On Mon, 03 Aug 2015 20:59:57 -0500, Ignoramus26006
wrote:

Raising minimum wage to $15 per hour is a very interesting experiment,
whose objective is to bypass or overrule mechanisms of labor price
formation and basic workings of microeconomics.

It is also a very bold experiment, in the sense that the legally
mandated "labor rate override" is quantitatively large compared to the
rates at which job markets cleared previously.

What makes it so interesting is that this experiment is confined to
small locales.

My expectation is that just like the laws of physics, the laws of
economics, competition and pricing will work relentlessly, and
industries with low pay will either close down, or move out of these
cities. The low paid workers would either have to follow those
industries out of those cities, or become unemployed.

It would be interesting to try to keep track of a few statistics. For
example, count the number of jobs that paid under the new minimum
wage. After a couple of years, see how many of those jobs still
remain.

What should happen, is that the rate of economic progress, defined as
people being replaced by computers, will increase somewhat. For
example, the number of people employed in fast food industry, per
million meals sold, will first decline in high minimum wage cities.

In other words, it is crazy to hope that the class of people who
cannot compete with computers now, will benefit from making them even
more expensive to hire.

i

Thailand is a relatively low cost country and for years has enjoyed
extensive employment in industries that were built to take advantage
of the low costs here. A couple of years ago the political group then
in power doubled minimum salaries country wide. Minimum salaries had
previously been on a province by province basis relative to living
costs in that province.

Last week there was a tear jerking article in the news about
"industries" in a city in central Thailand being closed. The reason
given was that labor costs had risen to the point where it was no
longer economical to continue and reference was made to industries
moving to Burma and Cambodia where labor costs are substantially
cheaper.

One factory mentioned had laid off 3,000 workers and the article went
into some detail about all the associated businesses that were failing
as a result - food vendors, rooming houses, etc.
--
cheers,

John B.