Subsidize rent and you will find that rents go up. For everyone, not just the subsidized. If you want more of something, subsidize it. If you want less of something, tax it.

Thank you for your post, Santara.

So, what do you think we should do instead, to help those who are struggling financially? I mainly want to be able to help them without raising the prices of everything. I even thought about constructing government-run, shelter-like living spaces for those who don't have secure housing. But I think it would be too expensive, and also, people probably would not want such a living arrangement, either.

I would love your thoughts.

This post was edited by JessiWan on May 3 2023 06:51pm

The economic literature on the minimum wage is complex.

https://www.nber.org/papers/w12663



You're referencing a study which looked at a small local economy and analyzed the impact of a very modest increase in the minimum wage. Small increases have small effects, and reducing employment is only one of multiple options available to companies faced with higher employment costs. In some cases, for instance, it may be possible to pass the costs entirely onto the consumer.

As a freshman I got lectured by my professor for making an overly strong case in a paper. As he said, there was no need when I could make a more subtle argument instead. What you're doing is that on steroids. You can absolutely say that "minimum wage increases do not always lead to decreases in employment", because it's a multi-faceted equation. To say that there is no correlation between the minimum wage and employment is simply incorrect.

In many cases, the minimum wage is a problem in and of itself, because a large proportion of minimum wage earners are not primary income earners for their household. It might be a student, or a stay-at-home parent, and if their household income is above the poverty line, that's not really the demographic that you're trying to help. It can even be a bit perverse, because you might end up with higher prices which are footed in part by very poor earners.

Food banks are always a good idea. In general, if we want to subsidize low income earners, we should tailor policy so that it directly benefits low income earners. The benefits should gradually fall off as income rises so that we don't inadvertently create an incentive for people to not work.

I'm making a strong claim because it's well substantiated over the past 30 years of research. When you look at every level, from national to local, you find at best a small and inconsistent change in employment as a result of minimum wage increases.

The reason is pretty simple. Workers produce income for the business. If your worker produces $50 for you, and you have to pay them $7, you aren't going to hire fewer people if you now have to pay them $10. They're on aggregate income-generating tools. You already want to expand your business as much as you can with as few workers as possible, and workers are still making you a healthy profit.

Here's an actual peer reviewed article that comes to the same conclusion using national level data (I've noticed this is a trend. When you say something that is overwhelmingly supported in the scientific literature like, modest minimum wage increases don't decrease employment, or illegals on average commit significantly less crime, conservatives retort with crap tier studies from non-peer reviewed journals and then claim you can't really control for everything)

https://onlinelibrary.wiley.com/doi/10.1111/irel.12267

Yeah you can cherry-pick studies to find a consistent decrease in employment, but the reason for that is pretty simple. It's a small impact that hovers around zero. Even with no significance you would expect random variation to produce a certain amount of papers above a 5% or 10% confidence threshold in the negative direction.

This post was edited by NetflixAdaptationWidow on May 3 2023 09:10pm

You two are quibbling over a largely irrelevant point. One thing that is crystal clear from all empirical data we have is that the "mass unemployment", the "wave of layoffs" that lobbyists of the employer side are citing whenever unions or politicians suggest raising the minimum wage are bogus and not supported by reality. (At least not if it's raised responsibly. You might get a relevant surge in unemployment if the federal minimum wage was raised to $25/h in one fell swoop or something like that.)

To the extent that a (reasonable) hike of the minimum wage has a negative effect on employment, it's a miniscule one which is easily offset by the benefit.

This post was edited by Black XistenZ on May 3 2023 09:36pm

If they're young or intelligent enough, retrain them so they can do other jobs which are still in demand.
If they're too old, or just too far on the low end of the IQ spectrum, subsidize them in exchange for them doing some community work.

This post was edited by Black XistenZ on May 3 2023 09:27pm

lefties only want a higher minimum wage so they can grab more taxes

making life more affordable never occurs to them

I mean, that's literally the point I was making.

Bogie made the categorical argument that a higher minimum wage leads to lower employment, but in reality there's a pretty good range where that just doesn't happen.

This post was edited by NetflixAdaptationWidow on May 3 2023 09:44pm

This is indeed something that left wing people often fail to realize.

By making life more affordable (necessities - food, fuel, shelter), that IS a minimum wage increase, as their wage is now worth more.

Lower taxes? Minimum wage is increased.

Cheaper gas? Minimum wage again increased.

The same people often operate under a very flimsy assumption that tax revenue helps those minimum wage earners enough to justify it. Not even close in my opinion - a VERY small fraction of taxes goes toward actually helping the poor.

Not to mention frivolous and ineffective regulation, which drives up the cost of goods and services, which is passed down to the consumer through higher prices.

This post was edited by El1te on May 3 2023 09:55pm