Quote :

"I've already explained several times why this is inherent in unskilled labor. You just stick your fingers in your ears and your head in the sand."

Not true, your suggestion that any market with a greater ratio of sellers to buyers is automatically a monopsony was rediculous on it's face, nevertheless I still drug up statistical data from http://www.bls.gov to disprove the assertion. The market is not acting like a monopsony, the results being generated by the market bare no resemblance to a monopsony, and I know of no mechanism by which it could be acting like a monopsony, therefore it cannot be a monopsony. If it walks like a duck, quacks like a duck, and swims like a duck, why do you keep calling it a horse!?!?

Quote :

"Even a one firm monopoly will produce demand and supply curves that will meet."

Oh, I see now your misunderstanding, you don't actually know what a monopsony market looks like, do you?
#1 Fine, metaphore time. Let us look at a town with only one large employer. This company probably has many divisions, each one seeking labor and capital to fullfill their role in production. Now, the company as a whole has an interest in minimizing labor costs, so being the only employer it can arbitrarily lower wages. However, as it does so, each division of the company will see ways to utilize more labor (since it is now cheaper), however, doing so will dry up the supply of labor (since market equillibrium had been previously reached at the low wage), necessitating the offering of a higher wage to bring back workers. Of course, each division is not independent, they answer to the owners of the company. By my division raising wages the owners of the firm will also suffer the increased labor costs of every other division. Therefore, if a division is short on labor the owners will more likely divert capital or even labor from less important divisions to help the insufficiently manned divisions cope with the artificially imposed labor shortage without raising company wide labor costs.

All in all, a monopsony dominated labor market will visibly suffer from low wages, cronic labor shortages, excessive capital investment in efforts to cope with the shortage, and static wages which only go up in the event the capital expended to cope becomes excessive (cheaper to raise everyone's wage than continue investing).

#2 Conversely, Raleigh's labor market is completely the reverse: instead of different divisions of a single firm the city's employers are entirely different firms and therefore do not face each other's costs. If I only offer 10 jobs, by offering a dollar more I cost myself an extra $10 an hour, a small price to pay if the alternative is shutting down due to a lack of employees. It doesn't matter to me that the extra $1 an hour is going to cost wal-mart $1000 an hour because I do not see Wal-Mart's costs, only my own. Therefore, while wal-mart would prefer I spent $1000 on labor saving devices to prevent raising wages I am only willing to spend $10. In this way a labor shortage is prevented, that is until the minimum wage kicks in, driving wages up another $1 an hour. This attracts more high-school students to work while at the same time encouraging me and Wal-Mart to invest more heavily in capital to destroy jobs.

All in all, in Raleigh we see cronic labor surpluses and excessive capital investment in efforts to cope with artificially high wages.

In both cases more effort is being expended to destroy jobs than should be. In both cases society as a whole would be better off if capital expenditure was invested elsewhere and employment increased, at a higher wage in the #1 scenario and at slightly lower wages in the #2 scenario, increasing production and society-wide living standards.

Of course, like I said before, the minimum wage in scenario #2 is not substantially high, simply letting it continue to be eaten away by inflation would suffice. Conversely, in scenario #1 a price floor for labor would eliminate the labor shortage, enabling divisions of the single company to get the workers they need without wasting capital, freeing it up for other uses. In other words, scenario #1 needs a minimum wage and scenario #2 would like to lose the one it has.

7/24/2006 6:31:04 PM

Quote :

"Not true, your suggestion that any market with a greater ratio of sellers to buyers is automatically a monopsony"

I never said that. I said more buyers than sellers creates less competition between buyers therefore gives the buyer market power and creates imperfect competition.

Quote :

"the results being generated by the market bare no resemblance to a monopsony, and I know of no mechanism by which it could be acting like a monopsony, therefore it cannot be a monopsony."

First off, it's pointless to try to pull some random data and stretch interpret it to try to disprove an accepted economic concept. Furthermore, it's silly that you won't even try to understand this concept.

Quote :

"you don't actually know what a monopsony market looks like, do you?"

Yep it looks exactly like this:

Quote :

"Fine, metaphore time. Let us look at a town with only one large employer."

I've already made this metaphor.

