These two paragraphs one right after the other seem to contradict each other.
You say “fairness doesn’t matter.” You’re right. But here’s where the labor market comes in. A worker paid what he or she perceives is an unfair amount will look to move elsewhere, thus putting pressure on the employer to increase the pay to keep an experienced worker.
You say “let the market work.” Unfortunately, the reality of the labor market today is that it is a monopsony. That is the opposite of a monopoly, essentially that there are few buyers and many sellers, a situation that gives the sellers market power.
The first claim is that competition to keep experienced employees will force employers to give workers higher wages.
The second that there is so little competition employers can dictate wages. (monopsony)
- Does this mean that an increased minimum wage would have limited cascade effect in a monopsony dominated labor market?
- If so would wages compress around the new legal limit and remain at that level?
- If so then a test for monopsony should be a compression of wages, potentially around the current legal minimum or the effective minimum wage needed to entice people into the formal labor market.
Let me know what I am missing
SMV