Labor Markets and Minimum Wage: Crash Course Economics #28

[@drakeblood4]

One thing that's important to note about wage discrimination is that it happens primarily when people are working under imperfect information. In other words, when everyone knows what everyone else is making it's harder for companies to pay people unfairly.

[@firudu]

unfortunately companies will fight against making wages transparent, as that will drive up bargaining for more pay. if they were more transparent, more people would be motivated to sue their employer using the '63 equal pay act, and thats also not wanted by employers

[@drakeblood4]

Yup, more liquid pay markets are inherently bad for employers, because with less information a boss can bluff about how little they're able to pay other people.

[@tiehut]

+Markus Leben wage discrimination? haha. is the term you use for the wages of unskilled laborers? stop feeling sorry for yourself and learn a fucking skill

[@drakeblood4]

+MrBipBipp I guess it does open up the opportunity for price signaling like you see between stores selling the same good and trying to avoid Prisoner's Dilemmaing themselves.

[@liwendiamond9223]

A quick note for Crash Course editors : Could you avoid using the visual effect used at 2:57 and 8:07? This Flashing Screen effect is really painful on my eyes. I'm not prone to epileptic seizures or anything, but it's still incredibly annoying. Thanks for the video.

[@EbyKat]

Seconded

[@AnyBodyWannaPeanut]

yes! seriously what was up with that?

[@mallry2515]

+LiwenDiamond I thought my screen was messed up!

[@deannasmith4443]

+LiwenDiamond thanks for the heads up... ill be skipping ahead now =D last thing i need is a migraine or seizure.

[@deannasmith4443]

***** thanks, as it is i am still an undergrad... however i still skipped the video as it quite unpleasant for me.

[@fridems5341]

Honest impression: This is the best crash course I have seen. This is also the best explanation I have received about the labour market, even during my three years of studying economics in high school. Hence, a toast to you guys, and also a big THANKS!

[@mr7clay]

2:58 Love CC, but please stop these flickering borders. They're distracting and could induce headaches/seizures.

[@arrowkrueger]

I'm a college student and I just want to thank Crash Course! You are such a HUGE help in just about every subject! Thank you so much for making such great quality videos with so much good information!

[@voodootrois]

Simply making a greater percentage of the workforce more skilled isn't a substitution for a minimum wage. There will always be a need for at least some unskilled labor.

[@theflourishcrisis]

shouldn't the minimum wage be scaled with inflation?

[@BrigadoomNorth]

Yes...

[@FieldMarshalFry]

+fiery shendu yes, and it should be a living wage, but the corporations don't want it as it means they'll have to pay a lot of low level employees a fair wage

[@dluff]

If minimum wage works make it $50 a hour.....

[@nattygsbord]

+Draevon May Small amounts of salt is essential for survival. Some amounts make your food taste better. And if you eat too much, you will die. But of course, since you understand things as fallacies unlike all others, you eat 200kilos of salt every day. For you everything is all or nothing.

[@dluff]

+Draevon May just making opinions like on this show

[@CharlieJapan]

ACDC

[@Malegnius]

Such a Dad belt haahahahah

[@Marcos-ux9hx]

I realized I never said: thanks for the wonderful job everybody does on Crash Course. DFTKeepBA

[@RainAngel111]

Could you do an episode about Universal Basic income and how automation may affect our economy in the future?

[@JediBearBob]

+RainAngel111 It would be pretty speculative.

[@wtfamiactuallyright1823]

+Robert Richter along the lines of, the rich get richer and the poor die down an alleyway. :o

[@JediBearBob]

That's one plausible future, but by no means the only one. As I said, highly speculative.

[@wtfamiactuallyright1823]

Robert Richter Yeah, but I just thought it fit well with your surname. ;)

[@JediBearBob]

Ah, it's pronounced more like "Rik-ter," but I can see that.

[@TheGreatAnt]

I appreciate the note how minimum wage effects possible unemployment and seeking more skilled workers, though there was no discussion of how minimum wage might affect product prices within that establishment and influence the cost of living for everyone, employed and unemployed. Could you discuss how minimum wage effects those factors?

[@RavenwolfFoxtrack]

At 0:11 , that's the kind of work I do. Working on the poles for the phone company, but these days we are putting up fiber cables and fiber service drops to the home. Not often we use butsets anymore.

[@nehilbhatnagar3989]

10:03 Messi took that advice seriously 😂😂

[@szgergo99]

2:57 starts glitching - epilepsy warning

[@havek23]

+szgergo99 Yeah, what was up with that? Simulating welding or something?

[@pummisher1186]

+szgergo99 All their videos have this problem when they're using that filter on the borders. It's annoying.

[@InfamousAustinT0]

I never noticed until i saw this comment

[@trungduong4040]

Good message: learn new skills!

[@Zappyguy111]

Spent 6 months looking for work as a barista, so instead, I got a load from a family member to get a Medium Ridged heavy vehicle license. Got a job that same week. Thinking about the labour market as a market is very, very helpful, I am glad I made the switch in mindset, now to get that raise... Maybe next week...

[@joshmnky]

When I was out of college looking for a job in engineering, I worked at a small computer repair business for $9/hr for a while. There were three people who worked there, and they hired me to take some of the load off. If the minimum wage were much higher than that, I think they would've just sucked it up and worked harder. I'm not saying this is a super common situation, just that these situations definitely exist.

[@coolmansam150]

Could you do a video on basic income or negative income tax?

[@lassebom]

Nice AC/DC belt, Jacob! 9:36

[@smh9902]

6:48 If that grocery store is the ONLY place hiring, and there are more people looking for the job than the positions can be filled, then guess what? Markets DO reach balance, and their fair market value decreases dramatically. So its not that the employees are accepting lower than market value, but rather their market value is pretty low to begin with. 8:00 Spending is nothing, spending merely shuffles money around and doesn't do squat for growth. Only investments and value additive processing, manufacturing, mining, agriculture, etc. actually produce value and increase economic prosperity. Service sectors just help value creators more efficiently create, distribute, and sell their goods/materials.

