Closing Republican message, checks notes, abolish the Federal Minimum Wage

[Gass3268]

https://twitter.com/JStein_WaPo/status/1057996385902039040

[RI]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.



- edit -

I should probably add/clarify that this may apply less to particularly huge or sudden increases in the minimum wage, but assuming we are talking about normalish levels of minimum wages there is really no substantive evidence that it is an issue at all.

[RI]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.

I'm well aware of the minimum wage literature. You can find an empirical study showing just about whatever you want. Surveys of economists suggest a dim view on the minimum wage, for example: https://www.epionline.org/studies/survey-of-us-economists-on-a-15-federal-minimum-wage/

Most economists may be tepid about simply repealing the minimum wage without anything else in place, but almost all would leap at the chance to replace it with something better which eliminates the market distortions it generates.

You're also contradicting yourself a bit. Incentives to automate and substitute toward capital most certainly reduce employment until general equilibrium effects eventually set in.

[MarkD]

Minimum wage laws have even been held to be unconstitutional. That was within the last 100 years.
A District of Columbia minimum wage law was struck down in 1923's Adkins v. Children's Hospital (held to violate the Due Process Clause of the Fifth Amendment; i.e., "substantive due process"). Two state minimum wage laws were held to violate the Due Process Clause of the Fourteenth Amendment in two cases later in the 1920s. A fourth case in 1936, Morehead v. New York ex. rel. Tipaldo, struck down another state minimum wage law, and this time the opinion hinted that all minimum wage laws, no matter how they are designed, are unconstitutional. Then all these precedents were overturned in 1937, West Coast Hotel Co. v. Parrish. Ooops. the Court made a mistake, and corrected the mistake.

There's a part of me that would take delinquent delight if the Court would revisit the issue soon and strike down all minimum wage laws again, holding that the federal minimum wage law violates the Fifth Amendment and the state minimum wage laws violate the Fourteenth Amendment. I can even argue that minimum wage laws violate the principle of Equal Protection of the Laws. I don't wish for this because it would be an accurate interpretation of the Constitution, but because I don't, in fact, like minimum wage laws, and because I would love to see whether liberals would adopt an urgent cry for amending the Constitution in order to get rid of "substantive due process." Maybe they - liberals - would find merit in my proposal for clarifying the Fifth Amendment and rewriting the Fourteenth Amendment, per my signature.

[Chief Justice Keef]

^^^ That's cool, guys. Good luck getting more than 10% of the voting age population to support abolishing it.

[Adam Griffin]

Lucky for him the current federal minimum wage is a s[ink]t wage no matter where you live.

[Fmr. Gov. NickG]

I'd support getting rid of the minimum wage in exchange for a robust UBI.

[Nyvin]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.

I'm well aware of the minimum wage literature. You can find an empirical study showing just about whatever you want. Surveys of economists suggest a dim view on the minimum wage, for example: https://www.epionline.org/studies/survey-of-us-economists-on-a-15-federal-minimum-wage/

Most economists may be tepid about simply repealing the minimum wage without anything else in place, but almost all would leap at the chance to replace it with something better which eliminates the market distortions it generates.

You're also contradicting yourself a bit. Incentives to automate and substitute toward capital most certainly reduce employment until general equilibrium effects eventually set in.

Poverty level wages should not be allowed. Anywhere.

[Person Man]

I'd support getting rid of the minimum wage in exchange for a robust UBI.

I would be willing to swap out FMW for

- Passing Obama's union bill
- Repealing Taft-Hartley
- cutting highway funding to states that outlaw cities over 300 000 from passing their own minimum wage ordinances
- Change the Wagner Act to allow for management-workers' counsels
- Nonexempt every worker making less than $24 an hour/50kpa or is in an OPM occupation where the median wage is under $36 an hour/75kpa.

[Virginiá]

I'd support getting rid of the minimum wage in exchange for a robust UBI.

