Does a Minimum Wage Increase Come With a Price?

As promised in his 2014 State of the Union Address, President Obama signed an executive order yesterday raising the minimum wage to $10.10 an hour for a portion of federal contractors. Obama has also pressed Congress to raise the federally mandated minimum wage as well.

Obama reassured raising the minimum wage won’t cause harm, but will “boost” the economy. Few economists would go this far however. Instead, most agree there is mixed evidence.

For instance, economists have found evidence that raising the minimum wage can lead to businesses laying off workers, hiring fewer workers, and reducing business expansion. Others have found that it raises prices of good and services many low-income Americans depend on, and may even discourage workers from receiving further training and education.  In their meta-analysis of over 100 studies, economists David Neumark and William Wascher conclude “the minimum wage leads to economic distortions and often has unintended adverse consequences for the employment opportunities of low-skilled workers.”

Is it really that hard to believe that raising the minimum wage is going to cost somebody something? 

Nevertheless, other economists have failed to detect significant costs. For instance in Hristos Doucouliagos’ and Thomas Stanley’s meta-analysis of 64 studies, they conclude there are no “meaningful adverse” effects on employment. Although even economist and New York Times columnist Paul Krugman suspects that setting a minimum wage high enough, say at $20 and hour, “would create a lot of problems.”

Former Obama administration economist Christina Romer synthesized the contradictory effects of a minimum wage hike in the New York Times, acknowledging the presence of small adverse effects depending on the size of the increase.

So are Americans willing to take the risk of harming job opportunities during a time of high unemployment, particularly among African-American teenagers (35.5%) and young people generally (22%)? It would be difficult to tell based on most public opinion polls which presents the question not as an economic trade-off, but as a benefits-only proposition.

In my recent op-ed in the Washington Times, I explain how public support for a minimum wage increase plummets as soon as Americans consider the possible costs. Read more here.

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  • Pro Libertate||

    No, no, no, this is the Age of No Consequences. By executive order, the president has abolished the law of cause and effect and repealed entropy!

  • waffles||

    I know you're being facetious, but why can't we have a living wage? In this age of record breaking corporate profits it seems justifiable and prudent to have some common sense regulations that will allow a fulltime worker to feed her family. Surely it isn't outrageous to suggest that 15/hour is too much. And think of the multipliers that extra money will find once it goes back into our economy and off the corporate balance sheets.

  • ||

    You know what we need? Multiplier multipliers. Then multipliers can work exponentially. I'm not sure how to get them, but TOP MEN like Obama must. He needs to get on that right away. Maybe he can consult the voodoo priestess he uses to plan the economy; she seems to know what's up.

  • Almanian!||

    Wow - Jack Frapp is not gonna like this one bit LOL!

    www.economicprivacyfordummies.de/fuckObama

  • Pro Libertate||

    It is possible to raise a number by another number to achieve a result that is orders of magnitude higher than the original figure.

  • waffles||

    I think we can all agree on this!

  • ||

    Know what else we need? A predictable price point!

    $5.99 for every single item on the shelves!

  • Rich||

    I suggested something similar, Rufus, and no one took me seriously.

    But, mysteriously, the minimum wage flies.

  • ||

    Yet, you'll still have someone complain.

    Parasite: I can't afford $5.99!
    Worker: Ma'am, that's a $37 bottle of fine olive oil!

  • Rich||

    US: Put it on my tab!

  • Sevo||

    How 'bout just a price? Not sure what the point of the point is.

  • Pro Libertate||

    Don't you dare out-snark me, tasty breakfast treat!

    You know, in all seriousness, if the left (and the statist right, for that matter) would simply realize that spending far beyond revenues is unsustainable and has dire consequences for the economy, there would be more interest in trying to make the pie much bigger and to ensure its sustained growth. Even if we taxed everyone heavily, we couldn't afford what we're doing. It's that bad, and that's leaving aside the obvious destruction huger taxes would wreak on our economy.

  • wareagle||

    I'm reasonably sure in congress already realize the money in/money out problem. They just don't give a shit because they do not expect to ever feel the result personally. Their cronies, read: contributors, are still donating money and besides, an economy growing on its own reduces their biggest asset - power.

  • wareagle||

    sure = some

  • Tulpa (LAOL-VA)||

    Absolutely right. Even the threat of being drubbed out of office has lost most of its punch, since there's usually a sweet "consulting" gig waiting in the semi-private sector for legislators who play ball.

  • waffles||

    Yeah, that's the scary part. We can't tax our way out of debt and if government tries to, we are beyond doomed.

    I also find it weird that my snarkiest snarkeroos could easily pass as legitimate comments on other sites. Unless there's snark-infested waters all over the web.

  • Pro Libertate||

    Maybe we'll soon learn that it's all been a mass goof--we've all been having each other on a bit.

  • prolefeed||

    You walked a fine line on the snark, waffles -- it seemed just a bit over the top, but still less than actual comments I've heard from leftists, so took a couple seconds of processing, and trying to remember your previous posts, before I was sure it was parody.

    The same remarks from, say, Tony, would have come across as their actual views.

    The same remarks from Epi would have been laced with profanity and e-spittle.

  • JohnD||

    I'm not sure many politicians understand this. It's obvious the Dems don't.

  • Invisible Finger||

    In this age of record breaking corporate profits

    Citation needed.

    If you exclude government transfers, those profits vanish.

  • Tommy_Grand||

    see

  • JohnD||

    People at the bottom of the wage scale are there for a reason. New to the work force with little experience or education, or part time who are just supplementing their income or in very low effort, minimal jobs.

    The point that everyone is missing is this. When the bottom of the scale is given a wage increase that isn't justified by need of the business, then everyone up the ladder will expect one. If I have some minimum skills that justify a $10 an hour wage and the new guy with no experience gets raised to my salary level, then I am going to demand a corresponding increase.

    This will cause a ripple effect throughout the company.

  • Gahan||

    The sad thing is that many proponents of a minimum wage hike understand the ripple effect and consider it a selling point. Everybody gets a raise! Yay!

  • LibertarianX||

    What you want or what you need have little to do with what you are paid for a job.It has to do with the value of the job to the employer and the number of people with the necessary skills to do the job.

    Besides, who gets to decide what a living wage is? Does it vary with the number of people in the family or region of the country? If you want more pay, get better skills.

  • JWatts||

    "but why can't we have a living wage? ... Surely it isn't outrageous to suggest that 15/hour is too much. "

    15/hour? I hope your not talking about dollars. $15/hour is a subpar wage. To truly support a family on a 40 hour week and not starve to death, a worker needs at least $30/hour. And honestly, isn't having to 40 hours a week for a greedy corporation a form of death?

    So, I hereby call for a living wage of $120/hour and a 10 hour work week.

  • JWatts||

    "but why can't we have a living wage? ... Surely it isn't outrageous to suggest that 15/hour is too much. "

    15/hour? I hope your not talking about dollars. $15/hour is a subpar wage. To truly support a family on a 40 hour week and not starve to death, a worker needs at least $30/hour. And honestly, isn't having to 40 hours a week for a greedy corporation a form of death?

    So, I hereby call for a living wage of $120/hour and a 10 hour work week.

  • Meerkatx||

    Sarcasm aside, those who make minimum wage tend to put every cent back in the economy. It's not like most of these companies we're talking about won't make record breaking profits while still being able to pay an affordable living wage.

  • Pro Libertate||

    What about those who will be out of work? I sure as fuck won't be hiring high school or even college-attending kids at above-market wages. Just for example, I'd not be hiring others who aren't supremely qualified at those rates, either.

    Also, robots and automation. Go ahead, make something that's coming anyway come much faster.

  • ||

    The government "suggests" to me a girl with 'qualified' papers should be paid $16 an hour in my business.

    I do not think they're worth that. Guess what? I don't hire them. There's a gigantic pool of 'non-qualified' workers who get the job done as well it not better - and with less lip. The ones that come in waving government bull shit papers are trouble.

    All good, right? Not really. The government knows we're too rational so what they turn around and do is write up a law stipulating I must have x-amount of qualified educators (remember, this is qualified as the state sees it) on staff.

    Where they fuck up they just fuck up more by adding laws with a 'fuck you, that's why' label.

  • Pro Libertate||

    We have weird pressures going on to employ fewer people, to exclude some people from the workplace altogether, and for people to drop out of the labor force. I assume most of this is just the usual incompetence, but it does smell like something worse.

  • ||

    In my business, immigrants looking for entry level jobs get screwed. The kicker is, from my experience, they're more motivated to work. The kid with the degree has too many expectations without much experience.

    Classic case of government distorting the employee-employer relationship.

  • LynchPin1477||

    I think very little money is effectively locked away and buried in the ground. Profits are usually used as vehicle for generating more revenue for someone, either by the corporation directly or individual shareholders who are paid dividends. I'd love to see a statistic on how much "idle money" exists in the economy. I suspect it is extremely low.

