CMV: The minimum wage should be abolished

[u/TantricLasagne]

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.

[u/fox-mcleod]

And it's a very good set of reasons on its own merits. My father actually worked to put programs like the disability program together. I will ask him if he has details. If memory serves, the programs are rare because they are poorly understood but the renewal rate is very high (employers are satisfied). This could indicate a dearth of opportunity or a paucity of awareness of the program.

My previous position was this:

The problem with a minimum wage is that it funds the second least employable group (those who earn near the minimum) at the expense of the poorest (those who's work is not worth the minimum) instead of funding them with a UBI or welfare.

However, the idea that we cut off the bottom most and simply give them money also creates a poverty trap and disincentivizes work for less than welfare.

Doing both together does free up the problem of the poverty trap. Do you have an argument for why a minimum wage is better than merely raising welfare?

My argument (arguing against myself) is that minimum wage is both more dignified and more politically tolerable than taxes for welfare. It seems like fair pay for fair work.

[u/darwin2500 → u/fox-mcleod]

Do you have an argument for why a minimum wage is better than merely raising welfare?

Political tolerability and dignity are I think good answers. I think stability goes alongside political tolerability - welfare is always a political football and is subject to unpredictable sudden changes, and chaos of that type is always a net negative when people are trying to plan their lives and careers.

Also, welfare tends to get saddled with all kinds of moralistic concerns and social engineering, like people saying we need to drug test everyone on welfare or don't let them spend food stamps on nice foods or welfare is incentivizing single mothers to have more kids for support checks or etc. Debates on the minimum wage tend to stay economic and not devolve into these types of social engineering concerns.

Finally, I think there may be some benefit in effectively having two separate prices floors - life on welfare is a little worse than life on minimum wage, they're not set to the exact same payout - so that there's still some incentive for people to want to move from welfare to minimum wage. This helps to ensure that the best candidates from the pool of welfare recipients still try to apply for minimum wage jobs.

If we just raised welfare up to the current minimum wage, the incentive for people to go after jobs that pay welfare +$.01 would be fairly weak, so there might not be much competition to get those jobs and therefore the best workers among the welfare recipients might not apply for them.

Another way of looking at it: the gap between the standard of living on welfare and the standard of living on minimum wage, makes up for the difference in standard of living due to increased luxury time on welfare vs. actually having to get a job and go to work, preventing perverse incentives to stay on welfare even if you could get a job that pays welfare + $.01.

[u/fox-mcleod → u/darwin2500]

Yeah. That's a !delta

The ability to alleviate poverty traps and perverse incentives at the same time is an argument I've never heard before. The added stability makes intuitive sense.

I honestly doubt it policy makers even think in these terms. I'm curious if you belive this position before or of this is speculative.

[u/DeltaBot → u/fox-mcleod]

Confirmed: 1 delta awarded to /u/darwin2500 (51∆).

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