Wage Determination

[zelmo1234]

The law of demand will typically hold (but not always of course; see the giffen good extreme)


It does not decline if monopsony exists.


Typically that distinction in minimum wages cannot be made. A national minimum wage, for example, would typically include employer and employee groups. A minimum wage based on collective bargaining, in contrast, would be reliant specifically on the nature of employer-employee bargaining.

My question and don't dodge: Can you dismiss the relevance of monopsony in the labour market?

Here is what I am reading on your theroy of monopsony.

http://en.wikipedia.org/wiki/Monopsony

Which allows you do argue coth sides of the coin, and from the pure meaning I know of only Unions shops that are that tighly controled?

So if the law of supply and demand has nothing to do with wages, then why back in 2006 were companies like Burger King and McDonalds offering wages as high as $12 an hour to start and a signng bonus to start?

This had a dramatic effect on profits for each location but was necessary to get the needed work force. There were few workers for every job. Now we are in a situation that there are many workers for every job, and thus wages have declined. Can you deny that this has a large effect on the wages in the market place.

[Leveller]

So if the law of supply and demand has nothing to do with wages

I wouldn't go that far! It just can't be used to explain our wage outcomes. Even with monopsony theory, of course, demand is important. We just can't assume workers are paid according to the productivity determining that labour demand. It can only achieve that under extreme conditions (essentially where productivity effects don't exist and the minimum rate more than eliminates underpayment)

[Newpublius]

The law of demand will typically hold (but not always of course; see the giffen good extreme)

It does not decline if monopsony exists.

Typically that distinction in minimum wages cannot be made. A national minimum wage, for example,
would typically include employer and employee groups. A minimum wage based on collective bargaining, in contrast, would be reliant specifically on the nature of employer-employee bargaining.

My question and don't dodge: Can you dismiss the relevance of monopsony in the labour market?

Yes, there are millions of employers.

For those who are wondering about this, a monopoly is when one seller faces many buyers, market power permits him to charge a monopolist's price. A monopsony is the other end of the spectrum, where one buyer faces many sellers. If there were one employer you'd obviously see this effect.

In point of fact, the largest employer in any state is the state itself, the largest private employer will either be some medical establishment or Walmart....the largest private employer is Walmart.

Even if we gave Walmart a million employees in the US, they would still be employing less than 1% of the US labor force. If we likened this to cars and share of the auto market attributing each employer's share of the labor force as if they were car manufacturer's and their share of the nation's labor force represented that cmpany's share of the car market, it wouldn't be perfect competition but it would be considered highly competitive akin to hyper-competitive.

[Chris]

The state has a monopoly on force.