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Comment by alkonaut | Hacker News Reader

> he'd likely close the business and she (my family member) would end up being worse off.

This is exactly the train of thought I think is incorrect: Businesses that can't pay workers a living wage should have to shut down. Workers (as a collective, and in the long run - not individuals in the short term obviously) are better off.

The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can.

> she combines this with her husband's income

This is another reason for having living wages: this persons low wage makes her economically dependent on another person. This might be a happy marriage but what about all marriages that aren't? Living wages means people can leave destructive and abusive relationships too.

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> The idea is that businesses should compete on efficiency, not lower wages. When a business that can't pay a living wage closes, another can take its place that hopefully can.

In this case, these shops are located in a sort-of marketplace, where there are dozens of shops selling very similar goods. They all effectively share the same customer base and they are all barely functioning, and are only doing that thanks to avoiding all sorts of laws. If they started paying minimum wage, some of them would close, which would increase profits for the rest, allowing them to stay in business. From the workers' perspective though, it would create a bimodal distribution where employees of surviving shops are better off, while the rest is fired. I'm not sure if that's a positive outcome.

It would indeed suck for those folks that get laid off - temporarily, at least. But those same folks will likely find another job somewhere - and as a bonus, that job will pay the higher wage. They can work less hours and be in the same situation as before or work the same amount and be a bit better off.

If the US had an actual safety net, those laid off workers wouldn't be so bad off either.

If you agree that the minimum wage would likely mean that there would be fewer businesses, and therefore fewer jobs, then isn't it hard to also believe that the people who lost their jobs would likely find other work? Isn't it also likely that at least some of them will become permanently unemployed?

Sure, but some of that is normal. Economic downturn? A few folks get permanent unemployment. Big enough place closes? Sure, a few get permanently unemployed. I don't think there is a way to stop that, nor do I really see that as an issue so long as it is a minority of folks. It definitely isn't something special to minimum wage hikes in any case.

In fact, I'd argue that even then we are better off. Say you have 20 low-paying jobs, the sort which means you are still eligible for food stamps and other tax-payer funded assistance. All 20 get laid off. 13 find full time work at the new minimum wage, so they no longer need assistence. Four find part-time work, making nearly what they did before with fewer hours. They still need assistance, but slightly less since they don't need as much child care. One makes less money. The other two are unemployed forever, requiring assistance. I'm gonna guess this is a win in the end.

> From the workers' perspective though, it would create a bimodal distribution where employees of surviving shops are better off, while the rest is fired. I'm not sure if that's a positive outcome

Actually ending up with a positive outcome requires more reform than just minimum wage - which may actually be negative (on its own, and short term).

There has to be good unemployment benefits for all, you have to have good employment security so hours can't be cut and so on and so forth. The idea is to have such a strong labor collective that driving bad employers out of business is a sustainable strategy. Organization level needs to be pretty high, say at least 50% for unions to have any real power here.

A minimum wage seems like an attempt to compensate for weak labor collectives and the lack of a safety net. Sweden, for example, has no minimum wage, but a combination of strong unions/labor collectives and decent unemployment benefits manage to keep wages up anyway.

My concern minimum wage wise is simply that firms seem to use social programs to subsidise wages, rather than a minimum wage I'd like to see the tax write off removed for wages below the cost of living. Below the poverty line I'd like to see employers pick up the entire tax bill of their workers.

> he'd likely close the business and she (my family member) would end up being worse off.

>>This is exactly the train of thought I think is incorrect: Businesses that can't pay workers a living wage should have to shut down.

So are you saying that no business should ever start or get off the ground because they don't have all the funding they need to do so (including paying proper wages)? Many of these minimum wage jobs were not suppose to be a full-time career path. These jobs were intended for people getting their first job, people in retirement or those seeking just a little bit of extra cash.

Short answer: yes.

Long answer: Yes, and it's an acceptable drawback because being allowed to underpay worker is an unacceptable competitive edge. If one wants exceptions it's better to do with directed efforts such as lower payroll taxes for small or new companies.

So I guess I should just give up and stop working on anything since I don't get paid for what I do and it might be "..an unacceptable competitive edge".

Not sure how hobby or volunteer work has anything to do with that. A bit strawman-y.

That said - where I live it's also not allowed to volunteer at e.g. a home for the elderly, because the union would feel you are taking their work.

So it's not all positive.

> Not sure how hobby or volunteer work has anything to do with that. A bit strawman-y.

It's not a hobby or volunteer work if the end goal is to start a successful business. Some of us are (again) not lucky to be born with a silver spoon in their mouth or have some VC drop money in our laps to start something.

> ...where I live it's also not allowed to volunteer at e.g. a home for the elderly

I'm very glad that I don't live where you do since it seems like a place that is hostile towards humanitarian efforts and kindness.

>...because the union would feel you are taking their work.

So what if the unions feel that you are taking their work? After being a part of a union for several jobs, I am very much against them since they took a large portion of my pay for nothing in return.

I'm sure that there are many founders out there who worked long hours with little to no pay to start their companies since they lacked investors or bootstrapping funds. These minimum wage laws only drive up the cost of living, drive out jobs and make it even more difficult to start a business. My stance is that there should be no minimum wage and if the pay is too low, go find a job where the pay is not too low.

A personal business such as an early 1 person startup isn't paying anyone wages so I don't see how minimum wages apply at all tbh. Minimum wages are for employees.

> Businesses that can't pay workers a living wage should have to shut down.

This should emerge as a natural consequence of economic reality. If workers can't earn a living from a business, they are supposed to either resign or die (per definition). And the business would have to either increase its wages or shut down.

There should be no need to regulate that with laws.

There is no need to regulate this with laws if the parties of the labor market are of comparable strength (which is the definition of a functioning market - that the parties involved have some kind of parity).

In most parts of the US labor market there is no such power parity between employees and employers - and minimum wage laws are just trying to band aid the problem instead of addressing the root cause.

I doubt the US will see scandinavian levels of worker organization any time soon, but a reasonable fix would be to have a social safety network that is so strong that it competes with employment. A non time-limited unemployment insurance that paid a reasonable fraction of the minimum wage (e.g. 50-75%) would likely have a significant effect on the bargaining position of workers.

Are there no prisons? Are there no workhouses?

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