Good news from Arkansas! (Minimum wage increase)

[Zkribbler]

Originally posted by Kidicious
You need a lesson in elasticity.

Right! Send him a curvateous 23-year-old lady dressed in Spandex. That'll learn him.

[lord of the mark]

I dont have any recent empirical studies to hand, but theres pretty decent theory suggesting that all else being equal a rise in the min should increase unemp. But that will only show up when the min is above the market clearing low skill wage, which in recent years it hasnt really been. And more importantly, I think, increasing the minimum CAN, even in economic theory, represent a real net transfer to low wage workers, even if it DOES increase unemployment. The increase in wages earned by those who stay employed can far exceed the loss by those who lose their jobs, depending on the elasticity of demand for labor. Its not a perfect way to transfer income to the poor, but then there really isnt a perfect way.

[Kidlicious]

Originally posted by lord of the mark
The increase in wages earned by those who stay employed can far exceed the loss by those who lose their jobs, depending on the elasticity of demand for labor.

Well the increase income isn't ever very big, but there's not enough evidence to show that people loss their jobs. It's such an insignificant factor that it's no use assuming that nothing else changes.

[MrFun]

The "argument" that higher minimum wages will hurt the economy is bull****. It's nothing more than pseudo-logic to keep lower-class workers down in order to maintain the unjust status quo.

[DanS]

I guess the overwhelming argument here is that the economists don't know what they're talking about on this score. Correct?

[MrFun]

Originally posted by DanS
I guess the overwhelming argument here is that the economists don't know what they're talking about on this score. Correct?

Not all economists agree with you though, DanS. To say that all economists have the same opinion as you do is ridiculous.

[Donegeal]

Ok, who else on these boards is an economist?

[Zkribbler]

Imran was an econ major in his undergrad days.

[Rufus T. Firefly]

Not an economist, don't claim to be one. But I did find, easily enough, this table of minimum wage rates and this table of historic unemployment rates. Comparing the two we see:

After the 1995-97 phase-in of the minimum wage hike, unemployment fell during the phase-in and continued falling.

After the 1989-91 phase in of the minimum wage hike, unemployment rose during the phase-in and for one year, then fell rapidly.

Now, I'm sure someone will chime in with the news that other factors effect unemployment too and, to quote LOTM, "all else being equal a rise in the min should increase unemp."

That's the problem with the dismal science. People have to live in the world, not in some pristine land where "all else is equal."

[xvdravarvx]

Let's look at the minimum wage from two different view points...from the employer's perspective and the employees.


From the employers perspective minimum wage laws matter not one iota if the employer is offering his wages above that level. He feels no push as to raising his wages if he offers his starting employees $7.00 to work in an area where the minimum wage was just moved from 5.00 to 5.50. So the only employees that this effects are those who hire at the minimum wage.

Who are these employers? These are the employers whose profit margin is as slim as possible to compete with their next door neighbor....more likely than not, your fast food restuarant.

But not just your normal fast food restuarant, but rather your urban fast food restuarant. A restuarant has to have a staff in order to work and where there are less people willing to work a higher wage has to be offered.

A raise in minimum wage has a dramatic effect on them. Often they are no longer willing to take on an employee who is questionable. The equation for this is quite simple...if the employer does not think that he will get at least 1 cent more than the minimum wage then that want to be employee is non-employable.

From the employees perspective, they are willing to work at the price that they accept a job at. If they are good at their job and gain skills, and even in the most menial labor jobs one can gain skills to earn a raise.

Furthermore, just who are these employees anyway? Often times they are young, school kids who are still living with their parents and most of their incomes are disposable. They do not have to pay living expenses and so a lot of the living wage must equal minimum wage arguements are bunk....

For those of you who are for a minimum wage laws and raising them how would you answer France's labor problems?


Currently, 40% of their youth (25 and under) are unemployed, most of them being young muslims and innercity ethnic groups.

Their wage laws are not necessarily measured in money but rather in time that they must be employed. Currently, the way I understand it and I may have a few of the details wrong but, if a company hires a worker, that worker must be employed for up to two years before you can fire that worker.

The French have passed a law that would allow a company to fire for any reason someone younger than 25 before that 2 year time frame...and the youth (who are unemployed and really have too much time hence..) are rioting.

I cannot think of a more telling example in our world today as to why minimum wage laws are extremely bad.

[Jon Miller]

Originally posted by DanS
FYI, Oregon has the 7th worst unemployment rate in the union.

that is because the timber situation

JM

[Rufus T. Firefly]

For those of you who are for a minimum wage laws and raising them how would you answer France's labor problems?

