Minimum Wage

The Minimum Wage: A Little Light Empiricism on a Heavy Subject

|

Today here at Reason, Steve Chapman reminded policymakers in the context of raising the minimum wage that we generally understand it to be a rule at the heart of economics that other things being equal, increasing the cost of something will lower the demand for it. In it he quoted New York Times columnist Paul Krugman, generally a fan of modern Democratic Party policies, and indeed a fan of raising the minimum wage to $9 as President Obama wants, admitting back in 1998 that indeed increasing the price of labor may lessen the demand for it.

The modern Krugman thinks, in this case, that economic logic must bow to empirical reality, and says that it is a settled matter than in this instance, raising prices will not decrease demand.

There is a reason why economics as a science coalesced around coming up with logical regularities that likely underlie the buzzing, blooming confusion of reality where so many countervailing forces and influences are at work to reach any real world outcome that it would be remarkably easy to be fooled about what is causing what, and what is not having any effect.

That's good science: looking through appearances to find underlying regularities. Thus, there is a reason why one should be super extra skeptical about empirical science that seems to contradict an underlying law on which so much of the discipline depends.

That said, some bits and pieces of countervailing empiricism and thoughts on the question of whether raising the minimum wage costs people jobs.

*Robert Murphy thinks he's got some numbers indicating higher minimum wages have some measurable effects on teen employment (likely to be the sort of unskilled worker whose value-added to a company might be less than minimum wage):

First of all: Notice how high the teen unemployment rate is, across the country. If minimum wage laws have no effect, why should this be so?….if we look at the 19 states that have a minimum wage higher than the federal minimum, the average unemployment rate among teens is 25.2%. In contrast, if we look at the 31 states that have either no state-level minimum wage or one that equals the federal level, the average teen unemployment rate is 21.5%. A pretty big difference, and this is from sample sizes of 19 and 31….

But beyond the arithmetic averages is the clustering of the states, in their respective groups, when you rank them from the highest to lowest teen unemployment rates. The most striking result to me: If you look at the top 5 and the bottom 5, you find: Four of the top five states have higher-than-federal minimum wages, while only 1 out of the bottom five does. I'm not sure how to set up the statistical problem, but I think that would be an incredibly unlikely result, if minimum wage laws had nothing to do with teen unemployment rates.

Furthermore, if you look at the top and bottom 10, you get: Out of the top 10, six of them have higher-than-federal minimum wages, while out of the bottom 10, only 1 does.

Murphy does not seem to be adjusting for different price levels in the states to get a "real" minimum wage.

Commenter Walter Wessels in Murphy's thread brings up what strikes me as an interesting point and a good start into understanding why "just looking at the facts!" isn't always the best way to tease out the effects of an action in a complicated, complicated world–when you aren't sure what facts are the relevant facts:

Most labor economists dismiss using the unemployment rate as a measure of the effect of the minimum wage. Why? Because economic theory says the minimum wage should reduce employment, so you should look at the employment rate. The "unemployment rate" does not measure the number of people who lost their jobs due to the minimum wage (or anything else, for that matter. It measures the number of persons actively looking to work. As Jacob Mincer showed, a minimum wage could increase the unemployment rate if it caused more people to want to look for work (which he called the "pull" effect. Alternatively, the minimum wage could reduce unemployment if the lack of jobs and turnover discouraged workers from looking for jobs. What is worse, an increase in unemployment could, but need not, be consistent with the minimum wage increasing the value of looking for a job, thus making all workers better off, and alternatively, a decrease in unemployment could (but need not ) be consistent with a minimum wage lowering the value of looking for a job (making everyone worse off). To put it another way, the effect of minimum wage on unemployment tells us nothing, at least without other data. So once again, one can become labeled by the Bureau of Labor Statistics as unemployed without losing a job, and one can lose a job, leave the labor force, and not be "unemployed" at all.

*It does not appear, though, that the minimum wage is the prime causal factor in general unemployment. (Nor is their any reason on free-market logic to think it should be.)

*Don Boudreax wonders about getting so empirical in an attempt to challenge basic economic logic in this one area:

Of all valuable goods and services bought and sold in markets, human labor is one of the few in which many people seriously believe that the law of demand – the proposition that, ceteris paribus, the higher is the cost of acquiring a unit of some given good or service, the fewer will be the units of that good or service sought to be acquired per period of time – does not necessarily apply.

And so empirical studies are done to test the law of demand as it applies to human labor and, lo and behold, some studies find that it does not apply while other studies find that it does.  So we are to conclude from this fact that employers of workers whose pay is in the range of the legislated minimum-wage might well not seek to economize on their production costs, in the face of higher mandated wages, by reducing the quantities of labor they hire, by working their laborers harder, or by lowering on other dimensions (say, fewer fringes) their hourly costs of employing labor.

Such a conclusion seems to me to be an incredible leap, one born chiefly of the romantic wish to believe that (apparently) well-meaning government mandates aimed (apparently) at 'the poor' really are an easy way to help the poor earn more income.

*Perhaps the numbers don't show long-term employment effects on minimum wage because:

there have been very few long-run changes in the minimum wage in the United States, so evidence on their effects is scant. The minimum wages is set in nominal terms, so it declines with inflation, is raised, declines with inflation, is raised, etc.  This yields a sawtooth pattern of the real (inflation-adjusted) minimum wage in which almost all changes in the real minimum wage are temporary. And [University of Michigan econ grad student Isaac [Sorkin] argues that temporary changes in the minimum wage have muted effects. 

*Reason in 1995 questioned the famous Card-Krueger study of fast food employment effects in two states after one minimum wage hike in 1992, the ur-source of "minimum wage hikes don't increase unemployment" modern smarty-pantsery, as did the National Bureau of Economic Research.

