So I was walking to work the other day when a man approached me...

[Adam Smith]

Originally posted by Shi Huangdi So has Card and Krueger's study on this been discredited or fallen out of favor with economists?

The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

[Imran Siddiqui]

Originally posted by Adam Smith
The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

Yep, I saw the second study and it totally ripped the Card and Krueger study apart. The way Card and Krueger measured things was ridiculous!

[Dis]

Originally posted by Adam Smith

You need to get your economics straight, UR. The result is mainly a redistribution from consumers (some of whom are low wage workers) to low wage workers. But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much. Empirical studies indicate that, all else equal, a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent. Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal. A far better policy would be to have negative income tax for low wage workers, which increases employment, with little or no effect on prices.

that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

And don't tell me companies aren't running bare minimum. My last company we were over worked, and my current company we are over worked. These companies simply refuse to hire more workers. They are trying to squeeze every ounce of productivity out of as few workers as possible.

I'm not a robot, eventually I get tired of it. That's why I change jobs every 4 years or so.

[Urban Ranger]

Originally posted by Adam Smith
But you still get low wage workers pushed out of the market, since companies are unwilling to hire the low wage / low skill workers a the higher wage. Any good economist would know that much.

It's not that simple. Giving low wage workers a raise generally results in higher productivity.

Originally posted by Adam Smith
Net result is that raising the minimum wage increases prices, and decreases employment ... not such a good deal.

An increase in wages for a segment of the society does not automatically result in higher prices.

[Fake Boris]

Originally posted by Adam Smith
The Card and Krueger study has been discredited. Card and Krueger asked managers what they thought would happen to hours woprked if the minimum wage was raised. A subsequent study (by Murphy and Welsch IIRC) looked at the actual time cards in the same establishments and and found the same empirical results that all the previous studies did ... a ten percent rise in the minimum wage (after adjusting for inflation) reduces employment by about three percent.

Three percent or three percentage points?

[Kuciwalker]

Originally posted by Urban Ranger
An increase in wages for a segment of the society does not automatically result in higher prices.

For certain commodities, yes it does.

[Fake Boris]

When the price of basic commodities is controlled, it stays the same.

[Kuciwalker]

Most countries don't have price controls.

[Adam Smith]

Originally posted by Dissident
that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

Firms generally operate with the minimum number of employees for a given level of output. Thats part of "the all else equal ". When prices increase, the quantity demanded declines, hence the decline in employment.

Originally posted by Urban Ranger
It's not that simple. Giving low wage workers a raise generally results in higher productivity.

If increasing wages increases productivity and hence profits, then wouldn't these greedy, profit grubbing firms do it on their own?

Originally posted by Urban Ranger
An increase in wages for a segment of the society does not automatically result in higher prices.

Then where doe s the money come from to pay the wages?

Originally posted by Oncle Boris
Three percent or three percentage points?

The standard economic measure is called an elasticity (percentage change in x with respect to a percentage change in y), so there is a three percent decline, not percentage point decline.

[DanS]

Just to be painfully clear, that's a 3% decrease in overall employment, not just a 3% decrease in employment of those at the low end of the scale?

If so, then that's a pretty huge change. I didn't know the impact was that big. Previously, I didn't think a minimum wage was that big of deal, but now I'm compelled to be against it.

[Theben]

You were against it before.

[DanS]

Mildly, at least at what I perceived to be a relatively low minimum wage in the US.

[Theben]

Originally posted by Dissident

that's false because companies already operate with the minimum number of employees to operate. They can't fire any more or they wouldn't have enough people to provide service.

Or less than minimum, which is what we had to do in the last few years. Quality of service had been a problem for awhile.

What would've helped would have been the decrease in taxes at the lower end of the pay scale, as suggested, or not scaling back public services for low-income families, which took money out of their pockets that could have been used on luxuries such as dining out.

[Traianvs]

In Kansas it's $2,65/hour,... omg. I hope life is a bit cheap there.

[Traianvs]

Originally posted by Solver
The minimal wage here is 143 USD. Per month .

lol.. these people live on the streets then no..? How on earth could anyone pay rent with such a miserably small amount of money!