Economists for a Hike in the Minimum Wage

In October 2006, 659 economists signed a public call sponsored by the Economic Policy Institute for a raise in the minimum wage--bringing, one would assume, the professional expertise of their deep understanding of economic science to the table.

Daniel Klein and Stewart Dompe, economists at George Mason University, surveyed a bunch of them to get their reasons for supporting a minimum wage hike, and 95 responded. While part of the authors' deal with the surveyed was that they wouldn't comment on their comments as they were published, I'll point out that many of them have very little to do with economic science per se.** A few examples:

Alan Blinder: ....Regardless of Pareto efficiency, we do not allow indentured servitude or child labor. Similarly, a $7.25 minimum wage would state that society deems it wrong to pay less.

Amitava Dutt: Reducing poverty, reducing inequality. Creating a culture where people realize that some basic needs of people should be satisfied.

Robert Haveman: ...giving low wage workers a feeling that they are less marginalized than they now feel.

John R. Morris: Economic justice for low income people.

Jeffrey Waddoups: Reducing wage inequality will increase the quality of democratic institutions.

I was hepped to the study via Tyler Cowen at Marginal Revolution, who has his own longer collection of excerpts from Klein and Dompe's respondents, and he and his commenters have their own thoughts.

**UPDATE: That's because, as the original Marginal Revolution link didn't specify, and as my quick read-through of the study didn't catch either, those responses are specifically to a question that asked them to discuss "broad sociopolitical mechanisms"--thus making the responses openly those of economists speculating beyond economic science. I apologize for my misreading.

Comments

thoreau | January 31, 2007, 2:25pm | #

Let's just get this acknowledgement out of the way so we can't be accused of ignoring data:

It is entirely possible that a small increase in the minimum wage will not have a statistically significant effect on unemployment. Indeed, apparently there have been some studies that failed to find significant effects on unemployment when comparing locales with different minimum wages. (Please take note of the qualifiers in italics.)

There. It was said. We are indeed reality-based here.

Now, before anybody else jumps all over me, there are plenty of reasons to suspect that a large enough minimum wage increase would indeed produce a statistically significant increase in unemployment, and I certainly don't want to find out the exact numbers the hard way, i.e. by increasing the unemployment rate.

Lowdog | January 31, 2007, 2:32pm | #

Sounds like all those economists were engaging in normative economics.

Not that there's anything wrong with normative econ, per se, but when supposes experts aren't just presenting facts but also throwing opinions into the mix, then their recommendations shouldn't be completely followed without paying some attention.

Wasn't there another thread about scientists and whether or not they, too, can be a political animal?

JKP | January 31, 2007, 2:39pm | #

Let's make the minimum wage $50,000 per year. That way EVERYONE will be middle class!

Right?

Sam Franklin | January 31, 2007, 2:40pm | #

It is an antitrust issue. Corporate law and (non-enforcement of) anitrust law allows suppliers of important things (eg, gas, food, lodging) to consolidate to the point where consumers of the things are too fragmented to effectively bargain on price (and other terms like product safety).

Therefore, people need extra money to offset the competitive and informational disadvantages they routinely suffer in modern consumer markets.

Now the minimum wage increase may not be a solution co-extensive with the bargaining problem in either size of the offset or scope of people who in fact receive the offset. But it helps.

There is the economic argument for the increase.

Me, I would rather have them repeal corporations law and enforce antitrust law. then suppliers would be as fragmented as consumers and prices would come down as truer Smithean bargains were struck more often.

James | January 31, 2007, 2:41pm | #

Lowdog: that's what I got out of it. The economists weren't commenting on economics at all. Polling economists was therefore irrelevant to the question, since the economists did not approach the problem from their professional viewpoint.

As for scientists, they are often clever, but relatively narrow. They know a lot about one or two things, and no more about other things than a welder. Thus, polling "scientists" on the topic of stem cell research or climate change is meaningless. A physicist wouldn't necessarily know any more about such issues than a well-read hair stylist.

Kwix | January 31, 2007, 2:43pm | #

Thoreau,
Your point is taken, particularly with regard to different locales. In most of the Southeast, minimum wage is $5.15/hr and the cost of living is low enough that folks could probably get by with a little less. Here in Alaska the state mandated minimum wage is $7.50/hr but nobody actually gets paid that little (except for waitstaff) as the cost of living is prohibitively expensive. In essence, the market has insured that the wages outstrip the regulations. Locally to me, this Federal increase will amount to nothing as it is lower than both the state mandated wage and the effective minimum wage.

That having been said, I love how a fair number of economists signed on the bandwagon with the "fairness" and "equality" line. This has what to do with economics?

Warren | January 31, 2007, 2:44pm | #

Minimum wage, is nothing more or less than rent payed to the establishment. It's pork for large companies that already pay their workers more than min wage. Thus eliminating competition from small companies that might pay less but offer more opportunity for advancement, or more edifying and stimulating positions which people might be attracted to in spite of low wages.

Of course established employers that don't want to pay that much, agricultural harvesting e.g., will still be exempt.

Ben Regenspan | January 31, 2007, 2:45pm | #

Using these quotes to demonstrate that the signatories were not basing their arguments on economics is hardly fair--they all come from a section of the survey in which respondents were asked specifically to discuss "socio-political mechanisms". (p. 145)

I wouldn't be surprised if some of the economists surveyed didn't really feel the need to justify their belief in the minimum wage with economic thought, but you're not going to find any demonstration of this assertion in a section where they were specifically asked to discuss their socio-political, and not economic, reasoning.

Kwix | January 31, 2007, 2:48pm | #

Now the minimum wage increase may not be a solution co-extensive with the bargaining problem in either size of the offset or scope of people who in fact receive the offset. But it helps.

I disagree with this. Minimum wage will actually help the consolidation of firms, not hinder it. A larger company is able to absorb and pass the expense of increased wages onto it's customers far more efficiently than a smaller business. This will lead to imbalance in the marketplace whereby smaller business compete at an even greater disadvantage than before. Given enough time and expense, the smaller businesses fold and the larger businesses get larger and more powerful.

Rex Rhino | January 31, 2007, 2:48pm | #

Economists can believe in the so-called "Minimum Wage", the same way Cosmologists can believe in God.

In fact, the state has largely replaced God as the thing we pray to help us when we are in trouble, and the results are largely the same. Minimum Wage is more than a government price control scheme, it is a holy sacrament for the church of the state.