Do we have reason to believe that workers are not likely to be hired if the employer thinks they don't add value above the wage he pays them? Do we have reason to believe workers exist whose value added is less than $9? Do we have reason to believe that people tend to want less of something the more it costs, other things being equal? Do we realize that the "other things" that have to be equal are a huge, dizzying, number? Do we grant that employment numbers can go up after a minimum wage rise without that meaning that the rise in the wage did not cost some people a job? (Since there are many, many other reasons that employment might be going up that countervail the effect of the wage hike?)

Then it pays to think twice about hard factual true empirical numbers that make people conclude you can raise a minimum wage without causing people on the margins to lose a chance to work. (And those are exactly the people for whom some kind of job is most important.) This is not to make a statement about overall social good (if you believe in such a thing) when comparing the complicated effects of who wins and who loses when wages are raised for those working in that $9 an hour range. Just that it's hard to get around the thought that someone is going to lose or not get a job over it.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

163 responses to “The Minimum Wage: A Little Light Empiricism on a Heavy Subject

  1. That’s racist!

  2. Brian,
    Those asterisks; do they indicate some missing footnotes or are they intended to be bullet-points?

    1. Meant as bullet points, dividing one link/quote from another.

      1. Thanks.
        I was lookin’ around…

        1. I have the same issue with asterisk proliferation. I always assume it’s supposed to point me to something else.

          1. ****

            *(*
            ((**

            *

            **(*

  3. if we look at the 19 states that have a minimum wage higher than the federal minimum, the average unemployment rate among teens is 25.2%

    Is this corrected for parental income?

    1. Dunno, but I’ll presume that per-capita income is a good proxy; you can look here and get some handle on it:
      http://www.missourieconomy.org…..i_2011.stm

    2. Why would you “correct” for parental income? Just curious.

      1. To distinguish the extent to which elevated teen unemployment is due to an inability to find work vs. not needing to work.

        1. Doesn’t the unemployment measurement already differentiate and only count those actively searching for work as unemployed?

          1. Yes

            Just because teen unemployment is 25% does not mean 75% of teens are employed

  4. More OT stuff, but behold the idiocy:

    Will the sequester squish the economy?

    From Yahoo News:

    http://finance.yahoo.com/blogs…..45202.html

    Yeah we’re doomed.

  5. If the minimum wage isn’t low or non existent, how will people be motivated to leave shitty jobs? You don’t want people to hang around forever in low skill jobs.

    1. Think of all the cures for cancer and faster-than-light-drives and energy-too -cheap-to-meter NOT being invented by those 6 figure income-earning California prison guards and union longshoremen.

  6. Do we have reason to believe workers exist whose value added is less than $9?

    If you’re arguing for a minimum wage, it doesn’t matter–businesses shouldn’t be allowed to have labor that’s worth less than the minimum wage. Sweatshops shouldn’t be allowed, and an economy that requires them is unacceptable. (Oh, hi there China and Bangladesh, what’s up?)

    If basic economic logic (that thing Boudreax thinks shouldn’t be questioned in light of, pthht, evidence) says that minimum wage lowers employment, then we must conclude that in periods with both near-full employment and a minimum wage in place, that minimum wage was below the minimum value of a unit of labor (thus redundant and harmless).

    There is a whole list of social goods a minimum wage is supposed to promote. Plus the fact that the only countries without one have names like Somalia, Ethiopia, and North Korea. And yeah they’re taken to be worth the price, even if the price includes slightly higher unemployment. And even that outcome can be construed to be a social good, again, as we don’t want to promote very low-wage labor in this country, and forcing a minimum cost of labor forces employers to work that much harder and innovate more.

    1. Tony| 2.21.13 @ 7:33PM |#
      …”Sweatshops shouldn’t be allowed,”…
      You never fail do deliver, scheisskopf.
      1) “Sweatshop” has no objective definition; it is an invention of those who favor emotion over thought.
      2) “shouldn’t be allowed” is every bit as helpful as calling in unicorns.
      Go suck a sewage pipe.

      1. I wasn’t going for an objective definition of “sweatshop” but used the term as a representation of unacceptable working conditions.

        Government says what isn’t allowed. That’s its job.

        1. “I wasn’t going for an objective definition of “sweatshop” but used the term as a representation of unacceptable working conditions.”

          Unacceptable to who? Shouldn’t that be for the person taking the job to decide?

          1. Unacceptable according to societal norms. If denying the existence of sweatshops led to rampant unemployment, then sweatshops are certainly preferable, but that’s clearly not the case since we’ve had minimum wages in place during perfectly good employment rates. The idea is that a minimum wage promotes a more advanced economy by requiring entrepreneurship to gravitate in the direction of efficiency and innovation, and encourages people to gain more skills (get an education), rather relying on more primitive industry that sustains itself on the backs of low-wage, low-skilled workers.

            I’m certainly not saying that the presence of low-wage, low-skilled workers both domestically in the form of migrant workers and overseas in the form of actual sweatshops doesn’t complicate this picture just a tad.

            1. Tony| 2.21.13 @ 8:11PM |#
              “Unacceptable according to societal norms.”

              IOWs, shitheads like you can enlist the government to deny jobs to people who want them in the name of helping them.
              Have I got that right, shithead? Are you really that callous, shithead? Are you really that stupid, shithead?

              1. You’re not allowed to make a profit anyway you possibly can. If you can only figure out how to make a profit by defrauding people, then tough shit. Same logic applies. If you can only be entrepreneurial enough to make a profit while paying people less than the minimum wage, then tough shit. Try harder.

                1. You’re not allowed to make a profit anyway you possibly can. If you can only figure out how to make a profit by defrauding people, then tough shit.

                  But you’re perfectly fine with the government extorting money, through threat of deadly force, from innocent people for the purposes of wealth redistribution .

                  Keep livin’ tha THUG LYFE, Tony.

                  1. Extorting? No. Taxing is another of government’s primary functions.

                    1. Taxing is another of government’s primary functions.

                      And what happens when you choose not to pay the protection money tax, Tony? What happens?

                      By the way, thanks for playing the accordion at my last party. It was boss!

                    2. 20 minutes on, and Tony is still too cowardly to answer the question about what the government does if one chooses not to pay taxes.

