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Comment by kork__ | Hacker News Reader

Because I don't want to starve.

Please see https://news.ycombinator.com/item?id=18124049.

We detached this subthread from https://news.ycombinator.com/item?id=18121317.

The reason that, back in the progressive era, all the eugenicists were on board with the idea of the minimum wage was that they thought that at a high enough wage "undesirables" wouldn't be able to a job and so couldn't compete away jobs from "desirable" workers. Thankfully these days we have a social safety net that generally prevents people from starving whether they could get a job or not but making people starve was part of the reason for the original support for minimum wage laws back at the turn of the last century.

[citation needed]

During the second half of the Progressive Era, beginning roughly in 1908, progressive economists and their reform allies achieved many statutory victories, including state laws that regulated working conditions, banned child labor, instituted “mothers’ pensions,” capped working hours and, the sine qua non, fixed minimum wages. In using eugenics to justify exclusionary immigration legislation, the race-suicide theorists offered a model to economists advocating labor reforms, notably those affiliated with the American Association for Labor Legislation, the organization of academic economists that Orloff and Skocpol (1984, p. 726) call the “leading association of U.S. social reform advocates in the Progressive Era.” Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it 212 Journal of Economic Perspectives performed the eugenic service ridding the labor force of the “unemployable.” Sidney and Beatrice Webb (1897 [1920], p. 785) put it plainly: “With regard to certain sections of the population [the “unemployable”], this unemployment is not a mark of social disease, but actually of social health.” “[O]f all ways of dealing with these unfortunate parasites,” Sidney Webb (1912, p. 992) opined in the Journal of Political Economy, “the most ruinous to the community is to allow them to unrestrainedly compete as wage earners.” A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants (Henderson, 1900) and also by removing from employment the “unemployable,” who, thus identified, could be, for example, segregated in rural communities or sterilized.

https://www.princeton.edu/~tleonard/papers/retrospectives.pd...

Are you really going to starve ? Why aren't the products you need to buy to not starve cheaper ? Maybe because of this kind of laws

In a free market without minimum salary, it would be difficult for people living alone and having kids (so they have to pay rent and for kindergarten or school), to compete with someone living with parents (and not paying any rent) or with immigrants living 8 people in a room.

And of course, in minimum wage societies money, resource, wealth just fall from the sky and all the people you described have kids, nannies, multiple houses just like that.

We should just ban poverty it will solve everything

Resources, houses and other nice things are created by people who work. It is not like everyone stops working after setting minimum wage. Business owners might get little less profit, but somehow I don't feel sorry for them.

You example was rather extreme so le met take an extreme example : put the minimum wage at 1 million USD / month. What happens ?

  but somehow I don't feel sorry for them

Of course you don't. But do you for people who weren't able to work because of the minimum wage law and its enforcement ?

Kraft-Heinz had $26.2B in sales in 2017, of which $9B was profit. They had 39K employees. If we naively assume that all 39K are minimum wage employees working full time all year, that comes out to a payroll cost of $1.2B. that's approximately 5% of their total revenues, meaning if it had to be paid for exclusively through new sales, the price increase per item sold would likely be 5%. In reality, it would be much lower than that because Kraft-Heinz is already paying a large portion of that $1.2B in its existing payroll costs and not all of its 39K employees are minimum wage workers. So the argument that food is expensive because of employee wages is provably false.

  provably false

False because you take a "real world" example and twist it to fit your beliefs ?

A good amount of the cost of what is produced comes from work. Hence the cost of inputs is also dependent on the cost of work (does the company you refer to contracts with suppliers ?)

If you force work to be paid 1 million USD / month, what happens ?

I didn't twist it to fit my beliefs: i presented a scenario that is actually more expensive than what it would be in reality and showed how even that would not be a substantial increase in cost, even if it was paid for exclusively by increasing the price of products sold.

A $1M/mo additional increase in supply costs would be less than .1% of their revenue. It just manages to be .1% at $10M/mo. Given that the $1.2B/yr payroll cost I cited above is actually only 4.5% of Kraft's yearly revenue (I rounded up to 5% for simplicity), the additional supply chain cost you present would actually be covered by the 5% price increase I initially mentioned. It would in fact be covered by that 5% even at $10M/mo.

But this company buys products from others company so ultimately an increase in wages will feed through almost all inputs, hence output. Your calculation is wrong

Yes, you already said that. You asked what would happen if their supply chain raised payroll (and therefore prices) by $1M/mo. And I answered that question.

No my question is setting the minimum wage to 1 million USD per month (per employee obviously). Of course 1 million USD / month more in cost is nothing

Obviously that wage isn't sustainable. The good news is that the majority of people discussing wage increases are making good-faith arguments about sustainable increases, and are not asking for a (ridiculous) $12M/yr minimum wage.

I'm not sure I understand what point you're trying to make by presenting a hypothetical wage that's 5 orders of magnitude larger than the situation being discussed.

That you cannot create money out of thin air, that you are only trying to force increasing the relative value of labor vs. capital / land / moral hazard etc.

If your increase in minimum wage follows productivity then what's the point ? It's like voting for no child labour laws after most of the children are not working anymore

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