    The issue of a living wage or some other similar thing like a GMI is separate issue. There are better ways of achieving this goal then by mandating an increase in the minimum wage.

  • Zeb||

    Lots of people really don't understand what wealth is. They seem to think that rich people's fortunes are somehow removed form the economy so it can't help anyone else. For the most part, quite the opposite is true. Their money is invested and out there in the economy creating jobs and wealth for other people. It's almost as if people really believe that Scrooge McDuck is an accurate picture of how wealth works.

  • Don Mynack||

    I would support a lessening of the minimum wage for young workers (16-21), which might impact the economy far more, and get more people in the workforce, than an across the board raising of the minimum.

  • Adam330||

    As opposed to those high income earners, who just stash all their money under their mattresses? What does "put every cent back into the economy mean"?

  • ||

    Sarcasm aside, those who make minimum wage tend to put every cent back in the economy.

    Those who make just above minimum wage put the majority of their earnings into the economy too. What happens to them when you raise the wages of the workers below them?

    Also, these workers on the bottom wrung, are they putting their money back in by boosting economic productivity/capacity or are they simply consuming goods who's prices are inflated by artificially high wages? If the latter, how does increasing their wages, in any way, solve this problem?

  • Invisible Finger||

    those who make minimum wage tend to put every cent back in the economy.

    Not true at all.

    Most people making minimum wage are in debt.

    Savers are the only ones who put every cent back into the economy they just don't do it imemdiately.

  • SusanM||

    Well, if it's in a bank being used for loans and collecting interest isn't it still in the economy?

  • robc||

    Some percent (10%? 15%?) is being held by the bank as reserve.

    So some saving isnt back in the economy.

    But, yeah, generally yes.

  • prolefeed||

    It's not like most of these companies we're talking about won't make record breaking profits while still being able to pay an affordable living wage.

    Not sure if this is sarcasm.

    If it isn't, how in the heck can you significantly raise someone's costs and make them more profitable than they have ever been? Does not compute.

  • JohnD||

    Too many of you don't realize that most companies are not making record breaking profits. In fact, start ups have an extremely high failure rate. Year one = 25%, year two = 36% and year three = 44%.

    Most people are employed by small companies.

    Also, the founders of Home Depot recently stated that they would not be able to start a company like Home Depot in the current business environment.

  • OldMexican||

    Nevertheless, other economists have failed to detect significant costs. For instance in Hristos Doucouliagos' and Thomas Stanley's meta-analysis of 64 studies, they conclude there are no "meaningful adverse" effects on employment.


    "See? The Law of Demand has been repealled! I have the meta-analysis to show this is so!"

  • UnCivilServant||

    For instance in Hristos Doucouliagos’ and Thomas Stanley’s meta-analysis of 64 studies, they conclude there are no “meaningful adverse” effects on employment...

    ...high unemployment, particularly among African-American teenagers (35.5%) and young people generally (22%)

    In his opinion, their joblessness is not meaningful.

  • OldMexican||

    Racists!

  • ||

    Does a Minimum Wage Increase Come With a Price?

    They've artificially raised the cost of labor. That sort of counts as a price. So yes. Next question?

  • Hugh Akston||

    Come on, Epi. Raising the minimum wage is a total free lunch, like blowing your own sail on a boat. It doesn't cost anybody anything, and everybody benefits!

  • Zeb||

    Those fat cats would have just used all of that money to light cigars with $100 bills and as mattresses, so it can't really affect anything.

  • UnCivilServant||

    Have you ever slept on a dollar bill mattress? Best sleep you'll ever get (especially if the owner catches you).

  • Bardas Phocas||

    Since this is just impacting gov contractors, the "Cost" would impact gov services. So we would have fewer services or higher taxes to pay for it.
    Is it possible for government to be more inefficient?
    Barry's trying.

  • Drake||

    Isn't government inefficiency a feature?

  • Fist of Etiquette||

    ...economists have found evidence that raising the minimum wage can lead to businesses laying off workers, hiring fewer workers, and reducing business expansion.

    No economist the president knows found this.

  • ||

    He also doesn't know any economists who voted for Nixon.

  • Almanian!||

    It's certainly not in the news media, which is where the President gets all his information needed to do his job.

  • ||

    No economist the president knows found this.

    No economists on the other end of his phone.

  • OldMexican||

    Is it really that hard to believe that raising the minimum wage is going to cost somebody something?


    I don't think it is hard to believe; however, the concept is too easy to obfuscate especially when people start to moralize and pontificate about "living wages" and fairness and other economically-irrelevant crap.

  • The Other Kevin||

    This. When you frame the debate as "super rich billionaires vs. working people who can't support their families", any economic arguments tend to get lost.

  • ||

    Not to mention, they don't really mean "wage" in the way we understand it.

    Otherwise, they could simply take all the benefits we currently dole out and make them monthly, lump-sum transfer payments.

    I remember hearing Daniel J Mitchell I think discussing how all these transfer programs could lift every single person in poverty, out of it 5x over. Even if its over stated, I have no problem believing it is once or twice over as a pessimistic estimate.

    The problem is, once this idea is brought up, the imaginary, lunch-pale toting stiff who needs a living wage suddenly transforms into a shifty heathen who can't be trusted to make the correct choices.

  • UnCivilServant||

    In their eyes, a blue collar man is always a shifty heather who can't be trusted to make the correct choices, because they invariably disagree with their betters.

  • Invisible Finger||

    But that shifty heathen can suddenly be trusted in the voting booth.

  • R C Dean||

    Serious question:

    Does this diktat mean that federal contractors must pay their employees the new minimum wage? Or does it just mean that individuals who contract directly with the feds get the new minimum wage?

    If the former, this is going to wreak some havoc out there, especially among the multitudes of mostly non-profits who contract with the government via grants and other programs to deliver healthcare services and whatnot to underserved populations.

    It could even theoretically apply to Medicare providers, meaning doctors and hospitals, who all have contracts with the government to participate in Medicare.

  • ||

    RC, are you implying that the administration might implement a politically motivated law with absolutely no comprehension of possible consequences, or at least no care about them? Where would you get an idea like that?

  • ||

    My guess is that all contractors and subcontractors will have to pay the higher minimum wage on all government contracts.

    The way that a lot of federal law works is if flows down to subcontractors. For instance with hiring union labor or minority owned businesses. For example, to fulfill minority representation requirements a prime contractor will often hire a minority owned business as a subcontractor to do some low-priority work.

    If that works for that requirement, I would bet that it applied to this minimum wage requirement. You can't just subcontract out to another company to reduce labor costs.

    However, I doubt it applies to any work done on NON-government contracts. So they would only have to pay the employees assigned to the government work the new wage. They wouldn't have to pay it to any employees working on private contracts.

  • Bo Cara Esq.||

    I thought it only applied to all new contracts.

  • Hopfiend||

    There would also have to be a provision for subcontractors. Since privity of contract only exists with the prime, if the contracts are not so structured, the contractor can sub and bypass the regulation.

  • Tulpa (LAOL-VA)||

    If that works for that requirement, I would bet that it applied to this minimum wage requirement. You can't just subcontract out to another company to reduce labor costs.

    But you can bid higher during the contract award process, and presumably all your competitors will do the same, so no effect on the contractors. (big effect on people who now can't get jobs and taxpayers/inflation sufferers, of course)

  • mad libertarian guy||

    However, I doubt it applies to any work done on NON-government contracts. So they would only have to pay the employees assigned to the government work the new wage. They wouldn't have to pay it to any employees working on private contracts.

    Might this be a dark horse for liberty by disincentivizing being a government leech contractor?

  • Square||

    No. Davis-Bacon sets wages on construction projects WAY above market. As Tulpa mentioned, it really doesn't make a difference to contractors, other than giving an advantage to those who figure out how to game the wage-compliance system.

  • Tulpa (LAOL-VA)||

    It is the former, but it doesn't affect existing government contracts, only those that will be initiated after the EO was signed. Presumably the effect of the higher minwage will be priced into the bids for those future contracts.

  • Pro Libertate||

    Stupid question, I know, but where does the president get the authority to do this? Seems like something that would need congressional authority.

  • Pro Libertate||

    Oops, see now than R C Dean raised the same question below.

  • Pro Libertate||

    THAT. Jesus, errors within errors within errors.

  • Adam330||

    It looks like it only applies to procurement contracts (i.e. buying goods and services for government use) and some concessions contracts (i.e. a cafeteria for government employees in a government building). It's pretty much meaningless because nearly all of those workers are already covered by the Service Contract Act or Davis-Bacon Act, which already requirement wages/benefits higher than $10.10.

  • Zeb||

    From what I have heard, the biggest effect of the increase will be increases for people with union contracts whose compensation is tied to the minimum wage somehow. Anyone know more about this than I do?

  • R C Dean||

    Second question:

    Does the President have the authority to unilaterally impose this kind of rule on federal contractors? Its essentially an amendment to their contract, I suppose, which generally requires the agreement of both parties.

