McDonalds: "What, my peon, you don't work two full time jobs?"

[Admiral Yi]

Shelf: 

1. Your claim of a monopsonistic labor market is patently ridiculous.  It makes as much sense as saying all people working low skilled jobs constitute a monopoly.

2.  I know of almost no economists who predict a rise in minimum wage would generate zero increase in unemployment.

What I am aware of, is a large number of lay commentators who took a look at the last round of minimum wage increase (under Bubba I think) and gleefully reported that the impact on employment was trivial.  What they failed to mention, of course, is that the new national minimum wage was still lower than the state minimum wage in most places.  In the few places where it did actually raise the floor, such as Alabama and American Samoa, it did impact employment.

[Josquius]

What about all those people who no longer need to work 2 jobs? That would help employment a fair bit.
Given that workers are always needed and companies will usually pay the lowest they can get away with to the fewest people they can get away with it doesn't rally follow that unemployment would rise in many places. The only possible danger zone is with small employers, charity workers and that sort of thing

I did my time as a fast food cashier in high school, around 1989 & 1990.  Was not difficult then, and it doesn't appear to be difficult now.  I hated it-- it was the most demeaning thing I ever did-- but it was not hard.

Doing such things as a temporary part time job and doing it all day, day in, day out, for year upon year, are rather different experiences.
Plus times at tougher

[Admiral Yi]

Given that workers are always needed and companies will usually pay the lowest they can get away with to the fewest people they can get away with it doesn't rally follow that unemployment would rise in many places. The only possible danger zone is with small employers, charity workers and that sort of thing

I don't understand your logic.

[Sheilbh]

1. Your claim of a monopsonistic labor market is patently ridiculous.  It makes as much sense as saying all people working low skilled jobs constitute a monopoly.

Good to know there's a word for it. Why's it patently ridiculous?

2.  I know of almost no economists who predict a rise in minimum wage would generate zero increase in unemployment.

Here's a book on the subject:
http://press.princeton.edu/titles/5632.html
I believe the other big economist on this is David Neumark who I mischaracterised. He thinks there is a significant enough effect but that it's limited and not across the board.

Here's a piece on possible reasons:
http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

From that I see a bit on monopsonistic labour which doesn't seem ridiculous to me:

Dynamic monopsony model
The dynamic monopsony model is a third theoretical approach to the labor market that opens up additional channels of adjustment. The most important new channel is the possibility that the minimum wage reduces the costs of turnover to low-wage employers.

The key difference between the standard competitive model and the monopsony model concerns the circumstances employers face when it comes to recruiting and retaining staff. In the competitive model, employers can hire all the labor they desire by paying the prevailing market wage; and, in the event that a worker quits, employers can instantly replace that worker with an identically productive worker at the same wage. By contrast, in the dynamic monopsony model, employers, even those
operating in low-wage labor markets, face real costs associated with hiring new workers. These costs flow from inevitable frictions in the labor market. Workers incur costs (time, effort, financial expenditures) to find job openings; and, workers must limit their job searches to openings that fit their geographic, transportation, and scheduling constraints. To overcome these frictions, employers must either pay above the going wage (to draw extra attention to the particular vacancy) or wait
(with implied costs in lost output) until they are able to fill the vacancy with a worker willing to accept that particular opening at the going rate.

At first glance, these frictions seem to work against low-wage employers, who must pay higher wages to attract additional workers. In reality, however, these frictions put low-wage workers at a significant disadvantage relative to their employers. Employers must pay above the going rate to fill vacancies quickly (or wait longer until the vacancy is filled at the going rate) because unemployed workers face real barriers (transportation, scheduling, information, financial, and others) to locating
suitable jobs. Low-wage employers are well-positioned to take advantage of these difficulties. Even though employers must pay new workers a higher wage to fill a vacancy quickly, employers are able to pay their current workers – who had to overcome various frictions to find their current job – below their "marginal product."

In the monopsony model, employers are unlikely to pay higher wages in order to fill vacancies because they would then have to raise the pay of their existing workers to match the pay offered to their last hire. As a result, in monopsonistic settings, employers habitually operate with unfilled vacancies, rather than raising the wage for their entire workforce. In this context, raising the minimum wage can actually increase employment by raising the wages of the existing workforce to the "competitive" level (no existing jobs are lost because these workers were being paid below their "marginal product") and filling existing vacancies (which increases overall employment).

Again I don't mind low-paid employees having a low wage, or having to work two jobs to be enjoying an 'average' sort of life. If that were the worry, or income inequality were then I think the EITC would probably be the best solution.

