluntarily by both parties. The employees know how much they will be paid and agree to accept the terms.

Walmart is operating within the legal employment framework set up by the government, including the welfare state and the minimum wage. That will not change by raising the minimum wage. Rather, Walmart will simply add automation and reduce its employment.

Minimum wage is arguably the worst idea when it comes to improving the lot of the poor. If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That is, their skills are not worth the minimum amount an employer is allowed to pay, so they will not be able to find a job. Ever. That person will be a permanent liability of the State.

[gnaritas]

> Walmart employees are not compelled to work for Walmart

Yes they are, poor people are compelled by lack of opportunity to take whatever they can find even if it sucks. Pretending they have the option of just saying no to a low salary is a bit of willful misunderstanding of the reality of their situations.

> Minimum wage is arguably the worst idea when it comes to improving the lot of the poor.

No it isn't.

> If someone cannot command more than the minimum wage when it comes to productivity, intelligence, etc, then raising that wage means that person will be unemployable. That person will be a permanent liability of the State.

That is the point, a minimum wage allows people the opportunity to get into welfare because minimum wage is part of the welfare system, it sets the low bar. It's better to not have a job and qualify for benefits than it is to have a job that pays so little it's not worth having. The minimum wage forces society to deal with the problem of people who lack the skills to make a market wage, and that's a good thing.

[danieltillett]

The problem with this analysis is it assumes that the power to negotiate a wage is equal between the parties. The second is wages are set at the margins. This means it takes very little excess labour supply to drive wages to subsistence levels.

[WoodenChair]

I must commend you - I have never seen the main detrimental effect of the minimum wage explained so succinctly. Not in Friedman, not in Hayek, not anywhere.

[easuter]

> Walmart employees are not compelled to work for Walmart; the employment contract is agreed upon voluntarily by both parties. The employees know how much they will be paid and agree to accept the terms.

While technically true, you're ignoring a ton of other factors such as the lack of any other alternative employment or the lack of financial capability to move to an area where more employment exists.

When the only jobs available are McJobs, then that is what you are compelled to do, to support yourself and your family - regardless of your intelligence or qualifications because someone else is ready to take your place if you don't accept the job. You have no power to negotiate a higher salary regardless of whether or not you deserve it.

It is a very hard rut to pull yourself out of and stay free from. Companies like Walmart exploit this as much as they can, and have no reason to change their behaviour unless forced to do so.

[sce]

tl;dr: Raise the minimum wage so that employees don't need to live off of welfare. People lose their job? Good riddance, seriously. People don't lose their job? Called their bluff.

> Walmart employees are not compelled to work for Walmart; the employment contract is agreed upon voluntarily by both parties. The employees know how much they will be paid and agree to accept the terms. Walmart is operating within the legal employment framework set up by the government, including the welfare state and the minimum wage.

Yes. And if you think everything is fine the way they are now, then don't change a thing.

> That will not change by raising the minimum wage. Rather, Walmart will simply add automation and reduce its employment.

Sounds great to me. You're basically arguing that not having minimum wage is actually holding back progress.

> That is, their skills are not worth the minimum amount an employer is allowed to pay, so they will not be able to find a job. Ever. That person will be a permanent liability of the State.

If an economy can produce the same amount of wealth with much less workforce/work hours than today, then why shouldn't it? Sounds great if you ask me. (And if that's not possible, just hire more people, it's apparently worth it, problem solved.)

"Minimum amount" is in this case "amount needed to reasonably survive", ie. not need extra welfare. If you can't produce enough value that you can't even justify being paid to "reasonably survive" then yes you need help.

Okay, so I'm no economist, but it sounds like you're arguing that not having minimum wage is in itself a socialist measure. In other words, paying people something, anything, is better for the poor than paying them nothing. The only reason to pay the employees anything at all is to "help the poor", because their work is not really needed anyway (their work is worth that little).

To follow that line of reasoning, from a capitalistic viewpoint, it would thus be wise to raise the minimum wage. If people are being paid to do work that's not actually worth it (ie. subsidized via welfare), then don't. I seriously don't understand why capitalistic Americans defend that point of view. Why should the state/government subsidize effectively worthless labor?

What I'm doing is "calling the bluff". People won't get hired? That's fine, the work they were doing is practically worthless anyway, and I'm certainly not for subsidizing that. However, I think people actually will be hired anyway. Because their work is not worthless. I think the only reason people are being paid so little is not because of the "worth" of the work they're doing, but because the market allows it.

I don't know how that happened, perhaps because the big cooperations have too much power, perhaps it's just inevitable in a free market. But I do not support subsidizing labor, and I don't buy the argument that you have to. The money is there, the value of their work is there, there's no problem paying people more, they just don't want to, and luckily for them they don't need to either. And as long as everyone plays along, that's how it's going to stay.

