Part 1 of 2
Sorry, I had to go to sleep. To this,
they will once again, because there is no minimum wage requirement, be working for the least amount of money that the employer is willing to pay
I reply that under a reasonably working economy there is no such possibility.
You know, if a given job yields a net revenue of, say, 11 dollars per hour to employer X, then he can’t just cut offers indefinitely. Using the example above, he can offer a wage between 9 and 11 dollars per hour to A and between 9.5 and 11 dollars per hour to B, for maximum net profits of 2 dollars per hour if he employs A and 1.5 dollars per hour if he employs B. Now, two things can happen: either X manages to impede that any other employer enters the market, or he doesn’t. If he does, then, yes, he will surely offer the lowest possible wage, 9 dollars per hour, to A, or 9.5 dollars per hour to B if he prefers to discriminate.
But this is not realistic, and for several reasons. One is free entrepreneurship. Why wouldn’t new employer Y copy whatever employer X is doing and offer a better wage to either A or B? As long as he manages to create a job with a similar yield of 11 dollars per hour (or maybe a bit more or a bit less) he will be able to undermine X’s power to drive down wages while still turning out a profit. For example, if X offered A 9 dollars per hour, which A would accept, X would turn out a profit of 2 dollars per hour. But, of course, Y could come and offer A 9.5 dollars per hour, which A would obviously prefer. In this case, Y would turn out a profit of 1.5 dollars per hour, less than what X wanted but still positive.
A second reason why that race to the bottom is impossible in a market economy is that there is mobility across sectors and locations, of both employers and employees. The value of 9 dollars per hour that A would be willing to work for is in fact a reservation wage: considering all other alternatives, it is the smallest wage that A would accept to take that particular job. Maybe if he had to work in another, more dangerous location we would only accept 10 dollars per hour. Or maybe if he had to work in a smaller, cheaper place he would do the same job for 8.5 dollars per hour. Or maybe he would consider becoming an employer himself after having done that job for a while. The point is that there are alternatives in a well-functioning market economy.