How does minimum wage hurt workers? (again)

A. Employers will not employ workers at a higher wage than their expected marginal revenue product.

B. Applying minimum wage law creates a situation in which a greater number of workers are expected by employers to result in a net loss of revenue if legally employed.

C. We can therefore expect fewer of these marginal workers to be legally employed under minimum wage law than otherwise would have been.

[bitbutter]

"So, we need to introduce a maximum wage instead?"

Radical idea: How about you let go of the idea of using threats of force to limit the way peaceful people may behave altogether?

[bitbutter]

"Employers use their power to coerce employees into accepting low pay and poor conditions."

No, you need to think more carefully about this: Offering a person an option they may voluntarily take or leave is not coercion. Nor is it aggression. You may not like the offer, but that is irrelevant.

[bitbutter]

"I am to understand then that YOUR argument is not premised on "statistics" ?"

Correct. My argument is based on the assumption that most employers seek to maximise profit, and on deduction.

[bitbutter]

"Unions + minimum wage + reforms = exponential economic growth"

Correlation=causation fallacy.

[bitbutter]

"Brazil has established minimum wages and it helped increase the middle class, decreasing the population below the line of poverty."

Correlation=causation fallacy

[LeoMRogers]

If neither hypothesis can be falsified by empirical evidence, how would i distinguish which hypothesis is an accurate representation of reality?

[FutureLaugh]

I would love to see an animation about privitized road options- the BIGGEST question when confronting anarchy.

[bitbutter]

"The assumption is that all on minimum wage are judged by employers to capable only of low productivity."

No. See the info box for the summary of the reasoning, notice that no such assumption is necessary.

[bitbutter]

Comments relevant to the content of the video are preferred.

[bitbutter]

"No overall macroeconomic effect of increase in unemployment exists."

I have not made any claim to the contrary. Pay closer attention.

[bitbutter]

"Jobs do not have fixed pecuniary standards of productivity"

The point is that employers do have an expectation about what employees in certain roles will mean for them in terms of revenue. If the expected MRP is less than the wage that can legall be paid, the employee will not (legally) be hired.

[bitbutter]

"Anyway, thanks for the video :)"
You're welcome, thanks for the comments.

[bitbutter]

"suddenly your position becomes "complex" where "correlation is not causation", it's now so subtle, and not so straight forward "you see", there are "some many variables"."
If you can point to any specific instance where I seem to have contradicted myself or modified my position without acknowledging that I've done so,  I'd be grateful if you could let me know where (use of actual conflicting quotes would be very useful here).

[bitbutter]

I don't think that the hypotheses "MW decreases unemployment" or "MW has no effect on employment rates" are falsifiable by empirical evidence either.

[bitbutter]

"Does your argument relies on the premisse that a employer would always employ more workers if there´s no minimum wage?"

It's an implication of this chain of reasoning (not a premise) that fewer low-productivity workers will be employed each time there's a raise in the MW level.

[bitbutter]

First of all do you agree we shouldn't threaten peaceful peaceful (such as two people buying and selling labour respectively) with force?

[boskowski]

(1:10-1:18) "he estimates that the sign guy will generate between one or two extra dollars for the restaurant before the sign guy's wages are paid"

The restaurant owner's decision to hire the sign guy is based on the present value of the marginal revenue expected from the advertising initiative in the future. If he trusts the worker he may even pay his wage upfront, as this is unlikely to have great influence on his investment decision.

[bitbutter]

@cbl2988 just one point: raising prices isn't inflation. Expanding the money supply (which will raise prices) is inflation. 'inflating' the money supply. Its often used incorrectly, but its an important distinction.

[Uruz]

The issue here is that any attempt to collect said evidence would be comparing apples to oranges. The only way to get good data would be to set up two identical locations with identical people, market conditions, etc. This is impossible, therefore comparing unemployment rates in say, Zimbabwe to rates in say, Greece. It's not a controlled experiment (explained in the video) so no data can confirm or refute the hypothesis. That's why central planning doesn't work. Bad data=bad policy decisions

[bitbutter]

"Actually, no. It's not so hard. In fact I've seen people, in person, recently, work so for just such a rate ;) In quite hard labor mind you."

In the West, at least, I believe it would be hard to find such people--i don't think i could find any. The reason is competition from other uses of their time (including working for other employers, for a better wage).

The point is that firms are not at liberty to offer arbitrarily lower wages, not if they want to stay in business.