Newsgroups: alt.politics.clinton,talk.politics.misc,sci.econ
From: mfriedma@uucp (Michael Friedman)
Subject: Re: Minimum wage: balancing job losses vs pay increases
Organization: Oracle Corporation
Date: Sun, 26 Jul 1992 10:01:16 GMT
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In article <1504@cogsci.ucsd.EDU> king@cogsci.ucsd.EDU (Jonathan King) writes:

>pjm@anegada.sps.mot.com (Patrick J. McGuinness) writes:

>>And workers, like entry level workers, that aren't fully 
>>productive, get canned. 

>First, I know that you know it's not just entry-level workers who get
>canned.  Second, this is how the economy works.

Only when you mess it up with things like the minimum wage.  Do you
really think that it is good to be firing the most vulnerable people
in our economy?

>>Shifting of costs, while not a positive overall, will help some
>>individuals (capital-intensive or more skilled labor).
>>Unfortunately, the minimum wage hurts the unskilled
>>and entry-level workers who most need work.

>It hurts them if there is no way they can become skilled workers, for
>certain; that's the real problem.  I suggest that government policy
>might better be aimed towards training a highly skilled workforce
>earning real money than towards ensuring a pool of cheap labor for
>low-wage employers.

Duhh.  How the heck do you become skilled?  Well, very often you start
on the job as an unskilled laborer and acquire skills.

>>You have
>>shown that if the company was faced with a rising labor cost they
>>would react in a way that hurts either the company (eat costs), the
>>customers (increase prices), or the employees (lay people off).
>>Well guess what? You are right -- they *all* get hurt.

>Once again, do you have evidence that the layoffs are more damaging
>overall than the positive effect of increasing income for the vast
>majority of those workers who *don't* get laid off, PLUS the possible
>gain in productivity?  Again, how important is the price inflation
>factor here?

1.  I contend that there is no benefit, 0, hada, from increasing
income via minimum wage increases.  Please explain why you think there
is a benefit.  In your explanation please do not forget that every
dollar that goes to a worker whose salary gets increased has to come
from someone else's pocket.

2.  I contend that almost by definition the gain in productivity can
not offset the extra cost of labor.  Why?  Well, without a minimum
wage your productivity as a function of cost is at a maximum.  As soon
as you make people move away from that maximum then, by definition,
the production per dollar must go down.

>And you keep ignoring the other way out:  the company could decide to
>"skill-up" its workforce, and try to make money with higher quality
>products; no, I guess that would never work. :-)

Sure it would.  But it would work without the minimum wage too.  So we
don't need the minimum wage to arrive at this result.


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Newsgroups: alt.politics.clinton,soc.women,talk.politics.guns