ResponseToBitButter

 

I'm curious what you think would happen if you flip the argument in the description of the video around.  

 

Going by the same logic, suppose a worker would not take a $3.00/hr job if the marginal benefit (wage) outweighs the cost (cost of living). If the worker operated under the same constraints and behaviors as the firm, the worker would simply say that working that job was not a good idea, and would not do it.  This, however, is not an option.  A firm can make less profit, a person cannot simply cease to earn a living and still get by (of course assuming the person does not look to welfare, help from friends, etc as discussed in the video).  

 

So, my main problem with this argument is that we're examining two systems.  The first ensures that in the labor market, a firm never has to purchase labor for more than it's worth, but some workers will work for marginal benefit that is lower than their marginal cost of working.  In this system, by design the worker gets the raw deal (and all of this is assuming we're talking about workers at the very bottom of the market, apologies for not specifying that sooner).

 

The second system ensures that in the labor market, a firm will likely have to purchase some labor for more than it's worth, but no workers will be forced into a situation where their marginal cost of labor is greater than their marginal benefit of labor.

 

Both situations have drawbacks, but the first implicitly favors the firm's side of the bargaining table while the second explicitly favors the workers's side. In this bargaining situation, the firm's incentives are largely profit-driven (purely profit-driven assuming we're not talking about a firm right on the verge of becoming unprofitable as a whole).  However, the worker's incentives are both profit-driven as well as existential.  Lastly, the firm is entering this bargaining situation from a comparitively more voluntary position.

 

These last couple points all point to a system where by default a market free of a minumum wage starts the firm at a higher bargaining position than the worker.  While the minimum wage is not necessarily an ideal way to even this out, it seeks to recognize the fact that workers at the bottom of the ladder are at a disadvantages position and artifically strengthen their bargaining position.