[@leonlionheart01]

+Joe Schmoe PREACH! I noticed that this video is delivered mostly by Adrian. Jacob gives a much more balanced approach in his own video. While there are some places to disagree, it's better

[@smh9902]

Leon Poke Also, the thumbnail thats put up on the left side inside the circle is an "all seeing eye" triangle with elephant ears/trunk. WTF? I'm not one for conspiracy's and all but this is getting a little ridiculous at how often I see the Eye of Horus inside triangles just about everywhere. Just saying its getting kind of creepy.

[@CaptainZuluGamma]

+Joe Schmoe well that is all good news and i agree, silver and are important to stop wealth confiscation & destruction of your families wealth through the means of central banks actions.

[@smh9902]

CaptainZuluGamma Anymore I'd bet on ammo being a better investment.

[@ThomasBaxter]

There's some serious strobing going on from 2:58-3:04 and again 8:06-8:20. Ya'll should really fix that now y'hear?

[@MrChickennugget360]

raising the minimum wage slightly as well as making it mandatory for businesses to allow tipping could drastically help out with our working poor in this country, i work slightly above minimum wage but i also receive tips, these tips can some times effectively double my wages when people are generous. It also incentivizes people to work hard and be kind and positive, while giving people who are well off an opportunity to give to people who are actually working rather than people who want to abuse government subsidy and not work

[@Harvest_Mint]

MR.Chickennuget 360 I know all the baggers I work with would love to be able to receive tips. Just cause a lot of them are kids doesn’t mean they can’t use extra money.

[@محمدالامريكي-ج9م]

They forgot to mention that higher minimumwages also result in higher prices for goods made by minimumwage workers.

[@RedLeader327]

Citation needed

[@TheOsamaBahama]

+John Dough Which questions the idea that increasing the minimum wage would increase consumer spending.

[@Stars-Mine]

+John Dough Yea, you are right, but the price increase in goods is significantly less then the increase in wages. The min wage workers still end up with more buying power.

[@magister343]

+John Dough More importantly, she forgot to mention that the higher wages lead to higher prices in goods with less elastic supply. It particularly leads to increasing land rents in an area, which can make it particularly hard for the poor to keep living there. In fact, some studies which seem to show minimum wages being good for employment rates actually demonstrate that it can gentrify an area by pushing its poorer residents into lower rent areas. Those who stay may be better off, but that is more than balanced by the increased hardships of those who have to move away.

[@chillsahoy2640]

+John Dough What a lot of people seem to forget is that shareholders are the issue. It's quite possible to make reasonable quality products (in most cases), while paying decent wages at every stage, and keep the prices affordable, but that would require shareholders to miss out on some rather large profits. Higher wages only means higher prices for goods IF shareholders are unwilling to earn less, and that is usually not the case.

[@acey195]

8:52 whats the point of the blur, if its still clearly readable in the reflection of the window :P? Nice episode though.

[@zachlevy]

+Twan de Graaf i have no idea what fast food chain that is. not from usa tho

[@TheColorRed]

+Zachary Levy I'm a 'murican I can help! www.bk.com/

[@Itamar_Shai]

lol, on 8:53 you can see the burger king reflection

[@YeTenuousUmbrae]

Propaganda starts at @6:45. Lady suggest minimum wage protects against companies offering less than someone is worth despite the fact she correctly explained earlier that what someone is worth is determined by mainly supply and demand. (She also calls it a market failure which makes no sense at all). In her example she says "...and if its the only place hiring" but this is almost never the case. But it is far more likely in a town with enforced minimum wage laws. And after which says that economist against minimum wage laws are losing the policy battle but this is not an argument and I'd say it's mainly because people don't understand the full effect of minimum wage laws and only support it because it seems to be doing good.

[@sheepwshotguns42]

Can you do a video on mondragon cooperatives?

[@ragmondead]

I am not going to tell you what to believe, but this is what you should believe.

[@Ali80076]

+ragmondead yeah you can believe in Green little mushrooms running the universe and conspiring to end humanity for all I care, but what you should believe is in the apparent, in the random nature of the universe

[@jefferymoffitt]

+Ali80076 the universe is random, but society and people are not, though we try to make it seem that way

[@natureabioros8686]

They presented data and economists opinions. If you disagree with them due to contrary reasoning or evidence, you are free to do so. However, evidence was presented, and they impose a firm conclusion. They're allowed to present what they believe is valid and relevant information to the topic at hand.

[@tommy07robs]

Economics isn't a belief system. Although I suppose you could argue there are various economic theories

[@leiftorbjorn5621]

Naturea Bioros they don’t give any evidence, at all, rewatch the video, the sole justification for the minimum wage they give is the logical fallacy of appealing to authority, by just pointing at “look all these smart people that think this”, the other argument they presented was also based on a logical fallacy, correlation doesn’t imply causation. They took two states with a huge multitude of factors influencing their Labor market and economy, and insinuated that the minimum wage was the determining factor, without providing any proof whatsoever.

[@lukekent9386]

Gathers cookies, prepares to watch political flame wars unfold.

[@BlueyMcPhluey]

remove the minimum wage and implement a Basic Income, then the value of the worker can truly be set to market value because the employer loses the leverage described at 6:30

[@zuthalsoraniz6764]

+josh mcgee That would be the best, yes, but it won't ever happen in the US, because "ermahgerd, cermahnersm" and "muh freedumb"

[@tiehut]

+josh mcgee you can make the min wage as high as you want, and then you will wonder why all workers are replaced by robots and vending machines. duh

[@BlueyMcPhluey]

tiehut I just hope that we implement a Basic Income sooner rather than later because you're right, technological improvements aren't slowing down and if we leave it too long it may be too late.

