I think he is again, but someone please confirm my intuition.
If you make someone take a break for a quarter of every hour they are working on the job you are roughly reducing their productivity by a quarter. You are shifting the MRP curve to the left. That will give you a new equilibrium where you are going to have lower employment and lower wages.
The same goes for a tax on wages that government imposes on the firm (his initial counter-argument).
Neither of these are at all comparable to the shift along the MC curve that a minimum wage is alleged to accomplish.
Another way of putting it is this: nothing about taxing the firm prevents it from exercising the exact same monopsony power - setting quantity such that MC=MRP and the wage as low as it goes. They just do that with a new MRP curve. Nothing about deliberately making workers less productive (presumably in a way that those workers would like) prevents the firm from exercising the exact same monopsony power - setting quantity such that MC=MRP and the wage as low as it goes. Again, they just do that with a new MRP curve.
Setting a minimum wage does prevent them from exercising monopsony power and as long as it is modest enough it will present them with a wage bargain that would be found mutually beneficial. Should we look at other margins of exploitation? Ya, sure. But that's a different issue.
I feel like I'm taking crazy pills here. Am I? What am I missing about these arguments?
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Loved that movie. Had quite forgotten about it. Thanks for reminding me. :)
ReplyDelete"If you make someone take a break for a quarter of every hour they are working on the job you are roughly reducing their productivity by a quarter. You are shifting the MRP curve to the left. "
ReplyDeleteIf laborers are NOT laboring during those 15 minutes, then their MRP won't necessarily decrease, would it? Per working hour, there is no necessary reduction in output, mathematically speaking.
The only way that mandatory non-labor periods introduced into labor periods would reduce a worker's MRP would be if their regular work is affected by the continuous breaks in a positive or negative way.
Or is the assumption that the 15 minutes per hour of doing nothing still "counts" in a worker's labor hour output?
If that's true, then that would imply that the MRP for an 8 hour workday worker can be increased if they stopped taking 16 hour breaks per day. But that is rather silly, which means so is including the 15 minute breaks per hour.
The whole point of mandating a break is that the workers are at work and on the clock and getting paid. One hour at work produces three quarters as much product.
DeleteRead how Don phrased it: "Suppose the government were to mandate, not an hourly minimum wage, but, instead, an hourly minimum break time. Specifically, suppose Uncle Sam were to oblige employers to force each worker earning less than $9.00 per hour to take at least 15 minutes of break time each and every hour. Is it plausible that employers would continue to pay their low-wage workers for 45 minutes of work per hour the same wage that these employers paid for 60 minutes of work per hour?"
If there was just a mandate that the day be chopped up that might not have quite as big of an impact but it has even less to do with the issue at hand than the original proposal.
I pay you $9 to make 4 widgets per hour. Now I have to pay you $9 to make 3 widgets in the same time. Assuming you are willing to work longer, so I can get 32 widgets out of you a day, this is equivalent to paying you $12 and letting you beaver away at 4 widgets per hour.
ReplyDeleteMy point being, is there implicitly a limit on this growth of the workday? If not, Don is right. If there is, Daniel is right.
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