Sometime in the future I'm sure we'll be able to produce enormous amounts of wealth with minimum man power (re: automation). What will everyone do then? That's up for debate, but it looks like the best bet is putting everyone on universal basic income. And that's not a problem, because the wealth is there, the "problem" is that no one needs to do anything to produce it. I'm sure our future selves will find a fix. (If not, then that sounds like a base line for a revolution. Let's hope that's not needed.)

In the meantime, redistribute some of the wealth by raising the minimum wage. Wal-Mart don't need employees? Fantastic, the future is already here.

[clarkmoody]

Either you're trolling, or you completely misunderstand my position.

Thought experiment: Let's make the minimum wage $1000 per hour. I'd like you to think through the ramifications. What would happen?

> Sometime in the future I'm sure we'll be able to produce enormous amounts of wealth with minimum man power

We already do! The amount of productivity possible by a single worker today was completely unheard of 50 years ago, let alone 100 or 200.

> What will everyone do then?

What do we do now? We continue to work, even though we're far past satisfying all of our material needs. Why didn't everyone just stop working more hours than it takes to eat and stay warm?

Come up with answers to those few questions and you'll be well on your way to being an economist ;-)

[sce]

> Thought experiment: Let's make the minimum wage $1000 per hour. I'd like you to think through the ramifications. What would happen?

I'm assuming prices through the roof, companies forced to sack their workers, unemployment rate through the roof, companies go bankrupt, economy collapses.

I believe Sanders is suggesting $10/hour (and that it's around $7 now). That's just a number, but I'm assuming it's the threshold between "needing welfare" and not. So my argument is that if you're paying an adult less than that then that's less than the cost of that person to "reasonably survive", thus artificially low. (In other words, companies are paying less for labor than the actual cost of labor.)

So now instead they're getting $7 from their employer, and in practice $3 in welfare. That's the difference with your example: People are already earning $10/hour, they're just not getting it from their employer. So raising the minimum wage is not raising the cost of labor, it's simply placing the entire burden on the employer instead of subsidizing it. There might even be room for a tax break there once people start number crunching. (Although in Sanders case I'm guessing he has other things to spend that money on, but I digress.)

If raising the minimum wage to the real cost of labor is a problem, then I just don't understand why. The money is there, it's just "stuck" at the top, and minimum wage is one way to help distribute some of the wealth (which really should benefit the economy as a whole, since the incredibly rich can't possibly spend all their money like millions of middle class families would).

> What do we do now? We continue to work, even though we're far past satisfying all of our material needs. Why didn't everyone just stop working more hours than it takes to eat and stay warm?

I guess it's partly because we live in a material world (where having a nice house, car, pretty clothes etc. is rewarding in its own right), and partly because money brings possibilities, and thus freedom: Freedom to travel, to not work, to do whatever one pleases. So money ultimately brings pleasure, and what else is life than seeking pleasure? ;-)

[mcginleyr1]

Sanders also, least in my mind, poses the question to us, is this morally just? We have a large group of people who are born and cannot afford to go to college, are strapped with debt to go to college, or simply can't make it in college. Do we allow an economic natural selection to weed these people out and suffer or do we as a society take a road based on moral principles to help each other by all of us paying in. Something interesting that I've been thinking about. I also wonder how much it hurts us in expansion of ideas. We have all this engineering talent focused on how to get people to click on ads, optimize e-commerce sales, and much more. What more could be done? Also when food chains break down and fully automate drive thru restaurants.. we'll there go lots of labor jobs... random thoughts feel free to ignore me.

[harryh]

This assumes an obligation on Wal-Mart's part to pay people according to their need. In a market economy, people are paid according to their ability.

[beagle3]

But welfare payments are paid according to need.

My understanding on Sanders' statement is that it could be paraphrased: "If walmart employes didn't get state welfare, waltons wouldn't be as rich, because they would have to pay more (employees who can't afford food and shelter can't work for you) ... ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons".

(That is how I understand his statement -- I don't agree or disagree, I don't know the details well enough to do either)

[wutbrodo]

> ergo, walmart employees are, at the moment, practically, a conduit of welfare from the state to the waltons

This doesn't make any sense (though you have paraphrased Sanders accurately). While technically true for some definition of "conduit of welfare", the same is true of almost everybody in society. Welfare recipients are integrated into the economy enough that "if X didn't get welfare, person Y wouldn't be as rich" is true for many, many, many values of Y (neighborhood stores in poor areas, people benefiting from reduced crime ("stealing bread to feed your family" used to be more than a trope), etc). To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of.

To the extent that society is responsible for helping the poor (FTR, I personally believe in this responsibility), it makes absolutely no sense to claim that employers (as opposed to the welfare system) are responsible for filling the gap between "market value of a person's labor" and "how much income he needs to reasonably survive".

