[delichon]

If you can't afford a home up to our standards, better that you should be homeless? If you can't land a job at minimum wage, better for you to be unemployed? I wish that these were reductio ad absurdems rather than common place luxury beliefs.

[user3939382]

It’s a lose lose. If you remove the wage floor many people with “livable” wages now would have theirs cut, it’s a problem of adversarial incentives a la nash.

[pas]

Sure, but now there's a deadweight loss by allocation inefficiencies (plus the disemployment effects are strongest at the margin, so now many people are working less than they want to, because they cannot sell more of their work for less, so ie. they have part time jobs).

The "obvious" thing is to subsidize employment (by negative income tax for low-incomes to avoid discontinuities), and sectoral/collective bargaining (to avoid divide-and-conquer information asymmetry), and unemployment payments (to allow for the market to find new "healthy" equilibrium, so people don't have to take the first shitty job).

[user3939382]

You have two underlying factors which make everything else downstream moot. Fractional reserve lending and plastic imports. FRL means a bank is depositing $5 and lending $50 then charging you interest for the $45 they never had in the first place. Now you must extract that interest from someone else, who likely finances the missing amount and compounds the problem. So that’s how we stay ‘afloat’ if you can call it that despite the problem of #2. #2. Plastic is made from oil. Whereas anyone would exchange labor for energy, energy prices money. It’s the civilizational bottleneck. It would be cheaper to empty fort knox into Boston Harbor than accept another ship of disposable plastic goods that we send to a landfill. It’s effectively taking a big wad of US wealth every day and lighting it on fire, then using the nonsense FRL to make up the difference.

Given all that, whatever labor or wage trick you do is rearranging the deck chairs on the Titanic. I know how to remediate the plastic issue, which is an engineering question. Until that’s addressed the union sq debt clock is counting the cargo ships docking to feed our money/energy/oil->landfill pipeline.

[pas]

Money supply management is important for price stability. There's no debt problem in fractional reserve banking. (Exactly because debt is slowly inflated away while real assets keep their value [as their nominal value increases].)

There's a tremendous amount of economic growth. And as long as there are places where we can put in some better technology, a more efficient process or organization, then growth will continue, and the money supply will have to grow, and it's currently done via bank-issued money, because it provides some risk management. (Which is the most important factor of money creation. This is why finance and insurance developed intertwined.)

Energy is one bottleneck, sure, but there's no serious slowdown of growth of electricity generation capacity for example. And GDP growth is decoupling from carbon intensity. (As it should as we started to invest a lot of our economic surplus to do so.)

...

The important thing to remember is that there's a balance between how much money is needed now and how much is issued to be paid back later, and obviously if the growth would be almost zero the interest rate would be almost zero too.

If growth slows down (the fiscal multiplier goes down, there are no more public things to do, no more houses to insulate to get a smaller HVAC bill, no unemployed person to teach skills who would then work) then need for money also goes down, as no one will offer to pay it back with interest, so interest rate will go down, so whatever amount of money we have (as debt) we can keep rolling it over.

And of course the central bank can always exchange debt money to non-debt money. (And every time it wants to increase the interest rate it used to do something similar, it sold assets [US Treasury bonds] which removed debt money from the system. And back in the 90s there was talk about how the US central bank will adapt if the US government starts to run surpluses permanently.)

[user3939382]

> Money supply management is important for price stability

That’s an academic answer but it’s wrong. Price stability is derived from economic equilibrium, which means energy however you want to label it in and out must be stable. It’s not a philosophical debate nash models most of it. Our landfill pipeline is the source of our debt.

The classical hypothesis is that a swamp of credit is always going to buy some magic wand where the ends justify the means and there are infinite ways for society to store debt. What you get is fraud after a phase transition which is the society we live in now. Basically all I’m pointing out is no free lunch. There’s nothing to debate. I’m mapping no free lunch to the various materializations of energy in the economy. Food fuel labor oil power whatever you want to label it you have to pay for that oil. It’s potential energy whose current payment date is hundreds of years in the future. The whole global supply chain theology is laid bare a bunch of horrible trade offs which falsely claim credit for largely unrelated gains in raw human output and hidden costs.

[pas]

Of course there's no free lunch, but economic equilibrium includes future obligations too (at a discounted rate), it includes the value of current unfinished things, there's a lot of real economic value backed by demand, because otherwise there's nowhere for supply to go. (Imagine if suddenly no one wants to build houses, because let's say everyone gets a tent. Suddenly there is an oversupply of construction services, and construction materials, and architects, and inspectors, and labor in general. Which will immediately triggers a drop in wages.)

You have a hypothesis about price stability, and it's easy to see that while energy prices do impact everything so do interest rates (and in general monetary policy), therefore you need a model that's more complex than what you propose.

Prices inherently aggregate almost all concerns, so even logically it cannot be simply determined by one thing (like energy). Even if energy is cheap if we misallocate it then food, housing, or transportation gets more expensive.

