Labor Markets and Minimum Wage: Crash Course Economics #28 

unfortunately companies will fight against making wages transparent, as that will drive up bargaining for more pay. if they were more transparent, more people would be motivated to sue their employer using the '63 equal pay act, and thats also not wanted by employers

Yup, more liquid pay markets are inherently bad for employers, because with less information a boss can bluff about how little they're able to pay other people.

+Markus Leben wage discrimination? haha. is the term you use for the wages of unskilled laborers? stop feeling sorry for yourself and learn a fucking skill

+MrBipBipp I guess it does open up the opportunity for price signaling like you see between stores selling the same good and trying to avoid Prisoner's Dilemmaing themselves.

Seconded

yes! seriously what was up with that?

+LiwenDiamond I thought my screen was messed up!

+LiwenDiamond thanks for the heads up... ill be skipping ahead now =D last thing i need is a migraine or seizure.

***** thanks, as it is i am still an undergrad... however i still skipped the video as it quite unpleasant for me.

Such a Dad belt haahahahah

Yes...

+fiery shendu yes, and it should be a living wage, but the corporations don't want it as it means they'll have to pay a lot of low level employees a fair wage

If minimum wage works make it $50 a hour.....

+dluff Are you saying that minimum wages don't work in principle because a 50 dollar minimum wage is ridiculous? Because if you are, you are engaging in a form of the continuum fallacy.

+dluff And if you are (and I hope you're not, I don't know), here are some other fallacious arguments that use the same form of argumentation. If owning 10 pairs of jeans really works, why don't you just buy 200? If lightly tapping someone on the shoulder is legal, why isn't punching them as hard as you can legal? If you really think 10 mg of oxycodone helps reduce the pain of your surgery, why don't you just take 100 mg?

+szgergo99 Yeah, what was up with that? Simulating welding or something?

+szgergo99 All their videos have this problem when they're using that filter on the borders. It's annoying.

I never noticed until i saw this comment

+RainAngel111 It would be pretty speculative.

+Robert Richter along the lines of, the rich get richer and the poor die down an alleyway. :o

That's one plausible future, but by no means the only one. As I said, highly speculative.

Robert Richter Yeah, but I just thought it fit well with your surname. ;)

Ah, it's pronounced more like "Rik-ter," but I can see that.

Citation needed

+John Dough Which questions the idea that increasing the minimum wage would increase consumer spending.

+John Dough Yea, you are right, but the price increase in goods is significantly less then the increase in wages. The min wage workers still end up with more buying power.

+John Dough More importantly, she forgot to mention that the higher wages lead to higher prices in goods with less elastic supply. It particularly leads to increasing land rents in an area, which can make it particularly hard for the poor to keep living there. In fact, some studies which seem to show minimum wages being good for employment rates actually demonstrate that it can gentrify an area by pushing its poorer residents into lower rent areas. Those who stay may be better off, but that is more than balanced by the increased hardships of those who have to move away.

+John Dough What a lot of people seem to forget is that shareholders are the issue. It's quite possible to make reasonable quality products (in most cases), while paying decent wages at every stage, and keep the prices affordable, but that would require shareholders to miss out on some rather large profits. Higher wages only means higher prices for goods IF shareholders are unwilling to earn less, and that is usually not the case.

MR.Chickennuget 360 I know all the baggers I work with would love to be able to receive tips. Just cause a lot of them are kids doesn’t mean they can’t use extra money.

+ragmondead yeah you can believe in Green little mushrooms running the universe and conspiring to end humanity for all I care, but what you should believe is in the apparent, in the random nature of the universe

+Ali80076 the universe is random, but society and people are not, though we try to make it seem that way

They presented data and economists opinions. If you disagree with them due to contrary reasoning or evidence, you are free to do so. However, evidence was presented, and they impose a firm conclusion. They're allowed to present what they believe is valid and relevant information to the topic at hand.

Economics isn't a belief system. Although I suppose you could argue there are various economic theories

Naturea Bioros they don’t give any evidence, at all, rewatch the video, the sole justification for the minimum wage they give is the logical fallacy of appealing to authority, by just pointing at “look all these smart people that think this”, the other argument they presented was also based on a logical fallacy, correlation doesn’t imply causation. They took two states with a huge multitude of factors influencing their Labor market and economy, and insinuated that the minimum wage was the determining factor, without providing any proof whatsoever.

Sparsh Agrawal MW was intended to be livable at it's passing. I don't like it because it gives companies a bottom line to pay employees rather than actually paying then their true economic worth which could potentially be more than minimum.