[@BlueyMcPhluey]

Zuthal Soraniz I have hope that the trials being done in Finland, Canada, Netherlands all lead to positive results. If we can show that it's a system that works - more specifically that in the future it will be the ONLY system that works - then the US will come around.

[@philllllllll]

+tiehut before the Canadian dollar crashed due to oil prices, we paid our employees double what the minimum wage is in certain parts of the US. Robot overlords haven't arrived yet.

[@blurglide]

Minimum wage just means it's illegal for you to work unless you're worth whatever the minimum wage is. Labor is just a service you buy, and raising the price of labor means people find ways to make due with less of it. Let's say we're in bizarro world though and demand doesn't change one bit, even if you're unable to be worth minimum wage is. What you have here is a subsidy for low-value workers. You always get more of what you subsidize, so why would people invest in their skills if the end result is making the same amount as before? In either scenario, economic productivity is reduced either due to unemployment or low skill. The political push for increasing minimum wage is mostly through unions, who often get paid a certain MULTIPLE of minimum wage. Even if this doesn't convince you minimum wage is a bad idea, a federal minimum wage is as the cost of living is do different in different...not just states...but cities! It should be a local thing. A $15 minimum wage in New York City would be unnoticeable as few there would work for less than that anyway, but in Rome NY the effect on the economy would be devastating. Wage discrimination is BS these days; if I could save 23% for the same level of productivity by only hiring women, then I'd only hire women and put my competitors out of business. But then, they'd try to do the same, raising demand, and therefore price, of hiring women. That's exactly what we have today; it's whacko conspiracy-theory territory to think otherwise.

[@nicole5657]

+blurglide Yay! Someone else who is against minimum wage! ;D

[@Stikibits]

“A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.” -Harold Laski, British political theorist (1893-1950)

[@Anonymous-qs9is]

Why I don't understand left wing philosophy. You say things like this and you go vote for more government.

[@Anonymous-qs9is]

Beans Haha wtf are you even trying to say?

[@Anonymous-qs9is]

The right and left aren't parties. The political spectrum best describes size of government.

[@saeedbaig4249]

4:13- "There are some situations where wages may actually be higher than market equilibrium. For example, some employers might voluntarily offer higher than normal wages to increase worker productivity and retention". Wouldn't that just be a case of market equilibrium wages increasing, rather than wages being "higher" than equilibrium? After all, if the employers voluntarily choose to increase wages, that would just represent an increase in the demand for that kind of labour and, hence, a higher equilibrium market wage.

[@JamieTheTroll]

Saeed Baig No, this is a bit more in depth. But the equilibrium wage in perfectly competitive markets, considering CRS. You take the First Order Condition of the neo-classical production function. By doing so, you get MPN = w. The equilibrium wage is hence equal to the marginal product of labour. You can calculate it using partial derivatives. Hence, of firms offer a wage greater than MPN, it is above the equilibrium wage, not a shift if the equilibrium wage.

[@SparshAgrawal44K]

I think a minimum wage wasn't put in place to be a living wage, but rather to prevent employers from exploiting people. Also I think that having unions decide the minimum wage via collective bargaining is a more free market answer

[@dosbox907]

Sparsh Agrawal MW was intended to be livable at it's passing. I don't like it because it gives companies a bottom line to pay employees rather than actually paying then their true economic worth which could potentially be more than minimum.

[@dosbox907]

Sparsh Agrawal also, I really dislike the idea of a federally mandated wage because there is not a 1 size fits all solution to all problems. it should be addressed state by state or even better, city by city. same with firearms laws and the like. I have no clue why our government just insists on making broad sweeping legislation to deal with relatively localised issues.

[@plumeater1]

Yes because Unions only, and only should have one goal. To promote a better wages among the people of that said union. The Union shouldn't lobby "how many can teach", or make rules that benefit the longer the people who joined the unions (FI-LO, First In last out, that is, people who taught the longest will stay the longest no matter how "good or bad" they are just because they are the longest). Unions was founded to negotiate WAGES and to improve workplaces. That's it.

[@MichaelShulski]

"Workers of the world unite. You have nothing to lose but your chains".. -Karl Marx

[@magister343]

Some studies have seemed to show that local minimum wage increases lead to a reduction in unemployment, but those failed to take into account the effects on movement of people between adjacent areas. A higher minimum wage makes it more expensive to live in an area, especially increasing the price of goods with less elastic supply like basic housing, and tends to push the poorest members of society into other neighborhoods where the rent is lower. Minimum wage laws may lead to gentrification and make a locale more prosperous, but the former inhabitants of the region are left worse off than without the wage floor.

[@MaitreiJ]

Hello team, I am from India. I would like to see crash course on international trade agreements. WTO agreements, bilateral, plurilateral and so on. How does these effect the stakeholder countries and small businesses. Thank you.

[@markspqr]

I enjoy Crash Course because you inform and give a fair and balance perspective .... you have me respect

[@BHBrunt]

+Raphael Dean Yeah. I don't particularly object to this, but lines like "I'm not going to tell you what to think, but think about it this way ... " make me cringe.

[@markspqr]

+Raphael Dean my point is the did not make a conclusion they just give the information but what makes it balanced is the gave disconfriming information to give another perspective .... compared to this progressive bullshit propaganda on this site. This is my opinion, they are right and gave facts ... I respect that

[@Onihikage]

What's with the flickering vignette at 3:00? I almost thought something was wrong with my monitor lol

[@TheKdcool]

This video should be corrected, the effect flashes at 3:00 during 15 seconds and at 8:00

[@IoachimSavianPopovici]

I like how objective you've become.