But, as a Libertarian, I would say the minimum wage fight is a waste of our energy. Prices will go up, in order to match the increase in wages, a few people at the bottom of the economic scale will lose their jobs... but the overall effect will generally be neutral. That is of course assuming the minimum wage increase won't be so modest as to be insignificant (which will most likely be the case).

In terms of price control schemes, and harmful government intervention, the Minimum Wage is the least harmful... as the ill effects mostly fall on the people it is supposed to help (the working poor are the people it will hurt the most).

Lost_In_Translation | January 31, 2007, 2:48pm | #

Teenagers and slackers rejoice. No longer can your lack of skills or knowledge keep you from earning less than $7.25/hour now....

Seriously, I haven't earned minimum wage since I stopped bringing in grocery carts from a local albertsons.

thoreau | January 31, 2007, 2:50pm | #

Thus, polling "scientists" on the topic of stem cell research or climate change is meaningless. A physicist wouldn't necessarily know any more about such issues than a well-read hair stylist.

I half agree. You're right if the comparison is with a well-read layman, who could very well be an enthusiast and closely follow a field at least as well as a scientist from another field. However, if we do the comparison with the average layman, then I would say that the comparison needs to be done very carefully:

I may not know much more than the typical layman about things outside my research. However, I am more likely to be skeptical about certain statements, more likely to ask the right questions, and more likely to spot some BS. So I may not actually know more true statements, but I probably accept fewer false statements.

jake | January 31, 2007, 2:52pm | #

Just a single data point, but when I was a teen working at McD's way back in the groovy 70's there were probably two dozen people working during any given dinner time. The counter staff wrote tickets, did the math by hand, and drew the drinks. Today, the counter staff pushes buttons on a terminal to take the order -- the terminal does all the tough stuff -- and the customers draw their own drinks. Of course, at the drive up, the window staff pushes buttons on drink fountain and it automatically fills the cups with ice and soda.

Given enough time, increasing wages and advancing technology will allow/force employers to replace people with machines.

It doesn't really matter whether you are talking minimum wages or guarenteed benefits. Whenever the government mandates the compenstation "floor" for any given industry, people will eventually be replaced by automation.

More jobs for high-tech staff who build automation and fewer jobs for the marginally skilled.

Sam Franklin | January 31, 2007, 2:53pm | #

I disagree with this. Minimum wage will actually help the consolidation of firms, not hinder it. A larger company is able to absorb and pass the expense of increased wages onto it's customers far more efficiently than a smaller business. This will lead to imbalance in the marketplace whereby smaller business compete at an even greater disadvantage than before. Given enough time and expense, the smaller businesses fold and the larger businesses get larger and more powerful.

Then again, nobody ever said that big businesses need to have the same minimum wage as small businesses. Hopefully, some of the economists pointed this out (although I am doubting it -- nobody wants to make themselves unemployable just for the privilege of being honest in a survey).

Rex Rhino | January 31, 2007, 3:02pm | #

Let's make the minimum wage $50,000 per year. That way EVERYONE will be middle class!

Right?

Minimum Wage supports will just ignore your comment, because it is too hard to talk yourself around it. They might be forced to admit that so-called Minimum Wage is a sham.

You see, Catholics know that the wine and the euchrist don't actually become the body and blood of Christ. I have tasted the damn stuff, and it tasted like cheap red wine and stale bread, not like blood and human flesh. However, Communion is such an important part of being a Catholic, that Catholics simply ignore the fact that they aren't really engaging in canabilism.

Likewise, everyone here knows that Minimum Wage doesn't work. Everyone knows that it is a scam. Everyone knows that there is no way you can magicly rearrange pieces of paper to give someone something that they couldn't already demand themselves. No one here actually believes that minimum wage will actually help the working poor.

Supporting Minimum Wage laws is such an important part of being a "Progressive", that is doesn't matter if it doesn't work or not. Minimum Wage is such a fundamental part of the ritual, that you can't question it without having a crisis of faith in the Statist religion.

To say that the state can't make poor people middle class by simply stating that "it shall be", is like saying that God can't create the heavens and the earth by saying "it shall be". It is Left Wing Blashphemy!

Sam Franklin | January 31, 2007, 3:07pm | #

Minimum wage law is one of those things that we know makes not-that-much-difference (at least at the margin) because of federalism. different states have different minimums and it doesn't make for huge differences, ultimately.

I wish we had more federalism.

then we would have this kind of useful info on more things.

KoWT | January 31, 2007, 3:07pm | #

How many people actually earn the minimum wage?

not many

http://www.bls.gov/cps/minwage2004tbls.htm

so few that it makes for a safe debate

because it's unlikely to result in much (if any) actual economic effect

if anything, raising the minimum wage could prove to be a drag on the wages of those earning just above the new number, as their wages'll lag under the pull of a minimum moved closer to their earnings

the minimum wage, in most of the nation, is actually behind the prevailing market rate for low skilled workers

case in point: my 18 y/o son just got his first job

he does laundry at a flea bag motel

7.50/hour

if they paid less, they couldn't get the help they need

so who is this bill targeting?

people making the minimum wage?

or people who really really want the voters to think that, by superficially/ceremonially addressing lagging lower class wages, they're doing something for the little guy?

jake | January 31, 2007, 3:09pm | #

As for scientists, they are often clever, but relatively narrow. They know a lot about one or two things, and no more about other things than a welder. Thus, polling "scientists" on the topic of stem cell research or climate change is meaningless. A physicist wouldn't necessarily know any more about such issues than a well-read hair stylist.

As a broken clock is correct twice a day; your comments are true some of the time.

I have certainly met scientists and engineers that are obsessed in a particular field of interest and not worth much outside that field. However, my personal experience is that most scienists and engineers have a much better understanding of a broad range of technical issues that the average person on the street.

Madpad | January 31, 2007, 3:17pm | #

From the Bureau of Labor Statistics:

Of those paid by the hour, about 570,000 were reported earning exactly $5.15, the prevailing Federal minimum wage, and another 1.6 million were reported with wages below the minimum.2 Together, these 2.2 million workers with wages at or below the minimum made up 3.0 percent of all hourly-paid workers.

From that I would say that the puffed up economic arguments against a minimum wage are crap - not enough people are at it to make that much of an impact.

While I don't think it's reasonable to go to the other extreme and demand minimum wages equate to a "living wage," I do think that the libertarian/conservative arguments fall pretty flat.

On the other hand, I would say that having some sort of minimum wage is wise to mitigate (notice I didn NOT say 'prevent') abuses of people at the lowest end of the economic strata.

All right. I'm ready for some red-faced fanatic to start calling me names now.

andy | January 31, 2007, 3:19pm | #

"we do not allow indentured servitude"

That dude was obviously never in the military.

