Which Would Be Worse: a Minimum Wage or a Maximum Wage?

[helmuth_hubener]

Which one would be worse?

Assume an equal number of wage earners directly affected. For instance, a maximum wage lopping off the top 3% of wage earners, or a minimum wage cutting off the bottom 3% of wage earners.

[dannno]

I think the answer is 'it depends'.

A maximum wage of $20/hour would be worse than a minimum wage of $1/hour

A minimum wage of $15/hour would be worse than a maximum wage equivalent to $10 million / year, I would think (and certainly worse than a max. wage equivalent to $10 billion / year)

[juleswin]

I think the answer is 'it depends'.

A maximum wage of $20/hour would be worse than a minimum wage of $1/hour

A minimum wage of $15/hour would be worse than a maximum wage equivalent to $10 million / year, I would think (and certainly worse than a max. wage equivalent to $10 billion / year)

Exactly, a minimum wage of $1/hr would have next to zero impact on the economy just as a maximum wage of $1b/yr. It all depends on the amount of people and economic activity such a law will restrict from doing business.

[helmuth_hubener]

Ah, man, you guys! Bringing reality into it in the very first post! What's a guy to do?

Here's my answer: Normalize. Assume a minimum/maximum that outlaws an equal number of wage earners. How about a minimum wage at a level below which 3% of wage earners or about 2.3 million currently fall, vs. a maximum above which 3% of wage earners or about 2.3 million currently fall? Which would be worse?

[Cabal]

Minimum.

[gwax23]

What danno sai

[Danke]

Whatever I'm paid should be the maximum.

[angelatc]

Ah, man, you guys! Bringing reality into it in the very first post! What's a guy to do?

Here's my answer: Normalize. Assume a minimum/maximum that outlaws an equal number of wage earners. How about a minimum wage at a level below which 3% of wage earners or about 2.3 million currently fall, vs. a maximum above which 3% of wage earners or about 2.3 million currently fall? Which would be worse?

Price floors create surpluses. Price caps create shortages. Both are problematic.

[otherone]

Price floors create surpluses. Price caps create shortages. Both are problematic.

This.
They both suck.
EFF the wage police. I ain't payin' for them.

[jclay2]

I answered maximum for the reason that I don't want a society to punish productivity as opposed to rewarding lack of marketability.

[ProIndividual]

I think maximum...as minimum wage, no matter how high, will eventually cause a shift economically to compensate. For example, if min wage was $1,000 an hour, it would take a while, but eventually everything, including wages, would just cost more, leading us back to a kind of equilibrium where relative cost of living and standard of living normalize (albeit highly distorted). This is why we "need" to keep raising min wage now. Even with no inflation from usual sources, min wage inflates everything until "water seeks its own level". Min wage, if not continuously raised and with inflation controlled for, eventually becomes a non-factor in its original intent...prices all normalize around the $1,000 and hour wages, and things go back to about how they were before the min wage. Hence, they need to try to keep raising it all the time. This is also why the unemployment problem of min wage basically disappears if we never raise it again. That's why its advocates need to keep raising it all the time...even if inflation didn't exist, the economy's prices adjust in time, and the min wage becomes a non-factor. If all prices rise eventually to compensate, eventually the price of labor also rises until min wage is overtaken and becomes irrelevant. Imagine if the min wage was still 50 cents an hour, for example.

Max wage, OTOH, would not do this. Once set, it would, even the absence of inflation, have no way to cause this ripple effect in the economy's prices, and therefore lead to a distortion (a disincentive) that can't be resolved on its own over time. What creates wealth for a population is mostly technological advance that makes production cheaper, keeps prices falling accounted for inflation, and therefore causing standards of living to rise by reducing costs of living. If max wage were incepted, capital can't be accumulated in the few hands of those who most efficiently accumulate and allocate it, creating immense permanent inefficiency, and thereby less technological advance (or distorted and perverted tech advances)...and that $#@!s the poor and low skilled workers worse than min wage unemployment increases. What's worse, if inflation occurs it would mean the max wage, if not raised along with inflation, would continue to expand its distortions...whereas min wage distortions actually lessen with inflation (as the wage of 50 cents an hour would now be irrelevant, for example).

But both are horrible. The fact the real-world max wage effects less people doesn't, to me, mean it is the lesser of the two evils. That's because it only DIRECTLY effects less people...but in the long run, a max wage actually effects MORE people due to its widespread cause of inefficiency. So, whether they both effected the same amount of people directly or indirectly, the max wage, in totality, effects more people negatively. Also, who is effected indirectly matters, as the poor and unskilled are harmed by the max wage as much or more than by the min wage.

So, real-world or according to your hypothetical, I'd still answer max wage. And the proponents of max wage can't even say "but all the revenue brought in by max wage to the state would help the poor through wealth redistribution"...because there are no additional tax receipts under max wage. Under max wage, it is ILLEGAL to pay over a certain amount for any job, so no additional revenue is present. It just distorts, with not even a statist authoritarian way to try and make the harm "more equitable".

Both blow big donkey c--k.

[erowe1]

It depends what each is. The higher a minimum wage is, the worse it is. And the lower a maximum wage is, the worse it is.

If the minimum wage is low enough, it won't matter. And if the maximum wage is high enough, it won't matter.

For any given minimum wage there must be some maximum wage that is equal to it in malevolence.