                    3. Heroic Mulatto| 2.21.13 @ 9:05PM |#
                      “20 minutes on, and Tony is still too cowardly to answer the question about what the government does if one chooses not to pay taxes.”

                      Not cowardly; too stupid.
                      You’re asking shithead to examine bleefs; not going to happen.
                      You can ask someone who bleeves the world was created X years ago about the evidence of, say, the Grand Canyon, and you’ll get a ration of stupid such as you get from shithead.
                      The only difference is the creationist is less dangerous than shithead, not more stupid.

                    4. You get punished, and rightly so, because people shouldn’t be allowed to freeload. WTF?

                    5. you can’t be called a freeloader if your choice is to participate or have your property stolen and your butt hauled off to jail or shot.

                    6. Holy shit, was he playing the old Disneyworld tika room song?

                    7. You know what….I think you’re right!

                    8. Ideally, you would be gently, but firmly, expatriated to some other country where you won’t be required to pay taxes.

                2. Tony| 2.21.13 @ 8:17PM |#
                  …”If you can only figure out how to make a profit by defrauding people, then tough shit”…

                  Notice: Shithead posted this.
                  Shithead thinks offering X pay for Y effort is “fraud”.
                  Shithead has an IQ in the low single digits.

                  1. Are you denying the existence of fraud or what? I’ve seen you be lucid… just never when responding to me.

                    1. Tony| 2.21.13 @ 8:34PM |#
                      “Are you denying the existence of fraud or what?”

                      No, scheisskopf, I’m pointing out that you’ve made the false equivalence of “fraud” and an honest agreement between two parties.
                      Do you really not understand that?
                      I have to admit to struggling with the lack of intelligence you demonstrate. I’d be happy to have a clear definition, but I’m afraid you’ve already given it.
                      As an ignorant egomaniac, you’re hateful; as an ignoramus who has fantasies of knowledge, you’re truly pathetic.

                3. The corollary to that is: If you can only make money while being paid less than the minimum wage, then tough shit.

                  1. The corollary to that is: If you can only make money while being paid less than the minimum wage, then tough shit.

                    True. Hopefully there would be options like education.

                    Again I’m not saying our system is great by any means. Whole industries depend on cheap overseas labor. Higher education is too expensive for most people. Lots of things need to be rectified, but under no scenario is lowering labor standards domestically a good idea.

                    1. Tony| 2.21.13 @ 8:45PM |#
                      …”Lots of things need to be rectified, but under no scenario is lowering labor standards domestically a good idea.”

                      Shithead posted this; shithead probably imagines it means something.
                      Shithead is an idiot.

                    2. Whole industries depend on cheap overseas labor.

                      Yes, how dare people in other countries try to eat!

                      Higher education is too expensive for most people.

                      So? I have a valuable skill and I expect to be compensated for it. I’m not going to be forced to work for less just because you feel other people should be paid more.

                    3. “Again I’m not saying our system is great by any means.”

                      No, you just want to make it work worse because of your crackpot arbitrary notions of what is too undignified for a person to accept.

                      Furthermore, higher education is not appropriate for all career fields, and one of the reasons it has become so expensive has been the government’s attempts t lower the costs the student sees. Your vision is incredibly cramped, trying to box everyone into a your idea of a perfect lifestory.

                    4. problem is, min wage precludes you from one of the best options to bettering your situation. experience. hard to get experience and prove yourself to be a valuable employee if you can’t get your foot in the door.

                4. Tony, did you know that if you were to raise the minimum wage.. i would be virtually unemployable. I am an unskilled full time student, i can’t find a job that pays north of $16/hr without some incredible luck, i’ve worked as low as $8/hr and been contempt with that. Minimum wage cannot be set above the Equilibrium point.. and that Equilibrium point varies between industries, i’ve worked in food and beverage my whole life, that is my experience…

                  1. Plus i’ve worked cash-in-hand for half anyway, minimum wage is hard to enforce considering all the grey markets..

                    1. The idea is to encourage you to go get skilled. After each technological and economic revolution in western civilization, it became necessary for workers to become more educated to succeed in those new economies. Now it’s clear that a college education is becoming necessary to be employable beyond menial work, as a result of it being the information age. Thus I think college should be free.

                    2. how can one get skilled if they don’t have the money to get the education because min wage keeps them from finding employment? Debt? Dependence on family or government financing? Sounds like a way to just increase the intricacy and dependence on the welfare state. isn’t the goal to reduce those things? to increase self sufficiency?

              2. Yes, it is that callous and stupid.

            2. “Unacceptable according to societal norms.”

              Why shouldn’t society’s norms prevent me from working for what I find to be an acceptable wage?

              “The idea is that a minimum wage promotes a more advanced economy by requiring entrepreneurship to gravitate in the direction of efficiency and innovation, and encourages people to gain more skills (get an education), rather relying on more primitive industry that sustains itself on the backs of low-wage, low-skilled workers.”

              This is the worst economic analysis I’ve ever seen in my life. Without minimum wages, everyone would have no education and be working in sweatshops? With your logic, why doesn’t everyone (or almost everyone) get paid minimum wage? The fact that it’s such a small portion of the work force (and considering that most people who make minimum wage are teens or other people making supplemental family income and considering that most people who start out on minimum wage get raises ) proves your logic is absurd

              1. Why shouldn’t society’s norms prevent me from working for what I find to be an acceptable wage?

                I think you mean “should.” The answer is because presumably you have opportunities elsewhere, such as getting an education, and you should be persuaded to pursue them in order to contribute to a more advanced economy. I’m not saying that’s truly the case here. Our economy is nothing to brag about.

                The question is are enough teens and others being denied employment due to a minimum wage to outweigh the benefits of having a minimum wage.

                1. If the current quality of your work is such that cannot get a job higher than minimum wage than where are you going to lean job skills that will?

                  It is a helluva catch, that catch-22.

                  1. School? For a job in the modern economy?

                    1. Schooling is not appropriate for all career paths and it will not impart all job skills. In fact, many areas of study mat very well retard the appropriation of job skills. The best teacher is practice, not theory.