[@ARP2wefightforyou]

They're extremely subjective.

[@ARP2wefightforyou]

They're extremely subjective.

[@IoachimSavianPopovici]

You should see their older videos.

[@Boarky]

+Levi “When will we want wantons” Quickburger5000 He's being sarcastic I'm sure. This video was like 90% bias.

[@Jedran275]

My lesson for today was to orient myself toward developing skills that would benefit both myself and businesses I'd like to hopefully get to invest my time into.

[@AndreiTM96]

Guys, I have to tell you, I absolutely love this series! I think CrashCourse Economics is the most useful series on this channel, and I'm glad you took your time to go into details and stretch it to many episodes, and I hope you're planning on many more :)

[@SevenRiderAirForce]

The Card and Krueger study was apocryphal - when studied again later with more comprehensive data, the econ 101 hypothesis was confirmed. C&K used phone survey data, rather than the actual books. In any event, there are meta-studies showing the classical position by Neumark and Wascher. There are others that show the opposite. The core problem of the minimum wage is that it is a price control. Price controls are lies, because prices convey information about the *underlying economic reality*. Minimum wage is like putting makeup on an rash. The rash is no longer ugly-looking, but the ugliness was never the real problem to begin with. The real problem is that people do not have the skills required for them to command a higher wage, or that there are insufficient employment opportunities. The solution is to increase people's skills and encourage the creation of new businesses, not shoot the messenger, as it were.

[@klingefjord]

Do a video on basic income

[@Visfen]

This was surprisingly bad. The reason some economists believe raising the minimum wage doesn't affect unemployment, is because a higher minimum wage will drag people who prefer other options to enter the labor market. For instance, someone that prefered to be on welfare or go to school instead, will now enter the market because the market wage "is too low". It's not about bargaining power. Suggesting bargaining power has something to do with it makes no sense, because if the above scenario was the case, then you would have upwards market pressure to raise the minimum wage, lest you be without workers. The above model is what is supposedly proven in the non-reproducably New Jersey study, which is always referenced by people who believe minimum wages does not raise unemployment. A minimum wage hike would only stimulate consumption (not the economy, but a specific part of it at the expensive of another, this is classic broken window fallacy) but it would do so at the cost of a rising standard of living cost as the cost of labor is carried over. Minimum wages do not affect margins for companies on gross. Neither does unionization. The US and UK which have low uninonization have larger wage shares in the economy than Scandinavian countries with high unionization. Unionization merely raises the wages of the jobs they unionize, at the expense of other workers or by creating unemployment. Also, supply and demand is ultimately not what deterimnes wages. It's called marginal productivity.

[@JacobShepley]

you heard her, it's time to practice our scissoring. any volunteers?

[@scr3aming3agle83]

That belt buckle is fucking amazing!!!!

[@ClassicJukeboxBand]

I tuned out when they started talking about discrimination and quoting the Brookings Institution. These guys are putting a liberal spin on minimum wages. There is no doubt minimum wages kill many start up companies. Businesses have to come from somewhere, and overly high minimum wages make it much, much harder for people of modest means to hire somebody on a shoestring budget. This kills small businesses and keep small businesses from hiring due to a lack of resources. Walmart and General Electric can pay these wages, but Joe's Burgers and Mary's Nail Salon will be hurt really bad, or never opened at all.

[@constantine2197]

+ClassicExampleBand I can't agree more.

[@crono3015]

Way to tune out on facts. No wonder other countries laugh at us.

[@ARP2wefightforyou]

+Crono How did he tune out on the facts?

[@StephySon]

+ClassicExampleBand So your saying there's no wage discrimination?

[@archdukeferdinandofthe3rdc9]

+ClassicExampleBand "Facts tend to be liberally biased" - Stephen Colbert (correct me if I'm wrong).

[@FTWSkillDrain]

I love the narrative of I am not going to tell you how to think, but here is what I think and the only situations where it might not have a net negative impact. I do appreciate the attempt at balance offered by crashcourse though different lenses in the social sciences as they at least give the arguments. I guess perfection is just the enemy of good.

[@corvoshlorpe3849]

"I'm not gonna tell you what to think buuuut, here's what you should think"

[@shriramvenu]

minimum wage is essential in rich advanced economies to counteract the impact of migration of the poor to those nations. Without the minimum wage, the floor price of unskilled work would continue to fall, while the rich pocket the additional profit of exploiting the poor.

[@mosesking2923]

Raising the minimum wage will crush small businesses and therefore result in a net loss in jobs. Being paid 5.25/hour is MUCH BETTER than being homeless. Not to mention the increase in the cost of goods which hurts the middle class. NOBODY has a right to a job at the salary they want with the benefits that they want. There is no such thing as a "living wage." You either earn your salary or die on the streets. Ultimately, your life is worthless to me and I could care less if you died on the streets. Just don't make me pay higher prices for goods and we won't have a problem.

[@2299jsimon]

Just a few quick thoughts... 1) If small start ups have to pay this, it will limit entrepreneurs from entering business. This is a big deal since about 80% of start ups fail in this country anyway. 2) Depending on the type of business, the total cost of paying $15/hr. is from $22/hr. to $32/hr. 3) Those who have never been in business or attempted have no idea what an owner goes through... I know a man who slept in his small office for months and ate popcorn for dinner... and people resented his success. How about those sleepless night trying to figure out how to pay your bills and cover payroll? I'm just saying that most people have no idea what it takes to start a business... the level of commitment.

[@destinationfreedom2939]

When this guy isn't making economics videos he's a Rock 'n Roller! Check out his AC/DC belt... :-)

[@TheOsamaBahama]

If you rase the minimum wage above an employee's productivity, he will generate a loss to the employer an get fired. It could also force the other employees who didn't get fired to take work harder to cover the job of the guy who got fired.

