[tuna-piano]

Not sure why you're being down-voted.

It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss. Everyone needs to understand that raising prices of almost anything will reduce the amount of that thing demanded. When price goes up, people buy less. Wages are just price and labor is a thing that people buy.

The more complicated issue, which democrats and republicans both ignore, is the elasticity of demand. Democrats love saying "Minimum wage increases are good, and they've been proven not to affect the demand for low-wage labor!" and republicans say "Minimum wage increases are bad, and they've been proven to increase unemployment!"

The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.

http://ftp.iza.org/dp3150.pdf

[AnthonyMouse]

> The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.

That is actually the false dichotomy that leads people to consider minimum wage as a good idea. Just because something might be better than nothing doesn't mean it's better than known alternatives.

Model minimum wage as a tax on employers for the difference between the minimum wage and what they would have paid without it, which is used to fund wage subsidies in the same amount to those employees.

Looked at in that way, minimum wage is obviously ridiculous. There is no reason to ever use that tax structure for anything. Even if you wanted to have the same subsidies for the same employees, it makes more sense to spread out the tax burden across everyone so that you don't have a de facto >=100% tax to hire someone who would have made half the minimum wage or less.

The only issue then is that without the disincentive to hire created by the minimum wage "tax", anyone could offer to do easy work for $.01/hour just to get the subsidy, so you might as well make the subsidy a fixed unconditional amount regardless of wages or hours.

At which point you have a UBI.

[monocasa]

> It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss.

Except that there's good data that this doesn't happen, ie. that minimum wage increases are actually associated with small increases in employment.

There's also very good data that subject of minimum wage increases is fraught with rampant publication bias.

https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...

  In the minimum-wage literature, the magnitude of the
  publication selection bias is as large or larger, on
  average, than the underlying reported estimate. Overall,
  correcting for publication bias would transform a
  modestly negative average elasticity to a small positive
  employment elasticity.

[tuna-piano]

Honestly, I haven't looked into your claim. But just off-hand, I'm very skeptical of any evidence that minimum wage increases cause anything but a decrease (even if tiny) in employment. How many goods in the world do price increases cause an increase of demand?

Economists have a term for this type of good, "Giffen Good"[1]. And for obvious reasons, they almost never exist. When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?

[1] http://lexicon.ft.com/Term?term=Giffen-good

[monocasa]

> Honestly, I haven't looked into your claim.

You should read the article I linked. : ) It's a very solid meta-analysis including pretty much every peer reviewed article on the subject of the past few decades.

> ... When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?

The article explicitly doesn't go into why, but I can think of a few reasons.

Totally off hand, I'd put my money on the fact that businesses that employ minimum wage earners tend to also be disproportionately patroned by minimum wage earners. Add to that the fact that minimum wage earners tend to pretty much immediately spend their paychecks, you're left with businesses having their customer base with more disposable income.

Why don't employers simply raise wages themselves? Aside from the implicit information asymmetry sort of denoted by this very conversation, it doesn't make sense from a sort of game theory point of view for an individual business to go out on a limb without their competitors doing the same at the same time. In my mind, that makes it a perfect opportunity for government to step in, and add some lower bounds of acceptability. This way both employees and employers can have more success.

[D-Coder]

Who bothers to sell their goods at a loss?

A price increase increases sales, yes? My time is all I have to sell.