Minimum Wage

On Minimum Wage, Democrats Have Lost Their Marbles

And grasp of elementary economy logic

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Minimum wage hikes are back in vogue among progressives. With a vengeance. Bernie and Hillary are demanding

Unemployed Man
DreamsTime

more than a doubling of the current minimum wage to $15 an hour, the highest by far in the "free" (or unfree) world. California and New York have already obliged.

But this is insanity. Such laws will make the American labor market even more rigid than the European one, rendering it unable to accommodate any shift in the supply of workers, negating a key strength of the American economy. They'll also, as in many European countries like Spain, result in a quarter of the youth being unemployed.

It is true that the academic consensus on this issue has shifted a bit in the last decade. But the extravagant claims that liberals are now making to justify their calls demonstrate a breathtaking lapse of elementary economic logic. I debunk four of them in my column at The Week.

Go here to read them.

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  1. You’re not going to trick me into going to a publication I don’t recognize.

  2. On Minimum Wage, Democrats Have Lost their Marbles

    And grasp of elementary economy logic

    Not really. The only logic that counts is: “Will this buy me votes? And will the labor unions send more campaign contributions in gratitude?” Since the answers are both “yes”, it is perfectly sensible and logical on the part of the politicians.

    1. it’s curious how few people seem aware of the connection between the minimum and union wages. Maybe it wouldn’t matter, but maybe it would reveal the self-serving nature of some of the debate participants.

    2. Also stuff like this..

      http://dailysignal.com/2015/09…..exemption/

  3. So is reason strategically omitting the Shikha byline?

    1. Also, a functioning alt text tag?

    2. Would not have clicked if I knew beforehand.

  4. “We may be pricing ourselves out of the international labor market, we may be forcing businesses running on slim margins to close up shop, we may be forcing unskilled workers into unemployment, but by Gaia we’re going to get those votes!”

    1. “We have to protect our phoney-baloney jobs!”

        1. I didn’t get a harrumph out of that guy!

          *points at WTF*

          1. Can’t go a day without Mel Brooks…

            In our contracts it seems.

    2. “We may be pricing ourselves out of the international labor market”

      Are we sure this isn’t the left’s goal?

  5. The argument that former Labor Secretary Robert Reich offers is that higher wages means happier employees and lower turnover, something that saves a company money. If so, the million-dollar question is why aren’t greedy companies doing this already? Are they too stupid or sadistic or both to pass up on a win-win deal for both themselves and their workers?

    Let me answer that question by posing another:

    If a woman is paid only 73% of what a man is paid for doing the same job, why aren’t greedy companies hiring only women?

    1. If a woman is paid only 73% of what a man is paid for doing the same job, why aren’t greedy companies hiring only women?

      Because PATRIARCHY! Duh!

    2. Every time someone shares a Reich video on derpbook, I feel the sudden urge to mainline a cocktail of battery acid, draino, and bleach.

      1. Better yet, inject it into Reich.

        1. something something woodchipper…

          something something federal subpoena…

          1. The woodchipper is being called to testify?

    3. That particular flavor of argument always boggles my eyes. Businesses are full of owners who think only of money and profits above all else, but are simultaneously either too stupid to recognize a way to make money or too mean and spiteful to pay people a profit-making wage.

    4. Sure, if you assume all people are rational actors and that they aren’t biased, just malicious.

  6. Somebody Sugar-Freed the link that is supposed to be a photo credit for the illustration.

  7. Even NPR is skeptical. On Friday they ran an article on evening drivetime about Taco Bell’s new Tacobot order-taking robot and pointedly commented on how things like this were coming along with higher minimum wage.

    1. *clutches hair, shrieks*

      WHO COULD HAVE FORETOLD SUCH A THING COMING TO PASS

    2. Obviously this means we need to ban automation! Duh.

        1. Am I the only one who thinks that “tacobot” is the FUNNEST word to say?!?!

      1. -1 Johnny Cab

    3. Thanks. I have friends who regard NPR as Divinely inspired and inerrant, so I’ll have to let them know about that.

    4. I’m looking for to the day I can load my order into Tacobot.

        1. Yes, a gross of loads.

          1. You and everyone else.

            1. You slut shaming Tacobot?

              1. I thought I was slut shaming you?

        2. It is only gross when a big load of sour cream oozes out of the Tacobot’s serving slot….

    5. The google news feed has had a couple of links which amuse me. One is about California and New York leading the way with $15 minimum wage laws. The other is that California is expected to outpace the nation in growth. I realize this is just a google bot selecting the headlines, but I also know that this is what proggies believe.