Quote :

"Of course, like I said before, the minimum wage in scenario #2 is not substantially high, simply letting it continue to be eaten away by inflation would suffice. Conversely, in scenario #1 a price floor for labor would eliminate the labor shortage, enabling divisions of the single company to get the workers they need without wasting capital, freeing it up for other uses. In other words, scenario #1 needs a minimum wage and scenario #2 would like to lose the one it has."

In situation #2 the disparity would be defeated by inflation anyways. But you seem to be arguing (or you were arguing) unilaterally agianst minimium wage. I've been explaining to you exactly why we have them, and why they help our economy go.
Market power is a market failure.

7/24/2006 7:07:54 PM

Ok the communists and socialists have been heard from...let's get some Free-Market opinion in this thread

Quote :

"Minimum Wage Socialism by James A. Dorn, professor of economics at Towson University Communism may be dead, but socialism is alive in the many forms of government intervention we see daily in the marketplace. One widely accepted policy — the minimum wage — is appropriately reflected in Karl Marx's dictum, "To each according to his needs, from each according to his ability." When Maryland legislators increased the minimum wage from $5.15 to $6.15 in February (overriding Gov. Robert Ehrlich's veto), they did so because, as House Majority Leader Kumar P. Barve, D-Montgomery, put it, "If you want to have a stable society where hard-working poor people can support their families, you have to do things like this." That sentiment was echoed more recently in Washington when 52 senators voted for an increase in the federal minimum wage (frozen since 1997) from $5.15 to $7.25 per hour over the next three years. Sen. Ted Kennedy, D-Mass., argued that such an increase is "a matter of decency and fairness," given that Congress has awarded itself a number of pay raises. The idea that legislators can help low-income workers simply by mandating a pay raise is the height of hubris. While the minimum-wage rhetoric may sound good, the reality is quite different. Forcing employers to pay low-skilled workers a higher than market wage — in the absence of any changes in productivity — will decrease the number of workers hired (the law of demand). The National Federation of Independent Business estimates that if the federal minimum wage is increased to $6.65 per hour, nearly 217,000 workers would lose their jobs. The long-run consequences would be even more severe, as employers introduced labor-saving equipment and technology. In fact, many entry-level jobs actually pay more than $5.15 or even $6.15 per hour, so the idea that without the minimum wage, workers would be exploited is a myth. In competitive markets, such as fast food and retailing, employers who pay below-market wages will not be able to attract sufficient help. McDonald's is paying up to $8 per hour in Panama City, Fla., for example. Yet it is easy for the "legislator gods" in the state House or in Congress to take credit for increasing the pay of the poor while disavowing any negative consequences from pricing low-skilled workers out of the market. A minimum wage of $7.25 per hour translates into an income of zero if a worker cannot find a job or is fired. It would be much wiser to let workers and employers freely negotiate wages than to enact a minimum wage law that interferes with freedom of contract and prevents low-skilled workers from gaining the experience and work ethic necessary to achieve higher living standards. David Neumark, an economist at the University of California, Irvine, has found that increasing the minimum wage does not reduce poverty. Rather, for every 10 percent increase in the minimum wage, he estimates that the poverty rate increases by 3 percent to 4 percent. Contrary to the rhetoric, therefore, the people harmed the most by minimum-wage legislation are precisely those it is intended to help — the poor. Increasing the minimum wage may give "liberal" legislators great pride and win them votes, but it does not address the key issue of how to achieve economic growth and thus reduce poverty. Hong Kong has no minimum wage but is one of the most prosperous economies in the world — because it is also the freest. Economic freedom, not minimum-wage socialism, is the key to reducing poverty, as China is learning. If legislators really want to help the poor, the best thing they can do is abolish, not increase, the minimum wage. In America, the majority of low-income earners typically move up the income ladder by improving themselves, not because of the minimum wage. Policies that increase competition and choice in public education, reduce marginal tax rates on capital and labor, and protect private property rights would be positive steps toward increasing economic freedom, workers' dignity, and prosperity."

7/24/2006 11:49:45 PM

Quote :

"Ok the communists and socialists have been heard from...let's get some Free-Market opinion in this thread"

No, let's let the liberitarian equivalent to salisburyboy post other people's beliefs from lack of his ability to think for himself.
You're just as brainwashed as him, just by a less racist group.

