Friday, January 19, 2007

The minimum wage went up, so the owner cut my hours! :: Salon

Imagine that: people respond to incentives.

A 19 year-old writes Salon for advice and receives this reply (extract):
Do you want your labor to reverberate in the world by creating more hamburgers, so that the world is increasingly filled with people who are filled with hamburgers and shaped like hamburgers and smelling of hamburgers? Or do you want your labor to reverberate in the world by creating more knowledge and understanding, by helping people who want to become architects become architects, by helping people who want to become mathematicians and scientists and priests become mathematicians and scientists and priests?
. . .
When a person owns a business, he buys your labor from you. Then he owns that labor -- the time you spent, what you made: He owns that. You have sold it to him. It is not a relationship between equals engaged in a common endeavor. It is a relationship between buyer and seller. The buyer in this case has most of the power.

That is not a good situation. He can buy as little of your labor as he likes. It sounds like the price of your labor went up so he decided to buy less of it. He may be making a point; here is what I think of the government's increasing the minimum wage: I will buy less labor!

You have a practical problem here, which is you need more money. In this instance, I think you will make more money in the long run if you take the bookstore job.

That is, assume an opening at a bookstore that pays sufficiently well, taking account of the implicit benefits. But wait, doesn't the bookstore also have to pay minimum wage? Is that opening going to exist?

I want to assume much of this answer is tongue in cheek. But the majority of Americans (and other peoples for that matter) believe the minimum wage benefits the intended beneficiaries. It benefits only the lucky ones who don't lose work.

The "power" to the buyer that exists here, exists purely because of the minimum wage. The owner/manager is going to cut the hours because the incentive to hire labor has changed (not to make a political statement). And those whose hours get cut are the ones the manager likes least -- something that's possible to do with profit consequences because the minimum wage has created excess supply.


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