John | January 31, 2007, 3:32pm | #

From the economist quoted in Instapundit the other day.


"It is probable that the minimum wage increase will not cost enough jobs to make its effects readily distinguishable from random economic variation. It is also probable that it will improve the lot of a few poor people, though not many, as fewer than 20% of those who earn the minimum wage live in poor households now. On the other hand, it also seems probable that much of any benefit that goes to poor families will come out of the pockets of other poor people—very probably even poorer people, such as convicts, who are currently barely hanging onto the fringes of the labour force. . . .

CEO's who support higher minimum wages are not, as the media often casts them, renegade heros speaking truth to power because their inner moral voice bids them be silent no more. They are by and large, like Mr Sinegal, the heads of companies that pay well above the minimum wage. Forcing up the labour costs of their competitors, while simultaneously collecting good PR for "daring" to support a higher minimum, is a terrific business move."

Everyone assumes that only poor people work for minimum wage. That is just not true. Lots of other people, in fact 65% if the Economist is to be believed, who are not poor work for miminum wage.

I am all for helping poor people. I do think that helping people who need it is a proper role for government. But if you want to help the poor there are a lot better ways to do it than increasing the minimum wage. I think the economist hits on a great point; the politicians who bloviate about the minimum wage couldn't care less about the poor or the American worker, they are looking for cheap publicity and money from the companies who benifit from their competitors having to pay a higher wage.

Andrew G | January 31, 2007, 3:32pm | #

"That dude was obviously never in the military."

Or a grad student...

Brad L | January 31, 2007, 3:39pm | #

The primary negative impact from minimum wage is not unemployment, but rather it is inflation. A uniform increase in the minimum wage will force non-minimum wages up, slowly, across the board, as those who make 8 bucks an hour complain that they are barely above the minimum. Corps will fund this with increased prices (which, large corps can handle more readily than smaller ones). I suspect that the end result of inflation is more damaging on the little guy than the benefit of increased wages. That’s why these comments indicate a frightening level of ignorance: even if they are commenting on politics alone, they should realize, as economists, that lip-service does not equal actual increased advantage.

NoStar | January 31, 2007, 3:39pm | #

Good economics is bad politics.
Likewise, economists being politically correct will espouse bad economics.

Rex Rhino | January 31, 2007, 3:41pm | #

On the other hand, I would say that having some sort of minimum wage is wise to mitigate (notice I didn NOT say 'prevent') abuses of people at the lowest end of the economic strata.

How does minimum wage prevent the abuse of people at the lowest end of the economic strata? Haven't you been listening to what most everyone is saying. Minimum Wage is an *illusion*. It is like giving someone three cookies, at 0.66 grams each, instead of giving them two cookies at 1 gram each. The person has the illusion of getting more cookies, but it is exactly the same.

The value of money exists only to facilitate the exchange of goods and services. If the supply and demand for goods and services are the same, and if the supply and demand for labor are the same, giving workers at the bottom of the pay scale more money LOWERS the value of money, it doesn't INCREASE the value of their labor. Understand?

So minimum wage doesn't do anything to protect anybody. It is simply a game you play with numbers.

James Ard | January 31, 2007, 3:42pm | #

This isn't about poor people, its about middle class union members. The Democrats want the increase to reward union support, since many unions have pay scales that are linked to the minimum wage. Michigan can kiss a few thousand more decent paying manufacturing jobs goodbye.

VikingMoose | January 31, 2007, 3:42pm | #

Hi Madpad:

It would be very interesting to see the effects of big box ordinances! And you may be right (harking back to the original comment that there might not be a significant economic impact) in the thought that this is less of a big deal than portrayed, at least for economic reasons.

Studies that look for consensus in economists are always fun - this one is really cool because there's actual feedback given.

Back in the mid 80s some economists (Frey, Pommerehne, Schneider, and Gilbert) studied consensus and dissention. "Conesnsus and Dissension Among Economists" (The American Economic Review, Vol. 74, No. 5. (Dec., 1984), pp. 986-994.), and they used entropy rho to look at consensus.

They checked out 27 propositions. Rho varies between 0 (full consensus) and 1 (no structure). It is nonlinear so 0.5 doesn't necessarily mean 1/2 way.

Minimum wage was one of those issues that had a higher rho (p = 0.83). That was actually at the mean rho for "macro" questions, and a little above the rho for positive ("can") questions (0.82). For what that's worth... Probably only that economists don't agree on stuff like that as much as you'd think.

One thing - there are other studies out there that suggest that fed. minimum wage increases do not address the original intent of the FAIR 1938 (IIRC) act, and that their increases follow a special interest model.

That may be in indicator why some are for and others are against: it's not for economic, rather for political reasons. A fed minimum wage also is imprecise - it's too big of a gun needed to address the original law.

But this is an issue that has been in bed with so many different special interests, Trojan and Bayer (Cipro people) have invested heavily in it.

Suffice to say keeping this in the political arena first, economic much later, might keep the debate more honest.

Mr. Steven Crane asks: what do the Colts and a DEMAND CURVE have in common?

They're both going DOWN!!!!!

jb | January 31, 2007, 3:46pm | #

The people who say that the political outcomes of the minimum wage debate outweigh the economic ones are right.

That said, this does seem like the poster child for things that should be dealt with locally. What's a good minimum wage for New York City or Alaska is way too high for rural Kansas, and vice versa.

Madpad | January 31, 2007, 3:59pm | #

Thanks for the stats lesson, Viking. I only understood about half of it but I think I can sum it up like this (while answering Rex Rhino's rather caustic and condescending query)...

1. The Federal Minimum Wage is not a zero sum game with plainly visible causes & effects. The issue is far more complex - so complex that there is very little concensus among economists regarding it.

2. Since it has evolved beyond and does not specifically address the act that established it, it's impossible to evaluate it on that framework.

But I don't see how keeping anything political can make it more honest ;-).

More pointedly, Red-Faced Rex, pulling out the demand-curve chart from your first week in economics class is kinda silly. It only suggests that that's as far as you got in your economics education.

Your example is only applicable if everyone is making the same amount of money.

Since that's not what ANYONE is talking about (and since you obvlously read only 5% of my post before you went off half-cocked), I suggest you calm down and go read a little more about economics before you contribute further to this thread.

joe | January 31, 2007, 4:04pm | #

Brian,

Stunts like this are why the blogosphere has a bad name.