[@svankensen]

+Rick Apocalypse Thats a big if.

[@xStrikie]

In the last few decades wages have fallen behind, while productivity kept growing. It's to the point where wages could go up by 10% or more and still be in line with productivity

[@TheOsamaBahama]

Strikie That's a myth. Productivity has risen, but not on the same level to all workers. The productivity of office workers have increased thanks to computers and the internet. But the productivity of waitresses, for example, remains the same. That's why you can't compare AVERAGE productivity with MEDIAN compensation.

[@TheOsamaBahama]

Strikie Also, GDP has risen side by side with productivity. That means companies have been producing more. If they have been producing more, that means they have lowered their prices. Otherwise they would have an overproduction. If their prices have lowered, that means people's purchasing power have increased.

[@nattygsbord]

Yes pay people according to productivity. I'm sure you get many nurses, chefs, firemen, clerks and teachers by doing so. I'm sure people are happy to do expensive educations to get jobs with 3rd world wages for low productive service sector jobs, while industry workers get paid 400 times more thanks to productivity increases since the 1800s.

[@kaninma7237]

Employer greed needs to be taken into account. Do not underestimate the devastating effects of this on a great many people.

[@Frodojack]

What wasn't mentioned is that the Krueger and Card study was flawed and its results haven't been replicated. It also defies logic to believe that raising min. wages won't have an impact on employment or sales. Unless a particular market is enjoying a huge amount of growth, the money has to be made up for somewhere. That could mean trimming 40 hour work weeks to 30, laying off employees, or not hiring new employees. Usually raising prices and passing those costs on to consumers isn't the answer because there's a slim margin for what the consumer will pay for a given product. A fast food restaurant may have no problem selling a $5 burger, but if the price is doubled then the consumer may figure for that price she may prefer going to a non-fast food restaurant. If the owner doesn't make up the difference somewhere, then profits will be reduced and the business goes belly up, meaning that the $15 hour min. wage employee now gets $0 per hour along with reduced prospects at finding a new job. Moreover, at the higher wage, employers can be more selective and pick only those with years of experience or a higher than average level of education, which shuts unskilled workers or underskilled workers out of the market. To believe that raising the min. wage will have no adverse effects is to believe in magical thinking, it's to believe in unicorns and rainbows that sprouting outside people's windows.

[@morningmadera]

+Frodojack There are lots of cities/states where the minimum wage is over 10$/hour ... why didn't the market collapsed? You know how much McDonalds has to raise it's burger price to have 15$/hour wages? Around 16 cents to have the same billions of dollars in profit ... Why not force corporations to have a little bit less profit? Why do they need that huge amount?

[@jdjack519]

+Frodojack You're not entirely wrong. Your examples don't represent reality. But they are still sound in principle. Many small businesses I've seen are run in such a way that the owner has high enough profit margins to allow for a little wiggle room in labor. What is more realistic is that a 10-30% increase in wages occur, and that the owner may increase price by up to 5%, which likely causes a slight decrease in sales, depending on the situation of the substitutes. But if it's a law, then all comparable businesses are experiencing roughly the same thing, and the decrease largely comes from those who'll take mcdonalds (with their more inert pricing) over the mom and pop joint. But most of those people were probably already doing that, I expect that the actual number of converts will be low. Meanwhile the business owner does take a small hit in their bottom line. But this causes innovation. If a 10% increase in labor completely puts them out of business, then they're probably not be running a very good business. It seems more likely that they will find ways to cut waste, they will reconsider their vendors, their capital, their pricing, their products in general. They will slow down on hiring, but they will also be more likely to hire better employees, and more likely to let the bad ones go sooner. all of the reviews and replications of the Card-Krueger study still showed 2-4 times the increase in wage percentage than they saw in decreased minimum wage employment. This whole process also increases demand throughout the market as employees spend that new money, which will increase sales, allowing the bottom line to recover from previous damage done by the increased labor cost. It's almost like the government is forcing market competition in a way that is upsetting to risk-averse business owners, but overall good for everyone.

[@Frodojack]

jdjack519 You are entirely wrong. Nothing you wrote discredits or even challenges what I wrote. Parts of what you wrote actually agree, like "the business owner does take a small hit in their bottom line." In other parts you just restate what I wrote. The major difference is at the end where you proclaim that the employees will be spending that "new money." Evidently you didn't consider that the "new money" may not make much of a difference since the government created inflation will have driven up prices everywhere else too, and that the "new money" will have new taxes imposed on it. Have you ever actually ran a business?

[@jdjack519]

The major difference is scale. A burger jumping from $5 to $10 over a 30% minimum age increase is entirely unrealistic. Cutting labor by 25%, is more realistic, but not by much. You ignore the fact that quality of employees tends to improve when wages rise, which improves productivity and profits. You act like businesses can't raise prices for fear of consumers switching to a substitute, regardless of the fact that the substitutes will be largely affected in the same way. And you seem to act as though these businesses are already operating as efficiently as possible, creating no room for innovation, which tends to be observably untrue. Inflation occurs regardless of wage growth, if wages don't grow with inflation, you make low wage workers increasingly unable to afford the goods and services required to maintain good human capital, you gradually reducing demand, and you increase poverty; the externalities of which happen to be bad for the economy. Those new taxes can be spent by the government to create public sector jobs; to improve infrastructure, improve education, and fund research in science and technology. Which are all good for the economy. Broh, do you even Neo-Keynesian business cycles?