7/25/2006 12:21:22 AM

Quote :

"In situation #2 the disparity would be defeated by inflation anyways."

You keep saying that, and it kinda has over the past few decades, but the government insists on raising it again and again, keeping the minimum wage just enough ahead of inflation to inflict hardship on the poorest among us.

Quote :

"But you seem to be arguing (or you were arguing) unilaterally agianst minimium wage. I've been explaining to you exactly why we have them, and why they help our economy go."

No, Kris, read the heading of the thread, read any of my posts, I was arguing against an increase in the North Carolina minimum wage, not the imposition of a minimum in some mill town in pennsylvania back in 1860. The former is relevant to today and I have demonstrated it to be a bad idea, your defense of the latter has no relevance with the present discussion.

7/25/2006 9:54:26 AM

Quote :

"Ok the communists and socialists have been heard from...let's get some Free-Market opinion in this thread "

Because before now, the libertarians were hardly represented. Such a neglected minority on this forum those lot are. tsh...

7/25/2006 11:24:38 AM

Quote :

"read any of my posts"

Ok, how about the first one?
"If you raise the price of apples, people buy fewer apples. If you raise the price of labor, firms buy less of it. And if you look at what happens to those whose lives are disrupted by higher minimum wages, the policy seems less and less just."

You seem to be arguing that minimium wage will unilaterally result in a lower demand for labor. This clearly is not always the case. Additionally you seem to be arguing agianst minimium wage in general, which is just as stupid.

7/25/2006 1:59:58 PM

wouldnt raising the min. wage help get mexicans out of some jobs and more americans back in them...honestly i only base this on the fact that if i owned a business and i had to start paying higher money, i'd want more qualified people that actually speak english

7/25/2006 2:05:02 PM

^ Personaly, I'd hire more illegals or more people under the table. As the cost of legal wage goes up (remember that the more the business has to pay you by law, the more taxes they pay too) the cost of hiring illegal help and the consequences of getting caught go down.

7/25/2006 3:00:47 PM

the costs stay the same, they just go down relative to legal labor

7/25/2006 3:40:57 PM

Quote :

"You seem to be arguing that minimium wage will unilaterally result in a lower demand for labor. This clearly is not always the case. Additionally you seem to be arguing agianst minimium wage in general, which is just as stupid."

The first post, as I hoped people would take from the link that followed it, was quoted from a web site written by someone else. He was obviously talking about apples and he was obviously operating under the assumption that the subject at hand was the 2006 raise of the North Carolina Minimum Wage and that North Carolina does not have a monopsony labor market. I realize what happens when people assume, as he and I did. Therefore, I am going to correct his statement for you:
"If you raise the price of apples, people buy fewer apples. If you raise the [minimum] price of labor [in North Carolina in 2006], firms [will] buy less of it. And if you look at what happens to those whose lives are disrupted by higher minimum wages, the policy seems less and less just."

So if that was your problem, I fully conceed that instituting a Minimum Wage would have boosted employment in a few mill-towns back in the 18th century (and I've said as much). Will you now consider the evidence offered against the current North Carolina Minimum Wage and conceed that it will reduce employment?

Quote :

"the costs stay the same, they just go down relative to legal labor"

Not at all. Many firms must remain visible so their customers can find them which also means the police can easily find them, making an illegal workforce unworkable. Therefore, as the minimum wage goes higher firms that cannot utilize illegal labor will simply economize, reducing the number of legal jobs available without increasing the number of illegal jobs available. These displaced workers will now need to compete for the same number of illegal jobs, driving illegal wages lower until businesses find ways to use more illegal labor or more workers leave the workforce (such as through starvation).

[Edited on July 25, 2006 at 5:11 PM. Reason : .,.]

7/25/2006 5:04:28 PM

Quote :

"So if that was your problem, I fully conceed that instituting a Minimum Wage would have boosted employment in a few mill-towns back in the 18th century (and I've said as much)."

I take that as almost sarcastic. You still refuse to accept the true usefulness of minimium wage. It's been something similar to you sticking your fingers in your ears.

Quote :

"Will you now consider the evidence offered against the current North Carolina Minimum Wage and conceed that it will reduce employment?"

No. I don't much care, and researching this would take a lot of work and I could still only arrive at a guess.

