[krschultz]

Let's say we cut minimum wage in half. How many jobs are going to be created? If it's not profitable for the business to hire a worker at $7 an hour, is it going to be at $3/hour? That's a business with crazy low margins.

Pretty much right now minimum wage workers usually do service jobs (fast food, waiting, etc), household chores (cleaning, landscaping), farming, or no-skill manufacturing.

No-skill manufacturing is largely dead in this country. Changing the minimum wage won't change the fact that you still have to follow environmental and safety regulation. That is expensive in its own right. You also can pay $3/hour in a different country and get good people. You can pay $10-15/hour and get great people. If you pay $3/hour in the US, you are going to get the people who can't even get a minimum wage job. I doubt a lot of companies want to hire those people for any price.

For service jobs, you usually have a fairly fixed number of people. If McDonalds has 3 registers, they already have 3 cashiers at lunchtime. Lowering minimum wage just hurts all those people because the pay will be less. It won't create many more jobs.

Farming could see a big increase in people, or at least a big increase in paying people on the books. A lot of migrant farmers are paid off the books below minimum wage as is.

So where is this giant pent up demand for hiring $3/hour workers? All I see is a marginal increase in jobs, and a massive decrease in wages for everyone else near the bottom.

[meric]

I am all for setting up a minimum wage below the fair price of labor. This way you protect people who are vulnerable, e.g. people with no savings or can't speak the language, while at the same time ensure more people who wants a job can get one.

There are some people who can only be hired with a wage below the minimum:- high school dropouts, immigrants, physically disabled, blind, mentally ill, elderly, long term unemployed. By setting up a minimum wage too high you are ensuring all these people will not get jobs even if they want or need one. To the employers eyes: if you had to pay $7/hr anyway to hire someone, you might as well hire someone who is physically strong, understands english and has graduated high school.

The minimum wage makes people on the lowest tier unemployable. Arguably it does raise wages for workers on the people near the bottom but not quite there. As you can see there is certainly a trade-off to be made.

[yummyfajitas]

If you pay $3/hour in the US, you are going to get the people who can't even get a minimum wage job. I doubt a lot of companies want to hire those people for any price.

All you are saying here is that the min wage is harmless because it's set below market rates. I.e., it's like setting a $0.25/gallon price floor for petrol, or passing any sort of "keep doing what you are already doing" law.

But if that is the case, then why would wages decrease if we eliminated the min wage?

As for the pent-up demand for $3/hour workers, you can see it every time a company outsources or offshores. My company (located in India) wouldn't exist if we had to pay $7.25/hour, for example. (Of course, market rates for the people we need would probably be higher than $7.25 in the US, so the min wage is a moot point - lowering it would not affect our costs or our hypothetical US employee's wages.)