This particular claim of Sanders is absolutely idiotic: people are blindly pattern-matching it to support for the poor when in reality he's arguing for shifting the burden of subsidies from all of society to arbitrary consumers/business owners/employees affected by artificial wage floors.

[sce]

> To give an example in microcosm: if you buy a used car on Craigslist from someone, the fact that the seller is a welfare recipient doesn't mean that you're a beneficiary of welfare because you're not paying him enough to live off of.

I think the difference here is that it's not a matter of a single transaction, it's an employment, so what the employer is basically paying for is the employees time (and time is finite). So a better example would be that you pay someone on craigslist for a service, e.g. paint your house. If the painter works full time painting houses and still needs welfare, then the taxpayers are basically subsidizing house painting ("conduit of welfare" as it was phrased). Why can't those that need their house painted pay what it actually costs to get the job done? Because if the full time painter needs welfare, they're in reality paying him too little.

[wutbrodo]

> I think the difference here is that it's not a matter of a single transaction, it's an employment, so what the employer is basically paying for is the employees time (and time is finite).

I think the distinction you're making here is more than trivial, and considered mentioning it but decided that it's still not relevant. My point was that Sanders definition (esp as paraphrased by you) is silly to the point of being meaningless, since it consisted of "X isn't paying enough for Y to get off welfare, thus X is receiving welfare". This applies to my example writ small. Your painter example isn't much difficult from the Craigslist example: the person spends his time doing multiple things that add up to less than enough salary to live off of. That doesn't make any of the purchaser's of his services responsible for the shortfall. To the extent that anyone else is responsible, it's all of society.

> Why can't those that need their house painted pay what it actually costs to get the job done? Because if the full time painter needs welfare, they're in reality paying him too little.

You're defining "what it costs to get the job done" very bizarrely here. If the painter takes odd jobs but his wife is employed too such that the two of them are somewhat comfortable (at least above the poverty/welfare line), by your definition it would suddenly "cost less to get the job done" (since the shortfall to a reasonable income has now diminished/disappeared)? This is of course an absurdity.

The problem again is that you're picking a way to place responsibility for subsidies that makes no sense from either an efficiency or an ethical standpoint. Assuming a need to take care of the poor, we all share that responsibility. The only reason we've "decided" that the burden should fall on arbitrary industries and their employees/customers/owners[1] is because that way we can pretend that we don't believe in taking care of the poor and the robust welfare system that it would entail. All we're doing is creating a shitty, roundabout version of welfare.

Note that I have a tendency to consider complete systems when it comes to policy. In the current political climate, it's no doubt more feasible to implementing higher minimum wages than, say, a basic income. So despite thinking that minimum wages are a terrible idea in a well-functioning system, I wouldn't necessarily vote against them in our less-than-optimal system. I just don't think there's any reason to delude ourselves into thinking that they're good policy per se.

[1] And in a weaker effect, that their effects should fall on arbitrary

[harryh]

It's not clear to me that they would have to pay more. In previous generations people leaved in much worse poverty and still managed to show up to their various jobs.

[sce]

In the case of minimum wage, they would indeed be forced to pay more, rendering the need for welfare to those same people unnecessary, thus shifting the cost from the state/government to the employer.

That is in effect wealth distribution, which again closes the big income inequality. (That's the intended effect anyway.)

[Plough_Jogger]

> thus shifting the cost from the state/government to the employer.

This would simply shift the cost from the state/government (read taxpayer) to end consumers (read taxpayer).

[sce]

If the employer responds by increasing the prices of the goods/services they sell, then yes. However, in the market the consumers have a choice, so they can choose to not buy something, or buy somewhere else, and the market thus regulates itself. Don't want to pay taxes? Not much choice there. So I think having the market regulate itself is better than enforcing the cost of labor through taxes. (Who knows, maybe the employers would be forced to cut their margins even.)

[harryh]

beagle3 argued that in a world without welfare, Wal-Mart would have to pay more or their employees would be unable to work due to lack of basic necessities. I was only arguing against that assertion.

[beagle3]

I was merely paraphrasing my understanding of sanders' argument.

But the argument has merit if the wage is not livable. The two issues the make this an issue (or a nonissue) is what is a minimum livable wage, and whether or not it is the governments role to enforce that or not. (No idea about the first, I think Yes about the second)

[panic]

In a market economy, people are paid just enough so they don't leave. Salary depends more on the typical economic situation of an employee than their ability.

[harryh]

Ya, ability isn't really the best word to use there. I was being cute by using the words of Marx. In reality "output" is probably a better word here.

[walshemj]

Which is something that George Osbourne a Conservative has said in the UK.