Quote :

"Many firms must remain visible so their customers can find them which also means the police can easily find them, making an illegal workforce unworkable."

Those factors are included in the cost, which is not effected by the price of labor (although it does increase with output, like most any other labor cost).

Quote :

"Therefore, as the minimum wage goes higher firms that cannot utilize illegal labor will simply economize, reducing the number of legal jobs available without increasing the number of illegal jobs available."

Once agian, not neccesarily. You're taking about three extra steps there and assuming them to be true.

7/25/2006 7:22:38 PM

Quote :

"You still refuse to accept the true usefulness of minimium wage"

No, I don't really see all that much usefulness to be found in a minimum wage. If the problem is monopsony as found in a small mill-town back in 1860 then it strikes me that a better solution would be to subsidize the relocation of workers out of that town and into the nearest larger city with more employers. Of course, the low wages in the town are already strong indicators to disuade workers from locating there. As a matter of circumstance, most rural mill-towns didn't have a sufficient supply of local labor and usually needed to continually attract more workers from far away with regionally competitive wages. In this way to mill was not really a monopsony because it was in competition with every other mill town for the limited supply of mobile labor available (recent immigrants and the fed up).

You see, even the classic examples of monopoly tend to contain elements of competition. I'm not saying the 19th century mill towns were not monopolies, many of them probably were and a price floor for labor would have helped, just not all of them.

[Edited on July 25, 2006 at 7:48 PM. Reason : .,.]

7/25/2006 7:43:19 PM

Quote :

"No, I don't really see all that much usefulness to be found in a minimum wage. If the problem is monopsony as found in a small mill-town back in 1860 then it strikes me that a better solution would be to subsidize the relocation of workers out of that town and into the nearest larger city with more employers."

I've explained why buyers of labor inherently have market power. Minimium wage addresses this.

Quote :

"You see, even the classic examples of monopoly tend to contain elements of competition."

But they also contain elements of failure, thus inefficentcy. It's as if you had someone stealing from you and you won't fire him because "he contains elements of doing his job". Monopoly and monopsony exist in varying degrees in the form of market power. Thus most every market has varying degrees of failure, we should just try to fix the biggest ones the best we can, and this is what minimium wage attempts to do.

7/25/2006 7:58:50 PM

Kris...let me be hypothetical with you.

Say you're right...there is this terrible monopsony in labor. How do you know how much to raise wages to free-market equilibrium and how can you have a one-size-fits all solution, when some markets may be in free-market equilibrium below the new minimum wage?

7/25/2006 8:16:22 PM

Quote :

"Say you're right...there is this terrible monopsony in labor."

It wouldn't be horrible, labor is simply going to be undervalued and profits will be overvalued. It would make our market less effecient than it would be if this problem were addressed, but it wouldn't cause as much damage as, let's say, getting rid of income taxes.

Quote :

"How do you know how much to raise wages to free-market equilibrium and how can you have a one-size-fits all solution, when some markets may be in free-market equilibrium below the new minimum wage?"

There are three cases, I've discribed them earlier:
1:Minimum wage reflects the market price. You win, mission accomplished
2:Minimum wage is lower than market price. Companies may use their market power to bid the market price down to the price floor and the workers get less than market value for their labor, luckly this is restricted to the floor so the impact is somewhat minimalized.
3:Minimum wage is higher than market price. Companies employ less people than the would if it was market price. Sucks, but it's generally not that bad, and will eventually work it's way out as labor becomes more skilled or as the government takes measures to battle unemployment or at worst, inflation eventually takes care of it.

Without it you've got one, case #2, and it's not dampenedby the floor.

Now a good start would be pushing minmium wage down to the states as well as keeping the federal as a rock bottom price floor. Thankfully Clinton did this. Now in any of the other cases, they're pretty much all better than doing nothing.
Now how would I pick? It would take a lot of people looking at a lot of statistics to try and guess the best wage. There's a reason we have the census and such, it's not just to keep government workers busy. It's invalueble for doing things like this.

7/25/2006 8:30:02 PM

Right, but one wage only works if each industry faces the same elasticity and labor market curves.

They don't. You'd need a separate wage for each industry. And beyond that, market conditions are always changing, so you'd constantly need to adjust it...

Its just impractical even if there WERE a market failure.