                2. Tony| 2.21.13 @ 8:37PM |#
                  …”The question is are enough teens and others being denied employment due to a minimum wage to outweigh the benefits of having a minimum wage.”

                  No.
                  the question is:
                  Is there *any* advantage to a minimum wage?

                3. Tony, do you realize that a very large portion of those on minimum wage are people in the process of acquiring an education? And what about people who either can’t afford an education or just aren’t cut out for school and would benefit a lot more from work experience – tough shit?

                  1. Like me… T o n y, or Tony or whoever the fuck this guy is doesn’t get how bad it would be for a student like me if they got rid of the minimum wage.

                  2. Tertiary education should be subsidized by government just like primary and secondary education are now and as it is in other countries.

                    That’s only if you want a healthy advanced economy of course.

                    1. For someone who keeps claiming to be a utilitarian, you are certainly blas? about spending money we don’t have on stuff of highly debatable utility.

        2. Tony| 2.21.13 @ 7:54PM |#
          “I wasn’t going for an objective definition of “sweatshop” but used the term as a representation of unacceptable working conditions.”

          Unacceptable to ignorant third-parties like you, scheisskopf?
          And yes, the government should act to keep you from demonstrating your ignorance.
          Go suck on a sewage pipe.

        3. Government says what isn’t allowed. That’s its job.

          That you think that’s the job of government is ipso facto evidence that you’re nothing but a thug. A greedy thug with the morals of your average ghetto criminal.

          And you have the chutzpah to act as if you stand on the moral high ground.

          Insane.

          1. Murder and theft aren’t allowed. Government says so. Yes, that’s its job.

            Notice I didn’t say government says what is allowed. Thought I was throwing you a bone, but carry on with your nonsensical invective.

            1. Murder and theft aren’t allowed. Government says so. Yes, that’s its job.

              So without the government, you’d commit murder and steal? That says so much about your lack of an inner moral compass, gangsta.

              Unlike you, however, I’m not a sociopath who needs the threat of force to not kill, rape, or steal from other people.

              1. Probably not, but someone else would. Carry on with this argument that laws against murder don’t do anything to mitigate the problem of murder. I’m fascinated.

                1. Carry on with this argument that laws against murder don’t do anything to mitigate the problem of murder.

                  Do they? Have we successfully legislated away murder? And while we’re on the subject, why is it that the states that don’t have a death penalty tend to have lower murder rates than those that do? What do you have to say about that, gangsta?

            2. Murder and theft aren’t allowed. Government says so. Yes, that’s its job.

              Science H Logic you are a turd. When someone comes to me and demands money at the point of a gun it is theft. When someone kills someone without a trial, except for self-defense, it is murder. The fucking government that you worship does both these things on a regular basis. Hopefully, more of them toward you, really soon, you piece of human filth.

              1. Science H Logic

                You got it wrong, it’s Science R Logic.

            3. “Murder and theft aren’t allowed. Government says so. Yes, that’s its job.”

              No, dipshit, the Government only disallows everyoneELSE from killing and stealing.

      2. Meaning if labor is so cheap then the company isn’t doing enough to make a profit while maintaining certain civilized standards for working conditions. You shouldn’t be allowed to make a profit unless you can do it while paying people a decent wage. Yeah that excludes some forms of industry. One of the costs that needs to be factored in. Minimum wage advocates say the cost is worth the benefit.

        1. “Meaning if labor is so cheap then the company isn’t doing enough to make a profit while maintaining certain civilized standards for working conditions.”

          What does this even mean?

          “You shouldn’t be allowed to make a profit unless you can do it while paying people a decent wage.”

          Who says so? You? What exactly constitutes a “decent wage”? I fail to see how preventing someone from getting a job because you deem it “uncivilized” in any way helps them

          1. Calidissident| 2.21.13 @ 8:03PM |#
            “Meaning if labor is so cheap then the company isn’t doing enough to make a profit while maintaining certain civilized standards for working conditions.”
            What does this even mean?”

            It means that shithead is an ignoramus.
            Let’s say it’s true; guess what workers, you just got fired as a result of some ignoramus telling us you shouldn’t have that job

          2. Just saying since we’ve had full employment even with a minimum wage in place, then it is either benign because it is too low or it doesn’t have the effect of depressing employment in those times. If you can maintain full employment and have a floor on wages, it can only serve to promote a more efficient and advanced industries.

            1. Shithead posts under the delusion that employers hold 100% of the power in negotiations with employees. In shithead’s case, it’s not surprising; shithead could obviously be replaced by any bot that approaches passing the Turing test.

              1. You guys are certainly trying your hardest to make that number as close as possible to 100%. For freedom, of course.

                1. Tony| 2.21.13 @ 8:46PM |#
                  “You guys are certainly trying your hardest to make that number as close as possible to 100%.”

                  Prove it, shithead. Cite one example where anyone here prefers contracts biased toward one side or the other.
                  Put up or shut up, shithead.

            2. No one here has said that you can’t have low unemployment rates with minimum wage laws. There are a lot of factors that affect that besides minimum wage laws. All we’ve said is that there will be fewer jobs than there otherwise would have been (among other things). And even back in 1999, when the general unemployment rate was very low, for teenagers the unemployment rate was 14.3%, as low-skilled groups like teens are the hardest hit by minimum wage laws.

          3. it’s just like what Unions do when they strike and beat up scabs who cross the picket line. They say, “I want more money and i don’t care if that means you have to go find work elsewhere where you won’t make what you make now.” very selfish.

        2. Minimum wage advocates say the cost is worth the benefit.

          That’s nice. When those people are ponying up their own capital to organize a business, they’re free to steer clear of those icky forms of industry that are unprofitable if they’re required to pay more than some politically-determined wage.

          Until then, they can go piss up a rope, because they’re not party to the employment contract.

        3. “Minimum wage advocates say the cost is worth the benefit.”