    I know, its a purely academic question, but just what is the legal authority for this order?

  • Paul.||

    Does the President have the authority to unilaterally impose this kind of rule on federal contractors?

    One would have to ask what the limits of an executive order is.

  • LynchPin1477||

    There are limits to executive orders? I wouldn't have guessed based on the last decade or so.

  • Paul.||

    In all seriousness, it's a subject I know very little about. I know there are these things called executive orders... and I know the presidents make things "the law of the land" by signing them, but what's the limitation? I mean, I presume with checks and balances that the other two branches can override-- whether it takes a supermajority in congress, I know not.

    Have to do some reading I suppose.

  • ||

    Those are interesting questions. Just how 'binding' are they? To the extent future government are willing to tolerate them and therefore can easily be rescinded?

    Wiki has a list of EO's by President. FDR was quite busy.

    http://en.wikipedia.org/wiki/L.....ive_orders

  • Paul.||

    Wiki has a list of EO's by President. FDR was quite busy.

    The Constitution was constantly in FDR's way. Pesky thing.

  • Francisco d Anconia||

    I can't imagine this is legal. There are signed contracts for work. This action will require all contracts be renegotiated to account for increased costs. That would require the government to pay more for given services and that must be budgeted for (yeah, I know). The budget is law and the realm of congress.

    EOs can't make law.

    IMHO.

  • Bo Cara Esq.||

    It only applies to new contracts starting next year, and the legal basis for it is explained here:

    http://www.washingtonpost.com/.....l-actions/

  • Francisco d Anconia||

    Even so. It involves payment of money' to government contractors. Still a function of congress. He's writing law here, not executing it.

  • Bo Cara Esq.||

    But Congress, in its usual lack of wisdom and cowardice, passed a law that said "the Executive can fiddle with the pay rates for what he deems to be causes of efficiency," so he can easily claim he was just executing their law.

  • Rich||

    there is a strong constitutional case for the president’s minimum wage plan, though it is not without doubt.

    IOW, there is not a strong constitutional case for the president’s minimum wage plan.

  • Bo Cara Esq.||

    Eugene Kontorovich is not exactly a liberal supporter of the President generally, so if he says it there is a strong case for the constitutionality of it there probably is. The problem is more in Congress delegating this and in the President's motives which, while likely unprovable for judicial purposes, are likely not really rooted in efficiency.

  • Pro Libertate||

    To be sure, Congress' constitutional authority to delegate is limited. There are cases that have ruled delegations of power to be improper. Nowhere near enough, but sometimes when a president does something that seems improper, it's really Congress' fault. So screw them all, including the courts that insist on blurring the barriers between the branches.

  • Francisco d Anconia||

    Yeah, I must have missed the part of the Constitution that allows Congress to delegate ANY of its powers.

    But what difference, at this point, does it make?

  • Pro Libertate||

    I'm unclear on how this could be consistent with existing agreements, though I'm no expert on FAR or any other federal contracting laws/regs.

    There's also a problem in that Obama is doing this for reasons other than improving the efficiency of the contractors, etc. This is being done to advance a more global policy, which is something that really is a congressional prerogative. Or, at least, it should be.

  • Bo Cara Esq.||

    "I'm unclear on how this could be consistent with existing agreements"

    It only applies to new contracts starting next year.

  • Pro Libertate||

    Okay, that's better, but I still don't think this seems quite legal. Of course, most things seem that way today, so maybe it's all peachy keen.

  • Bo Cara Esq.||

    I think its legal, but that it is an unwise and stupid law that the administration is taking advantage of for dubious reasons.

  • Pro Libertate||

    Strictly speaking and within actual law, I believe an EO can only be effective if it operates solely within the gamut of executive authority. So an EO governing, say, the dress code of executive employees would be okay.

    Really, EOs should be way down in the hierarchy of American law, below the Constitution, of course, below statutes, below regulations, below treaties.

  • Francisco d Anconia||

    It's not law. It's simply policy. Not binding for anyone outside the executive branch.

  • ||

    Really, EOs should be way down in the hierarchy of American law, below the Constitution, of course, below statutes, below regulations, below treaties.

    As much as I hear cries of 'anachronism' for the 2nd Am., EOs always had a strong stench of anachronism to me.

  • Paul.||

    Hmm, then this might be legal then?

  • Don Mynack||

    Wait a minute - there are federal contractors who only pay minimum wage? You mean there are honest federal contractors?

  • ||

    There are subcontractors for the cleaning staff, security etc.

    Although, from what I understand they usually get more than minimum wage anyway because of the security requirements.

    The cleaning staff at CIA headquarters has to be vetted.

  • Tulpa (LAOL-VA)||

    Quite so. My neighbor is in charge of landscapers with TS/SCI clearance. NoVA is a weird place.

  • Square||

    I think certain wage rates are a multiplier of the minimum, so that even if no one makes the actual minimum, wages based on the minimum go up.

  • Bo Cara Esq.||

    Whoops, this should have gone here: it only applies to new contracts starting next year:

    "The order will affect workers starting on January 1, 2015, and applies to new contracts and replacements for expiring contracts."

    http://www.reuters.com/article.....PZ20140212

  • Paul.||

    When all you have is a hammer...

  • ||

    "Obama reassured raising the minimum wage won’t cause harm, but will “boost” the economy."

    Yes, because he has a strong track record that can back this claim up. How many of his schemes have failed already?

  • Paul.||

    Obama: Recovery done!

    Janet Yellen: until there's a recovery...

    So uhh, which is it?

  • Rich||

    "I guess the bitch set him up."

  • wareagle||

    Is it really that hard to believe that raising the minimum wage is going to cost somebody something?

    not hard to believe at all, just like it's not hard to believe that those pushing the increase think the ones whom it costs deserve to pay that bill. All those filthy, rotten, evil rich people diving into their swimming pools full of cash.

    I keep waiting for someone to ask why all this time and rhetoric is being wasted on less than 3% of the working population and most of those being either students or the very low-skilled. Meanwhile, the numbers bear out Milton Friedman's view of the minimum as the most anti-black law ever.

  • Rich||

    Meanwhile, the numbers bear out Milton Friedman's view of the minimum as the most anti-black law ever.

    Yeah, well, everyone knows he was a racist!

    /proggie

  • Bo Cara Esq.||

    "Meanwhile, the numbers bear out Milton Friedman's view of the minimum as the most anti-black law ever."

    I am not sure about that. I understand the argument to be that many blacks, especially in the inner-city, are unemployed and have a low skill set and that raising the minimum wage makes it less likely someone would offer them employment. But I think a lot of those same blacks likely are stuck in a dependency mode and/or are largely unemployable for a variety of reasons, so I doubt that in the absence of the minimum wage that they would suddenly be seeking low wage employment and that businesses would be offering them such.

  • Tulpa (LAOL-VA)||

    and/or are largely unemployable for a variety of reasons,

    Almost anyone would be employable for a low enough wage.

  • Bo Cara Esq.||

    I am talking about people who live in inner city areas that are rife with a host of social problems. There are a lot of people there that are going to be fairly unemployable at almost any wage.

  • wareagle||

    and one of those reasons are the horrible public schools blacks are forced into. So, not only are they poorly prepared for work, but the minimum wage compounds that by prohibiting an employer from providing them an opportunity for on the job training at a wage commensurate with the person's skills.

  • Bo Cara Esq.||

    The public schools are often horrible, but there really are some messed up subcultures in some of these areas that even a great school would not know what to do with.

  • wareagle||

    bo,
    this applies to any subgroup.

  • Bo Cara Esq.||

    Oh, of course. There are white neighborhoods with similar disfunctions running rampant, and see some Native American reservations where unemployment is around 90%, but there is such a culture of dependency and pathology that most there are uninterested in employment and/or largely unemployable.

  • Tulpa (LAOL-VA)||

    You're making the prefect the enemy of the good here.

    Getting rid of the minimum wage would not result in jobs for everyone of course, but it would certainly lower unemployment.

  • Bo Cara Esq.||

    Sure, I am not arguing against that, just saying this rhetoric about the disproportionate racial impact on inner city black youths is, like a lot of rhetoric based on race, not very spot on.

  • Tulpa (LAOL-VA)||

    You're still wrong even saying that. Look up the meaning of "disproportionate".

  • Bo Cara Esq.||

    The argument goes like this: the minimum wage laws hurt potential low skill workers like the black youths in the inner city, and look, the unemployment rate there is really high! The minimum wage is presented as a barrier that has a disproportionate impact on these inner city young blacks because of their low skill set. But if they are not potential workers at all then the minimum wage is not the problem for them, and cutting it out would not be the solution.

    Who getting rid of the minimum wage would help would be people of low skill or experience but who are employable and interested in low wage work. Of the large number of unemployed black inner city youth, very few would fall into that.

  • ||

    Who getting rid of the minimum wage would help would be people of low skill or experience but who are employable and interested in low wage work. Of the large number of unemployed black inner city youth, very few would fall into that.