7/25/2006 8:44:30 PM

Quote :

"Right, but one wage only works if each industry faces the same elasticity and labor market curves."

We're only talking about one market here, unskilled labor. That's the only market minimium wage applies to.

Quote :

"And beyond that, market conditions are always changing, so you'd constantly need to adjust it..."

Generally we're only going to need to be adjusting it up for inflation, so in the time before you're only going to be dealing with minimiumly undevalued labor, so it's not much of a problem anyways. Deep depression could cause the demand for labor to fall a lot, so in that case we would need to adjust it downward, but in that case the government's going to have to be doing a shitload anyways, and most likely will need to account for the disparity in demand for labor anyways by funding public works.

7/25/2006 9:02:32 PM

Looks like Chicago is using minimum wage to chase away Wal-Mart and Target and all the jobs they provide...
http://msnbc.msn.com/id/14047748/

Does anyone really believe these politicians are forcing higher min. wages for anything other than maintaining their own political survival?

7/27/2006 10:49:40 AM

do politicians do ANYTHING thats not to prolong their own political survival?

7/27/2006 10:50:49 AM

Quote :

"Does anyone really believe these politicians are forcing higher min. wages for anything other than maintaining their own political survival?"

Why they do it is irrelevant. For example, a politician might lower defense spending for his own political survival to increase his popularity among voters, but the reason he did it has nothing to do with whether or not it was a good thing to do. Certainly politicians, just like anyone else tends to serve their own best interests, but our government is set up in a democratic system by which the politicians best interest tend to also reflect the general public's best interests. I won't disagree that there are faults in this system as well, but it works better than anything else. Democracy isn't a perfect solution, but it's better than anything else we can see on the near horizon.

7/27/2006 11:33:49 AM

Quote :

"Generally we're only going to need to be adjusting it up for inflation, so in the time before you're only going to be dealing with minimiumly undevalued labor, so it's not much of a problem anyways. Deep depression could cause the demand for labor to fall a lot, so in that case we would need to adjust it downward, but in that case the government's going to have to be doing a shitload anyways, and most likely will need to account for the disparity in demand for labor anyways by funding public works. "

If a deep depression is the only thing that you think will change demand for labor, you're beyond hope. You know there are more demand shifters than that.

7/27/2006 11:40:21 AM

Quote :

"If a deep depression is the only thing that you think will change demand for labor"

Where did I say that depression was the only thing that changed the demand for labor?

7/27/2006 11:41:41 AM

Quote :

"It depends on the market. Price floors account for market failures of imperfect competition due to monopsony. Let's look at an example. Let's say we have a mill town. There is one employer in this town. Being a monopsonist, this employer can effectively reduce wages well below market price. Wages left alone will never return to market price, so what is to be done? Obviously something must be done if the market can't adjust for it. So what must happen is that a price floor must be applied. Will this create a surplus? Not neccesarily. The demand for labor is going to be inelastic up to the market price, thus a surplus will not be created."

This is completely correct.

Unfortunately this is not

Quote :

"The market failure we're talking about here is market power and imperfect competition. Having fewer buyers than sellers causes less competition"

The number of buyers and sellers per se does not determine the competitiveness of a market. Classic example is brand name products. It is even possible that when a competitor enters the market against a brand name the price of the brand name product actually rises.

This is because the competitor sweeps away some of the inelastic demanders causing the brand name company's demand curve to become even more inelastic.

Eitherway its very hard to argue that there is a monoposony in the NC labor market.

What has to be the case is that some indivdual employer can raise the going wage rate by hiring more workers.

7/28/2006 10:58:12 AM

A better form of minimum wage might be "I, the state of North Carolina, will hire any capable worker willing to work for $5.15 an hour to dig ditches and road-ways with pick and shovel" If they ever run out of work just have them tear it up and start over again.

Sure, it might bankrupt the state, but at least then we'd only be hurting people that can afford it instead of harming those with the least options.

[Edited on July 28, 2006 at 1:35 PM. Reason : .,.]

7/28/2006 1:34:23 PM

Quote :

"The number of buyers and sellers per se does not determine the competitiveness of a market"

It does create market power.

Quote :

"Eitherway its very hard to argue that there is a monoposony in the NC labor market."