          And minimum wage advocate are milk-fed busybody snobs whose credo seems to be no one should accept employment under conditions I would not do well under.

    2. Yes, countries that don’t have a minimum wage are absolute hell holes. Countries like Germany, Austria, Denmark, Switzerland, and Singapore.

      1. All those places have “partial” de facto minimum wages, set for some industries and otherwise set by collective bargaining agreements enforced by law.

        1. A wage negotiated through collective bargaining is a de facto minimum wage? That’s a stretch.

          1. It’s also de jure as I said since those contracts are legally enforced. The only places without some form of minimum wage are shitholes.

            1. Tony| 2.21.13 @ 8:41PM |#
              “It’s also de jure as I said since those contracts are legally enforced”

              Yes, shithead, as is any contract (except in your utopia).
              But it’s not a mandated minimum wage, and it’s not surprising you missed that.

              1. It’s not practically different.

        2. Tony| 2.21.13 @ 7:53PM |#
          “All those places have “partial” de facto minimum wages,”

          IOWs, they have none, shithead.

        3. Not in Singapore and not for all workers, as not everyone is covered by a CBA in all those countries.

          1. Also, Hong Kong didn’t have a minimum wage until 2010. What a hellhole that place was.

    3. Value is subjective, Tony. Let me put this in terms you can understand. Either someone thinks a blowjob from a male prostitute is worth $20, or they do not.

      Let’s say 5 out of 10 people in one day think that getting a blowjob from a male prostitute is worth $20. If the male prostitute is forced to raise the price of what he charges for a blowjob through government intervention and not market demand to $25, then maybe only 3 out of 10 people will think that it is worth it.

      What does that mean? The male prostitute loses $25 per day.

      1. Saying value is subjective is to deny the “basic economic logic” that drives anti-minimum wage arguments. All you’re saying is that enacting a minimum price above its market value (which is apparently optimal when half of people want to pay it) reduces demand. That’s the logic. The relevant argument is that the specific market of labor defies this preconception in certain ways.

        1. Tony| 2.21.13 @ 8:02PM |#
          “Saying value is subjective is to deny the “basic economic logic” that drives anti-minimum wage arguments”

          No, shithead, it does nothing of the sort.

          1. HAHAHA And this, gentlemen–assuming you are all proper Rothbardian subjectivist jellyfishes–is the joker in your whole system. You say value is subjective? Guess what–so did Keynes and every other shitty state-shilling economist.

            If you read Atlas Shrugged and you still think value is subjective, you deserve it.

        2. Hey cunt, have you stolen any armoires lately?

        3. “…logic”

          I don’t think that word means what you think it means.

          Value most definitely is subjective.
          However, value is a different thing than price.

          All customers, including buyers of labor, consider price when purchasing.

          1. “…logic”

            “subjective”

            I don’t think that word means what you think it means.

            1. That was meant for Tony.

    4. North Korea, one of the last five Communist countries on the planet, doesn’t have a minimum wage? You sure about that?

      1. Virginian| 2.21.13 @ 8:06PM |#
        “North Korea, one of the last five Communist countries on the planet, doesn’t have a minimum wage? You sure about that?”
        Why would they bother? Everyone is employed by the state; is the state going to tell itself it has to pay X?

        1. …..and three minutes with Wikipedia shows that shithead is still a shithead. North Korea does have a minimum wage. There’s no food to buy of course, but there is a minimum wage.

          1. So the Nork government lies and claims it pays X to those who are starving…
            I’m sure shithead will be really pleased, as it shows the best of intentions, and produces death and poverty!
            “Utopia According to Scheisskopf”; new novel by John Irving

          2. He did say “names like”. Maybe North Korea is a name like….

    5. “businesses shouldn’t be allowed to have labor that’s worth less than the minimum wage.”

      Read carefully, if businesses truly weren’t allowed to have labor worth less than the minimum wage then NO ONE COULD START THEM. Any entrepreneur will have a period of time in the beginning where they’re only making $2 an hour, if they’re lucky. Do us a favor and take an Econ 101 class sometime when you’re bored instead of spewing ignorance on here.

      1. I think you’re allowed to pay yourself less than the minimum wage. If you grow enough to hire someone, then you need to pass a certain bar. This falls apart when unemployment is extremely high and our economy can’t sustain growth and innovation, but why is that anything to strive for?

        1. Tony| 2.21.13 @ 8:47PM |#
          “I think you’re allowed to pay yourself less than the minimum wage. If you grow enough to hire someone, then you need to pass a certain bar.”

          Yes, shithead. That bar is “I’ll offer X for doing Y”.
          Go suck on a sewage pipe.

    6. A seriously unhinged post.

      businesses shouldn’t be allowed to have labor that’s worth less than the minimum wage

      WTF does this even mean? This is much like saying “People whose labor is worth less than the minimum wage shouldn’t be allowed to have jobs.”

      Really, what’s the difference?

      If basic economic logic (that thing Boudreax thinks shouldn’t be questioned in light of, pthht, evidence)

      You mean like the evidence Doherty cites that supports basic economic logic? Isn’t that the gist of the article? We have a theory. We have some evidence that fits what the theory says should happen. We have some evidence that it doesn’t. But we have no counter-theory that would explain why it wouldn’t which fits the predictions of the contrary evidence.

      This is much like creationism. All sorts of evidence supports evolutionary theory. The creationist cherry pick things that don’t appear to fit. But in it’s place they have no viable counter-theory. Only blind faith in a supernatual being.

      Progressives really have blind faith in the ability of government to command things into being. That the government can just order all the wages to increase and *magic* people will be richer. In complete defiance of the logic and laws of economics.

      1. This is much like creationism. All sorts of evidence supports evolutionary theory. The creationist cherry pick things that don’t appear to fit. But in it’s place they have no viable counter-theory. Only blind faith in a supernatual being.

        Uh, in this case it’s the libertarians who are arguing against the empirical evidence and in favor of blind faith in the naive and rigid law of supply and demand.

