Minimum Wage

Four Progressive Minimum Wage Myths Debunked

Democrats are just making things up to advance their job-killing cause.

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Progressives have gone crazy over the minimum wage.

President Obama got the ball rolling when he called for hiking the federal minimum wage from $7.25 to $10.10 per

Jobless Couple
Dreamstime

hour. Now, both Democratic presidential candidates are trying to one-up him, with Bernie Sanders demanding a $15 federal wage and Hillary Clinton $12. Meanwhile, California and New York have already passed laws mandating the Bernie rate, and scores of cities across the country are clamoring to follow suit.

And all the while, minimum wage advocates are making increasingly fanciful claims on behalf of their beloved laws.

The left's minimum wage obsession dovetails with a shifting academic consensus that until the 1990s considered such hikes a recipe for killing jobs, especially for low-skilled workers. For a long time, the generally accepted rule of thumb was that, all else remaining equal, every 10 percent increase in the minimum wage would decrease low-skilled employment by 1 to 2 percent, since the more employers had to pay these employees, the fewer jobs they could afford to provide.

This consensus began to fray with a 1992 study by economists David Card and Alan Kreuger, who found that New Jersey's minimum wage hike—from $4.25 to $5.05—did not lead to expected job losses in the state's fast food restaurants. This finding has been hotly contested, but even if it were true, it doesn't mean there are no other downsides to minimum wage laws. For example, sometimes employers don't respond to minimum wage hikes by laying off workers, but instead by raising prices for consumers. (Minimum wage opponents haven't helped their case by hitching it almost exclusively to job losses while ignoring the other, equally pernicious, adjustment responses by businesses.)

There is only one scenario, according to Naval Postgraduate School economist David Henderson, under which a modest legally mandated minimum wage might do more good than harm: when employers enjoy monopsony power (a monopoly on the buying side) in the labor market, either because there are very few of them or because workers can't leave for some reason. Employers then have a relatively free hand to hold wages down. A mandated minimum wage under those circumstances merely diverts the firm's "excess profits" to the worker, something that would have happened automatically in a more competitive market. But it doesn't diminish a company's productivity or its incentive for additional hiring—thereby actually boosting job growth. But genuine monopsony isn't common and would require a very finely calibrated and skillfully crafted minimum wage, which is not how blanket policies work in the real world.

America's federal minimum wage of $7.25 per hour works out to about 42 percent of its $17.40 hourly median wage. Even the most gung-ho academics only advocate raising it to 50 percent of the median — which means a little over $8.70. This in itself is a crude benchmark that lumps together high-wage service occupations with low-wage construction and other non-service ones whose market realities are completely different. Be that as it may, it is inconceivable that a $15 minimum wage—equal to 86 percent of America's median wage, and the highest in the Western world—wouldn't kill jobs, especially in small towns and cities where wages tend to be lower. Witness the chronic double-digit unemployment rate that a far less insane minimum wage has generated in France, Spain, Belgium, and other European countries.

And yet, minimum wage enthusiasts are abandoning all caution and making increasingly extravagant claims. Here are four of their sillier arguments:

False: Minimum wage hikes will lead to productivity-boosting automation

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. This is the reverse of the Luddite fallacy that seeks to boost jobs by eschewing labor-saving technologies. Nobel laureate Milton Friedman once heard a Third World bureaucrat, suffering from this fallacy, defend his decision to have poor workers dig a massive canal with shovels rather than earth movers because that meant more jobs. Friedman asked: Why don't you replace their shovels with spoons?

Increasing productivity is not simply a matter of increasing output, but doing so in the most cost-effective way. You do not encourage that with policies that force investments in capital equipment when labor is plentiful. Indeed, this raises the overall opportunity cost, rendering an economy less efficient. If Friedman were alive, he may well have asked Yglesias why, by his logic, he doesn't just advocate a ban on all manual labor.

False: Minimum wage hikes helps firms make more money

This claim strains credulity. How would a $15 mandate that almost doubles a company's labor costs actually boost profits? 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?

False: Minimum wage hikes will stimulate the economy

Michael Reich, an economist at the University of California, Berkeley, claims not only that a $15 minimum wage wouldn't produce job losses in the short run, but would actually stimulate the economy, resulting in job gains in the long run. "They'd (employees) have more money to spend, the overall level of demand for goods and services would be higher, and so would the level of employment," he claims.

But shifting wealth around doesn't generate real economic growth. Boosting productivity does. Indeed, ordering employers to give artificial raises means that they would have less money to spend or invest, cancelling out any extra spending by workers.

False: Minimum wage hikes will diminish the strain on welfare programs

Advocates of the minimum wage claim that without a suitably high minimum, low-income workers are forced to rely on food stamps and health care programs to make ends meet. In essence, they argue, welfare programs end up subsidizing McDonald's low-wage workforce, which is hardly fair to taxpayers. Forcing companies to pay something resembling "living" wages would diminish low-wage workers' dependence on government programs.

This assumes that boosting the minimum wage would hand more workers a raise than it would throw people out of work, of course — which is hardly a reasonable assumption, as pointed out earlier. Indeed, notes University of California, Irvine's David Neumark, the probability that a family will escape poverty due to higher wages will be offset by the probability that another will enter poverty because it has been priced out of the labor market.

The core fallacy in this line of reasoning is that employers can set wages based on employee needs rather than market forces. Hence, they can simply be forced to hand over more money to their workers. That, however, is not how things work, especially in a globalized world where forcing employers to cough up wages higher than the market can bear would undermine their competitiveness—not something that helps anyone in the long run.