      It won’t be long before the headlines bemoan California’s crappy economy and crappy growth, all the fault of the evil GOP.

      1. They’ll just start demanding “guaranteed minimum incomes,” subsidies for everything they want to buy, and higher corporate taxes.

      2. And I think the Democrats in the CA state assembly are only 1 vote short of a supermajority (which they had previously).

    6. Tell me more about this “Tacobot”….

    7. That must be why the Taco Bell by my house is remodeling?

    8. Jack in the Box, at least here in California, already tried it. It didn’t work out. And seeing as the order-taker is rarely devoted to just that task (they already optimized that job a fair bit), it’s not like an order-bot means you send someone home either.

      Throw in that even at $15/hour, if you have 30 customers an hour that’s still only going to shave off $0.50 from each customers bill (assuming a uniform distribution). And 30 customers an hour? Might be highballing it for slow-times (but they’re reducing staffing and double-tasking people for those anyway), but it’s definitely lowballing it for the busy times.

      So while I’m sure automation is eventually gonna make a more permanent impact on fast food, I’m skeptical this will be the final straw.

      1. Call center ordering. Iirc, wendys experimented with it. But with the $15 minimum, drive thru boxes may connect to South Dakota or India soon.

  8. But the extravagant claims that liberals are now making to justify their calls demonstrate a breathtaking lapse of elementary economic logic.

    You can’t let something lapse that never existed in the first place.

  9. Would that it were only minimum wage.

    With the phased-in $15 an hour minimum wage deal, New York joins California, New Jersey and Rhode Island in guaranteeing paid family leave. New York’s plan offers 12 weeks of paid leave. California and New Jersey offer six, and Rhode Island four. Washington, D.C., is considering a 16-week proposal.

    No one is ever getting hired, ever again.

    1. I heard some small business owner ranting the other day that he would never hire another woman who might get pregnant.

      We’ll just see about that.

        1. I hope you mean post-menopausal, because otherwise that could lead to fistfighting, crying and hot flashes.

          “You stifle, Archie!”

    2. Jesus. France is a cautionary tale, people, *not* a model to emulate. The fact that the pinkos in power there are currently scrambling desperately to undo the very stupidest economic regulations should be a hint. (But I suppose that if our pinkos could take a hint, they would’t be pinkos to begin with.)

    3. How the fuck does anyone think that that is even remotely possible for a small business to provide?

      1. Everyone knows that all business owners are greedy bastards. Those owners will cover the costs by not being so greedy.

      2. why do assuming that “think” is a factor? Come on, man; it’s about the feelz. Those pushing things like this can show their friends and acquaintances how caring they are.

        1. You have to think to put your feelz into words.

          But you are right, a lot of people probably don’t even consider that someone actually has to pay people to not work for 12 weeks under this law.

          1. Not exactly, at least not in NY and NJ. It’s a state entitlement, not a demand on the employer, and the payroll tax funding it is a pittance.

            1. NY seems to be modeled on NJ, so I’m guessing the plan is going to top out early despite claims of “67% of pay.” NJ limits:

              Maximum Benefit Amount (MBA)
              For claims beginning January 1, 2016, the maximum weekly benefit rate is $615.

              You may receive benefits for up to six weeks (42 days) during a 12 month period or until you receive benefits equal to one-third (1/3) of your total wages during your base year, whichever is less. The 12-month period is the 365 consecutive days that begins on the first day of a valid family leave insurance claim.

                1. Yeah, but it’s a really tiny amount. If you can’t afford the the $75 per year NY is charging or the $29 that NJ charges, then you have much bigger problems.

                  It’s a silly policy, but it’s way, way down on the list of shit that’s bankrupting the country.

    4. And then they’ll wonder why all the mom-and-pop local businesses have disappeared, and only automated McDonald’s and Chik-Fil-As remain.

      1. What makes you think there won’t be Robo-mom & Robo-pop?

    5. If makin’ a baby is what it takes to get a paid vacay around here, well so be it.

      *rolls up sleeves*

  10. Minimum wage hikes have never gone OUT of vogue with the Progrssive Left. They suit its agenda perfectly; they make it look like the Progressive Left cares about the Lower Orders while ensuring that more of those Lesser Beings are entirely dependent on the State.

    *spit*

    1. But this time, I think they might be shooting themselves in the dick. In the past, minimum wage has pretty well lagged behind prevailing wages, so it hasn’t done too much harm. Now that they are actually trying to use it to push up a lot of people’s wages artificially, there will be real, noticeable consequences.