[Admiral Yi]

Good to know there's a word for it. Why's it patently ridiculous?

Because I can walk down the street, or scan the classified ads, and see that there is more than one company in the world that employs people.

[Josquius]

Given that workers are always needed and companies will usually pay the lowest they can get away with to the fewest people they can get away with it doesn't rally follow that unemployment would rise in many places. The only possible danger zone is with small employers, charity workers and that sort of thing

I don't understand your logic.

So I'm a business owner. I need a minimum of two guys to staff my business. So I employ 2 guys for minimum wage. That I can afford to pay them more or hire a third guy is irrelevant, I do the minimum I can get away with. If the minimum wage goes up then there's nothing  I can do, I have to pay my guys more. I can't fire the extra 3rd guy as I never employed him anyway.

[Admiral Yi]

So I'm a business owner. I need a minimum of two guys to staff my business. So I employ 2 guys for minimum wage. That I can afford to pay them more or hire a third guy is irrelevant, I do the minimum I can get away with. If the minimum wage goes up then there's nothing  I can do, I have to pay my guys more. I can't fire the extra 3rd guy as I never employed him anyway.

You can close your shop.

[Sheilbh]

Because I can walk down the street, or scan the classified ads, and see that there is more than one company in the world that employs people.

I compared in behaviour and said single buyers, I said it was monopsonistic in a sort-of Biden 'literally' not a really 'literally'

That doesn't change anything I've said and actually the 'dynamic monopsony' theory up there makes sense to me, I also think the institutional model in that link has something to it and there's something to the competitive model but I think more for higher wage workers.

[dps]

Most of the cashier fuck-ups I've experienced are usually honest errors that any competent operator could make, and if it takes a long time to fix, it's just because not enough responsibility has been delegated to the $8/hr serf to fix it due to shrinkage concerns.

There's a good deal of truth to that.  But most of the time, if your sandwich is wrong, it was actually wrung up correctly, and the kitchen staff made it wrong.  Or the folks in the back made it right, but you got handed someone else's order instead.  And as I said before, often the cashier has wrung up exactly what the customer asked for, and it was made that way, but what the customer asked for wasn't what the customer actually meant.

BTW, contrary to what some posts in this thread have claimed, not all fast food registers have icons on them.  Neither of the fast food places I've worked at had registers with icons.

[Admiral Yi]

I compared in behaviour and said single buyers, I said it was monopsonistic in a sort-of Biden 'literally' not a really 'literally'

That doesn't change anything I've said and actually the 'dynamic monopsony' theory up there makes sense to me, I also think the institutional model in that link has something to it and there's something to the competitive model but I think more for higher wage workers.

Your article is making a very esoteric point about labor market dynamics which has nothing to do with a single buyer.

[Sheilbh]

Your article is making a very esoteric point about labor market dynamics which has nothing to do with a single buyer.

I used the wrong analogy. Mea culpa.

That piece is about why there isn't a clear link between raising the minimum wage and employment what else is going on. It's discussing different adjustment channels there. One of the models uses the same term of art that I misused. I thought there may be a link.

[Admiral Yi]

I used the wrong analogy. Mea culpa.

That piece is about why there isn't a clear link between raising the minimum wage and employment what else is going on. It's discussing different adjustment channels there. One of the models uses the same term of art that I misused. I thought there may be a link.

It's proposing a theory of how low wage labor might not act like a perfectly competitive market.

Does he back up his theorizing with any data?

[Sheilbh]

Data for what?

[Admiral Yi]

Data to substantiate the claim that low wage labor markets act the he says.

[Sheilbh]

Data to substantiate the claim that low wage labor markets act the he says.

He basically plumps for this argument:

The standard competitive model makes stark predictions about the employment effects of the minimum wage: a binding minimum wage will price at least some low-wage workers out of jobs and will unambiguously lower employment. Why, then, does the bulk of the best statistical evidence on the employment effects of the minimum wage cluster at zero or only small employment effects?

This section attempts to answer that question, adopting and adapting the simple "channels of adjustment" framework proposed by Hirsch, Kaufman, and Zelenska. Hirsch, Kaufman, and Zelenska argue for a "channels of adjustment" approach through which cost increases associated with the minimum wage change "...the behavior of firms, with impacts on workers, consumers, owners, and other agents."

Hirsch, Kaufman, and Zelenska analyze the possible channels of adjustment emphasized by three different theoretical approaches to the minimum wage: the standard competitive model; the "institutional" model; and the (dynamic) "monopsony" model.

That's where the 'dynamic monopsony' bit came from.