By not being France? Buy not having the dumbest labor laws in teh industrialized world? ust a thought.

The UK has a higher minimum wage than the US, and a lower unemployment rate.

And the theoretical model that shows that a minimum wage hike should increase low-wage unemployment is contradicted by empirical studies of what actually happens when such hikes take place.

Oh, and

[Donegeal]

Originally posted by Rufus T. Firefly
Oh, and

I was thinking the same thing, but this guy is from 2004. He must be a DL of some leftist that has a consertive point of view on this subject.

Who could it be?



Spiff! (he did bring up the protests in France...)

[Adam Smith]

Originally posted by Donegeal
Ok, who else on these boards is an economist?

Ahem....

Originally posted by MrFun
The "argument" that higher minimum wages will hurt the economy is bull****. It's nothing more than pseudo-logic to keep lower-class workers down in order to maintain the unjust status quo.

So all these evil employers are out to squeeze every last dime they can out of their employees, suppliers and customers, right? And would sell their own mothers into slavery for another 29 cents, right? And when the price of something they buy goes up they are damn sure going to look for a cheaper way to do things, because that keeps one more dollar in their pocket, right? And when they find that cheaper way they are going to stop buying as much of the more expensive stuff they used to use and produce their product or service some other way so they can keep their profits up, right? Which means they stop using as much low skilled labor which is just earning the minimum wage, right? Which increases unemployment of that labor.....right?

Originally posted by Rufus T. Firefly
And the theoretical model that shows that a minimum wage hike should increase low-wage unemployment is contradicted by empirical studies of what actually happens when such hikes take place.

Originally posted by Kidicious
The evidence doesn't show that minimum wage increase unemployment.

After reviewing more than 100 studies of the effect of the minimum wage, Brown, Gilroy, and Kohen concluded that:

"Time-series studies typically find that a 10 percent increase in the minimum wage reduces teenage employment by one to three percent."
Brown, Gilroy, and Kohen, "The Effect of the Minimum Wage on Employment and Unemployment", [i]Journal of Economic Literature[i], June, 1982, p. 524.

This is “the evidence”. There are more recent studies which reach the same conclusion, but since I’m posting from home, this is all I have within reach right now. Can either of you produce one shred of evidence to support your statements?

Originally posted by Zkribbler
I have heard that line so many times before.

I’ve posted this so many times I must be getting carpal tunnel syndrome. And if this has failed to make an impression, then it is not clear to me what rational basis you have for your position.

Originally posted by Rufus T. Firefly That's the problem with the dismal science. People have to live in the world, not in some pristine land where "all else is equal."

That is why all sciences do controlled experiments. And that is what we have here. Set out a refutable hypothesis. Conduct controlled statistical studies to test the hypothesis. (Its difficult to stuff people into test tubes, so statistical studies will have to suffice.) Then determine whether the hypothesis is or is not rejected based on the evidence. Your post is an attempt at holding other factors equal, and in so doing you have made my point quite nicely.

Originally posted by lord of the mark Its not a perfect way to transfer income to the poor, but then there really isn’t a perfect way.

A negative income tax would increase the incentive to work , instead of increasing unemployment. It may not be perfect, but its a lot better.

[Rufus T. Firefly]

Originally posted by Adam Smith

After reviewing more than 100 studies of the effect of the minimum wage, Brown, Gilroy, and Kohen concluded that:
This is “the evidence”. There are more recent studies which reach the same conclusion, but since I’m posting from home, this is all I have within reach right now. Can either of you produce one shred of evidence to support your statements?

In their 1997 book Myth and Measurement: The New Economics of the Minimum Wage (ISBN 0-691-04823-1), they argued the negative employment effects of minimum-wage laws to be minimal if not non-existent (at least for the United States). For example, they look at the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage. In each case, Card and Krueger present evidence ostensibly showing that increases in the minimum wage led to increases in pay, but no loss in jobs. That is, it appears that the demand for low-wage workers is inelastic. Also, these authors reexamine the existing literature on the minimum wage and argue that it, too, lacks support for the claim that a higher minimum wage cuts the availability of jobs.

Like I said, I'm not an economist. But there it is. And more recent than Brown, Kilroy, and Kohen.

As for me attempting do do a "controlled experiment" -- read my post again. What I said was, effectively: I see a pattern; but I can't see all the factors influencing the data, so I don't really know why that pattern is there.

If only economists were that honest...