  11. So what if it fails economic logic? That’s not the point. The point is that everyone deserves a living wage, and $7.50/hr is not a living wage. Besides, unlike when the minimum wage was first created, the people who support this hike don’t intend for it to cause unemployment. Their intentions are good and wonderful. Whereas the critics have bad intentions. They want the rich business owners to stay rich. It’s just unfair that business owners are rich while their workers don’t make a living wage. Only someone with bad intentions would want to perpetuate that. So anyone who criticizes raising the minimum wage has bad intentions, and isn’t worth listening to. I mean, they love the rich and hate the poor. It’s the only possible explanation.

    1. The right intentions will earn us the favor of the economic spirits.

      1. The increased financial sacrifices will appease the animals spirits.

    2. and $7.50/hr is not a living wage

      Obviously. Everyone who makes $7.50/hr is dead.

      What is “living wage” supposed to mean again?

      1. If you have to ask then you obviously hate poor people.

  12. The standard rap against minimum wage laws is that by raising the cost of hiring workers, they prompt companies to invest in labor-saving technologies, throwing people out of work. But Matthew Yglesias claims that this would by no means be a “bad thing.” Why? Because productivity is the engine of economic progress. And if machines are more productive than people, then policies that prod employers to replace people with machines would mean more wealth without toil for everyone.

    These people are cargo cultists. Just having the trappings of productivity-boosting automation means that wealth is created, regardless of whether it’s the best investment for the companies affected. We could mandate that companies set aside 10% of their profit to pay the unemployed to dig holes and fill them back in, and that would generate a great deal of activity, but no new wealth has been created. Automation driven by regulatory change isn’t producing wealth, either, just diverting it to a second-best application. If there were gains to be had, companies would already have embraced it.

    1. And I love the argument that greedy, rapacious, anything-for-a-buck capitalists simply cannot dispense with their malicious hatred of the poor to boost wages and actually increase profits in doing so. Just like those evil misogynists can’t stomach hiring exclusively women despite being able to pay them almost a quarter less than the men they hire instead. Right.

    2. I don’t get the “more wealth for everyone” part. I see how a company might benefit but not how the individual(s) who used to do the job gain. Everything has effects, both foreseen and unforeseen, and to pretend that some action is universally beneficial seems a bit out there.

      1. “See, automation and capital investment greatly boosted productivity during nineteenth and twentieth centuries, and companies are investing in automation and capital now, therefore productivity must rise, costs will fall, and companies will hire more people.” It’s the cargo cult mentality.

        1. Russ Roberts tells a story about a student who came up with a mock business plan that plainly didn’t make any money. The student’s explanation was that all the successful startups lose money at first.

          Some people just don’t get causality.

          1. I keep bringing it up, but the Realtor ads I hear on the radio, especially after the housing crash, really bug me. They conflate all of the ostensible benefits of homeownership with simply owning a home, whatever the owner’s personal investment is. No, those benefits are characteristics of families with long-time horizons and a stake in the community. Reducing required down-payments and insulating prospective owners from the risks and discomforts of investing in a property diminishes the benefits of being invested. But they’ve bought into the cargo cult mentality.

            1. It also reduces labor market flexibility. How hard is it to sell a house, move, and buy a new house versus end a lease, move, and find a new lease?

      2. “pretend that some action is universally beneficial”

        That’s pretty par for the course.

      3. To be fair, that’s what actually happens. Not in the short-run, of course. One of the early pushes towards urbanization came from displaced farm workers looking for jobs after their old ones went to a machine. For that matter, textile mills put a *lot* of women who were working from home out of business. Go back decades and you see accounting offices with hundreds of people manually tabulating and going through reems of paper. Now one person with Excel does the same job. As the Model-T came out, people who had jobs running people around with a horse and buggy lost ’em.

        Heck, it’s likely that if the government ever gets serious about illegal immigration and cracks down on farms using their labor that we’ll see another wave of industrial farming.

        So yeah, in the short run there’s a lot of people that get screwed. In the long run, it *does* benefit everyone.

        That said, it’s reasonable to question if there’s a limit to our ability to reabsorb displaced workers and find new work for them. It didn’t happen much when the factories left for China. Even as (some) factories return, they’re relying on more automation and less workers. So it’s perfectly legitimate to question whether increased automation will eventually lead to a perpetually unemployed, and unemployable, underclass.

