[itsmek]

Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong?

If your question is why is minimum wage a good policy, you could start here for a summary of the arguments and evidence: https://en.wikipedia.org/wiki/Minimum_wage

[navi0]

It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work.

I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0].

Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country.

In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits).

[0] https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_Califo... [1] https://en.wikipedia.org/wiki/Chinese_Exclusion_Act

[unethical_ban]

You still didn't address the idea that there is a threshold for all intervention. You said "why not make $100hr minimum?" and the answer is "that's too high".

It sounds like, were you to acknowledge that thresholds exist somewhere for most things you think the threshold for minimum wage is 0 and that UBI and guaranteed services is a better mechanism.

Which is respectable, at least in that you recognize a government role in ensuring humane living conditions for its citizens. Most people who argue against a minimum wage seem to think any government action of any kind to protect or provide for citizens is "theft by taxation".

[navi0]

I don’t think there is a threshold for intervention in setting prices. If a $100/hr minimum wage is too high, then a $20/hr min wage will also be too high for plenty of employers and would-be employees who are now unable to legally transact. Safety standards create similar issues, but most typically require capex that can be amortized or depreciated (unlike labor opex).

I’m not opposed to taxes. When designed properly, they’re transparent and avoid excluding economic activity like min wages do.

[itsmek]

Ah sorry I was taking you seriously when you said "real question", I didn't realize it was a rhetorical device. The history of the minimum wage is pretty irrelevant compared to the economic models and empirical studies in that article, I'm not going to engage in such a pointless distraction. If the Nazis invented building codes I would still support them based purely on whether they are a good idea or not.

But you seem to be missing my point on housing code: do you support a nonzero housing code? Some is good, too much is bad. Same for minimum wage, many models and analyses show that some minimum wage improves productivity and counterintuitively increases employment in monopsonistic industries up to the point when they (partially) undo the damage the monopsony caused, at which point obviously a further increase in minimum wage causes damage as you say. My point is that your "real question" (which was an argumentative point in disguise) works rhetorically against nearly every intervention, some of which you certainly support (I tried to pick an obviously good intervention and came up with building code), and thus is a weak argument. If you truly support no market interventions I at least respect the internal consistency of your worldview but think you must underestimate how much food poisoning, fire death, servitude, etc it would cause.

[navi0]

Rhetorical questions are real questions and useful for exploring the logical fallacies that are embedded in ideas like minimum wage.

As shown by comments elsewhere, picking a minimum wage is often based on some imagined everyman/woman’s standard of living that may preclude others from earning a livelihood at all due to jobs never created or capital replacing labor because government decided by fiat that no work that generates less than $X/hr in output shall occur. Human skills and living arrangements are infinitely variable, and governments fail when they attempt to preclude people with lower skills from finding work.

In practice, very few workers earn the minimum wage, but union contracts are often tied to it, so unions like to advance laws that increase the minimum wage, which leads to the outcomes described in the parent post.

As economic policy, they’re also bad because inflating the price floor of labor fairly quickly feeds through to higher costs for housing, food, and services.

Safety standards (ie rules of the road) and competent enforcement are good roles for government, and while they do tend to increase operating costs and function as regulatory barriers to entry, setting prices is best left to markets.

Monopsonies are easily solved by workers moving out of the (labor) market controlled by the buyer to better job prospects. Claiming ancestral ties to a place, etc, as reasons for remaining are then the choice of the worker. If enough people leave, the employer will be forced to increase wages to attract workers.