[Paul Or Nothing II]

I think maximum...as minimum wage, no matter how high, will eventually cause a shift economically to compensate. For example, if min wage was $1,000 an hour, it would take a while, but eventually everything, including wages, would just cost more, leading us back to a kind of equilibrium where relative cost of living and standard of living normalize (albeit highly distorted). This is why we "need" to keep raising min wage now. Even with no inflation from usual sources, min wage inflates everything until "water seeks its own level". Min wage, if not continuously raised and with inflation controlled for, eventually becomes a non-factor in its original intent...prices all normalize around the $1,000 and hour wages, and things go back to about how they were before the min wage. Hence, they need to try to keep raising it all the time. This is also why the unemployment problem of min wage basically disappears if we never raise it again. That's why its advocates need to keep raising it all the time...even if inflation didn't exist, the economy's prices adjust in time, and the min wage becomes a non-factor. If all prices rise eventually to compensate, eventually the price of labor also rises until min wage is overtaken and becomes irrelevant. Imagine if the min wage was still 50 cents an hour, for example.

Max wage, OTOH, would not do this. Once set, it would, even the absence of inflation, have no way to cause this ripple effect in the economy's prices, and therefore lead to a distortion (a disincentive) that can't be resolved on its own over time. What creates wealth for a population is mostly technological advance that makes production cheaper, keeps prices falling accounted for inflation, and therefore causing standards of living to rise by reducing costs of living. If max wage were incepted, capital can't be accumulated in the few hands of those who most efficiently accumulate and allocate it, creating immense permanent inefficiency, and thereby less technological advance (or distorted and perverted tech advances)...and that $#@!s the poor and low skilled workers worse than min wage unemployment increases. What's worse, if inflation occurs it would mean the max wage, if not raised along with inflation, would continue to expand its distortions...whereas min wage distortions actually lessen with inflation (as the wage of 50 cents an hour would now be irrelevant, for example).

But both are horrible. The fact the real-world max wage effects less people doesn't, to me, mean it is the lesser of the two evils. That's because it only DIRECTLY effects less people...but in the long run, a max wage actually effects MORE people due to its widespread cause of inefficiency. So, whether they both effected the same amount of people directly or indirectly, the max wage, in totality, effects more people negatively. Also, who is effected indirectly matters, as the poor and unskilled are harmed by the max wage as much or more than by the min wage.

So, real-world or according to your hypothetical, I'd still answer max wage. And the proponents of max wage can't even say "but all the revenue brought in by max wage to the state would help the poor through wealth redistribution"...because there are no additional tax receipts under max wage. Under max wage, it is ILLEGAL to pay over a certain amount for any job, so no additional revenue is present. It just distorts, with not even a statist authoritarian way to try and make the harm "more equitable".

Both blow big donkey c--k.

+1

Don't think I can add much to the above; except that neither can be sustained since just as minimum wage leads to illegal hiring of lower-wage workers, same will occur with any maximum wage that is set; markets can't be controlled.

[helmuth_hubener]

I personally would tend to agree with ProIndividual. Put simply: High-income earners are far more valuable to the economy than low-income earners.

Unemploying low-income earners will lead to a dependent underclass and increased crime. It will lead to increased automation, understaffing, and less pleasant retail experiences in general.

But prohibiting high income earners from being compensated their full market amount will disincentivize them from putting forth their full effort. Why put out 1 million dollars worth of effort when 250,000 is the maximum anyway, and you can be profitable to the company at $250,000 with just 20 hours a week? This will massively decrease the amount of innovation and effort driving the economy forward, and thus massively decrease the amount of wealth available to everyone. Since high-income earners are disproportionately intelligent, they will also find many ways around the maximum wage, including the most important one: "See ya! Off to Shenzhen."

While the consequences of the minimum wage to the economy and society are very bad, the consequences of the maximum wage to the economy and society would be catastrophic.

On the other hand, the consequences of the minimum wage to those individuals and families who it bans from working are catastrophic, while the consequences of a maximum wage to those individuals it bans from being fairly compensated are not going to be nearly so bad.

[helmuth_hubener]

Thomas Piketty endorses what would be, for all practical purposes, a maximum wage in his new best-selling book Capital. Take a gander:

“A rate of 80 percent applied to incomes above $500,000 or $1 million a year would not bring the government much in the way of revenue, because it would quickly fulfill its objective: to drastically reduce remuneration at this level but without reducing the productivity of the US economy, so that pay would rise at lower levels.” (p. 513)

This would basically set the maximum wage at $500,000 (or $1 million, depending which variant is chosen), since getting only 20% of the money through the middleman gauntlet is so wasteful no one would do it.

Thoughts?

[angelatc]

Thomas Piketty endorses what would be, for all practical purposes, a maximum wage in his new best-selling book Capital. Take a gander:

“A rate of 80 percent applied to incomes above $500,000 or $1 million a year would not bring the government much in the way of revenue, because it would quickly fulfill its objective: to drastically reduce remuneration at this level but without reducing the productivity of the US economy, so that pay would rise at lower levels.” (p. 513)

This would basically set the maximum wage at $500,000 (or $1 million, depending which variant is chosen), since getting only 20% of the money through the middleman gauntlet is so wasteful no one would do it.

Thoughts?

Its not his money to distribute.

[helmuth_hubener]

Its not his money to distribute.

But it's his society to improve. He's a member of society. Isn't it his right -- his obligation, even! -- to do all he can to improve it by advancing proposals for making it a more fair and equitable place?