I didn't intend to. People didn't seem to understand why we have a price floor on labor, and I simply explained why the unskilled labor market is inherently monopsonistic.

Quote :

"A better form of minimum wage might be "I, the state of North Carolina, will hire any capable worker willing to work for $5.15 an hour to dig ditches and road-ways with pick and shovel" If they ever run out of work just have them tear it up and start over again."

This would help to push labor price up to what it should be, however you can clearly see why this is a good deal stupider than minimium wage. You're adding an inneffective competitor who is merely wasting the labor.

7/28/2006 2:40:08 PM

Quote :

"Quote : "Eitherway its very hard to argue that there is a monoposony in the NC labor market." I didn't intend to. People didn't seem to understand why we have a price floor on labor, and I simply explained why the unskilled labor market is inherently monopsonistic."

You don't argue that there is a monopsony...only that the market is inherently monopsonistic?

7/28/2006 2:47:31 PM

Quote :

"You don't argue that there is a monopsony...only that the market is inherently monopsonistic?"

Yes. The market varies.

7/28/2006 3:04:54 PM

Then you should have said "can exhibit monopsony" rather than inherently

See how "Muslims are inherenthly evil" doesn't have quite the same ring as "muslims, when overcome with zealotry, have a tendency to become evil"

7/28/2006 3:05:47 PM

Quote :

"Then you should have said "can exhibit monopsony" rather than inherently"

No I shouldn't have. I said exactly what I meant.

7/28/2006 3:15:42 PM

Then what you mean is a bloody contradiction.

"They aren't x, they're just inherently x"

is fucking stupid. It totally misunderstands the definition of inherent(ly)

7/28/2006 3:17:28 PM

Quote :

"Then what you mean is a bloody contradiction."

No, you simply don't seem to understand. The labor market is inherently monopsonistic in that there are more sellers than buyers. It may not always function as a monopsonistic market, just as a monopoly may not function as monopoloistic market should it need to ward off potential competitors.

7/28/2006 3:28:59 PM

So what in the current unskilled labor market in north carolina is forcing it to behave unlike its inherently monopsonistic self?

7/28/2006 3:34:35 PM

Quote :

"Kris: No. I don't much care, and researching this would take a lot of work and I could still only arrive at a guess."

And I've done the research, see previous posts in this thread for my evidence, it seems to me that the North Carolina Labor Market is NOT currently operating as a monopsony. As such, raising the minimum wage can only have one effect: greater unemployment and less production.

If you wish to disagree with my assertion, then you must first prove that the current labor market IS a monopsony. Not that it tends to me, not that it usually is, but that it is RIGHT NOW.

[Edited on July 28, 2006 at 3:36 PM. Reason : .,.]

7/28/2006 3:35:48 PM

Quote :

"And I've done the research, see previous posts in this thread for my evidence, it seems to me that the North Carolina Labor Market is NOT currently operating as a monopsony"

You missed my point of I don't care. But regardless, just because it doesn't seem to you like a monoposony doesn't mean it isn't or it won't be in the near future.

Quote :

"As such, raising the minimum wage can only have one effect: greater unemployment and less production."

I've explained why that's not neccesarily true. In order to prove it was you'd have to show that marginal cost is equal to marginal revenue for every firm in the market, not only is it unlikely that it's true, it's just as unlikely that you could even attempt to get that data.

Quote :

"If you wish to disagree with my assertion"

I never did, I saw a whole lot of people who didn't know basic economics whining about minmium wage, so I explained how it works.

7/28/2006 6:19:44 PM

Quote :

"The labor market is inherently monopsonistic in that there are more sellers than buyers. It may not always function as a monopsonistic market, just as a monopoly may not function as monopoloistic market should it need to ward off potential competitors."

If we were talking about buyers in the range of a dozen or so I could see this. However, given the number of firms even in most smaller towns in North Carolina serious monoposony power is a stretch theoretically.

If there was some empirical evidence it would really help this arguement out.


There are other reasons to suggest a minimum wage besides monopsony. The most obvious being that it serves as a subisdy to people who are more likely to be poor. For me this is probably the best reason.

However, I think that there are other tools which do a much better job. Anyone who reads my other stuff will know that I am big on the Earned Income Tax Credit (EITC). Unlike the minimum wage we can target the EITC towards working families.