        1. No, there’s plenty of emphirical evidence that supports the theory that minimum wages reduce unemployment.

          It’s just simply a LIE that the emphirical evidence leans the other way.

          1. Only if you cherry pick.

            1. You guys are the ones cherry picking. You have what? Two studies, by the same people Card and Kreuger from the Early 90s?

              Anything else?

    7. If you’re arguing for a minimum wage, it doesn’t matter–businesses shouldn’t be allowed to have labor that’s worth less than the minimum wage.

      Watch this and learn something idiot!

    8. “If basic economic logic (that thing Boudreax thinks shouldn’t be questioned in light of, pthht, evidence) says that minimum wage lowers employment, then we must conclude that in periods with both near-full employment and a minimum wage in place, that minimum wage was below the minimum value of a unit of labor (thus redundant and harmless).”

      And if one looks at the history of wages in the US you find that this is exactly the case.

      When they raised the minimum wage from $5.25 to $7.25 I lived in Louisville KY, hardly a high wage area and Fast Food places were paying $7 – $8 an hour to start, Wal Mart was at $6.75 an hour.

      I’m sure if I looked around hard enough I could have found somewhere that was paying $5.25 an hour as a starting wage but I highly doubt I would have been able to find any cluster of jobs outside of those which also offer some other form of compensation (aka tips or comissions) which paid $5.25 per hour on an ongoing basis.

      In otherwords, the increase in the minimum wage was largely irrelivant because the market had already set a minimum wage above the legal mandate

  7. Good article btw.

  8. Minimum wage is a joke, Corporate America has all of the right politicains paid for to ensure it never changes.

    http://www.GotzAnon.da.bz

    1. You scare me pedo-bot.

      1. I think this is pedo-bot’s slightly smarter cousin.

  9. There is a reason why economics as a science coalesced around coming up with logical regularities that likely underlie the buzzing, blooming confusion of reality where so many countervailing forces and influences are at work to reach any real world outcome that it would be remarkably easy to be fooled about what is causing what, and what is not having any effect.

    Is this a sentence or a random collection of words?

    1. Yes, as extra credit, go ahead and diagram that monstrosity.

    1. So, Buy Laguy, you post an opinion piece absent one bit of data, and think that means something?
      I’d say it means your a labor propagandist.

      1. Where is John Galt? He’s late for this par-tay.

    2. The fact that things other than the minimum wage affect demand for labor does not negate the fact that the minimum wage is one of many things that can affect the demand for labor.

  10. Totally unrelated, but I haven’t had much chance to get on here lately, you know, because of unfortunate circumstances, like having to work for a living, so just in case anyone wants to know.

    One of our esteemed assholes in Annapolis, here in MD, just introduced a bill to legalize MJ.

    Made me fucking laugh, a lot. This will be one of the last states to ever legalize pot. If I had to take a guess at it, I would say there will be at least 40 other states to legalize, or the feds will finally give in and legalize nationally before it ever happens here.

    Of course the reason for the effort is the same as everything else here, cronyism. But the stupid and statism will override that desire, forever, if need be, before it ever happens. I am shocked, after living here for 5 years, that alcohol is not still illegal here. And it sure the fuck would not be if they were willing to give up the tax revenue from it.

  11. Late arrival to the thread for me. Now guys, I know the President’styrant’s day holiday threw you all off, but it is troll free thursday. Carry on with life without feeding the wildlife.

    1. Happy TFT, Sudden!

    2. but it is troll free Thursday

      Then why is the Tony-bot here? Oh yeah, I forgot, his mommy is going to throw him out of the basement because he no longer has a job, because of no useful skills.

      It sucks to be Tony in a bad economy. Nothing better to do than troll, and having lost that edge, you know, he’s lost that trolling feeling… cause it’s gone, gone, gone whoa ohh ahh ohhh….

    3. I thought TFT got pushed back a day during holiday weeks, like garbage collection.

  12. OK, so Doherty first says attempting to draw conclusions from empirical data is tricky because of all the confounding variables (and he is correct)… then presents, as evidence for HIS favored position, a person drawing conclusions from empirical data in a sloppy and cherry-picked manner with not the slightest attempt to control for confounding variables. Hmm.

    The point is that *small* increases in prices do not necessarily affect demand. If a consumer widget is usually purchased one-at-a-time, and the price is raised from $9.20 per widget to $9.25 per widget, it is extremely unlikely that this will affect demand in the slightest. Not a single consumer is likely to say that well, $9.25 is just too much to pay. BUT, if we go by naive dogmatic supply and demand, we would predict that the demand MUST go down due to any price increase. So supply and demand, while useful in general, does have some situations in which it is merely an approximation to actual market behavior.

    It is for this reason that *small* increases in minwage may not increase unemployment. The effect is to cause a small amount of price inflation (which is not a good thing either) but not necessarily unemployment.

    1. Leave it to tulpa to make this post

    2. I can tell you from being a part owner in a small biz(mfg, retail, wholesale) that raising the minimum wage approx $2 an hour, will have real effects.

      For a small business it will have real effects, for Obamas favorite cronies, not so much, and maybe even good, but most of us are going to pay in the end, in one way or another, higher prices for consumer goods, less job opportunities..

      Just watched Atlas Shrugged Part II last night, much better than the first one, inspirational. Almost made me cry, lol.

      1. The current proposal is $1.75/hr in places where the state has no minwage higher than the federal one; I’d characterize that as fairly large (~24% of current minwage). So in those places we could see some trouble.

        IMHO they should have made AS into one movie if they were trying to do something other than preach to the choir. I know some Objies would be pissed about Galt’s speech lasting less than 45 minutes but screw them.

      2. Ayn Rand sucks, Atlas Shrugged sucks, Objectivism is stupid… I’m sorry but it makes me cringe whenever i hear praise given to this person, especially as a libertarian, basically her philosophy to me was Nihilistic Narcissistic worship of the Ubermensch, or Nietzsche Pt. 2.. That entire story was a wasted opportunity, though the Fountainhead, ‘cept for the rape, was a great story…

        1. I find it hard to believe, that as a Libertarian, that you think Rand ‘sucks’. Sure, objectivism is not a perfect fit with Libertarianism, but is sure as hell beats statism.