You don't blog the actual letter they signed, which lays out their opinion about the minimum wage and its effects on the econony. Instead, you blog a report about the comments solicited by a critic of theirs, carefully cropping selected quotes, and present those cropped quotes as if they are are the signatories' statements about the minimum wage and its effect on the economy.

The 7/8 of the signatories who blew Klein and Dompe off are looking pretty smart, given the dishonest manner the replies they received are being presented here.

MattXIV | January 31, 2007, 4:09pm | #

"As for scientists, they are often clever, but relatively narrow. They know a lot about one or two things, and no more about other things than a welder. Thus, polling "scientists" on the topic of stem cell research or climate change is meaningless. A physicist wouldn't necessarily know any more about such issues than a well-read hair stylist."

It depends highly on the phenomenon being discussed. For high-level polls about regulatory policy, there probably isn't that much of a difference. However, scientists and engineers do have stronger backgrounds in experimental design and statistics than most people and are likely to have introductory college level background in a few areas outside of their primary field. My background is in chemical engineering with supplemental biology and comp sci, so I couldn't spot subtle flaws in sociology paper like an actual sociologist could, but I would notice major flaws in experimental design or statistical analysis (lack of a control group, usage of an inappropriate statistical test, conclusions not supported by the statistical test, etc). This is mostly useful at the level of differentiating sciency-sounding bullshit from the real thing as opposed to critiquing published papers, since papers with that severe of flaws normally wouldn't make it through peer-review.

joe | January 31, 2007, 4:11pm | #

Just about all of the anti-minimum wage arguments put forth on this thread are refuted in the original letter, signed by the 659 economists.

Go ahead, read it. Doherty doesn't link to it, but if you look hard enough, you can find it linked to, somewhere in there.

VM | January 31, 2007, 4:16pm | #

Hi Madpad:

Whoops. Wasn't intending a stats lesson. My sincere apologies. [kicks pebble. blushes]

You raise an important point, and you're in what a huge consensus, probably, of those who feel that this is a very complex issue.

Neumark is one of the people cited in the study - his studies show negative employment in response to min. wage increases (-1.5 to -2.5% for every 10% increase in MW).

Klein and Dompe also bring up the fast food study by Katz, Card, Krueger that shows a positive effect. K&D also cite Manning who talks about the monopsony and its effect on the long run labor supply curve.

*yawn*. Fights off MEGO.

And grin to the point about keeping anything political makes it more honest. Touche, Sir! Grin. But if we get people talking about the interests they're serving and the battles they're fighting without the economic talk, it'd probably keep the issue less cloudy than it already is!

(or: remember those "starve the beast" idiots - they should have left econ out of their arguments. It made them seem even more dishonest)

cheers,
VM

p.s., here's the PDF of what Joe is talking about (at least those who signed). PDF WARNING
(Same Group's Minimum wage page)
http://www.epi.org/content.cfm/issueguides_minwage

Dan T. | January 31, 2007, 4:17pm | #

I love the argument that there’s no reason to raise the minimum wage because very few people make it, since that’s actually an argument to raise the minimum wage…what’s the point in having one if it’s so low that even the worst jobs aren’t affected by it?

Timothy | January 31, 2007, 4:17pm | #

Can we declare minimum wage a dead topic, please?

For serious. Types of commenters:

1) Economically ignorant market worshipers who think that even (relatively) tiny changes can have HUGELY HOLY SHIT WORLD WRECKING consequences in the labor market. Anyone who's said something like, "Well let's just raise the minimum wage to $100 an hour! Huh!" as anything other than an example of how the size of changes matter falls into this camp.

2) Economically ignorant market-haters who think that the minimum wage actually helps poor people, or that the demand for low-skill labor is basically vertical. Anyone who's ever said that the only reason for opposing a minimum wage increase is some sort of anti-labor or anti-poor bias/attitude/prejudice falls into this camp.

3) People with a somewhat more advanced understanding of economics, statistical significance and the like on both sides of the issue. These are few, and we get fucking tired of shouting at you other assholes. So until everybody on the damn planet has Economics In One Lesson committed to fucking memory let's just not talk about this on the internet anymore.

Sam Franklin | January 31, 2007, 4:18pm | #

I think minimum wages for employees that make products imported into the US would make sense. Some of those folks could use more dignity and clout and they are sorta human, too.

jake | January 31, 2007, 4:18pm | #

Just about all of the anti-minimum wage arguments put forth on this thread are refuted in the original letter . . . .

So which ones weren't? You just admitted that not all were refuted, so please follow up on the ones that weren't.

Congressman Leech | January 31, 2007, 4:19pm | #

What do you mean minimum wage doesn't help anyone? Take 100 minimum wage workers: 98 will get a raise and be grateful to me on election day. 2 poor schlubs will lose their jobs. I'll tell them it was the greedy businessmen and get their votes too. This is just the latest twist on bread and circuses.

Brad L | January 31, 2007, 4:21pm | #

Joe,

'If all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind.'
John Stuart Mill

You can have 10 billion economists say that minimum wage provides a benefit. That number is irrelevant.

joe | January 31, 2007, 4:24pm | #

Rex,

Re: inflation.

If there were 2 million full-time minimum wage earners (generous), and the wage was increased by $2/hour, the annual total of that increase would be $416 mill, not even remotely enough to produce an observable blip in our economy.

That might be way your postulated increase in inflation never shows up.

NoStar | January 31, 2007, 4:24pm | #

joe,

You never told me what you thought of my review of the 2002 Columbia Crest Two Vines Cabernet Sauvignon over @ The Wine Commonsewer.

VM | January 31, 2007, 4:25pm | #

Timothy:

okay.

:)

Gilbert Martin | January 31, 2007, 4:25pm | #

The only anti-minimum wage argurment necessary is to point out that there is no ennumerated power delegated to the federal government in the text of the Constitution to mandate any wage rates paid by private employers in any shape, form or fashion.

joe | January 31, 2007, 4:26pm | #

Find the letter, and read it yourselves. The ideas therein aren't right because there are almost 600 of them, Brian L. There are almost 600 of them because the ideas in the letter are right.

joe | January 31, 2007, 4:27pm | #

No Star,

I really liked it. I hope you picked some up to enjoy when you're feeling better.

Madpad | January 31, 2007, 4:33pm | #

Glad you enjoyed there, VM. I don't pretend to know enough economics to get into fisticuffs over the minutiea of various studies.

I'm an entrepreneur and I've been in management and I stay up on politics and current events...which means I'm probably as equipped to have an opinion about this as anyone.