[@Frodojack]

jdjack519 No, customers will slow down on making their purchases. They won't buy as much and will stick to necessities. When economies are bad there's an upward trend in auto repair and decline in new car purchases for that very reason. Then of course the first thing you think of with increased taxes is more government spending. In case you haven't noticed, California (where they just raised the min. wage to $15/hr) has hundreds of billions in unfunded debt, and the federal govt has trillions in unfunded debt. A better choice would be to use the money to pay down debts, if there is an increase in tax income. Since all this affects behavior it may in fact reduce tax revenues. The added money to pay those wages doesn't come from thin air, as you seem to believe. And business cycles are a myth used to explain an event that can't be explained by Keynsianism (or its Neo-varieties). They are almost always caused by bad government legislation.

[@ericpigeon6179]

If you want to blur the logo at 8:55, you might want to blur the reflection right under it.

[@Bunjee77]

Economists have figured it out without having to go out and test it. Price controls damage the economy. If there is only a handful of businesses providing jobs to masses of people, you can be damned sure that is NOT a market failure. It has to be a market that's hindered by government making it difficult for entrepreneurial efforts

[@unsc2060]

PraxeoLiberty Bias much?

[@Bunjee77]

+Jarred Richards no, economics is not intent upon pronouncing value judgements. Rather it shows that government intervention does not achieve what it aims to achieve because of basic principles like supply and demand

[@unsc2060]

Still, there are many who need to eat, there are those with a great deal more wealth than they could ever figure out to do with it, it only seems rational to have a system in place to redistribute that wealth to those in need. There is a supply of wealth in the hands of the few and a demonstrable need and demand for the wealth on the part of the many, regardless of whether or not governments get involved or economists say they've earned it.

[@Bunjee77]

Jarred Richards sure, but the best system for enriching the lives of the majority is unhampered free market capitalism. Low standards of living are the consequences of statists thinking they can design the economy

[@unsc2060]

Free market capitalism, universally ends up with a few successful rich, and many many poor who's luck ran out. It's just the nature of reality, you need only look at the origins of the British Industrial Revolution. It was only after socialists like Robert Owen stepped in to stand up and publish works on the squalid living conditions before parliament that conditions and wages improved. By free-totally free unrestricted capitalism, I'd probably be working for pennies in a coal mine. Sure that may be totally fair, but socialism-something synthetic- a concept in which we share the wealth collectively and democratically-can people prosper-sure that may not be fair or natural-but its morally correct.

[@jarnMod]

In Thailand, the elected gov, not the current junta, said about raising the minimal wages. Food price had risen before the wages did. After the military junta took over, they freeze the wages of anything but raise soldier's wage. Food price...food price never come down. You know which direction it goes.

[@stza16]

I don't get it.

[@MaD1ck]

love this.. no propaganda economics. Everyone should study econ

[@fewfre9108]

"I'm not going to tell you what to think, BUT--", followed by over 3 minutes of fairly biased arguments. Everything before this point seemed fairly unbiased though, and I did enjoy the first part of the video.

[@ppcondiscord7809]

+Wes Wells lol, exactly. The Karl Marx statue should have given it away.

[@YoSpiff]

I found this a good and fairly unbiased look at the situation in layman's terms. (I do see some previous commenters thought it extremely biased) Thank you.

[@illuminati_watching8391]

Why wouldn't you just calculate the living wage for each state then chain it to inflation. This way you don't have a $15 wage in somewhere like Idaho and you would never have do bring up the issue again since its chained to inflation.

[@neverknowsbest4994]

+Illuminati_watching first of all you need to define "living wage"

[@boatrat]

+Illuminati_watching How is "chaining it to inflation" gonna help, when it's precisely the minimum wage mandate, that's going to CAUSE the inflation? And what gives you, the Government, or anyone else, the right to determine for me, what I should want or need for a "living wage"? Who gets to decide what that is?

[@illuminati_watching8391]

+boatrat74 When you raise the minimum wage you have to make it so corporations cant use it as an excuse to jack up prices so it doesn't cause inflation. Also you determine the living wage by looking at the minimum wage per state needed to survive. So you would look at things like how much the average rent is, price of gas, and price for basic utilities.

[@illuminati_watching8391]

+neverknows best Living wage is the amount some one needs to live. I thought the name was self explanatory.

[@snicks34]

+Illuminati_watching Because I would just move to Oregon. That's what the New Jersey study from 1992 proved, on a small scale

[@SociallyTriggered]

They explained how supply and demand affects labor wages well then ignored it when it came to the minimum wage. If you increase the minimum wage you also increase the number of people who would be willing to work for that price. Because it is a competition those with more skills will end up getting the job. So when you raise the minimum wage you prevent those who have no skills and are trying to develop skills from ever entering the work force. Basically, the poor stay poor because usually people are poor because they lack valuable skills. If you really wanted to help the poor you would eliminate the minimum wage and by doing so create more opportunities for them to gain valuable skills.

[@ExPwner]

Yeah, Card and Krueger was exposed as bunk. That's also ignoring HUGE numbers of other studies that showed the opposite.

[@SmartChannel01]

James Adams 9:10 they admitted it

[@리주민]

How about doing it like the military? Low base pay in salary with a rank system for bumps in pay and responsibilities, and a housing allowance pegged to local cost of living (single/married with kids rates). For example, if average rent is $3,000 for 1 bedroom [single, no kids] in vancouver, store clerk gets monthly base pay of $1,500 plus housing allowance of $3,000. If small businesses cant afford, they can pool together under the local chamber of commerce. Likewise, person B has 2 kids and lives in Moose Crossing where average rent is $500 for a 2 bedroom. He would get monthly $1,500 plus $500.

[@Moribus_Artibus]

You didn't even mention how the impact of a higher minimum wage can trigger a demand inflation. Yes, it will stimulate the economy but that will eventually lead to inflation which would make things just as they were before.

