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Brandon Berg's avatar

Monopsony power, and thus the argument for minimum wage, is actually weakest among employers of unskilled labor in large cities due to the fact that there are likely to be many employers of unskilled labor in any given part of the city. Monopsony power is stronger in sparsely populated areas, and for workers with highly specialized skills.

Naturally, the strictest minimum wage laws are found in large cities and are binding primarily for unskilled workers, exactly the subset of jobs for which the argument for regulating wages is weakest.

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George Kikiros's avatar

Most of the Western Nations in the World look at the USA aghast at the way freedom is equated to unrestrained market forces.

The argument for and against a higher minimum wage is best discussed in the context of why other Nations such as Australia are not collapsing in economic ruin with high unemployment. Australia has a minimum wage based on a week of 38 ordinary hours ($23.23 per hour) as a base rate for adult employees in the national system who are award/agreement free. This equates to about USD 15.56 at current exchange rates.

Juniors (under 21 YO) get a percentage of an adult rate. As best I can determine for this example, a 16 YO Casual, working in the Fast Food Industry at the lowest rung would be paid $15.45 (USD 10.35).

Guess what!

The Hospitality Industry is always wanting more staff and this includes restaurants, bars and generally relies on tourists here in Australia on a Working Visa to fill many of the jobs.

A living wage is considered a minimum requirement (I do also realize that even Australia doesn't get it right all the time and we still have pockets of poverty).

Why should I, living well in retirement (but previously a well paid Civil Engineer) expect to go out and be served by a waiter earning USD 2.35 (where tipping is available). The employer should pay a 'proper' wage, raise his prices to a 'real' cost and cut out the insidious expectation of a surly waiter if you don't tip adequately (now in the USA a minimum of 15% but an expectation of 18% and even 20% all pre-calculated on your bill). Whatever happened to the good old 10% (now sneered at).

When travelling in the USA in 2018, I would almost have a heart attack each time in restaurants when I had calculated in my mind, say USD 65 for a nice but simple meal with a glass of wine or a beer but after provincial taxes, city taxes, which way the wind is blowing taxes (kidding) and then feeling obliged to choose at least 15% so that I was not abused on the way out (never happened but that is the perceived pressure) to find the bill with tip was say USD 85.

We get quite good service at restaurants in Australia (where serving is not a National Past-time as everyone is considered equal) not because of an expectation of a good tip but because they won't last in their job if the employer sees the waiter being disrespectful to the customer. Gee, someone in the Hospitality Industry being hospitable. Isn't that a first.

Come on guys. Just come into the 21st Century and stop treating your 'lowest' in your country as virtual slaves. Stop saying, 'They should be grateful they have a job because I deign to do this or that'. They should not have to work 2 or 3 jobs and still not scrape together enough to live a half decent life.

Economists would agree that a higher minimum wage is necessary if 'they' depended on it.

Choose compassion (the necessity to work but not struggle) over compulsion (the necessity to work and still struggle).

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