You seem to be mixing up monetarism with sustainability and diminishing returns.

[jgerrish]

I really appreciate the level of discourse here on Hacker News. Thank you to threads like this and the authors of the comments.

I appreciate your argument, and you knowlwdge of economics adds weight to it. I'm wary of putting the burden on workers to remove information asymmetry and power imbalances in bargaining. Just because it's necessary now doesn't mean it needs to be. It could create a cycle of permanent extra work for those most in need of regulatory help.

I don't know if I had the full language of economic inefficiencies ready to flow like you do if that argument would be more effective. Or if there are other blocks, you know?

[bccdee]

The market for labour is a monopsony (the limited number of buyers relative to sellers make it a buyer's market). Just as suppressing price in a monopolistic market is unlikely to drive down supply and can actually increase overall sales, recent minimum wage increases have been found to have a net positive effect on employment.

> We present the first causal analysis of recent large minimum wage increases, focusing on 47 large U.S. counties that reached $15 or more by 2022q1. [...] We then find significant and larger positive employment effects, as the monopsony model predicts. We go on to document the presence of monopsony in the restau- rant industry. [...] The fast food industry’s monopsony power allowed it to accommodate large minimum wage increases and raise employment.

Source: https://irle.berkeley.edu/wp-content/uploads/2023/09/Minimum...

[HDThoreaun]

Less than 1% of workers make minimum wage. There are effectively zero opportunities to increase employment by offering wages below the minimum. If someone cant land a job at minimum wage it is because the employers think they are a net negative.

[delichon]

> Less than 1% of workers make minimum wage.

So minimum wage helps less than 1% of workers, at the expense of people who don't have skills valued at the minimum wage? Why are you confident that's a net positive trade off?

> If someone cant land a job at minimum wage it is because the employers think they are a net negative.

That's why I think that people should be able to work for less, for employers who think they are a net positive at a lower wage. It's better than the true minimum wage of zero. It's not like the value of labor is discontinuous, such that it is worth zero if is worth less than a minimum.

[HDThoreaun]

> That's why I think that people should be able to work for less, for employers who think they are a net positive at a lower wage.

No. If someone cant land a job at minimum wage it is because employers think they would be a net negative at a $0 wage. There are a couple counter examples like walmart no longer being open overnight, but even then thats more because of theft than paying the employees. It is not hard to find a minimum wage job in the vast majority of the country. If you cant its because employers think you will do an exceptionally bad job. Every single adult has skills valued at minimum wage in the US, the question is just if they have a drug problem or mental illness or something like that. Those people wouldnt be helpful at $0 wage either

[delichon]

> If someone cant land a job at minimum wage it is because employers think they would be a net negative at a $0 wage.

Strong disagree, no foundation. There are lots of profits to be made at $10 per hour that can't be made at $15.

A minimum wage raises the bottom wrung of the economic ladder and declares victory for the workers.

[HDThoreaun]

> There is lots of profit to be made at $10 per worker hour that can't be made at $15.

Sure, if you have decent workers. But decent workers can make $15/hr so you cant get them. If youre stuck with the people who cant get a minimum wage job you dont have anyone you can trust and you cant build a business like that unless youre amazon tracking everyone's metrics with a billion dollar warehouse system. (amazon also pays well over minimum wage)

[derektank]

Why is someone who brings in $15.10 of value to a company a decent worker but someone who brings in $14.90 of value someone that can be written off completely? Obviously, we can quibble over the exact numbers and how one assesses value. But that’s kind of the point, we should let people figure that out for themselves what they’re worth and what they are willing to pay other people for.

I understand that there are concerns with race to the bottom dynamics and ensuring a minimum standard of living, but there are better tools for addressing that than the minimum wage (a more generous EITC or negative income tax for example).

[JohnMakin]

> Less than 1% of workers make minimum wage.

federal minimum wage, which is lower than many, many states, so stating this is a little misleading. It's also at or around 1% (for federal), not less - per this 2023 source: https://www.bls.gov/opub/reports/minimum-wage/2023/

In states like california, this number is much higher: https://lao.ca.gov/Publications/Report/4878/3

[ggfdh]

I'm not sure what standards you're talking about, but if you can't afford a home where you live you should move to a cheaper area. If the decision is being homeless vs moving, you should move.

[bluGill]

Cheaper options almost always mean less jobs. I know lots of cheap places to live - in the middle of nowhere. Small towns that can't even support a gas station: the locals drive half an hour to get groceries. (they are close to their job on the farm, or at least some job that needs to be out there because the farm is there)

These places were great places for the poor. They are close to lots of people and that implies some of those people will be willing to hire you for a something cheap. It isn't a great life, but if you have very limited abilities you likely prefer to make your own choices in life vs whatever the shelters force on you. (some shelters/institutions have been very abusive in the past)

[gosub100]

How about "if you are unwilling pay someone enough to cover most of their core expenses, you aren't allowed to hire them at all"? I like that phrasing better