[@noooreally]

Yeah while it will increase the velocity of money, it may also cause inflation. Capitalism is a pretty silly system to deal with.

[@vule92994]

MARX SHOULD HAVE BEEN MENTIONED !!!

[@coopsnz1]

He was an idiot

[@chrisray9653]

Is there a measurement of how minimum wage effects the amount of new small businesses that emerge?

[@FieldMarshalFry]

+Qio Cio here: it doesn't, the only people who spout that are the major corporations or those in their pocket, as they do not want to pay people on the bottom a decent wage as they will loose 1% in profit

[@alex39977]

+Qio Cio Luckily small businesses dont exist in a vacuum, so whats being said here probably still applies.

[@arefallout]

so small businesses like a lemonade stand can pay 15 a hour?

[@LD-qj2te]

There is another issue: in smaller or less technical countries the utilize cheap labor as it is abundant , a wage could be low but if the cost can be offset by technology then technology may be a cheaper alternative. Much like developed counties . If the fixed cost of labor and benefits plus risk ( employee quitting, labor interruptions Risk) etc then technology can be cheaper but elimination of risk

[@testiou]

8:55 you see the Burger King logo in the reflection... And did you really need to censor that?

[@alangao6599]

Can you talk about dollarization? Thanks!

[@Tupadre97]

so in other words dont work minimum wage got it

[@SL-pg4dh]

Good, now tell that to the rest of your friends and their friends. If fewer of you work minimum wage job, that means i can make more money from minimum wage than most skill workers.

[@AHBarbarossa]

"I'm not going to tell you what to think, *but*..." is not really a good start if you want to be perceived objective. But overall you tried to explain the opposition to your obvious opinion. - Thank you! In this sense: Big thumbs up.

[@MollyGermek]

+August Heinrich Barbarossa Actually that's the best way to be objective, include all the relevant facts. It's not the best way to appear neutral on an issue, but that's a different problem.

[@AHBarbarossa]

+WhiskeyWhiskers Your statement is correct, but does not relate to my statement: Wording and body language, especially by Ms. Hill, communicate that she believes that the explanation of other school of thoughts are wrong. In previous videos other schools were misrepresented (think of the fire department in Supply and Demand #4, which is funny, but in no way an organisation which would exist in a free marked... i.e. think of the damage to neighboring insured buildings). --- This video does a better job to provide findings. However, what I also wanted to point out is, that there is still prejudgment of these findings as valid/important vs. ideological/small. That is not the same as having an opinion. I have a completely different opinion on basic principles that Ms. Hill present, but I can still appreciate the facts she presents and the work she put into her work. - This is why I would not belittle her findings, but would try to argue against them.

[@AHBarbarossa]

+ragmondead was a *little* bit more concise than I was :-p

[@bengun2910]

This is a great video, but I would've liked to hear about how raising the minimum wage would affect specifically the middle classes and skilled workers. I think also they didn't really address the effect raising the minimum wage would have on small business.

[@ray1983able]

Volunteer exchange , opportunity cost , Derived Demand , Wage Discremination , Collective bargaining .

[@whyamimrpink78]

When you break it down there is not one single good reason to even have a min. wage.

[@nolanchoy5569]

+whyamimrpink78 lol

[@whyamimrpink78]

+Tom Howard I know, right. I mean, it is funny how people thing a min. wage is actually a good idea.

[@nolanchoy5569]

Vital Mark lol do you even know your own history? The fact is that min wage is and has always been discriminatory. In British Columbia, a min wage was passed so that Canadians could compete against Japanese immigrants willing to work for less in the lumber industry.

[@whyamimrpink78]

+Vital Mark Cost of living in a healthy economy falls. Sounds like you need to fix your economic situation in Vancouver.

[@libertyfive7241]

Prevent exploitation by bad employers

[@cassiuslives4807]

Problem with the argument at 7:00 is to think the employee's only choice is to work at that grocery store and then, after that, the employee never skills up. The minimum wage isn't meant to be a "living wage", it's meant to be at the bottom rung of the ladder that one climbs up out of. The minimum wage means that those bound by the law never get on the bottom rung of that ladder and are trapped in poverty- just like progressive politicians would like, with large plantations of pliable voter stock, reliant on them for hand outs. When I started, I worked below minimum wage for cash. I knew that employers only employed workers with experience and the boss who paid me below minimum wage was a hard nosed bastard, but he mentored me. My next job was significantly above minimum wage.

[@Rlyeh_The_Dead]

Employers aren't going to change their bottom line. Consumers will need to pay more for the same products and low skill level jobs such as fast food workers running a day crew of 10 people will have to now make due with 5 or 6 workers and work much harder for that extra pay. They'll probably not be as efficient with less man power and therefore, dissatisfied customers who will no longer frequent their establishment. Small-moderate size business owners will slash benefits, 401k matching, PTO, etc, etc. It just seems like it'll do more harm than good.

[@constantine2197]

+dujfraz Exactly a $1 burger now becomes a $2 burger. All an artificial market modifier like minimum wage does is hurt and damage small businesses and drive up prices in general.

[@Rlyeh_The_Dead]

Vital Mark It's not fear mongering. It's economics. Could you please source this penny increase?

[@coopsnz1]

it hurts middle class , which is small business owners

[@ray1983able]

Labor Market , Voluntary Exchange , Skills , Wage Discrimination , Monopsy , Efficacy Wages , Union , Minium Wage .

[@lumpenproletariat6816]

Of course the Chicago School would be against higher minimum wages

[@victorg.9370]

Nice AC/DC belt and nice video

[@LukrixGaming]

Is that a Karl Marx bust in the background?

[@ConradJD777]

+Lukrix289 Yep

[@FieldMarshalFry]

+Lukrix289 money box actually, I got one just like it from the British Museum, rather ironic...