        1. Heck, it’s likely that if the government ever gets serious about illegal immigration and cracks down on farms using their labor that we’ll see another wave of industrial farming.

          That, and a lot more imports.

          So it’s perfectly legitimate to question whether increased automation will eventually lead to a perpetually unemployed, and unemployable, underclass..

          That’s a question people have been asking every since the steam weavers put hand weavers out of work.

    3. Did he really argue that “By artificially making human labor more expensive than machines, we make machines more productive than humans”?

      It’s like there is some fundamental telepathic block in place that prevents people from seeing costs and benefits simultaneously and evaluating alternatives.

      1. I don’t think Yglesias is stupid, I think he’s a partisan hack who has to tow the lion because TEAM. Yglesias will never be affected by low-skill unemployment, not while he has an audience of adoring fans whose throbbing knobby egos he polishes. So it’s easy to write blatant lies and never give it a second thought. Helping disemploy a bunch of low-skilled slobs who don’t even read his column doesn’t really register.

        1. You lost me at I don’t think Yglesias is stupid. Everything that follows can still be true without the modifier.

          1. I don’t give him a pass for merely being stupid. I don’t think he’s wrong and ignorant or wrong and cognitively dissonant, he’s wrong and willfully publishing lies because it doesn’t matter to him.

    4. Actually this is my beef with it:

      The first minimum-wage laws were advocated by progressive economists on the assumption that if you forced employers to pay a “white man’s wage,” they’d only hire white men. As the sociologist E.A. Ross put it in the context of Chinese immigrant workers, in the early 1900s, “the Coolie cannot outdo the American, but he can underlive him.” The Davis-Bacon Act, still cherished by Democrats and their labor-union patrons, was passed in 1931 to prevent blacks and immigrants from competing with all-white unions for federal contracts during the Depression. And Jim Crow laws certainly locked millions of blacks out of the middle class.

      1. It’s the magic of intentions. Their intentions were impure and bigoted, but ours are pure as wind-swept snow and virgin teenage chorus girls. Sure, the mechanism we’re both defending hasn’t changed a jot or tittle in the meantime, and the effects are pretty much the same, but the innocence of our intentions have purified those things and now such laws are unimpeachable.

        1. virgin teenage chorus girls

          If you titled your newsletter with this, you’d get more subscribers.

          1. I’ll be in my library.

  13. If $15/hr is good, then $50/hr is clearly better. Why are the proggies trying to shortchange honest working people with their piddling $15? Monsters!

    1. Since housing affordability is also in the news, the minimum wage should be enough to afford a median-priced apartment in Manhattan. If you don’t agree that minimum-wage earners have a basic human right to be able to afford Manhattan, why do you hate the working poor so much, you horrible person?

    2. Had a discussion with a guy once who said that the government could make us all millionaires because they print the money. Technically he’s right. Not sure what that’ll do to the price of his crappy beer but pretty sure he’s not going to like it

      1. In entirely unrelated news, I bought $150 trillion in Zimbabwean currency on eBay for about five bucks US.

    3. They response is that a minimum wage increase that large will lead to unemployment, but that smaller changes can be absorbed through other means.

  14. Shikha for the alt text win!

  15. If so, the million-dollar question is why aren’t greedy companies doing this already? Are they too stupid or sadistic or both to pass up on a win-win deal for both themselves and their workers?

    That should be enough to end the entire argument. But, no siree. I want these idiots to pay $500 for their next haircut. If it was good at $25, it would be great at $500, no?

  16. As I hear it, it’s rampant consumerism that’s destroying the planet with global warming. If humans want to survive, they’ll just need to accept a reduction in quality of life. Industrialized nations only need to accept an 80% reduction, nations that are working towards industrialization a 50% reduction, and all others can stay as is.

    No lie, I read this comment on another site.

    1. That is pretty bad, but I can’t imagine that any comment from now until the end of time can beat one I read in the NYT a few years back. A woman explained that the only way the earth could heal would be for us to rebury all of the materials we have mined and dug up and pumped from wells. All the stone, all the concrete, all of the minerals, all of the hydrocarbons…

      1. Oil is the Earth’s blood, man.

        Did anyone tell her that we do a lot of that with these things called landfills?

  17. I have heard numerous retards, including Governor Moonbeam, admit that these minimum wage pushes make no sense economically but they have to do it anyway because somehow it is the right thing to do.

    Everything that comes out of the left is garbledy garbledy clap trap.

    1. That’s the really insane part. Jerry Brown doesn’t seem like a stupid person. And he said that this doesn’t make sense. But he and people like him just go along with it anyway. I don’t get it.

