Yes. If the job actually produces more than $(X+1)/hour worth of productivity to the employer.
The employer, unable to continue their advantageous position of paying $X/hour (it being illegal), but finding the job still worth retaining (it generating more than $(X+1)/hour) retains the employee.
The employee's salary goes from $X/hour to $(X+1)/hour.
Why would an employer ever start a business if he had to pay every dollar of "profit" to the employees?
Besides, who is to say what that productivity to the employer is?
If I start a grocery business and hire you to work the cash register - it's pretty easy for you to see $5k/day come through the drawer and think, "I'm responsible for $5k/day."
In reality, though, your contribution is minor compared to the costs of rent, paying for business licenses, paying taxes, stocking inventory, paying for inventory, paying for advertising, and managing the other employees of the business.
Your "productivity" is actually what you negotiate for your salary. My productivity as the business owner is what's left after all my costs including your salary.
> Why would an employer ever start a business if he had to pay every dollar of "profit" to the employees?
No one, ever. Maybe, on a technicality, the founders of 501(c)(3)s. I didn't use the word profit.
> Besides, who is to say what that productivity to the employer is?
The employer is to say the productivity of the employee. They won't do this explicitly, and it's very rarely a value that could be directly calculable.
This could be a case where I'm not using the best possible term. When I say the "productivity to an employer" of an employee, I'm actually talking about the value to the employer (http://en.wikipedia.org/wiki/Value_(economics)).
One way to answer the question of what the productivity of an employee is would be to ask this question:
"Were there only one laborer remaining unemployed, and they were free to name their salary, what is the maximum price that I would be willing to pay someone to perform this work?"
>If I start a grocery business and hire you to work the cash register - it's pretty easy for you to see $5k/day come through the drawer and think, "I'm responsible for $5k/day."
See above. All of this is from the employer's perspective. It doesn't matter what the employee thinks their "worth" is; what matters is what value the employer gains from the relationship.
> Your "productivity" is actually what you negotiate for your salary. My productivity as the business owner is what's left after all my costs including your salary.
This actually hits at my key point. Your "productivity" is actually your VALUE. What you negotiate for your salary is your PRICE (http://en.wikipedia.org/wiki/Price). I argue that these two are not necessarily coupled. Further, I suspect in the current U.S. economy at the low-income end of the job market these _are not_ coupled.
EDIT: Changed the final sentence from "I argue...that I suspect" to simply "I suspect...".
Okay, so in your world the government should be responsible for all negotiations? Some people and some businesses (run by people) can't negotiate well - so this logically follows from your caustic and emotional comment.
The government should set the price of my airline ticket, the price of milk at the grocery store, my salary, the salaries of professional basketball players, the prices that business use between each other, etc.?
Let me just truly get a full view of your philosophy and what kind of zero Liberty world you would have us all live in.
Protecting the weakest in society != zero Liberty.
The world ain't black and white and I didn't say the government should be responsible for all negotiations.
At the lower end, the people who are stuck on minimum wage, the people who cannot improve themselves, these people need some protection. Yes, there are humans who are not good at looking out for their own long term interests or even their short term interests, lots of them. Looking out for them, protecting them from getting into (for instance) unfair contracts is one very useful government function. One could consider very low wages to be an unfair contract, pretty much by definition.
Protecting the weakest in society != zero Liberty.
So what's the cutoff for the "weakest in society"? Do you have a percentage of the population that we're obligated to care for? Should these people too helpless/clueless to ask for a competitive wage be allowed to drive cars? Should they be allowed to vote when they can't really perform the most basic of tasks in society?
I didn't say the government should be responsible for all negotiations
So where is the cutoff and how do we prevent it from creeping up? Food stamp use continues to rise because apparently larger and larger segments of the population cannot earn enough money for food. When does the continued increase of helplessness level off?
the people who cannot improve themselves
Cannot or will not? What incentive is there for people to get an education, to work hard, to improve their lot in life, to learn better ways to live, to learn how to negotiate for their worth at a job, etc. if the government tries to take over care of so many aspects.
By seeking to protect people, government creates a dependency and victimhood mentality in society.
Look, I'm for helping the helpless in our society. What I'm not for are absolute statements like your next one that are guaranteed to lead to an increase in helplessness.
One could consider very low wages to be an unfair contract, pretty much by definition.
If the wage earner is free to go elsewhere to negotiate the fee for his time then it is not unfair by definition.
That example is too narrow/shaky. It requires employer to have some sort of monopoly on employing that worker (otherwise why would the worker keep working for that employer for $X/hour in the first place?).
I was asking about example when employee's gain (from increasing minimum wage) would be more reliable and would not depend on chance so much.
Gambler has a chance to win, but gambling is not a good way to get wealthier.
I disagree that this example is too narrow/shaky. I believe it actually encompasses a vast majority of people who are currently earning the minimum wage. Note that I'm willing to change my beliefs if my reasoning has led me astray :)
The key assumption you've made that I disagree with is this: "why would the worker keep working for that employer for $X/hour in the first place?". It seems to me that this assumption boils down to an underlying assumption that the labor market is an efficient market.
In another comment elsewhere in this thread sergiosgc makes a statement that I think is relevant here: "You wrongly assume the job market is a perfect market. It's not; there are barriers to entry, barriers to exit and lots of asymmetric negotiation positions."
My argument (and I Am Not An Economist) is that the COST of labor and the VALUE of labor (from the employer's perspective) are not necessarily equal.
A quick hyperbolic example of a labor-rich job market that demonstrates this difference:
* Your labor market has 1,000,000 people
* You are offering the only job in the labor market. For every hour the lone employee works the job will generate $500 of additional revenue for your company.
* There is no minimum wage, and your goal is to minimize your costs while maximizing your revenue.
What is the price you pay your employees under these conditions? It's not $500/hour. It's probably only room and board.
If we introduce a minimum-wage of $5/hour, what is the price you pay now?
If we raise the minimum-wage to $10/hour, what is the price you pay now?
If we raise the minimum-wage to $100/hour?
$1,000/hour?
I admit that this was an extraordinarily hyperbolic example, but I think the current U.S. job market is a less-extreme example of this.
1) Based on anecdotal evidence (that I'm too lazy to look up current estimates of the number of people not participating in the U.S. workforce), the current job market around the country currently favors employers. Many people are fervently searching for jobs which drives down the PRICE of labor. This doesn't change the VALUE of any particular job for the employer.
Finally, I refer you to Wikipedia where there is a rather good summary of current economic thinking on the impact of minimum wage laws on unemployment (http://en.wikipedia.org/wiki/Minimum_wage). As far as I can tell from a brief summary, currently thinking by economists is relatively mixed.
The employer, unable to continue their advantageous position of paying $X/hour (it being illegal), but finding the job still worth retaining (it generating more than $(X+1)/hour) retains the employee.
The employee's salary goes from $X/hour to $(X+1)/hour.
Or did I totally misunderstand your question?