          Rand lived in Soviet Russia, you do know that, right? WTF do you think that would do to a person?

          The 2nd part of Atlas Shrugged, the movie, is awesome, IMHO.

          1. To me, Ayn Rand was a statist, she believed in sanctioning primitive cultures, had some weird hate of art, believed in IP and copyright, i could go on and on, she just liked Capitalism, not even the free market, just capitalism. Yeah i feel sorry for her for the way she grew up, but it doesn’t apologize for all her fucked up beliefs. She was spot on in regards to mob mentality and collectivism, but was retarded in almost everything else.

            Though i’ll admit, the book The Fountainhead was actually very influential on me….

            1. She also was critical of Altruism and Compassion, and i really don’t see what that has to do with libertarianism except in the eyes of Socialists who think we are selfish life sucking demons (i’m a charity volunteer, suck it statists…) I thought it’s about the ethical, moral and practical justifications for liberty, free markets and voluntary society.

              1. Yeah, you really need to read the book again. Try to actually pay attention to it. Because she talks a lot about compassion and altruism, and what she sees as the proper form of it. She’s critical of compassion given for nothing in return, of altruism being used as a way to allay guilt that she doesn’t believe people should feel. The vast gulf between Dagny and her brother James is due to the fact that Dagny thinks she’s done nothing wrong by being successful, while James has believed the lies he’s been told. James is constantly ruining his company because he doesn’t want people to think poorly of him according to a twisted and depraved code of morality.

                1. I’ll give it another read but she still believed in fucked up statist shit, such as “primitivism” and how it should be sanctioned.

                  1. I don’t know much about her other stuff. I can’t think of a single thing she said in Atlas Shrugged that I disagreed with. She pretty much predicted the future.

                2. Dagny had the great foresight to choose to be an heiress. Why does no one ever mention that part?

            2. No, she had a valid hatred for the mindless nihilistic trash you probably consider art, and she validated IP because a man has a MORAL right to own the product of his intellectual effort.

              You guys just don’t get it: the moral is the practical. And before you launch into the usual bombast about “thugs and rackets”, ask yourself if you could invent a microprocessor, diesel engine or nuclear reactor–and even if you could, ask yourself how many years of excruciating cognitive effort you would devote to developing a product in order to bring it into a world in which you had no right to own it…

              fuck you goddamn mindless Rothbardian subjectivist jellyfishes, you are the worst fucking thing to ever happen to the intellectual defense of laissez-faire capitalism and political freedom. What started with the “hedonistic calculus” of the 19th century ended with Murray Rothbard asserting a non-objective tribalistic wasteland, with no property rights or rule of law, as being the fertile soil (fertile with his bullshit) from which industrial civilization will magically spring. Fuck all of you subjectivist intellectual cowards

        2. You might want to read the book again, because you missed some important things.

          1. Once is more than enough for anybody.

    3. Complete misreading of the post.

      he’s not trying to do a comprehensive survery of the emphirical evidence. He’s pointing out that indeed, there is plenty of emphirical evidence supporting the theory, and given the fact that said empirical evidence also fits neatly with a well-established theory of supply and demand it makes more sense to believe the theory. Instead of throwing price theory our the window in favor of – apparantly nothing. The idea that economics is total chaos and the government can arbitrarily command things to be the way it wants and there are no predictable consequences of it?

      If you don’t believe in supply and demand and price theory the entire field of economics might as well close up shop. Much like biology would have to do if you don’t believe in evolution.

      If you think you have evidence that supply and demand doesn’t apply to labor (unique amoung all goods in the world), then you ought to come up with a theory as to why that would be.
      Right now, all they have is magical thinking and emotionalism.

    4. If a consumer widget is usually purchased one-at-a-time, and the price is raised from $9.20 per widget to $9.25 per widget, it is extremely unlikely that this will affect demand in the slightest. Not a single consumer is likely to say that well, $9.25 is just too much to pay. BUT, if we go by naive dogmatic supply and demand, we would predict that the demand MUST go down due to any price increase.

      Demand curves typically aren’t linear. Single purchasers may not purchase fewer widgets at a .5% increase, but bulk purchasers certainly will, thus lowering aggregate demand for the good. And employers are bulk purchasers of the widget we’re setting a price floor on.

      1. This is basic marginal utility thoery.

        If you raise the price of something marginally, there WILL be a marginal decline in demand. Just because you personally as individual consumer would pay the 5 cents more doesn’t mean there isn’t a marginal consumer our there who wouldn’t.

        Making universal statements like “There’s no way that there is ANYONE in the world who would EVER make a decision not to purchase something based on a 5 cent difference” is silly.
        Never mind that said extra 5 cents adds up and comes out of the economy somewhere else. Perhaps in marginal purchases of lattes. People have a finite amount of cash. Does 0.5% inflation not eventually show up in reduced purchasing power?

        And besides that if a 5 cent increase has ZERO effect on demand, then put 5 such increases together and a 25C increase has no effect on demand. it’s like Progressives never studied Zeno’s Paradox, and they honestly think that a tiny amount is equivalent to zero.

  13. This may be a little old, but here is another argument against raising the minimum wage.

    http://jongriffin.com/business…..ving-wage/

  14. Statism takes whatever form necessary to achieve it’s evil, especially in Commifornia, and awesome music from Styx.

    Statism and Styx

    1. I loved Styx. Right up to, but not including, that robot thingy.

  15. First of of all, can you people PLEASE STOP RESPONDING TO TONY. I mean how many threads are you going to let him jack up people. Jesus Christ! Also, this is the worst anti-minimum wage article I have ever read. It’s like reading one of Shakmas ummigration articles. Who give a flying fuck about teen unemployment? Seriously! Not to mention making me dizzy with your way too long and circular explainations. Do you get paid by the word? You must becuse what a waste of space. You are correct that minimum wage is bullshit but there have been way way better articles on that than this one. Seriously.