I'm educated enough to know that some of the various issue involved include:

1. Unemployment rate at the time of increase
2. Overall stratification of incomes across various industries.
3. Degree of change in minimum wage
4. Rate of change of minimum wage

...and a host of other players.

My overall, big-picture opinion, though, is that it's probably not that big a deal.

jake | January 31, 2007, 4:34pm | #

Find the letter, and read it yourselves.

joe, this is a cop-out.

You made a declaration -- that most of the arguments against increasing the minimum wage are refuted by a letter that can be found elsewhere.

When someone asks a simple question like -- which ones weren't refuted by this letter; you essentially refuse to answer.

Either defend your declarations here -- in this forum -- or keep them to yourself.

MattXIV | January 31, 2007, 4:40pm | #

VikingMoose/Madpad,

While the minimum wage is more complicated and exactly what it does, the economic analysis is the vital piece of the puzzle. As I pointed out in the MR tread, most people who support minimum wage increases (and oppose them) do it because of their preception of the economic impact - people care about a minimum wage because they care about income distribution and unemployment. Also, as many factors as there are, if it turns out that the demand curve for entry-level unskilled labor doesn't end up shifting towards equal employment at the same wage because of them, there will be decrease in employment in that group. The simplest argument against a minimum wage is that the supposed benefits are on as weak of footing as the supposed drawbacks, and in absence of a strong argument for doing so intervention in pricing should be avoided due to enforcement costs and the prospect of unintented consequences.

Madpad | January 31, 2007, 4:42pm | #

If there were 2 million full-time minimum wage earners (generous), and the wage was increased by $2/hour, the annual total of that increase would be $416 mill, not even remotely enough to produce an observable blip in our economy.

I love your sentiment joe, but your math is off. According to your example, the average number of hours worked by those 2 million people is roughly 100 hours per year.

My work:

($416,000,000 / 2,000,000 people)/$2 = 104 man-hours

Madpad | January 31, 2007, 4:47pm | #

I figure it like this:

2,000,000 people * $2 per hour * 40 hours * 52 weeks is more like $8.32 billion dollars.

It's still a lot of money but I don't thinks it's gonna be that big a drawback to anyone.

VM | January 31, 2007, 4:48pm | #

Sorry Timothy - couldn't resist!

Summary of EPI's pro raising of minimum wage:

1) Equalize the imbalance in bargaining lower wage workers face in the market
2) fight poverty
3) real value of minimum wage is too low
4) ratio of minimum wage: average hourly wage is 31%, lowest level since WWII, causing hardship.
Here - PDF
"We believe a modest increase in the minimum wage would improve the well being of low-wage workers"

They share the view of the Council of Economic Advisors in 1999, which claims that modest increases in the minimum wage have had very little or no effect on employment.

They acknowledge there is controversy surrounding "the precise employment effects" of the MW, they feel that it benefits low-income working women (my paraphrase).

They propose increasing to $7.25 and indexing to inflation, because they feel that increase would be more positive than not.

Again, if you're interested in this group's POV, check out their web site on the MW.:
here

Gilbert Martin | January 31, 2007, 4:49pm | #

And as another poster pointed out earlier, the real political push behind it are labor unions because of contracts that tie union wage rates to some multiple of the minimum wage.

So the inflation effect on the economy would be more than merely the increased amount paid to minimum wage workers directly.

joe | January 31, 2007, 5:02pm | #

jake,

I'm flattered that you'd prefer to hear the answers from little ol' me, but really, you'd be better off going right to the source.

Madpad,

Oops. I multplied the 40 hour weeks by 26 rather than 52. Probably because I get bi-weekly paychecks, and am really, really stupid.

jake | January 31, 2007, 5:05pm | #

jake,

I'm flattered that you'd prefer to hear the answers from little ol' me, but really, you'd be better off going right to the source.

You made a very interesting comment . . I just wanted you to follow up on it.

So is your dodge laziness or just dishonesty?

Mo | January 31, 2007, 5:17pm | #

Has anyone considered the fact that a reason a lot of people don't earn minimum wage is that they live in states with higher minimum wages?

joe | January 31, 2007, 5:32pm | #

jake,

Are you refusing to look at the source because you're too intellectually insecure to read alternate viewpoints, or because you're trying to pick a fight?

Either way, what do I care?

jf | January 31, 2007, 5:33pm | #

I'd be fine with a one-time increase in the minimum wage if along with it came a return to the gold standard. Fiat currency only encourages these games with wages and price controls and the like, whereas a stable currency would render them moot.

thoreau | January 31, 2007, 5:37pm | #

joe-

Which source are you referring to? You criticized one, but a link in one of the links takes me to a survey of economists. I skimmed it, but did not notice any refutation of my argument: there is good reason to suspect that a sufficiently large minimum wage hike will cause a statistically significant increase in the unemployment rate, but the only way to know what that wage is will be the hard way, i.e. do something that increases unemployment.

I'd rather not learn about that the hard way.

Is there anything in there to allay that concern? I didn't see it, but I only skimmed.

jf | January 31, 2007, 5:38pm | #

Timothy,

I've begun reading Economics in One Lesson (I guess it's available in its entirety here.

Interesting stuff, and I agree that both of the "simplistic" (for lack of a better term) sides of this debate could do to read it.

joe | January 31, 2007, 5:42pm | #

thoreau,

I was referring to the original letter, the pdf.

joe | January 31, 2007, 5:47pm | #

jf,

The minimum wage chapter in "Economics in One Lesson" ends thus: "There is no escape from the conclusion that the minimum wage will increase unemployment."

And yet the data completely fail to back that sweeping statement up.

What are to make of this?

Happy Jack | January 31, 2007, 5:49pm | #

Klein and Dompe also bring up the fast food study by Katz, Card, Krueger that shows a positive effect. K&D also cite Manning who talks about the monopsony and its effect on the long run labor supply curve.

VM - I'm curious, have you read this? Wouldn't mind hearing your thoughts.

anon | January 31, 2007, 5:54pm | #

**UPDATE: That's because, as the original Cowen link didn't specify, and as my quick read-through of the study didn't catch either, those responses are specifically to a question that asked them to discuss "broad sociopolitical mechanisms"--thus making the responses openly those of economists speculating beyond economic science. I apologize for my misreading.]

I guess that is what happens when you have a conclusion in mind, and then, you look for something to support your conclusion.

VM | January 31, 2007, 6:00pm | #

Happy Jack:

thank you for the link - appreciate it very much!

have to run, now, but will read it this evening and tomorrow!

cheers,
VM

Rex Rhino | January 31, 2007, 6:32pm | #

If there were 2 million full-time minimum wage earners (generous), and the wage was increased by $2/hour, the annual total of that increase would be $416 mill, not even remotely enough to produce an observable blip in our economy.