    I think you've got the argument backwards; Getting rid of minimum wage isn't supposed to convert derelicts into paragons, continually raising it pushes marginally functional people into dereliction.

    The inner cities are full of youth who were put into public schools who (may have failed to) trained them for $7/hr. jobs and graduated into a market of not-less-than $10/hr. $7/hr. not being a 'living wage' to begin with.

  • ||

    Further, the minimum wage doesn't hurt socially and geographically mobile employees who can seek out unsaturated or underserved markets, it hurts the geographically and socially immobile portion of the population.

  • JWatts||

    "The argument goes like this: the minimum wage laws hurt potential low skill workers like the black youths in the inner city, and look, the unemployment rate there is really high! "

    The better minimum wage studies have shown that job losses due to previous minimum wage hikes are highest among minority teenagers.

    So, it's highly likely that lowering the minimum wage would reduce unemployment among minority teenagers.

  • Tulpa (LAOL-VA)||

    You're making the prefect the enemy of the good here.

    Getting rid of the minimum wage would not result in jobs for everyone of course, but it would certainly lower unemployment.

  • Tulpa (LAOL-VA)||

    There are a lot of people there that are going to be fairly unemployable at almost any wage.

    Here come the weasel words. If I'm running a business, I'd put up with tardiness, foul language, and minor misbehavior if I could pay someone $4/hr as opposed to $8/hr.

    The only people who are unemployable at any wage are those who would actually damage the business by being employed there. That's a tiny fraction of even poorly-schooled inner-city persons.

  • Bo Cara Esq.||

    You would be lucky to get tardiness and foul language. I am talking about incredibly spotty showing up, fighting with your customers and co-workers, dealing and using drugs right there on the job.

    I did some work at a legal aid clinic in an inner city area and it was pretty amazing what I came across. There was no way that many of the people I came across were going to get hired even if the minimum wage were 0 (of course, a bigger problem was that most of the people I met would not work these jobs if the wage were raised to 15 dollars an hour).

  • Invisible Finger||

    Meanwhile, the numbers bear out Milton Friedman's view of the minimum as the most anti-black law ever.

    So instead of asking "What's the matter with Kansas?" we should be asking "What's the matter with blacks?"

  • Rich||

    Is it really that hard to believe that raising the minimum wage is going to cost somebody something?

    Is it really that hard to believe that you are all a bunch of heartless nay-sayers?

    /proggie

  • GregMax||

    “the minimum wage leads to economic distortions and often has unintended adverse consequences for the employment opportunities of low-skilled workers.”

    The point of government meddling in the wage issue is . . . votes. The rest of this conversation is mental masturbation to statists.

  • Rich||

    How about we just cut to the chase: If you receive government largesse, your "votes" are automatically tallied to the party in power, thus saving *everyone* time and money.

  • Zeb||

    Or even better, if you work for the government or for a company that contracts directly with the government for your job, you don't get to vote at all.

    Honestly, at this point I think that voting should be limited to employed land owners over 30.

  • Tulpa (LAOL-VA)||

    Right, cause oligarchies worked so well historically.

  • Zeb||

    I think one could make the argument that we already effectively have an oligarchy. I think mine would be a lot more open and fair, assuming it is possible to maintain a constitutionally limited government.

  • Calidissident||

    I'm gonna have to agree with Tulpa on this one. Maybe if all the government did was tax and spend money, I can at least see the argument for your system. But it doesn't. It passes laws that affect a lot more than that. And I'm not really sure how much that would actually help. You might get marginally less spending on social programs for the poor and slightly lower taxes, but overall, I don't think it would drastically alter the budget situation (how many people in your group are clamoring for SS/Medicare reform or cutting military spending?). Is that group any more against drug laws, NSA surveillance, foreign wars, etc.? Whatever fiscal benefit it would provide right now is not worth creating a massive group of disenfranchised citizens, and the social turmoil and potential risks (I realize many of these would be extreme examples, but I can think of many societies that would have been far more free had landless people had the right to vote, i.e. the antebellum South) that involves, and possible worsening of liberty in other areas.

  • The Last American Hero||

    He who pays the piper calls the tune.

  • Bo Cara Esq.||

    Minimum wage laws are violations of the NAP, there is no way around it. You are essentially criminalizing a person offering someone employment. But if governments want to pay a minimum wage to its workers, or make that a condition of its contracts with others I do not see a problem with it (other than as a taxpayer it is likely not the most efficient use of my tax dollars, oh, and of course probably 90% of what they are contracting to do should not be done by the government).

  • JWatts||

    "But if governments want to pay a minimum wage to its workers, or make that a condition of its contracts with others I do not see a problem with it "

    Ok, but that's a bit of a strawman pose. The government doesn't want to, the Administration does. Hence, the whole Executive Order vs actually even attempting to pass legislation.

  • Rasilio||

    No of course it doesn't come with a price. Didn't you know that the magic of intentions makes the money for those higher wages just magically appear in the companies bank accounts?

  • Auric Demonocles||

    The minimum wage increase doesn't come with alt-text.

  • UnCivilServant||

    We have to make cuts to afford it.

  • db||

    I thought Obama and the Progs were anti-smoking? Why would they intentionally push so much money toward the tobacco companies?

  • ||

    President Obama signed an executive order yesterday raising the minimum wage to $10.10 an hour for a portion of federal contractors.

    This is a complete abrogation of his responsibility and authority. The federal government should award employment contracts, both contractor and civil servants, the same way it acquires toilet paper: to the lowest fucking bidder. The president is not constitutionally empowered to take the fruits of my labor to create another group of parasites with an artificial wage floor who will become wholly owned subsidiaries of the welfare state.

  • Sevo||

    'The president is not constitutionally empowered to take the fruits of my labor to create another group of *VOTERS* with an artificial wage floor who will become wholly owned subsidiaries of the welfare state.'

    See how that changes things?

  • Bo Cara Esq.||

    The argument goes like this:

    "The claimed executive authority is said to come from the Federal Property and Administrative Services Act of 1949. This sets no fast and firm rules for contractor pay, but says the Executive shall try to promote “economy and efficiency” in procurement. Paying people more at first glance does not seem to be either economical or efficient, but there are variety of policy arguments that it actually would be, by lowering turnover, for example. Generally, if the president has a colorable argument that it would serve these goals, that is enough for constitutional purposes, and this is what would generally count as a reasonable spin."

    http://www.washingtonpost.com/.....l-actions/

  • Sevo||

    So commerce clause.

  • Bo Cara Esq.||

    No, it was a law Congress passed giving the executive this authority.

  • wareagle||

    oh, please. There is no policy argument to be made or being made, just a political one.

  • Bo Cara Esq.||

    I guess you would have to read the text of the EO to see what they are saying the rationale is (of course, it could just be cover for political reasons).

  • wareagle||

    what from this administration has been about anything but political reasons? Words vs. actions.

  • Bo Cara Esq.||

    Don't disagree there.

  • db||

    The sad thing is there are probably thousands of little delegations of power to the Executive.in.existing law that can be used to.justify almost.any executive.order. The mark of.a.good White House Counsel is that he can root them out and make a.convincing argument for such use. Whether or.not.such delegations.are proper or.desirable, they.will be used to justify all manner of actions by the Executive that are otherwise Constitutionally unauthorized.

  • Bo Cara Esq.||

    As is often the case there is a supine Congress giving away its powers as one of the causes.

  • Rich||

    This. "It's the Law."

  • Bill Dalasio||

    The mark of.a.good White House Counsel is that he can root them out and make a.convincing argument for such use.

    I think we've reached the point where the argument doesn't have to be convincing. Just marginally plausible enough that it can't be rejected with certainty.

  • Zeb||

    the same way it acquires toilet paper: to the lowest fucking bidder.

    Does it even do that? I figured there must be some preference for unionized, minority owned toilet paper distributors.

  • UnCivilServant||

    We don't directly buy toilet paper, the company that cleans the bathrooms buys it.

  • Sevo||

    "Does a Minimum Wage Increase Come With a Price?"

    Not through the magic of Obo I!

  • ||

    The problem with all these studies is that there are so many confounding factors you can't just say because you can't detect an effect that there isn't one.
    The theory about minimum wage not cutting employment only makes sense if you assume that the employer has monosony power in the market, which means there is only one employer. But that's demonstrably untrue almost everywhere in the country. There is no monopsony on fast-food works or restauraunt workers or maid services. Minimum wage employment is spread across hundreds of small businesses in any locality. It's just crazy to think it would be the case.

    It's much more likely that the effects are real but are obscured by statistical noise and other confounding factors, and if you had a large enough increase in the minimum wage, you would see the effect. But I'm not going to propose doing such an experiment in real life, since it would be grossly unethical.

  • Tony||

    And the question you don't address: does the minimum wage do any good? Making the question not "does it come with a price?" but "is it worth the price?"

  • Rich||

    OK ....

  • PapayaSF||

    The good: some people with low-end jobs get a raise.