I would be willing to swap out FMW for

- Passing Obama's union bill
- Repealing Taft-Hartley
- cutting highway funding to states that outlaw cities over 300 000 from passing their own minimum wage ordinances
- Change the Wagner Act to allow for management-workers' counsels
- Nonexempt every worker making less than $24 an hour/50kpa or is in an OPM occupation where the median wage is under $36 an hour/75kpa.

That is pretty good. Republicans arguing about the COL differences between locales is really disingenuous when they really just don't want a minimum wage anywhere.

[Doimper]

I'd support getting rid of the minimum wage in exchange for a robust UBI.

What is this? Reddit socialism?

[McGovernForPrez]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.

I'm well aware of the minimum wage literature. You can find an empirical study showing just about whatever you want. Surveys of economists suggest a dim view on the minimum wage, for example: https://www.epionline.org/studies/survey-of-us-economists-on-a-15-federal-minimum-wage/

Most economists may be tepid about simply repealing the minimum wage without anything else in place, but almost all would leap at the chance to replace it with something better which eliminates the market distortions it generates.

You're also contradicting yourself a bit. Incentives to automate and substitute toward capital most certainly reduce employment until general equilibrium effects eventually set in.

You're completely misrepresenting the economic consensus on minimum wage. In general most economists support the idea of a minimum wage. It's a great tool in helping to counteract the effects of monopsony and the literature tends to show that this tends to outweigh the negatives such as increased unemployment and prices.

It is true however that economists tend not to support a blanket increase to 15 across the country. This makes sense considering the cost of living in San Francisco is much higher than in West Virginia. Generally minimum wage should be scaled to the cost of living in any given region. I would however argue that the current national minimum wage is probably too low. Plenty of Republican controlled states absolutely refuse to raise minimum wage to a reasonable level oftentimes trying to cut it instead.

[Person Man]

I'd support getting rid of the minimum wage in exchange for a robust UBI.

I would be willing to swap out FMW for

- Passing Obama's union bill
- Repealing Taft-Hartley
- cutting highway funding to states that outlaw cities over 300 000 from passing their own minimum wage ordinances
- Change the Wagner Act to allow for management-workers' counsels
- Nonexempt every worker making less than $24 an hour/50kpa or is in an OPM occupation where the median wage is under $36 an hour/75kpa.

That is pretty good. Republicans arguing about the COL differences between locales is really disingenuous when they really just don't want a minimum wage anywhere.

Pretty much and it would basically be the perfect con law case that would force the SCOTUS to make a drastic choice on whether there is actually a freedom of contract or some substantive due process on property rights that supersedes the commerce clause. Will they overturn WCH?

[Former Dean Phillips Supporters for Haley (I guess???!?) 👁️]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

There's a theoretical argument to that effect, but in practice it is not at all clear that holds (it appears not to, which suggests that there may be something wrong with the theory, the main problem being that it is a fundamentally microeconomic argument, and the economy is a macroeconomy, not a microeconomy, and what may apply to a part does not necessarily apply to a whole):

https://www.nber.org/papers/w4509

Insofar as there is a potential problem with minimum wages, I would say it is more related to potentially increasing prices/inflation by raising labor costs, rather than reducing employment.

Minimum wages may also have some other positive side effects, such as stimulating technological change by giving firms more of a reason to adopt new production technologies that are more efficient/automated/capital-intensive and require less low-skilled labor.

I'm well aware of the minimum wage literature. You can find an empirical study showing just about whatever you want. Surveys of economists suggest a dim view on the minimum wage, for example: https://www.epionline.org/studies/survey-of-us-economists-on-a-15-federal-minimum-wage/

Most economists may be tepid about simply repealing the minimum wage without anything else in place, but almost all would leap at the chance to replace it with something better which eliminates the market distortions it generates.

First, the particular survey you are linking too is for a $15 minimum wage, which is on the higher end of current proposals. Personally I even am not totally supportive of that, but not for reasons that have anything to do with it supposedly increasing unemployment (rather, an effect on prices would be the issue that is of greater concern). So just chalking up any hesitancy about moving immediately in one step to a $15 minimum wage among economists to the belief that the minimum wage causes unemployment is not a very good argument.