      1. See above explanations regarding ensuring dependency on govt and how the MW is tied to union wages.

        They don’t care for the poor the way a parent cares for children, they care for the poor the way a farmer cares for his cattle.

      2. Shut up, Zeb! You were not brought upon this world to get it!

      3. “Non-economic values”

        1. And/or the reasons he thinks it doesn’t make economic sense may not be the reasons we think it doesn’t make economic sense. Maybe to him that phrase means “from the point of view of a profit driven business”.

  18. Marbelous.

  19. According to Who are the working poor?, reviewing data from the Bureau of Labor Statistics for 2013, the “working poor” (meaning people earning less than poverty, but possibly more than minimum wage), were only 7% of the workforce. For 2013, the percentage of the workforce earning minimum wage was 4.3%. Out of both of those numbers, a significant percentage of the wage earners were not heads of households trying to earn “a living”.

    Reading between the lines, it becomes evident that the “working poor” are not the progressives’ target demographic. There simply aren’t enough of them; less than 10% of the total workforce and even less in terms of votes. Now, the folks between the “working poor” and a current wage of $15 an hour would also, purportedly, benefit, but neither group is particularly lucrative in terms of campaign contributions and other… perks.

    The greatest benefactors by large would be unions. The popular formulas for union wages set baseline wages at a percentage above minimum wage. When minimum wage is increased, then union wages go up as well. And it is all done by government fiat rather than contract renegotiation with the employers.

    1. Fun fact about most minimum wage jobs: If you do the job halfway competently (where “competent” mostly means showing up on time every day and not completely fucking up your work), you get raises and moved up to better positions after a few short months.

    2. Damn, should have hit refresh.

    3. Yeah, this. It’s about the unions, the underclass doesn’t matter.

      1. Oh, it is seriously evil shit:

        http://dailysignal.com/2015/09…..exemption/

  20. The real winners: Democratic politicians who will say and support anything for a vote [preferably a block of votes] and true “progressives” who want nothing less than a total re-design of our economy into a socialist workers paradise. Down with the greedy capitalist and up with “the people.” This is right up Sanders and Warren’s respective alleys, and while you are going about guaranteeing a “living wage” for everyone, throw in free college tuition, free health care, and all things Santa Claus.

    And we should know by now how those [do not] work out.

  21. Whenever some retard tries to bring up how we need to increase minimum wage for fairness or whatever, I like to point out that only 1.3MM Americans earn the federal minimum wage. Then I ask them who they’re really advocating get a pay raise cause there’s no way a high minded person such as themselves is only worried about helping such a tiny sliver of the population.

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    1. Is this the TacoBot I keep hearing about?

      1. Combine the Tacobot with the Realdoll and, mister, you’ll strike gold.

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    1. That’s great and all, but what about the regulars on here who are looking for children dating sites? A little discriminatory, isn’t it?

      1. OMWC doesn’t need help finding “dates”.

  24. I cant imagine a burger flipper at McDonalds making fifteen bucks an hour.

    http://www.Web-Privacy.tk

  25. Lots of min. wage increase supporters who don’t have a stake are for it because they simply don’t like the idea of people working for too little. They’d rather those people be out of work, because being unemployed doesn’t affront the dignity of onlookers as does working & not being paid enough to live on.

  26. The United States Department of Labor reviewed 64 studies, (not 1, not 2, but 64) on the effects of minimum wage increases and unemployment, finding no correlation between the two. In NBER Working Paper 19262, Meers and West argued, reasonably in my opinion,and with supportive data, that the effects of a minimum wage increase are not on current employment but on growth, taking several years to become apparent. That kind of multi-variate analysis requires a lot of plates to spin at once with many points of possible misinterpretation, but it seems a plausible argument. Of course this lacks the terror effect of telling the currently employed they will lose their jobs, especially in a culture where we may as well all be wearing shirts that say “I got mine, so FU!” I suspect Meer and West may have it right, but I await verification while not holding my breath. Any such study is a job for Sisyphus. But not to worry dear capitalists. I’m sure ALEC has already distributed sample legislation whereby GOP controlled state legislatures can preempt local jurisdictions from increasing the minimum wage by camouflaging such provisions, as they did here in North Carolina, by hiding it in anti-gay legislation.

  27. RE: On Minimum Wage, Democrats Have Lost Their Marbles

    The democrats haven’t lost their minds any more than the republicans.
    That’s why I’m voting libertarian (again).

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