That might be way your postulated increase in inflation never shows up.

Duh, do you even bother to read what I wrote? I said that fighting minimum wage legislation was not worth Libertarian's time. That either the raise was so small that the effect is negligable. In the unlikely case that the increase in minimum wage isn't negligable, the people most hurt are the people who are supposed to be helped (the minimum wage workers)... in which case I see that as a positive outcome as I enjoy irony.

More pointedly, Red-Faced Rex, pulling out the demand-curve chart from your first week in economics class is kinda silly. It only suggests that that's as far as you got in your economics education.

If my economics are so flawed, perhaps you could counter your arguement with some non-flawed economics, instead of name calling? Strange, you think these people who claim to know so much about economics are in some sort of secret society the way they work so hard to never actually counter my arguement with any sort of economics. Does the economist cabal cut your throat and leave your body at the edge of a river if you devulge the secret of economics?

Your example is only applicable if everyone is making the same amount of money.

No it isn't. You counter arguement is only applicable if non-minimum wage worker's wages are static. If you increase the wage of minimum wage workers, you have to increase the wages of non-minimum wage workers (they demand more wages because they have to pay higher labor costs, and because the jobs that were lower wage are now more desirable). The whole thing simply leads to wage inflation. Since there isn't a bigger pie, and everyone's wage is increasing, everyone gets the same slice of pie, they just shuffle more paper to do so.

Now, if the minimum wage also included a maximum wage, they your counter-arguement might be valid.

Of course, I don't expect you to respond with anything more intelligent than "I know economics good, you don't know economics, you poo poo head!". After all, you can't let the infidels in on the sacred mysteries of economics that only the inner circle share.

fyodor | January 31, 2007, 6:36pm | #

I love the argument that there’s no reason to raise the minimum wage because very few people make it

I don't believe anyone makes that argument. Rather the low number of minimum wage earners is relevant only as an explanation for why raising the minimum wage does not clearly raise unemployment in a clearly observable and unambiguous manner.

fyodor | January 31, 2007, 6:45pm | #

"...modest increases in the minimum wage have had very little or no effect on unemployment."

Definitely some wiggle room there. What is a modest increase? What is "very little effect"?

One certainly has the right to believe that certain increases have more pros than cons, since it's all ultimately based on value judgments anyway. Is nine people making more money worth the 10th who's unemployed, plus lower profits and more expensive goods (if only by small amounts since there's comparitively so few actually affected)? It's not economics per se that determines this. One might expect ecnonomists to have a keener perception into the undesirable consequences of raising the minimum wage (and I wonder what percentage of eligible economists this 600 represents and how many refused to sign), but ultimately one bases one's judgement on one's values, not on the economics.

JasonL | January 31, 2007, 6:49pm | #

Marginal increases clearly don't cause much harm, and there may be a why not element to them, which seems to be mostly what the polled economists are saying.

My only concern is that at some point a marginal increase might drive the cost of labor up unfavorably against something like process automation or outsourcing. The term "unskilled labor" should give people chills. The moment there is a cost effective way to eliminate an increasingly expensive unskilled workforce, people will do it. The cost of the automation of a given process tends to go down over time, while we are to assume in these discussions that the cost of unskilled labor should go up.

It is likely we can go a long while on modest increases without obviously hurting much - though the assumption that the difference comes straight out of the pocket of some rich guy is almost certainly invalid. I just hope that people don't get too enthusiastic about their ability to set from on high the right price of labor.

jf | January 31, 2007, 7:34pm | #

The minimum wage chapter in "Economics in One Lesson" ends thus: "There is no escape from the conclusion that the minimum wage will increase unemployment."

And yet the data completely fail to back that sweeping statement up.

What are to make of this?

Good question. I think the philosophical answer is given a few paragraphs before the concluding sentence:

The first thing that happens, for example, when a law is passed that no one shall be paid less than $106 for a forty-hour week is that no one who is not worth $106 a week to an employer will be employed at all. You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation.

The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization.

It may be thought that if the law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage-raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to the equivalent imported products or to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry may be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way.

I've bolded a few passages on which I'd being interested on hearing your opinion. I believe each of the bolded passages are true, but I try to have an open mind.

joe | January 31, 2007, 9:03pm | #

jf,

I concede that the reasoning is logical, and internally consistent. And yet, the conclusion that follows inevitably from the reasoning fails to comport with the real world.

Taking them one by one, the lack of job loss from higher minimum wage would suggest that the people being paid the former wage are worth more than they were being paid, and the market failed to provide them with sufficient compensation for any number of reasons. I'm also open to the idea that increasing the wages of underpaid employees increases their productivity, increading profits and making up for the additional labor costs.

Unionization is great, but difficult for, say, McDonalds workers to pull off.

As my previous comments indicate, I don't believe increasing the minimum wage results in higher product costs, possibly due to increased productivity and the ease with which the highly profitable corporations that tend to hire a lot of minimum wage labor can absorb an increase in labor costs. If a tendency of industries to hire at minimum wage was a actually a function of the tightness of their profit margins, we would expect to see price increases. However, it seems to me (and I don't have any evidence to back this up) that a tendency to pay minimum wage is a function more of the availability of vulnerable job-seekers, regardless of the corporation's profitability.

jake | January 31, 2007, 9:24pm | #

From the grand pdf file:

The minimum wage has been an important part of our nation’s economy for 65 years.

An opinion that is open for debate.

It is based on the principle of valuing work by establishing an hourly wage floor beneath which employers cannot pay their workers.

The government cannot establish the value of labor. Only the market can.

In so doing, the minimum wage helps to equalize the imbalance in bargaining power that low-wage workers face in the labor market.

May be true.

The minimum wage is also an important tool in fighting poverty.

An opinion that is open for debate.

The value of the 1997 increase in the federal minimum wage has been fully eroded.

Probably true, but so what. The statement assumes that the minium wage has value.

The real value of today’s federal minimum wage is less than it has been in 46 out of the last 48 years.

Probably true, but again so what.

Moreover, the ratio of the minimum wage to the average hourly wage of non-supervisory workers is 33%, its lowest level in 55 years.

Useless data. What says that unskilled labor is worth more than 33% of average of skilled, non-supervisory workers.

This decline is causing hardship for low-wage workers and their families.

Low income families can be offered help more efficiently through direct assistance programs. My opinion, but as long as the authors are throwing opinions about, me is just a good.