    The price: some people don't get employed.

    The people in #1 will be those most favored by employers: e.g. white high school students who need a summer job.

    The people in #2 will be the least favored: e.g. black teen dropouts.

    So you tell me, Tony: Worth it?

  • ||

    The price also includes higher costs for consumers, who now have less money to spend on other things, which means a reduction in aggregate demand, which ultimately reduces employment, and hence, probably a wash.

    There are no free rides, ever. The only thing that really increases prosperity is increased production. Moving poker chips around doesn't magically change the amount of wealth the players have.

  • Tony||

    Probably yes.

  • wareagle||

    so you accept the further harm to black teens already failed by the public education system. Okay then.

  • Tony||

    Spare me the crocodile tears. What do you want to do about the lack of access to good education for poor kids? Sprinkle market fairy dust over the land, right?

  • Sevo||

    Tony|2.13.14 @ 12:27PM|#
    "Spare me the crocodile tears."
    That's rich from a gov't thug.

    "What do you want to do about the lack of access to good education for poor kids? Sprinkle market fairy dust over the land,"
    No, asshole, I'd like the gov't to get out of the way and allow them to make a living. Sort of like NOT raising the minimum wage.

  • Brian||

    Tony:

    What do you want to do about the lack of access to good education for poor kids? Sprinkle market fairy dust over the land, right?

    I would leave it to the magical unicorns that operate the state education system, which universally enriches our children. Dare I say it, universally prepares all children for both adulthood and college education.

    What's worse? Believing a fairy tale dream is possible? Or believing that the stark, naked reality in front of you is already a fairy tale dream? Or, about to become a fairy tale dream?

  • Tony||

    I believe there is a pretty direct correlation between whether your parents have money and whether you get a good education from the public school system.

    Making school available only to those who are willing to pay (the real libertarian solution) would certainly not improve that situation.

  • Brian||

    Tony:

    I believe there is a pretty direct correlation between whether your parents have money and whether you get a good education from the public school system.

    So, basically, the libertarian solution would be the status quo, i.e., people getting the education they can pay for, minus the soul crushing state run schools, teacher's unions, and property taxes?

    Sounds horrible.

  • Zeb||

    Well, pouring more and more money into the schools hasn't helped.

  • Paul.||

    Spare me the crocodile tears. What do you want to do about the lack of access to good education for poor kids?

    Let's see here, we suggest privatizing large swathes of the education system, vouchers, charter schools, all kinds of things.

    What do YOU believe increases access to good education for poor kids?

    Throwing buckets of unaccountable money at continuously failing schools and the magical pixie dust of UNIVERSALZ PRESCHOOLZ FOR BILL GATES'S KIDS!

  • Bo Cara Esq.||

    Tony, that is a fair enough point. I would guess it does help the set of people who were employed for less than the wage and whose jobs would be kept regardless.

    But I am not a utilitarian about right and wrong, and I think to criminalize someone for offering another employment is just wrong, period.

  • Tony||

    What if that person is a child and the employer is a sweat shop? We set floors on these things, and that's good. It seems to have the effect of raising standards.

  • Bo Cara Esq.||

    I think it is reasonable to set limits on children because they can not effectively consent to such an agreement, but treating adults as children is a bug, not a feature of these kinds of laws.

  • Paul.||

    Hmm, you just raised an interesting point. Government treats me like a child, with our current culture and laws, children cannot enter into contractual agreements.

    Yet I'm told I signed some kind of social contract.

    I think y'all know where I'm going with this.

  • OldMexican||

    Re: Tony,

    And the question you don't address: does the minimum wage do any good? Making the question not "does it come with a price?" but "is it worth the price?"


    So you're conceding that there's a price to pay for raising the minimum wage?

    I call that progress. Before, you were simply denying there was anything like a price for those things you like, that everything was going to be lollipops and sunshine if only the right government-mandated policies were instituted.

  • ||

    /faints.

  • Tony||

    That's never been my position. Everything is a tradeoff. The key is to strike the right balance so that you trade something of less value (an employers' access to cheap labor) for something of greater value (workers who can afford to feed their families and increase demand in the economy).

  • Sevo||

    Now, it is possible to misunderstand the trade-offs here in many ways, but I'm gonna call this the most ridiculous possible rendition:

    ..."you trade something of less value (an employers' access to cheap labor) for something of greater value (workers who can afford to feed their families and increase demand in the economy)."...

    Hint, Tony: Raising the prices of what those workers buy does not help the economy nor them.
    But as an asshole wedded to lefty stupidity, that isn't the point anyhow is it? Your point is to do what ever it takes to make you feel self righteous, regardless of the harm it inflicts on anyone.
    Sleazebag....

  • ||

    The increased demand from some workers comes at a cost of reduced demand from others.

    Employers have less to spend on capital goods to expand (which are produced by other workers in other totally valid economic sectors). Prices increase, which means other consumers have less money to spend on other things. If you just shift wealth from one group to another, how can that possibly increase aggregate demand?

    Money in the bank is not sitting idle, it is being lent out. Why is money spend on groceries and toilet paper more "demandy" than money spent on machine tools or office supplies or new construction? It all gets spent, one way or another. Why do food producers deserve the money more than manufacturuers?

  • Tony||

    Some of the money that goes to profits may be spent on those things, or it may sit idle. But all of the money in the pockets of a low-wage worker is going to get spent. It really does increase overall demand to distribute downward.

  • Brian||

    Therefore, the best thing you could do for the economy would be to donate all of your spare money to the poor, to increase aggregate demand.

    Let me know when you start. Otherwise, you're not acting in accordance with the ultimate good of human well-being. What, with your silly "liking your property" stance.

  • Tony||

    The best thing would be to tax the rich heavily and cut checks to everyone.

  • Brian||

    So, just outright theft, making a sacrifice to the god of aggregate demand.

    All I have to do is lump you in with "rich", and it's even better, right?

  • Tulpa (LAOL-VA)||

    Remove all incentive to work and invest -- what could go wrong?

  • ||

    We the rich say, 'Feel free to try it (yet again).'

  • Tulpa (LAOL-VA)||

    Corporate profits are much more likely to sit idle, or be offloaded into stock buybacks, in a suffocating and unpredictable regulatory environment. Your co-ideologues in the executive branch are running the furnace and the A/C at the same time.

  • ||

    The money from a stock buyback goes to someone, who proceeds to either spend it on something or put it in a bank. It's still going back into the economy.

  • ||

    How does it sit idle? What do you think they are literally stuffing it in mattresses?

    If it's in a bank ANYWHERE, it is being lent out to someone.

  • Tulpa (LAOL-VA)||

    If it's in a bank ANYWHERE, it is being lent out to someone.

    Not quite true. Reserves at the Fed aren't lent out, and that's all that's preventing hyperinflation at this point.

  • ||

    Fair enough. But that's like 3% right now. 97% of the money gets lent out.

    Besides which, one would think that better banking stability would also have positive economic effects due to reduced risk and lower interest rates.

  • OldMexican||

    Re: Tony,

    That's never been my position.


    Of course it has been your position. See below:

    The key is to strike the right balance so that you trade something of less value (an employers' access to cheap labor) for something of greater value (workers who can afford to feed their families and increase demand in the economy).


    Your own value judgment of the situation is completely irrelevant for the simple reason that you're NOT a participant in the transaction. Whatever YOU believe should happen carries no weight, at all. What matters is that the employer and the employee come out benefiting from the transaction, otherwise neither would trade - is that simple. If YOU think the employee should obtain a higher wage, then you can always set up shop and offer higher wages, which comes at a cost to YOU. Asking the government to MANDATE the higher wage comes at NO cost to YOU. Ergo, you are indeed advocating for certain policies as if these carried no cost because they will not - for YOU.

  • Tony||

    Which is a completely separate debate. I think we are entitled as a society to require employers to meet certain minimum standards. Maybe it hurts their bottom line to require them to clean up a cockroach-infested kitchen. Oh well. As long as the economy is sound enough, setting floors leads to higher standards. And it's always been nonsense that the transaction between employer and employee is a perfectly balanced one.

  • OldMexican||

    Re: Tony,

    Which is a completely separate debate.


    What are you talking about? YOU were the one who retorted with this "living wage having more value" canard!

    I think we are entitled as a society to require employers to meet certain minimum standards


    There's no "we", Kimosabe. "Society" is just a concept, a facilitator for conveying ideas through more efficient language.

    You're refusing to address the issue yet again: You argue for policies that are in reality very costly to individuals only because they feel good for you, as you personally would NOT bear any of the cost.

    As long as the economy is sound enough, setting floors leads to higher standards.


    Non sequitur.

    And it's always been nonsense that the transaction between employer and employee is a perfectly balanced one.


    This is a moral judgment, again, not an economic one. You are too keen on pontificating about how the little guy cannot make a decision for himself, a very snobbish position. The relationship between employer and employee is always balanced as long as the transaction is voluntary.