Over half of all minimum wage workers are under 21. Many of those are kids in middle income families or young single adults. Neither of those groups seem to be in great need of government assistance.

Rasing the minimum wage also increase competition for jobs for working mothers. Since this is TWW I think I can drop the "Working Family" pretext. We are all really talking about single moms.

The higher the unskilled wage the more teenagers will look for unskilled work. I tend to believe that a higher wage means fewer unskilled jobs available -- but lets say it stays the same. Now you have more workers chasing the same number of jobs, making it more likely that a single mother would have a hard time finding one.

If instead you let the market determine the wage but tacted on a monthly EITC subsidy to the single mom's wage then you are giving her an advantage. Does this create some market ineffeciency? Of course, but we want some ineffecency because we are trying to stack the deck in favor of people who we see as underprivledged.

The goal in my view is to do it such a way that gets the most gain to the people we are trying to help with the least cost to everyone else. Targeted aid does a better job at that then blanketed manipulation of market prices.

7/29/2006 10:43:36 AM

Quote :

"If we were talking about buyers in the range of a dozen or so I could see this. However, given the number of firms even in most smaller towns in North Carolina serious monoposony power is a stretch theoretically."

But wouldn't you agree that in most every case there will be at least twice as many people selling labor as buying it? There is always going to be market power for the buyer.

Quote :

"There are other reasons to suggest a minimum wage besides monopsony. The most obvious being that it serves as a subisdy to people who are more likely to be poor. For me this is probably the best reason."

But that wouldn't explain why there is a federal and state minimium wage.

Quote :

"However, I think that there are other tools which do a much better job. Anyone who reads my other stuff will know that I am big on the Earned Income Tax Credit (EITC). Unlike the minimum wage we can target the EITC towards working families."

I think that you could use those tools to help working mothers, but I still think minimium wage is a neccesity. Without it unskilled wage will be bid artificially low. This will inflate profits.

Quote :

"The goal in my view is to do it such a way that gets the most gain to the people we are trying to help with the least cost to everyone else. Targeted aid does a better job at that then blanketed manipulation of market prices."

My purpose is a bit different. I'm not really trying to help a specific group of people, I want to accomodate for a market failure.

7/29/2006 12:33:51 PM

Kris, I was just wondering how you can babble on about your superior knowledge of economics while misusing the term "monopsony" throughout the whole thread. A monopsony occurs when only one buyer exists. There are thousands of firms willing to buy labor at any given moment. Is it possible you are talking about an oligopsony?

If you were awarded a degree from NCSU, I am ashamed to be a student of the school. You had the nerve to say you should be teaching economics? It's more like you should have paid more attention in intro to econ.

7/29/2006 6:04:40 PM

Quote :

"But wouldn't you agree that in most every case there will be at least twice as many people selling labor as buying it?"

As always, irrelevant. Forget me demonstrating that North Carolina today does not have a monopsonistic labor market, might you point to a single point in history where evidence of monopsony pricing exists while there were thousands of equally sized buyers? I'm asking for any point in history that we can look up, do some math, and demonstrate a thousand buyers engaged in monopsonistic behavior, please? If you are so sure, then surely you have an historical point in mind.

Thank you.

7/29/2006 8:02:02 PM

Quote :

"A monopsony occurs when only one buyer exists. There are thousands of firms willing to buy labor at any given moment."

I used it correctly. Do you know what monopolistic competition is? Hint: it involves more than one firm.

Quote :

"Is it possible you are talking about an oligopsony?"

What I'm really talking about, I've explicitly stated several times in this thread, MARKET POWER. Monopoly and monopsony exist in varying degrees in almost every market.

I said what I meant.

Quote :

"As always, irrelevant."

So market power doesn't exist?

Quote :

"might you point to a single point in history where evidence of monopsony pricing exists while there were thousands of equally sized buyers"

I could, I have access to google. But I'm talking theoretically about a generally accepted economic concept, I don't need to bring up specific instances because they are impossible to perfectly interpret. If we discuss in theory, we have black and white.

Quote :

"I'm asking for any point in history that we can look up, do some math, and demonstrate a thousand buyers engaged in monopsonistic behavior, please?"