We believe that a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that
critics have claimed.

More opinions, some data to back them up would help.

In particular, we share the view the Council of Economic Advisers expressed in the 1999 Economic Report of the President that “the weight
of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.”

While controversy about the precise employment effects of the minimum wage continues, research has shown that
most of the beneficiaries are adults, most are female, and the vast majority are members of low-income working families.

Great they admit the controversy. Some reference to back up their claims would be good.

As economists who are concerned about the problems facing low-wage workers, we believe the Fair Minimum Wage Act of 2004’s proposed phased-in
increase in the federal minimum wage to $7.00 falls well within the range of options where the benefits to the labor market, workers, and the overall
economy would be positive.

Opinions, opinions, opinons.

Twelve states and the District of Columbia have set their minimum wages above the federal level. Additional states, including Florida, Nevada, and
New York, are considering similar measures.

So what. As stated by many people in this forum, regional minimum wages would be far more realistic than a federal minimum wage.

As with a federal increase, modest increases in state minimum wages in the range of $1.00 to $2.00 can significantly
improve the lives of low-income workers and their families, without the adverse effects that critics have claimed.

There no doing enough damage with the federal minimum wage, they also want additional state increases!?

Where in this mess does it cover the economic pressures to replace unskilled labor with automation.

Edward | January 31, 2007, 9:27pm | #

I think we should revisit the abolition of slavery. So-called human dignity is is a vague notion derived from foggy religious nonsense about the soul. Let those who want economic security sell themselves as slaves.

jake | January 31, 2007, 9:28pm | #

joe, it may be true that the opinions expressed by the authors in the pdf statement run counter to the opinions expressed in this forum. But that is hardly a refutation of the concerns expressed here.

The level of you intellectual dishonesty is staggering.

Edward | January 31, 2007, 9:37pm | #

Jake,

Staggering? Isn't that a bit strong? How about mildly surprising?

madpad | January 31, 2007, 9:56pm | #

The whole thing simply leads to wage inflation.

MY point is that you oversimplify the effects of a minimum wage. Just lining it up on a demand curve is a great, simple approach. But labor isn't a product at the whim of supply and demand because the same agents (workers) also create supply and demand. You can't seperate them and provide any meaningful analysis.

But let's get off a subject your obviously weak in and consider this.

If the minimum wage is so bad and leads to economic catastrophe, why are we the biggest economy in the entire world? How can something that directly effects less than 1% of the entire U.S. population have such a dramatic impact?

ANSWER: It doesn't.

In economies where government meddling is higher, you might have a point. But the U.S. is 5% of the world's population and 20% of it's commerce & productivity. So I doubt the minimum wage is holding us back and I'm willing to bet it's at least 1 percentage point of the total reason for our overall success.

Face it Rex, anti-minimum wagers are making lousy arguments because reality pretty much trounces the whole point.

Which begs a question...is there a country without a minimum wage that ISN"T a shithole?

Mo | January 31, 2007, 10:08pm | #

jake,
A lot of the stuff you point to as "opinions" without data to back it up is not in fact opinion and data does back it up. It's a fricken letter of support of minimum wage, not a scientific paper. Those economist have looked over the data and probably can name a half dozen studies for most of their "opinions," something which most of the anti-minimum wagers don't have backed up.

If you notice, the posters that have talked about real studies and data have said the effect on unemployment is negligible.

Mo | January 31, 2007, 10:12pm | #

The real value of today’s federal minimum wage is less than it has been in 46 out of the last 48 years.

Probably true, but again so what.

Simple. It means that the old minimum wage, passed way back in the day, didn't cripple our economy, in fact it was pretty damn robust back then. It also means that old minimum wage was higher than the current minimum wage.

jake | January 31, 2007, 10:52pm | #

jake,
A lot of the stuff you point to as "opinions" without data to back it up is not in fact opinion and data does back it up. It's a fricken letter of support of minimum wage, not a scientific paper.

joe claimed that this pdf file refuted the claims made by the anti-minimum wage crowd on this page.

This "fricken letter of support" makes statements that may or may not be supported by various studies which may or may not be challenged by hundreds of economists that did not sign this letter.

I'm calling bullshit on joe, not the authors of the letter.

Rex Rhino | January 31, 2007, 11:13pm | #

I think we should revisit the abolition of slavery. So-called human dignity is is a vague notion derived from foggy religious nonsense about the soul. Let those who want economic security sell themselves as slaves.

Slavery has the same problems as Communism. Since the Slave Master gets his labor for well below market value, and the Slave is not allowed to demand fair market price for their labor, it means that labor is grossly misallocated. A black man in the pre-Civil-War South might have been naturally talented at medicine, or buisness, or a skilled trade, and a white man might have been naturally talented at picking cotton. However, the slave system, by artificially forcing people into work based on the whims of a the slave master's "central plan", completly distorted the real value of labor.

Slavery actually held the South back economicly, and Slavery is one of the reasons the U.S. South is where a large portion of U.S. poverty is concentrated (the rest of U.S. poverty being concentrated in urban areas where many of the decendants of slaves live). Slavery is the primary reason poverty exists in the United States.

Slavery isn't just bad because of "human dignity", slavery is downright stupid and bad for the economy. We don't need any grand moral reasons against slavery, from a purely pragmatic view slavery just doesn't work - Slavery, like Communism, is just an attempt to escape the market (in Communism, the goal is to artificially inflate the value of labor... in Slavery, to artificially deflate the value of labor).

If the minimum wage is so bad and leads to economic catastrophe, why are we the biggest economy in the entire world? How can something that directly effects less than 1% of the entire U.S. population have such a dramatic impact?

Uhhh... Did you guys even read what I said? Stop agreeing with me and pretending you are refuting my arguement. Go back and re-read (or probably read for the first time) my comments. Minimum Wage isn't a catastrophy, minimum wage is a *MYTH*. It is not going to destroy our economy at all, in the long term it will have a zero net effect on the economy. If it does hurt our economy, the only people who will really be effected are minimum wage workers, and I have no big worries about them suffering because they overwelmingly support minimum wage and I enjoy the irony of that situation.

I explicitly stated, right in my first comment, that minimum wage is not worth for Libertarians to bother about. It is just a ritual that so-called "progressives" (who also pretty much know that minimum wage is a joke) need to engage in - a symbolic act of "casting out poverty", in the same way many religions "cast out the devil". It is not important to progressives that it works, the meaning is in the ritual. It is Sympathetic Magic (http://en.wikipedia.org/wiki/Sympathetic_magic) for people with whome faith in the state has replaced supernation mystery.