  • Tony||

    It's more voluntary for the employer than for the employee. This is why there was a labor movement in the first place.

    You guys act like liberals just dreamed up wacky schemes between bong hits.

  • Brian||

    Tony:

    I think we are entitled as a society to require employers to meet certain minimum standards.

    Scandinavian countries don't have a minimum wage.

    Are wages there a race to the bottom? Do Norway and Sweden lose their Tony-issued civility seal of approval?

    This whole idea that government has to set minimum standards, that all modern democracies do this to the extend socialist democrats approve of, and anyone who wants any less it forcing us into a future of the poor eating the elderly while they wash the balls of the rich, is just silly stupidity. You have to ignore all the counter-examples to embrace it. That's just cherry-picking facts to back up your religious ideology. It's definitely not thinking.

  • OldMexican||

    Re: Brian,

    This whole idea that government has to set minimum standards, that all modern democracies do this to the extend socialist democrats approve of, and anyone who wants any less it forcing us into a future of the poor eating the elderly while they wash the balls of the rich, is just silly stupidity.


    You can be sure that he does not embrace the concept of a standard imposed by a society for the sake of the PRINCIPLE itself but, instead, as long as the standards being imposed agree with HIM. This is the very reason I put him to task for alleging that he takes into account the costs that come with the policies he likes, because it is clear he cannot conceive of a society where those same policies are not the prefered ones - case in point, his value-judgment-based conclusion that the relationship between employer and employee is not a balanced one. He's a hypocrite.

  • Brian||

    Tony:

    That's never been my position. Everything is a tradeoff.

    And there just isn't convincing evidence that the tradeoff (if any) is not worth it.

    If any != Everything.

    There are several other "negative" outcomes that are possible, ..Both of those are actually good for the overall economy...

    "Negative" air quotes that are good for the economy != everything is a trade-off.

  • ||

    That's your vision of balance?

    Holy shit.

  • ||

    And it's not a 'trade' when it's forced onto you. If one side of the coin doesn't consent it off the mark qualifies as unjust.

  • Bill Dalasio||

    Everything is a tradeoff.

    And Tony's made abundantly clear that he's more than happy to trade off Jamal's ability to take the first step up the career ladder to let Buffy have spending money to buy tickets to the Justin Bieber concert.

    Because, you know, he cares about the disadvantaged.

  • ||

    The price of the minimum wage is less overall production, because you've effectively idled any workers whose marginal productivity is less than the minimum wage. So you have a class of people who could be doing something useful, but instead are sitting at home consuming welfare. How could that possibly be a net gain for society?

    Less production is less production.
    Shouldn't Keynesians be *against* having a pile of unused labor sitting idle?

  • Tony||

    But it's just not been clearly shown that minimum wages at the small levels of increase we're talking about have that effect. We had a minimum wage with full employment, we had it during high unemployment. Overall economic conditions overwhelm any effects of the minimum wage.

  • Tulpa (LAOL-VA)||

    Overall economic conditions The Federal Reserve printing money overwhelm any effects of the minimum wage.

  • ||

    Are you denying the existence of marginal effects?

    If it has an effect with a large increase, how the hell does it not have an effect with a small increase? Does the amount of money people have to spend magically increase just because price changes are small?

  • Tulpa (LAOL-VA)||

    If it has an effect with a large increase, how the hell does it not have an effect with a small increase?

    Someone's never heard of inelastic demand.

    If McDonalds raises the price of a Big Mac by $0.01, are sales going to drop?

  • GregMax||

    If they raise it .01 dollar a week then there'd be an impact in 6 months. Was it the last week, the 3rd week or the 40th week?
    Just cause you don't observe an effect doesn't mean it isn't there. People manipulated matter long before atomic theory was postulated.

  • Tulpa (LAOL-VA)||

    I'm not sure if there would be, that's still only $0.26. But that's a relatively fast increase anyway.

  • ||

    Yes, marginally, they will.

    Besides the fact that one million big macs means $10,000 less aggregate dollars that consumers have to spend on other stuff.

  • Tulpa (LAOL-VA)||

    Yes, marginally, they will.

    A statement of faith? Tell me if the following situation is likely to happen, well, ever:

    The family of five piles into the car, drives to McDonalds, and when they get to the menu they notice that the Big Macs are $3.96 instead of $3.95 and the Happy Meals are $4.20 instead of $4.19. In a huff of fury, they drive back home and cook some mac and cheese for dinner.

  • ||

    Families of four with cars that have to drive to McD's are not the only people that go to McD's.

    Some of the people that go to McD's may include (for example) a homeless man who has collected just enough money in his cup to walk in and get a cup of coffee and a hamburger. Turns out he's one penny short. The first three times the cashier pulls a penny out of the jar and uses it. The fourth time, she says no.

  • Tulpa (LAOL-VA)||

    So he goes off and starves because he was a penny short? Or does he go out and find a penny?

    I seriously doubt that accounts for many Big Mac sales, anyway.

  • GregMax||

    Are you arguing that there is a point where you can raise the price of a commodity with out any effect?
    If that were true, then you could perpetually raise the price by that amount and no one would ever elect not to purchase. The frog in the pot. People aren't frogs.
    Chemical example: You have a beaker with a solution in it. You drip reagent in one drop at a time. Intially (according to my understanding of you post) each drop has no influence. But when you reach the critical point it goes and reacts completely. Was it the last drop that created the reaction or the unseen accumulation of all the previous drops.

  • Tulpa (LAOL-VA)||

    Are you arguing that there is a point where you can raise the price of a commodity with out any effect?

    Not indefinitely. You could raise the price a small amount, but there would be a threshold value where further price increases would lower demand.

    And this doesn't apply to all commodities. Stuff that's bought in large, variable amounts (coal, road salt, etc) might be affected by even a small increase.

  • GregMax||

    Okay. Not only not indefinitely but, as in the chemical example, not immediately. The 1 cent increases accumulate like fiddling with minimum wages in "minor" amounts. It gets no observable reaction cause 1 cent isn't enough to create an immediate negative impact . . . but 20 would, or 80. And the impact is based on the 20 not the 1 cent increase.
    Personally, I think minimum wage requirements give people a short term buying power boost. But it doesn't last (witness your point about Reagan era buying power.) Ultimately what benefits an economy most is people being satisfied with their buying power and access to stuff to make their lives satisfying. The bigger point is that government does that poorly, and because it creates the appearance to some that it's "good" a majority of voters don't demand a more fundamental strategy to accomplish satisfaction expansion.
    When I started working I made 1.35 an hour . . . I could buy 5 gallons of gas with that. Simply compelling business owners (who are also consumers) to pay a wage equivalent to 5 gallons of gas is that it creates the delusion of solving the problem. What really is happening is that the government is inflating the economy to pay off spending it can't afford, and it muddies up the natural economic processes that lead to economic stagnation. This is the new normal.

  • Bill Dalasio||

    For your argument to work, that scenario would have to be universally untrue. If one person is deterred by the new, higher, price, your argument falls apart. What you're arguing is that demand is not only inelastic, but perfectly inelsastic at that price point. There's no evidence to support that claim.

  • Bill Dalasio||

    And firms don't raise their prices $0.01 at a time, so such implications are estimates (your claim of "faith" to Hazel), just as much as the assumption that some of the people who drop out when there is a $0.20 increment are those who would have dropped out at the $0.01 increment.

  • KDN||

    Tulpa's really, really stupid about this issue; this isn't the first time he's gotten marginal demand wrong. The argument here isn't the homeless guy with pennies from panhandling, it's groups purchasing food in large quantities. If the total food budget is $2,500 and McD's raises the price of Big Mac by $.01, then the group will forgo ordering an extra meal or two to stay within the budget, thus lowering total demand.

    Even if those groups are vanishingly rare, the decline still exists.

  • ||

    Also, since when is demand for Big Macs inelastic?

  • Bill Dalasio||

    Yes. The amount may not be noticeable. But, some people will be priced out by the $0.01 increase.

  • Marc F Cheney||

    If the price could be raised by $0.05 without affecting sales, wouldn't McDonald's make a shitload of money by doing just that?

    Why are they leaving that money on the table then? Are they idiots?

  • Marc F Cheney||

    Similarly, if demand for unskilled labor is inelastic as you claim, so that the price could be raised to, say, $10/hour without unemployment going up, then why aren't workers asking for raises? Why would anyone be proposing an increase in the minimum wage?

  • Brian||

    Tony:

    Overall economic conditions overwhelm any effects of the minimum wage.

    I thought the whole point was to stimulate aggregate demand.

    Now overall economic conditions overwhelm the effects of the minimum wage?

    If your policies produce no measurable effects based on what else is going on, why do you guys always act like we're sending the poor to starve if we're not willing to use state violence to force employers we've never met to hire people we've never met for a price we have no idea is reasonable or not for the situation?

    If everything stays so static, what's the point?

  • Marshall Gill||

    Making the question not "does it come with a price?" but "is it worth the price?"

    The rational answer, as opposed to the emotional one, is, of course, no.