    1. JB, if it’s any consolation to ya, I stopped about month ago, and have encouraged others to do so.

      We have had recent influx of trolls, and I advise same for those.

      1. The one reason there is to respond to him is that if a leftist reads his nonsense without the string of comments tearing his idiocy apart, they’re going to be reinforced in their beliefs. But if they read the rebuttals, light may creep in through dusty dim windows.

        People tell you not to argue on the Internet, but any kind of argument is pointless. I’ve never changed someones mind by debating them, in public or online. But it’s not about that. It’s about the audience.

      2. Meh.

        I’ve said it before…arguing with dipshit serves a purpose. It provides an opportunity to apply rational arguments in the face of asshattery. Practice on the sock-puppet so you might be able to make an impact on someone more open to logic.

        Besides, it’s therapeutic to be able to direct your pent up anger at the ultimate representation of all that’s wrong with the world.

        I say…have at it.

        1. I do it so people who lurk these message boards (like i used to) can inform themselves of counter-arguments and shit.. Also because watching Tony is like watching a cat on LSD… amusing as fuck.

    2. “Who give a flying fuck about teen unemployment?”

      Teens? Parents of teens? Parents of kids who will become teens? Businesses that lose out a potential labor source and consumers that lose out on the additional production?

    3. I do… because i’m a student… who needs to work.

  16. HazelMeade| 2.21.13 @ 11:08PM |#

    No, there’s plenty of emphirical evidence…. It’s just simply a LIE that the emphirical evidence leans the other way.

    HazelMeade| 2.21.13 @ 11:14PM |#

    ….he’s not trying to do a comprehensive survery of the emphirical evidence…. there is plenty of emphirical evidence supporting the theory….

    That is all.

    1. Yes. I’m consistently saying there is lots of empirical evidence that supports the theory that the minimum wage reduces employment. And it would be a LIE to claim otherwise.

  17. I think those ladies holding the banner in the picture could raise the amount of time they spend on the stairmaster.

    ‘Cause damn. They ain’t exactly starving.

    1. I knew eventually someone would go there.

  18. Minimum wage laws have fostered an entire underground economy based on illegal immigrants who work for sub-minimum wages because they don’t have the legal standing to take advantage of the minimum wage.

    That alone should be evidence enough that minimum wages are a problem.

    The desire to make the minimum wage a “living wage” is terribly misguided. A lot of people don’t need a “living wage” — they just need some wage for an honest days work. They live with higher wage earners, or they pool resources with other low-wage workers to make ends meet.

    My first job, at 16, in 1980, was a no-skill job cleaning cages and mopping floors at a veterinarian’s office fora couple bucks an hour. It put a few bucks of spending/gas money in my pocket, but I learned more that was useful in that and other starter jobs than in any half dozen classes I took in high school.

    Now, my 13-year-old daughter is asking about when she can get a part-time job. It’s frustrating to know that most jobs like that don’t exist anymore.

    It’s not just the pay rate: the marginal costs of complying with all the regulations necessary to have an on-the-books employee price that kind of job right out of most small businesses reach. Unless you find someone willing to just slip your kid a few bucks cash “under-the-table” for doing odd jobs around their shop, they don’t want to delve into that maze of compliance for a possibly low-reliability, low-availability, short-term worker.

    1. Look around for shops owned by immigrants. One of my first jobs was at a Greek owned pizzeria. 15 or so employees, but that was all cash based, as far as the IRS knew the owner was the sole employee.

      For all the talk about independence and cussedness, native born Americans are much less likely to find ways around the rules and regulations. They bitch and moan, but they fill out the forms and pay the taxes.

  19. Wow. I never thought my hometown would make it big time, but here we are–in a photo for a Reason article. Of course, we aren’t big enough to warrant Alt text, but whatever.

    Next, can we get a pic of the peace protesters that still stand on the corner every Saturday morning?

  20. ” Do we have reason to believe workers exist whose value added is less than $9?”

    This is actually utterly irrelivant but I would bet that the number of workers who are only capable of or willing to produce $9 an hour worth of value is exceedingly small.

    The problem is once you get to jobs paying anywhere near the current and historical minimum wages the productive capacity of the worker is irrelivant the job itself is not able to provide more than $x per hour in value no matter who you have working in that job.

    Lets take for example a cashier at a Department or Grocery store, there are certainly skills and talents that differientate a good cashier from a bad one and a bad cashier could easily have a negative value to the company but I don’t care how good you are, the best cashier in the history of the world is simply not going to be worth more than $10 – $12 per hour in todays world, that said the average cashier is likely more than capable of providing more than $12 an hour in value in a different position and a moderately bad one is probably able to provide more than $10 an hour somewhere.

    1. This does not mean that cashiers are not necessary, although it does make them a good candidate for automation (Hello Self Checkout) but even there there would still be a need for some cashiers and a large store could not function without them, it also means that it is occasionally necessary for a store to pay cashiers above their value add just so they can allow the rest of the store to function at all.

      Where the minimum wage becomes a problem is if it is raised high enough that it makes entire companies no longer profitable because they have a large number of positions whose value is at or below the new minimum and they are in an industry which is very price sensitive.

      To date in the US this has not occurred because whenever the have raised the minimum wage the market had already largely established a minimum much higher than the previous minimum and near or below the new minimum which means that the minimum wage in the US has been little more than a meaningless piece of political propaganda. The new rise they are discussing is different however because the market has not raised the effective minimum wage significantly above the existing one and even though the jum is not large it is quite likely that this will have a far larger impact than any previous minimum wage hike.

  21. A little googline and I dug this up:
    http://www.stanford.edu/class/econ101c/class2.pdf

    A survery of emphirical studies on the minimum wage.
    See the chart on page 18.

  22. Short version:
    Hypothesis makes prediction.
    Prediction fails in reality.
    Hypothesis confirmed!

    Dogma is stupid.

Please to post comments

Comments are closed.