Sparsh Agrawal also, I really dislike the idea of a federally mandated wage because there is not a 1 size fits all solution to all problems. it should be addressed state by state or even better, city by city. same with firearms laws and the like. I have no clue why our government just insists on making broad sweeping legislation to deal with relatively localised issues.

Yes because Unions only, and only should have one goal. To promote a better wages among the people of that said union. The Union shouldn't lobby "how many can teach", or make rules that benefit the longer the people who joined the unions (FI-LO, First In last out, that is, people who taught the longest will stay the longest no matter how "good or bad" they are just because they are the longest). Unions was founded to negotiate WAGES and to improve workplaces. That's it.

They're extremely subjective.

They're extremely subjective.

You should see their older videos.

+Levi “When will we want wantons” Quickburger5000 He's being sarcastic I'm sure. This video was like 90% bias.

+Twan de Graaf i have no idea what fast food chain that is. not from usa tho

+Zachary Levy I'm a 'murican I can help! www.bk.com/

+Raphael Dean Yeah. I don't particularly object to this, but lines like "I'm not going to tell you what to think, but think about it this way ... " make me cringe.

+Raphael Dean my point is the did not make a conclusion they just give the information but what makes it balanced is the gave disconfriming information to give another perspective .... compared to this progressive bullshit propaganda on this site. This is my opinion, they are right and gave facts ... I respect that

+Wes Wells lol, exactly. The Karl Marx statue should have given it away.

Yeah while it will increase the velocity of money, it may also cause inflation. Capitalism is a pretty silly system to deal with.

James Adams 9:10 they admitted it

+Vital Mark Simple, he goes to another employer who is willing to pay him higher than you will.

Good, now tell that to the rest of your friends and their friends. If fewer of you work minimum wage job, that means i can make more money from minimum wage than most skill workers.

Why I don't understand left wing philosophy. You say things like this and you go vote for more government.

Beans Haha wtf are you even trying to say?

The right and left aren't parties. The political spectrum best describes size of government.

Saeed Baig No, this is a bit more in depth. But the equilibrium wage in perfectly competitive markets, considering CRS. You take the First Order Condition of the neo-classical production function. By doing so, you get MPN = w. The equilibrium wage is hence equal to the marginal product of labour. You can calculate it using partial derivatives. Hence, of firms offer a wage greater than MPN, it is above the equilibrium wage, not a shift if the equilibrium wage.

+blurglide Yay! Someone else who is against minimum wage! ;D

+Qio Cio here: it doesn't, the only people who spout that are the major corporations or those in their pocket, as they do not want to pay people on the bottom a decent wage as they will loose 1% in profit

+Qio Cio Luckily small businesses dont exist in a vacuum, so whats being said here probably still applies.

so small businesses like a lemonade stand can pay 15 a hour?

+Frodojack There are lots of cities/states where the minimum wage is over 10$/hour ... why didn't the market collapsed? You know how much McDonalds has to raise it's burger price to have 15$/hour wages? Around 16 cents to have the same billions of dollars in profit ... Why not force corporations to have a little bit less profit? Why do they need that huge amount?

+Frodojack You're not entirely wrong. Your examples don't represent reality. But they are still sound in principle. Many small businesses I've seen are run in such a way that the owner has high enough profit margins to allow for a little wiggle room in labor. What is more realistic is that a 10-30% increase in wages occur, and that the owner may increase price by up to 5%, which likely causes a slight decrease in sales, depending on the situation of the substitutes. But if it's a law, then all comparable businesses are experiencing roughly the same thing, and the decrease largely comes from those who'll take mcdonalds (with their more inert pricing) over the mom and pop joint. But most of those people were probably already doing that, I expect that the actual number of converts will be low. Meanwhile the business owner does take a small hit in their bottom line. But this causes innovation. If a 10% increase in labor completely puts them out of business, then they're probably not be running a very good business. It seems more likely that they will find ways to cut waste, they will reconsider their vendors, their capital, their pricing, their products in general. They will slow down on hiring, but they will also be more likely to hire better employees, and more likely to let the bad ones go sooner. all of the reviews and replications of the Card-Krueger study still showed 2-4 times the increase in wage percentage than they saw in decreased minimum wage employment. This whole process also increases demand throughout the market as employees spend that new money, which will increase sales, allowing the bottom line to recover from previous damage done by the increased labor cost. It's almost like the government is forcing market competition in a way that is upsetting to risk-averse business owners, but overall good for everyone.

jdjack519 You are entirely wrong. Nothing you wrote discredits or even challenges what I wrote. Parts of what you wrote actually agree, like "the business owner does take a small hit in their bottom line." In other parts you just restate what I wrote. The major difference is at the end where you proclaim that the employees will be spending that "new money." Evidently you didn't consider that the "new money" may not make much of a difference since the government created inflation will have driven up prices everywhere else too, and that the "new money" will have new taxes imposed on it. Have you ever actually ran a business?