    In typical fashion, the minimum wage hurts those covered the most. Does one seek to improve themselves when they are enabled to "advance" otherwise? Once given, does the increased salary provide actual self esteem as a result of personal actions? No.

    The minimum wage actually steals from the poor. Any success they achieve isn't from their own efforts but as a result of a "magnanimous" gift from others.

    Simply another instance of the Leftard attempting to feed upon those they claim to support.

  • KPres||

    The effect of raising the minimum wage on poverty is almost nonexistent, because most of the people that earn the minimum wage aren't anywhere near the poverty line. Their median income is something like $50K/year. The problem is idiot voters think people are raising families on the minimum wage, and get all worked up, so it's a great wedge issue for the Democrats. That's why the ALWAYS vote against pegging the minimum wage to inflation, they'd rather have it as an issue to bring up as an issue ever several years.

    The minimum wage should be zero. Any poverty programs are better run as direct transfers through the welfare system than fucking up the labor market.

  • Jgalt1975||

    That's why the ALWAYS vote against pegging the minimum wage to inflation, they'd rather have it as an issue to bring up as an issue ever several years.

    When was the last time someone introduced a bill in the US Congress to peg minimum wage to inflation?

  • PapayaSF||

    If you add weight to a car, it gets worse mileage. Period. Of course, you could do studies (and meta-studies) based on interviewing drivers about their cars and how much they carry in them, and "fail to detect significant effects."

    If you increase the price of low-end jobs, there will be fewer low-end jobs. Period.

    I believe every discussion of the minimum wage should include the fact that the original Progressive promoters of the concept not only knew it would cost jobs, but intended it to do so, for eugenics purposes. They wanted women to stay home and have kids. They didn't want Negroes and the handicapped to undercut wages, and to have enough money to have kids. This should be thrown in the face of every supporter of the minimum wage.

  • Tony||

    You need to figure out how to distinguish "what I want to be true so that I don't have to change my ideology" from "what is supported by real-world evidence."

  • OldMexican||

    Re: Tony,

    "what is supported by real-world evidence."


    Thus spake the Irony-impaired.

    You should take care of that hemorrhaging tongue, Tony, before you bleed to death.

  • PapayaSF||

    As I explained, the "real-world evidence" in favor of the minimum wage is bullshit.

  • OldMexican||

    Re: PapayaSF,

    As I explained, the "real-world evidence" in favor of the minimum wage is bullshit.


    No, no, you're mistaken. The "real-world evidence" in favor of the minimum wage is right there, for all to see - as long as you happen to be a member of a union, for which the barrier to entry for the unskilled is very beneficial and if your union contract happens to have clauses of wages and benefits pegged to the federal minimum wage.

    Tony couldn't care less about the "real-world evidence" of anything.

  • Tulpa (LAOL-VA)||

    You didn't explain shit. You made a poor analogy that wasn't even analogous to what the studies dealt with.

  • PapayaSF||

    If you raise the price of a commodity, people will try to buy less of it. Is that even arguable? There are a few exceptions (certain luxury goods), but labor is not one of those exceptions.

  • Tulpa (LAOL-VA)||

    Inelastic demand. Look it up before commenting on economics, please.

  • Bill Dalasio||

    Inelastic demand.

    You keep using that phrase. I do not think it means what I think you think it means.

  • Auric Demonocles||

    Inelastic demand means people will still buy food. And since McDonald's is the only place you can buy food, inelastic demand means people will still buy McDonald's!

  • PapayaSF||

    Inelastic demand for low-end labor? That's why we still have theater ushers and gas station attendants? Why the rise of unpaid internships? Why the rise in black teen unemployment? Think before commenting, please.

  • wareagle||

    the real world evidence you seek can be found in the jobless rates among blacks and teenagers. The left paints the minimum as what bazillions of people are using to support families. That is a lie, not unusual coming from Obama, but one nonetheless.

    I find it ironic how he and the left will spend so much time on a small segment of the population but dismiss a larger segment - those who lost insurance due to O-care - as being a very few.

  • Certified Public Asskicker||

    I wonder what would happen if Obama issued an executive order that any one named Tony must be paid $10,000 an hour.

    Would you be filthy rich, or unemployable?

  • ||

    Tony, do you not see the concern here that these measures hurts the very people (demographics) your side claims to help?

  • Tony||

    The demographics people?

  • Bo Cara Esq.||

    I do not think this has been the rationale behind support for the minimum wage laws for a long time though, so if you threw it in a supporters face they would likely (and rightly) shrug.

  • PapayaSF||

    That's beside the point. If someone invents something to create unemployment, it matters that later promoters of the same thing claim that it won't do that.

  • Bill Dalasio||

    Now, now, Papaya, it's only intentions and motivations that count. Not silly things like consequences.

  • PapayaSF||

    Think of it this way: If someone was selling you a drug for losing weight, would it matter if that drug was invented and sold 90 years ago as a weight-gain drug?

  • Tulpa (LAOL-VA)||

    Not a great analogy. You'd have to show that adding weight to a car results in fewer miles driven.

    If the effect on fuel efficiency is small enough, the drivers may just eat the difference. And of course, if the price of gas goes down, adding weight to the car may not cost anything, and drivers would have no incentive to reduce their miles.

  • PapayaSF||

    I'm not talking about the influence of vehicle weight on driver behavior, I'm talking about the pure physical effect, and the inability of (economic-style) surveys to detect the effect, even though it must exist.

  • Tulpa (LAOL-VA)||

    So, you're not talking about something analogous to what the studies measured.

    You're basically claiming it's impossible to measure real world effects, so we must accept your naive misunderstanding of supply and demand.

  • PapayaSF||

    Obviously studying the real-world effects of economic regulation is hugely complicated. If you know a basic, widespread principle (higher prices = fewer purchases), and you have no theory as why that would not be the case in a particular instance, then you have to be careful about studies that "show" the principle not working as expected.

    Some of these minimum wage studies were based on sampling employers via surveys. No wonder the effects of a wage increase might be hard to discern! What's the sample? What were the questions? How honest were the responses? A small negative effect could easily be lost in the noise.

    That's why I used my original analogy: people reporting their mileage, and the weight of their vehicle contents, is a very poor way of measuring the effects of weight on mileage. The studies that show "little to no effect" of a rise in the minimum wage are analogous to that.

  • The Late P Brooks||

    "Obama reassured raising the minimum wage won’t cause harm, but will “boost” the economy."

    Magic spell is magic.

  • Rich||

    You do know that "boost" means "shoplift", right?

  • Tulpa (LAOL-VA)||

    Obviously raising the minwage to $50/hr would kill employment rates, but the take from actual studies of real world effects shows that small increases in the minimum wage do not affect unemployment. The demand curve is really a step function, not a continuous curve. Raising the price of a Big Mac by $0.05 is going to have essentially no effect on sales.

    This is even more true in the presence of significant price inflation. BO was correct when he said that the minwage today is actually lower than it was during the Reagan administration when priced in real dollars.

  • CampingInYourPark||

    Obviously raising the minwage to $50/hr would kill employment rates, but the take from actual studies of real world effects shows that small increases in the minimum wage do not affect unemployment. The demand curve is really a step function, not a continuous curve. Raising the price of a Big Mac by $0.05 is going to have essentially no effect on sales.

    "Watch me while I blow a bunch of nonsensical numbers out of my ass while vaguely referring to 'actual studies'"

  • Tulpa (LAOL-VA)||

    RTFA.

    Nevertheless, other economists have failed to detect significant costs. For instance in Hristos Doucouliagos’ and Thomas Stanley’s meta-analysis of 64 studies, they conclude there are no “meaningful adverse” effects on employment.

  • CampingInYourPark||

    Oh shit! How could I have not seen the Doucouliagos' and Stanley's meta-analysis of 64 studies? The science is settled!

  • OldMexican||

    Re: Tulpa,

    Obviously raising the minwage to $50/hr would kill employment rates, but the take from actual studies of real world effects shows that small increases in the minimum wage do not affect unemployment.


    Not current unemployment rates, Tulpa, but setting a price floor changes the cost of opportunity for an employer, making it much less attractive to hire unskilled youths and setting for the sure thing. So a new price floor creep may not change current employment for companies but it has been distorting the labor market for decades.

    If my example (which I linked to above) does not convince you, then think about how the purchasing behavior of food companies has changed because of the domestic sugar subsidies which impose a de facto price floor on sugar, and why these companies now rely more on substitutes like fructose which are less tasty - but cheaper.

  • OldMexican||

    Sorry, should read: "... much less attractive to hire unskilled youths, settling instead for the sure thing."

  • Tulpa (LAOL-VA)||

    I agree about the effects of the minwage vs. not having a minwage. My point is that a small increase, like those being proposed by BO over a period of years, is not going to have a significant effect compared to leaving it where it is.

    That doesn't mean I think it's a good idea, of course.