Madpad | January 31, 2007, 11:17pm | #

man...what a useless friggin' point this whole thread is.

People bustin' on each other and the only thing anyone agrees on is that none of the experts agree.

Pointless.

But bein' as our country has suffered no apparent ill effects from the minimum wage and has in fact, led the world economically for the past several decades, I'm not gonna chuck the minimum wage because a few crabby libertarians read Atlas Shrugged one too many times.

Stevo Darkly | February 1, 2007, 12:49am | #

Alack for opponents of the minimum wage! Is there no real-world evidence that establishing or increasing the minimum wage ever actually has had a negative effect on employment? Oh, if only such a body of research really did exist! But if it did, surely someone with an axe to grind would have gathered it together years ago ...

KoWT | February 1, 2007, 7:30am | #

navel gazers

uncle sam | February 1, 2007, 10:21am | #

I think it was in Walter Williams' "The State Against Blacks" that he documents the increase in teenage black unemployment following the enaction of minimum wage in the U.S.
The minimum wage was supported by white dominated unions to prevent black youth from unbidding whites for jobs.
It's a consequence that plagues us to this day.

James Ard | February 1, 2007, 10:59am | #

Madpad, The rate at which I contract labor is just none of your fucking business, you fascist pig.

Madpad | February 1, 2007, 11:03am | #

Stevo,

Thanks for the biggest amusement I've gotten today.

You post a link to a page clearly labelled "Talking Points" from the "Joint Economic Committee" but is endorsed only by the Republicans on the committee. Real smooth.

Madpad, The rate at which I contract labor is just none of your fucking business, you fascist pig.

Once again, Ard shows his 13-year-old stupid ass. Can I holler "Godwins" and end this stupid thread?

Old Hand | February 1, 2007, 11:29am | #

...is there a country without a minimum wage that ISN"T a shithole?

Well, madpad, of course the answer depends largely on your definition of a shithole, but Norway, Sweden, Finland, Denmark, Switzerland, Germany, Austria, Italy, and Cyprus have no minimum wage laws. Do you regard these countries to be shitholes?

Eric the .5b | February 1, 2007, 12:19pm | #

But bein' as our country has suffered no apparent ill effects from the minimum wage and has in fact, led the world economically for the past several decades, I'm not gonna chuck the minimum wage because a few crabby libertarians read Atlas Shrugged one too many times.

Well, we don't know that your lucky rock has kept tigers away, but we'd better keep it around, just in case. After all, we've been tiger-free for the last few decades.

Madpad | February 1, 2007, 2:04pm | #

No need to be snarky, Old Hand. On that particular question, I was sincerely querying some facts on the subject.

I probably wouldn't classify any of them as shitholes, btw.

Thanks for the info. A lot of those countries have robust welfare states and relatively low income disparities. I'm not making a judgement with that statement, just an observation. I'm wondering what factors contribute to countries establishing a minimum wage to begin with.

Incidentally, despite my support for the minimum wage here in the U.S. (or more accurately, my lack of a problem with it) I don't think it's a must-have in all situations.

Still, modest (and usually temporary) increases in unemployment aren't reasons to not have a minimum wage.

Automation is frequently cited as a job-killer. as are free trade agreements.

In most circumstances, temporary job losses in those situations are followed by increased productivity and lower prices. Unemployed people move to more productive places and careers.

So pulling out unemployment as an argument against minimum wages is a little specious.

Madpad | February 1, 2007, 2:07pm | #

After all, we've been tiger-free for the last few decades.

Now now, eric...all I'm getting at is that there's a lot of economic issue that get me twitchy much more than minimum wage - a factor that only hits a small minority of Americans directly and has a lower economic impact than some of the chicken littles assert.

I'm more interested in chucking subsidies and increasing free trade. Those are things that affect EVERY american directly and have a much bigger economic impact.

Eric the .5b | February 1, 2007, 2:35pm | #

Now now, eric...all I'm getting at is that there's a lot of economic issue that get me twitchy much more than minimum wage - a factor that only hits a small minority of Americans directly and has a lower economic impact than some of the chicken littles assert.

Actually, I've never seen anyone respond to the points several people have raised - that of (usually union) salaries that are keyed to multiples of the minimum wage. That would seem to extend the effect further.

Stevo Darkly | February 1, 2007, 2:50pm | #

For the record, Madpad, my link wasn't intended to be an attack on you, despite the juxtaposition. It was meant to help out joe, who is under the impression that there actually isn't any evidence that the minimum wage really is a cause of unemployment, and has said as much several times lately.

Anyway, the point of my link wasn't the talking points (as I noted, it was put together by someone "with an axe to grind"). It was -- if you'll scroll down a bit -- the voluminous listing of research studies and books that overwhelmingly document the negative effect of the minimum wage. (Actually, you'll have to scroll down quite a bit to see them all.)

And if you're genuinely shocked that (1) the substantial effort of gathering this listing of independent research was undertaken by *gasp* people who actually had some motivation to do so, and that (2) the political party that loves to use the minimum wage as a pandering tool and would rather ignore the listing of evidence than welcome it ... then you've delivered my amusement for the day, too! Thanks!

MikeP | February 1, 2007, 2:58pm | #

Automation is frequently cited as a job-killer. as are free trade agreements.

In most circumstances, temporary job losses in those situations are followed by increased productivity and lower prices. Unemployed people move to more productive places and careers.

But those situations "kill jobs" because they make production cheaper. In the medium and long run, that cheaper production makes the now wealthier society offer better jobs at higher pay to those disemployed by the change.

Raising the minimum wage (enough to notice) kills jobs because it makes production more expensive. This change does not in and of itself add wealth to the society or offer consequent opportunities to the newly disemployed.

James Ard | February 1, 2007, 5:35pm | #

Madpad, So its ok to interfere with my private affairs because it might not do any harm? I am not sure you have a libertarian bone in your body.

joe | February 1, 2007, 5:45pm | #

"Well, we don't know that your lucky rock has kept tigers away, but we'd better keep it around, just in case. After all, we've been tiger-free for the last few decades."

Actually, it is your side postulating causal effects without evidence.

Cripes, at least in the tiger example we can look around and count the tigers.

joe | February 1, 2007, 5:48pm | #

"Raising the minimum wage (enough to notice)"

If your income went from $206/week to $290/week, I bet you'd notice. That's a 40% raise.

MikeP | February 1, 2007, 6:09pm | #

Enough for the economy to notice. I.e., enough to actually disemploy people.