Secondly, since you seem to agree with me that there is no clear evidence indicating that minimum wages at normal/reasonable levels increases unemployment (you say "you can find an empirical study showing just about whatever you want."), then your argument ultimately reduces down to the argument that many economists are ideological/theoretical hacks who believe things without evidence solely on the basis of questionable/abstract/unrealistic theoretical arguments, and try to apply those theoretical arguments to the real world, despite many enormous differences between their theoretical world and the real world. It may well be true that some economists (and even quite a lot of economists) are hacks like that, but doesn't support the argument that the minimum wage causes unemployment.

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I would say nuance, as opposed to contradiction. Also, automation and substitution towards capital need only reduce employment if policymakers fail to provide sufficient aggregate demand (if that is a problem, I would suggest increasing aggregate demand, so that we can have both automation/efficiency and employment).

In general, regardless of whether we consider something to be good in bad, if we are smart and intellectually honest, in general we should hope to be able to recognize positive/negative side effects even of things we oppose/support.

As far as my own position goes, I don't really oppose raising the minimum wage by reasonable amounts, but I also am not the most enthusiastic about it. It is good politics, though. The main issue from my perspective is that the minimum wage sets a nominal wage, not a real wage. Raising the minimum wage temporarily to a higher nominal level (but not continuously increasing it) will just result in a temporary increase in the real minimum wage while costs and prices gradually adjust, and then eventually prices will rise to match the new higher nominal minimum wage, and we'll be back with the same real minimum wage (more or less).

If you want a higher minimum real wage, which I would think is what most people really mean when they say they want a higher minimum wage, then to maintain that you need to keep continuously increasing the nominal wage further and further. And if you continuously increase it at a higher rate, then you should expect higher inflation.

Personally I would say the great majority of people are overly fearful of inflation, and that reasonable levels of inflation are not actually bad (and can even have some good effects in moderation), but unfortunately if we start getting too much inflation then a lot of reactionary Conservatives (plus the Fed) will start going nuts. However, if reactionary conservatives/the Fed are willing to go along with it without going nuts, I would be fine with continuously increasing the minimum wage at some reasonable rate of growth. But in practice, they are not going to want to go along with it, and we'll get inflation panic leading to all sorts of bad things such as the Fed trying to cause a recession and more people voting Republican.

So personally, if I had a choice and hypothetically had the power to implement whatever policy I wanted, I would rather do other things like increase the EITC or whatever else of various other options that wouldn't work via increasing nominal labor costs.

But none of that means that the minimum wage causes unemployment - it just means that it has potentially adverse political-economic side effects because it contributes to inflation.

[Ebsy]

Wow, a thread touching on economics where a blue avatar claims academic consensus where none exists in support of his position. Amazing!

[Badger]

Economists generally agree the minimum wage is silly and should be abolished. There does need to be something to replace it, though.

Citation needed regarding the generally agree part.

Funny enough, in reality, a substantial portion of economist Outside The Chicago School don't believe that reducing American consumer purchasing power down to $5 an hour is good for the economy

[Antonio the Sixth]

ITT: conservatives show us exactly why their economic message is so utterly reviled across the country that they have no choice but to run on racial grievance instead.

All Democrats need to do to destroy the GOP would be to expose it for what it is: an effort by the 0.1% to capture political power and use it to line up their pockets at the expense of working Americans.

[Wisconsin+17]

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What economic message do the Democrats have for someone who was making minimum wage fulltime who had their hours cut, or lost their job in the so-called 'fight for 15'?

The real minimum wage is zero.

[Wisconsin+17]

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Well, that's what inflation + taxation does. Doesn't matter how much you're earning. It matters what is the value of that money and what you take home. You can dictate that wages rise 40 percent, but if inflation rises more than you've lost rather than gained ground.