>Another evil I forgot to mention about minimum wage earier is the trap effect. Imagine your effective wage is worth less than minimum wage, but you've managed to land a dead-end job making minimum wage. Now you have a disincentive to refocus on something that would make you more valuable than minimum wage.
There are plenty of incentives to make better than minimum wage. Minimum wage doesn't exactly net you a luxurious quality of life. On one hand, it makes sense that if you allow the purchase of labour to be completely subject to the rules of supply and demand, information about what is needed where and most efficiently will spread through the network of economic activities. But labour has several disadvantages when compared to other commodities. Focusing on just one, it is expensive and time consuming for a person to upgrade the kind of labour they can provide. Education isn't cheap, and you have to support yourself while you obtain it. Being able to earn minimum wage while going through school helps to open up the opportunity to learn more valuable skills for many people. Unless your intention is to leave people from disadvantaged economic backgrounds out in the cold and allow their difficulties to propagate from generation to generation, there needs to be some mechanism to level the playing field, if only a little. My own tendencies would be towards even more socialist measures than just the minimum wage, but at least it puts a floor on how bad things can get.
Being able to earn minimum wage while going through
school helps to open up the opportunity to learn more
valuable skills for many people.
Yeah, that makes sense. Minimum wage gives those who have it a better opportunity to improve their situation than if they didn't have it, opposite to what I said in previous.
There are plenty of incentives to make better than minimum wage. Minimum wage doesn't exactly net you a luxurious quality of life. On one hand, it makes sense that if you allow the purchase of labour to be completely subject to the rules of supply and demand, information about what is needed where and most efficiently will spread through the network of economic activities. But labour has several disadvantages when compared to other commodities. Focusing on just one, it is expensive and time consuming for a person to upgrade the kind of labour they can provide. Education isn't cheap, and you have to support yourself while you obtain it. Being able to earn minimum wage while going through school helps to open up the opportunity to learn more valuable skills for many people. Unless your intention is to leave people from disadvantaged economic backgrounds out in the cold and allow their difficulties to propagate from generation to generation, there needs to be some mechanism to level the playing field, if only a little. My own tendencies would be towards even more socialist measures than just the minimum wage, but at least it puts a floor on how bad things can get.