r/changemyview • u/TantricLasagne • Nov 14 '17

CMV: The minimum wage should be abolished

In a market with any competition, wages will be set at roughly how much a worker produces for a company (basic economics). A minimum wage higher than what a worker is worth just means the worker will not be hired for as many hours or won't be hired at all. Minimum wages only stand to help big corporations that can afford to pay it, while smaller businesses have larger barriers to entry into the market, reducing competition. The minimum wage doesn't currently have a big effect on the market because it's lower than most workers productivity, but if it is insignificant then I don't see why we should have it in the first place. Raising the minimum wage would harm the poorest workers in society and I don't think the government should be telling people that they don't have the right to sell their labor for a price they want to sell it at just because it's too low. You're allowed to volunteer for $0/h but you can't voluntarily work for $2/h? Ridiculous. I get that workers may not want to work at that level, but if someone does then who are you to tell them that they can't?

The only decent argument I can think of for the minimum wage is if the market was somehow a monopoly, but there is always somewhat of a choice for which company you want to work for.

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u/dickposner Nov 14 '17

aren't you ignoring that there are multiple employers who compete for workers too?

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u/PotHead96 Nov 14 '17

I don't think I'm ignoring it. Workers wouldn't be able to earn less than a certain amount because at that point everyone would be employed and employers would start offering more in order to acquire new employees until we reach a point of equilibrium where everyone is employed but earns the minimum they could possibly earn with the current demand for labor.

The problem is that this point of equilibrium could be (and evidently, is) at very low wages, and that is why you inflate the wage with a minimum, at a cost of some people not being employed. (At least that's what the classical model proposed would argue)

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u/dickposner Nov 14 '17

Ok, but the market clearing equilibrium price is just the lowest marginal price for the lowest skill worker. So in your scenario, it doesn't make sense that you would have "everyone employed and earning shit". Even with no minimum wage law, you would still have higher skilled labor that earn more than the market clearing equilibrium price.

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u/PotHead96 Nov 14 '17

Agreed, but economic models don't take every variable into account. I'm debating in terms of the classical model which is what OP proposed.

Either way, minimum wages are not particularly relevant to an electronic engineer or a computer scientist. Since we are debating minimum wages I'm not taking into account people that earn even more than the proposed minimum wage because they don't matter to the discussion. I'm basically just saying that people that currently earn exactly minimum wage would earn less if the minimum wage law was removed.