  • OldMexican||

    Re: Tulpa,

    My point is that a small increase, like those being proposed by BO over a period of years, is not going to have a significant effect compared to leaving it where it is.


    I don't think you're getting it. Even if the increments were spaced and far-between, these will STILL change the behavior of employers of labor for the following reasons:

    * Prices are signals that convey information about the availability of resources. Prices have thus an epistemological purpose.

    * A price FLOOR would distort this information-conveying process, not allowing buyers to know about changes i the market.

    For instance, if the supply of labor suddenly shooted up, the employer could NOT take advantage of this by lowering his costs through hiring less-costly (i.e. more available) workers for certain tasks, having instead to continue to hire the more expensive workers. So even if you increased the minimum wage very gradually, the labor market does not behave in the same manner and you WILL have resource dislocations which we call "unemployment."

  • Tulpa (LAOL-VA)||

    Prices are signals that convey information about the availability of resources. Prices have thus an epistemological purpose.

    You're confusing macro with micro.

  • OldMexican||

    Re: Tulpa,

    You're confusing macro with micro.


    I think the confused party is sitting on the other side of this conversation. Prices convey resource availability information REGARDLESS if we're talking about a localized market or in the aggregate.

  • GregMax||

    And yet there IS already a minimum wage. Your point leads a rational person to ask if all "minimum wage" laws do is artificially compensate for inflation.
    Give people as much or as little minimum wage protection as you want (or as politicians want to get the base out to vote), in the end it's buying power we want not dollars.
    Minimum wages, the Fed, and government in general perpetuate inflation. It's a big ponzi scheme and the bulk of this discussion is crap.

  • Tulpa (LAOL-VA)||

    Agreed about the water-treading nature of minwage increases and the Fed's involvement.

  • GregMax||

    Then I would argue that the better course is to stop manipulating the appearance of buying power and actually stop screwing with average people's buying power.
    Politicians don't want to have that discussion. This is partly what leads me to believe this whole issue is about manipulating voters.

  • PapayaSF||

    Raising the price of a Big Mac by $0.05 is going to have essentially no effect on sales.

    I suspect that experienced MacDonald's executives would laugh at you for that one.

  • Tulpa (LAOL-VA)||

    Sure they would! Your adherence to the dogma is commendable.

  • Calidissident||

    Why are they leaving all that money on the table?

  • PapayaSF||

    Because they're not as smart as Tulpa. Why, he could just walk in to the boardroom and tell those dummies how to make millions more every week! What do they know about pricing their products?

  • Tulpa (LAOL-VA)||

    Uh-oh, snowball fight in Dupe Circle. Could be a springboard for another property rights vs. cop hate thread.

  • dantheserene||

    The EO has a section for "tipped workers". How many federal contractors and sub contractors does that apply to?

  • db||

    Technically, hookers entertaining Federal agents are contractors...

  • Pro Libertate||

    They'd better be careful, because if you don't handle contractors just right, they can be deemed employees, with all of the rights that go with employment.

  • dantheserene||

    I don't think I want to see a hooker whose rate is going to *rise* to $4.90 an hour on January 1, 2015.

  • The Late P Brooks||

    Fucking marginal return- how does it work?

  • db||

    The.increase.in quality of.sex.will be significant.

  • dantheserene||

    I didn't see a link to the EO itself in the article, so here it is:
    http://www.whitehouse.gov/the-.....ontractors

  • Rich||

    rounded to the nearest multiple of $0.05.

    I suppose there'll soon be a new EO correcting that to "rounded *up*".

  • Ayn Random Variation||

    How am I supposed to raise a family of 4 on 10.10 an hour??? How out of touch is Obama???

  • ||

    This may come as a surprise to the assorted freak-derps perusing these parts, but I pay myself a salary that equals the average of my payroll. I do this to ensure I remain solvent since I've only been in business three years and still have debt to pay back (to myself and the bank).

    I 'could' be a hot shot and raid the coffers but I don't. So when the government increases my costs I get angry because it defers getting my money back and reaching a salary I want.

    Plus, my mother won't allow me to take more. She's like the mother on Wahlburger's - she imposes her will.

  • Invisible Finger||

    Obama reassured raising the minimum wage won’t cause harm

    Has this jackass ever been correct about ANYTHING? He even thought Michelle was Ms. Right.

  • AlmightyJB||

    If you want to increase the minimum wage get the economy rolling again. Before this recession when unemployment was low the wendys in my neighborhood was hiring for $10 an hour because they were having trouble filling jobs.

  • OldMexican||

    Re: Tony,

    It's more voluntary for the employer than for the employee.


    No, jackass - it is 100% voluntary for BOTH, as long as no one else makes any of the two come together at the point of a gun - like the government does.

    This is why there was a labor movement in the first place.


    That's not even historically accurate. The labor movement started in the U.S. to keep immigrants and blacks out of the labor force. And in other countries primarily to keep country folk from entering the labor market. Why do you think labor movements always started in cities and especially those that were the big immigration magnets?

    You guys act like liberals just dreamed up wacky schemes between bong hits.


    I don't believe that is the case, otherwise liberals would have an excuse. No, liberals come up with these schemes because they're evil, inmoral people.

  • ||

    You guys shouldn't be so hard on poor Tony. I mean, he's in law school (or something) so he'll probably have to do an unpaid internship somewhere before he can sit for the bar. Then there's all that icky competition in the job market for lawyers.

    In all seriousness though, it is possible that an employee is paid less than the value of their work and it's not like companies don't routinely fuck their employees. Of course that doesn't mean Big Daddy Government needs to get involved, but its not like it doesn't happen.

  • MarkinLA||

    Does keeping wages artificially below the cost of living by flooding the labor market have a price? Yes, it does since those employees end up on some type of welfare program paid for by the rest of society and not the business or it's customers.

  • TheAtomicOption||

    Thanks for taking an even view on this. Like most macro-economic debate the evidence on this is mixed. The people who think there are no downsides are definitely wrong, but libertarians with integrity shouldn't argue that it's definitely all downside either.

  • concerned cynic||

    The main economic effect of the minimum wage is that it prevents people from getting jobs by offering to work for less than the minimum wage. The minimum wage thus strengthens the bargaining power of clerical and manual workers making up to $12-15/hour. One of the most strident demanders for minimum wage increases is... the AFL-CIO.
    The minimum wage also forces middle class ideologues to donate time to nonprofits rather than to work for very modest wages.
    BTW, I suspect that many undocumented Latinos work for less than the minimum wage, and that this is a major reason why the minimum wage is not binding.
    A rise in the minimum wage has little effect on who is above and below the poverty line. It is also forgotten that the rise in the minimum wage has complicated effects on the refundable tax credits, including increasing the maximum under the Additional Child Tax Credit, and possibly reducing the Earned Income Credit. Thanks to the se tax credits, households on the minimum wage owe no income tax.

  • 4thaugust1932||

    Unlike Capitalism, Globalization is Zero-Sum.
    Amend your Constitution accordingly. https://www.constituteproject.org/#/search
    Otherwise your future generations will regret. https://en.m.wikipedia.org/wiki/The_Global_Trap

  • ConstitutionFirst||

    Does a Minimum Wage Increase Come With a Price?
    Well DUHH... doesn't everybody know unit labor costs can infinitely rise without affecting the end consumer's cost?
    Either that, or you have to layoff workers and force the remaining ones to work that much harder.
    No free lunch.

  • ExNuke||

    Anything free is worth what you paid for it, including free money.

  • Draco Porphyreus||

    The minimum wage or living wage laws in the U.S. originated during the Progressive Era (late 1800s-early 1900s.) Quoting from Thomas C. Leonard's "Retrospectives: Eugenics and Economics in the Progressive Era", Journal of Economic Perspectives, Volume 19, No. 4, Fall 2005, pp. 207-214): "Reform-minded economists of the Progressive Era defended exclusionary labor...legislation on grounds that the labor force should be rid of unfit workers, whom they labeled 'parasites,' 'the unemployable,' 'low-wage races' and 'industrial residuum.'[These included women, blacks and others.]...[They]...believed that...minimum wages would cause job losses. However, {they] also believed...the job loss induced by minimum wages was a social benefit, as it performed eugenic service[s]...deterring prospective immigrants and removing from employment the 'unemployable,' who, thus identified, could be...segregated in rural communities or sterilized." One said, "The minimum wage protects deserving workers from the competition of the unfit by making it illegal to work for less." "'We have not reached the stage...where we can proceed to chloroform them once and for all; but at least they can be segregated, shut up in refuges and asylums, and prevented from propagating their kind.'"

    So, what does this mean? The penalties paid by taxpayers for the so-called societal unemployables are higher taxes and more unemployables. It’s a vicious circle. And, government policies are the progenitors of the problem.

  • Bob Armstrong||

    So even Krugman "suspects" a $20 threshold wage would be toxic .

    Then he and other statists must not believe , as they do for so many other toxins , that there is no safe dosage ,

    Rather , they must believe in hormesis , that a small enough dose is therapeutic .

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