The major difference is scale. A burger jumping from $5 to $10 over a 30% minimum age increase is entirely unrealistic. Cutting labor by 25%, is more realistic, but not by much. You ignore the fact that quality of employees tends to improve when wages rise, which improves productivity and profits. You act like businesses can't raise prices for fear of consumers switching to a substitute, regardless of the fact that the substitutes will be largely affected in the same way. And you seem to act as though these businesses are already operating as efficiently as possible, creating no room for innovation, which tends to be observably untrue. Inflation occurs regardless of wage growth, if wages don't grow with inflation, you make low wage workers increasingly unable to afford the goods and services required to maintain good human capital, you gradually reducing demand, and you increase poverty; the externalities of which happen to be bad for the economy. Those new taxes can be spent by the government to create public sector jobs; to improve infrastructure, improve education, and fund research in science and technology. Which are all good for the economy. Broh, do you even Neo-Keynesian business cycles?

jdjack519 No, customers will slow down on making their purchases. They won't buy as much and will stick to necessities. When economies are bad there's an upward trend in auto repair and decline in new car purchases for that very reason. Then of course the first thing you think of with increased taxes is more government spending. In case you haven't noticed, California (where they just raised the min. wage to $15/hr) has hundreds of billions in unfunded debt, and the federal govt has trillions in unfunded debt. A better choice would be to use the money to pay down debts, if there is an increase in tax income. Since all this affects behavior it may in fact reduce tax revenues. The added money to pay those wages doesn't come from thin air, as you seem to believe. And business cycles are a myth used to explain an event that can't be explained by Keynsianism (or its Neo-varieties). They are almost always caused by bad government legislation.

+Joe Schmoe PREACH! I noticed that this video is delivered mostly by Adrian. Jacob gives a much more balanced approach in his own video. While there are some places to disagree, it's better

Leon Poke Also, the thumbnail thats put up on the left side inside the circle is an "all seeing eye" triangle with elephant ears/trunk. WTF? I'm not one for conspiracy's and all but this is getting a little ridiculous at how often I see the Eye of Horus inside triangles just about everywhere. Just saying its getting kind of creepy.

+Joe Schmoe well that is all good news and i agree, silver and are important to stop wealth confiscation & destruction of your families wealth through the means of central banks actions.

CaptainZuluGamma Anymore I'd bet on ammo being a better investment.

He was an idiot

+whyamimrpink78 lol

+Tom Howard I know, right. I mean, it is funny how people thing a min. wage is actually a good idea.

Vital Mark lol do you even know your own history? The fact is that min wage is and has always been discriminatory. In British Columbia, a min wage was passed so that Canadians could compete against Japanese immigrants willing to work for less in the lumber industry.

+Vital Mark Cost of living in a healthy economy falls. Sounds like you need to fix your economic situation in Vancouver.

Prevent exploitation by bad employers

+Rick Apocalypse Thats a big if.

In the last few decades wages have fallen behind, while productivity kept growing. It's to the point where wages could go up by 10% or more and still be in line with productivity

Strikie That's a myth. Productivity has risen, but not on the same level to all workers. The productivity of office workers have increased thanks to computers and the internet. But the productivity of waitresses, for example, remains the same. That's why you can't compare AVERAGE productivity with MEDIAN compensation.

Strikie Also, GDP has risen side by side with productivity. That means companies have been producing more. If they have been producing more, that means they have lowered their prices. Otherwise they would have an overproduction. If their prices have lowered, that means people's purchasing power have increased.

Yes pay people according to productivity. I'm sure you get many nurses, chefs, firemen, clerks and teachers by doing so. I'm sure people are happy to do expensive educations to get jobs with 3rd world wages for low productive service sector jobs, while industry workers get paid 400 times more thanks to productivity increases since the 1800s.

but your best resources are your employees. If you empower your employees they'll be loyal to you and help improve your business by making it more "lean" in sense that non value added activities are removed.

+dujfraz Exactly a $1 burger now becomes a $2 burger. All an artificial market modifier like minimum wage does is hurt and damage small businesses and drive up prices in general.

Vital Mark It's not fear mongering. It's economics. Could you please source this penny increase?

it hurts middle class , which is small business owners