We won't find a perfect example of any economic concept in any market. Real analysis involves to many factors for us to be able to perfectly interpret. If I pointed to some market that was, I'd have no doubt that you could point to aspects that weren't a perfect example of market power and claim me to be false.

Why don't you address my arguement instead instead of whining about me not giving you some numbers to crunch. Market power exists, whether you want it to or not.

7/30/2006 3:13:07 AM

Quote :

"But I'm talking theoretically about a generally accepted economic concept, I don't need to bring up specific instances"

No you are not. If you are, then use google book search to find me one credible economics textbook which says a market with many thousands of buyers can be a monopsony.

Look, you are using monopsony as proof that a North Carolina minimum wage is necessary. I demonstrate that the market is not acting like a monopsony, you call it irrelevant because it could at any moment. I say it cannot because it never has and could never do so because there are too many disconnected buyers, you say this is irrelevant because you are only "talking theoretically about a generally accepted economic concept". Fine, so go away, you refuse to talk about real life. I guess the market is "monopsonistic competition" is the same way that the market for food is "monopolistic competition" because you can only get a Big Mac at McDonalds, while a Hambuger can be had at half a dozen places. Well, you can only work at McDonalds by working at McDonalds, while a "food service job" can be had at two dozen places.

Remember, we call it monopolistic competition, the market is still a functionally competitive market, the only issue is that products are not perfectly interchangeable (you must consider quality, location, and service). But this should not be mistaken for "market power" because anyone can make a good quality hamburger with great service, they only need to try.

Well, anyone can offer a clean, safe, comfortable job at a good location, they only need to try, therefore no sustainable competitive advantage exists in the labor market, therefore market power is largely nonexistant, therefore no government action is needed and will most likely be destructive.

7/30/2006 9:14:32 AM

Quote :

"Look, you are using monopsony as proof that a North Carolina minimum wage is necessary."

No I'm not. I've said several times that I neither know nor care if it is needed in this specific case.

Quote :

"If you are, then use google book search to find me one credible economics textbook which says a market with many thousands of buyers can be a monopsony"

You seriously want me to reference an economic book that explains market power?

Quote :

"emember, we call it monopolistic competition, the market is still a functionally competitive market"

Monopolistic competition is not only innefficent on its own, it often slips into Oligopolistic competition, which is even less effiecent.

Quote :

"Well, anyone can offer a clean, safe, comfortable job at a good location, they only need to try, therefore no sustainable competitive advantage exists in the labor market"

Not true, simply due to economies of scale larger firms will provide more of the jobs nationwide, thus retain more market power.

7/30/2006 11:46:02 AM

Quote :

"Monopolistic competition is not only innefficent on its own"

Kris, surely you have read the definition of monopolistic competition, right? In reality, no two goods are identical, there is no such thing as perfect competition outside commodities. This McDonald's and that McDonald's are not identical, therefore they are only competing indirectly, therefore we call it monopolistic competition. It doesn't change the fact that they are functionally competitive. And where do you get the idea that it is inefficient?!?! Inefficient compared to what?

I'm happy firms compete for the quality, safety, and reliability of their products. Would you prefer a perfectly competitive market where all the products were equally crap?

Or, more precisely, would you prefer if all jobs were equally crappy, but fetching higher wages? Of course not, so we have monopsonistic competition among employers for labor.

7/30/2006 5:11:36 PM

Quote :

"And where do you get the idea that it is inefficient?!?! Inefficient compared to what?"

Perfect competition. And certainly perfect competition doesn't exist, but nonetheless, there exists a market that is much more efficent than monopolistic competition, and it leans more towards perfect competition.

Quote :

"Would you prefer a perfectly competitive market where all the products were equally crap?"

Why must they be crap? Could there not exist a perfect competition in which all goods were equally good?

Quote :

"Or, more precisely, would you prefer if all jobs were equally crappy, but fetching higher wages? Of course not, so we have monopsonistic competition among employers for labor."

There is no reason why there can't be a close to perfect competition among good jobs, we only require the government's help through minimium wage.

7/30/2006 11:27:38 PM

the hike will help people who make minimum wage find cigarettes a little more affordable

7/30/2006 11:52:01 PM

they'll buy cigarettes regardless, perhaps they'll use this extra money to plan for retirement or helping their children.

7/31/2006 12:11:50 AM