[@libertyfive7241]

I noticed that too

[@JediBearBob]

The only people who can be fairly described as "Classical Economists" are time-travelers from the 19th Century. Anyone who resembles one and hasn't recently stepped out of a time machine is called a "poor student."

[@drunkenrampage1588]

I believe we should lower the minimum wage.

[@jbthinker1423]

We should do the opposite

[@bradrobbo1798]

I guess you don't work minimum wage

[@BioDevil-b7v]

I have listened to both sides of the minimum wage debate and my conclusion is raise it to a living wage but do it gradually so small business can adjust and tie it to inflation.

[@MrTacticalinuit]

The upper class doesn't want poverty and unemployment to end. If everyone had secure jobs then people would be ok with striking to get better conditions and wages. Since people are rightly scared of unemployment and poverty, people don't unionise and strike.

[@charlidog2]

+MrTacticalinuit Exactly.

[@T3hJimmer]

+19Szabolcs91 They live in gated communities far from any crime.

[@Elador1000]

+MrTacticalinuit The most of the strikes were during the industrial revolution when work was a lot of thing but not secure...

[@coopsnz1]

you realise small business owners are middle class

[@heldertoons1776]

Ben Chesterman with 'upper class' he's refering to the bourgeoisie, the class owner of the means of production

[@TheMotionHero]

Labor Markets...Perfect topic for Easter! Why not?

[@Rolyataylor2]

"I need a job, how bout you pay me 1 cent over min wage" - Stan "Nope I'll hire someone else" - Manger Unfortunately there is no fair market for low skill labor because there are way to many people. The only way for the market to be fair is if unemployment is 0% because then there is a shortage of labor thus some negotiation is available to the everyday person.

[@richardwallace6643]

+Taylor Burke (Rolyataylor2) But dont you know, its so much better if all of the power is i the employers hands because then people have an incentive to go to college and pay for that with their $7.00 an hour and 50 hour workweeks. Or the solution is simple: get THREE jobs, work 60+ hours so you can afford to not die in a gutter

[@dragony3931]

invisible hand of supply and demand is like gravity

[@jonasmuller1880]

Good job at keeping this politically neutral! I dont watch CC economics vids very often. But this one seemed interesting, and it was!

[@7BMan777]

When most people argue about raising the minimum wage, they omit the increased cost of living. With personal experience, when the minimum wages in Ontario increased from $10.25 CAD to $11 CAD, the cost of living went from approx $10/hour to $11.50/hour. Employers also cut back the hours of their senior staff and often tried to pressure them into accepting a lower wage if they were already making more than $11. Currently in Ontario, if you make minimum wage ($11.25/h going to $11.40 in October), you need to work 35 hours per week. Most minimum wage jobs only offer part-time employment or classify your full time as 25 hours a week. Raising the minimum wage is NOT the answer.

[@goldenspuds9207]

Small businesses can't afford to pay employees 15 bucks an hour.

[@RedLeader327]

Then they have a horrible business model.

[@goldenspuds9207]

Well yunno not everyone is Donald Trump and starts with a small loan of one million dollars.

[@RedLeader327]

+Emily Justice Still, if a small business cannot afford to pay a living wage to its employees, it has already failed.

[@goldenspuds9207]

Like they said in the video, if your job is heating up pretzels, you aren't doing much work to earn a lot of money.

[@HenryTitor]

+Emily Justice in some case it is true. however you need to know that small business has, lets say, 1 workers. and big business has, lets say, 2000workers. the min wage right now is 7 bucks. But we make it 10 bucks. For SB, they need to spend 30 bucks more than before. And BB needs to spend 3000 more than before. I know this is just made up and real life is not that simple. So the BB will fires, due to calculation, 300 workers. But this can not be the case because when there are 1000 workers, the production is at max, but now there are only 700 workers, which means the production would decrease 30% in order to make a even. that means the 30% production job would has to lie on the shoulders of Small businesses. Or other wise, we will simply see 30 % less products in the mall. So at the end, 10 bucks min gives small businesses more opportunities

[@senaraasini]

I honestly love these two.

[@AdhirajGupte]

But this will lead to rise in inflation right?

[@johnrockford8165]

What do you mean?

[@kenm908]

It causes both demand pull inflation and cost push inflation

[@hoorano]

Where is the money for the raise in minimum wages going to come from? Employers must raise the cost of goods and service to cover the profit margin. This is what this video totally missed.

[@kenm908]

T Hirano They dont raise the costs of productions, wages are a cost of production so it is raised without their consent. They must raise the price in order to cover the decrease in profits from the increase in costs of production.

[@hooktonfonniks]

Or they must decrease the costs of production (i.e. lay off workers or hire less to begin with).

[@LearnexDaily1234]

Which one of the following factor of production has most inelastic supply ? 1 land 2 labour 3 capital 4 enterprises

[@Spironic]

6:10 This argument that raising minimum wage will lead to greater unemployment for unskilled workers because their jobs will be taken by more skilled workers makes absolutely zero sense. An argument that businesses will be incentivized to automate jobs and remove them from the job market makes sense. An argument that businesses will go under because they cannot afford to pay employees a higher wage makes sense. But this idea that skilled workers will leave their higher-paying jobs because they can get paid "the same" to do a minimum wage job is absurd; there's no way the labor market wouldn't adjust skilled job wages to incentivize skilled workers to return to their trade.

[@Mr2587838]

Unemployed skilled worker will absolutely take a lower paying job.

[@TheRepublicOfUngeria]

If, instead of a mimnmum wage, we set a Universal Basic Income and tied its value to a percent of GDP per capita at a rate that guaranteed a living wage in most places in the country then we could solve the market discrepancies created by minimum wage laws. We have tried this in Canada in the 1970's and it showed net positive results.