This article originally appeared in The Week.

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  1. Economic arguments are cold and unfeeling. Because of this they must come from bad intentions. You know, like wanting the rich to stay rich and the poor to stay poor. Because of this these arguments can be safely ignored, because anyone making them is a bad person with bad intentions.

    What you don’t understand is that this isn’t about economics. It’s about fairness. People deserve to make a living wage. Doesn’t matter if they actually earn it or not. They deserve to take home a living wage because food, shelter, internet, smart phones, computers, cable television, Nike shoes, and all of that are basic human rights that all Americans should be able to afford.

    That is why we need to double the minimum wage. It’s fair. Anyone who says otherwise is a bad person with bad intentions.

    1. It’s the same feelz applied to gun control. There the matter is human life, and all human life is precious, so anyone dying from their mistakes, such as a home invader, is an appalling tragedy. Give up your possessions instead of defending it — no possessions can ever be worth as much as even the scummiest of human lives! And of course, home invaders who knew they would never find armed residents wouldn’t need to be armed themselves, so home invaders might knock the residents around a little to encourage faster compliance, but that’s still not worth protecting yourself at the expense of precious human life.

      I do understand that emotion. Every time I hear of some criminal killed in self-defense, I wish it hadn’t been so, that he had lived a better life. But what those emoters can’t fathom is that the dead criminals are the ones who chose a risky occupation, and their occupation involves scaring people with the threat of death, just as passing laws again anything and everything involves the ultimate enforcement of death by cop.

      I read somewhere that burglars in the US are more likely to rob during the day when houses are empty, but British (and other disarmed societies) burglars expressly target the evening hours when the residents are more likely at home and able to point out where the jewelry is hidden and give up safe combinations.

      1. Give up your possessions instead of defending it — no possessions can ever be worth as much as even the scummiest of human lives!

        One of my neighbors has a sign on his door that says something to the effect of “We’re armed to the teeth. Nothing in this house is worth dying for.”

        The neighbor on the other sided has a sign with a couple six-shooters, and a caption that says “We don’t call 911.”

        I’ve been considering getting one for my door that says “This house is insured by Smith and Wesson.”

        1. Reminds me of a sign I wanted to get following a burst of door-knockers: “No soliciting – See dog for details”.
          Instead, folks in our neighborhood have a Facebook group and immediately post when someone’s going door-to-door, and about five minutes later everyone’s dogs are in their front yards.

        2. I have one on my door that says “If you break in here I’ll be calling 911 to come pick up your body. Please ensure your ID contains the correct address to deliver it to.”

          1. Or, “Please bring your own bodybag.”

    2. Your point is well taken. I am solidly in the middle class, yet if I argue against a MW I’m accused of being an apologist for millionaires. Why in the hell would I be an apologist for millionaires? At least respect me enough to cede that my belief in free markets is sincere and that I don’t have an ulterior motive. Did I mention that I’m solidly in the middle class and have nothing to gain from “keeping people in poverty?”

      Another example of this is back in 1981, when Reagan was shot. I remember the Left saying, “well, now maybe he’ll have a change of heart on gun control” as if — again! — his position was due to some selfish, nefarious reasoning instead of a calm, deliberate position based on sincere beliefs.

      1. Another example of this is back in 1981, when Reagan was shot. I remember the Left saying, “well, now maybe he’ll have a change of heart on gun control” as if — again! — his position was due to some selfish, nefarious reasoning instead of a calm, deliberate position based on sincere beliefs.

        And yet he signed the Brady Bill on, uhh, November 30, 1993, which was named in honor of his press secretary. Hmmm. Are you just a very subtle troll, or am I pretty naive at recognizing the more blatant variety?

        1. Well fuck me for being stupid.

          I know Reagan signed some gun control bill in response, and latched on to the first google link without thinking.

          Fuck me for a duck.

        2. And the signing of that bill was the first time in history that Americans could be stripped of their constitutionally guaranteed and protected rights. Thanks to that law selling too many dildos in Alabama will cost you your right to bear arms.

      2. Why in the hell would I be an apologist for millionaires?

        Because you’ve been duped by the likes of Milton Friedman into believing that allowing the rich to keep their own money creates prosperity for everyone. Trickle down economics has been thoroughly debunked, you know. The only way to have prosperity is through force, not cooperation. Force employers to pay more. Force people to buy domestic products through tariffs on foreign competition. Force the rich to pay their fair share. Force is the only way to get anything done. It has been proven. Anyone who says otherwise is a liar with bad intentions, and their arguments can be summarily dismissed. Ad hominems are not fallacious arguments, they are in fact logical and convincing. After all, how can you judge an argument except by judging the person? If they have good intentions then their argument must be true.

        1. And actually, MW doesn’t affect the millionaires, who can actually profit by it. Their large companies can absorb the MW increase, but the mom-and-pop stores can’t and go out of business. And so less competition for the millionaires.

          MW increase hurts the middle class more than anyone by raising the costs of running a small business and overall raising prices in general, in addition to the increases in unemployment. And if prices shoot through the roof while your bank account continues to accrue 0.05% interest, well, you are losing money on your ‘safe’ life savings.

          And yet, you keep hearing how 75% of voters in states like CA would vote for a $15 MW. Because almost all of them have no idea what it will do to them personally, they think it will just affect that nice young man at In and Out Burger.

          1. It’s not intended to put mom-and-pop stores out of business! How dare you accuse these people of having bad intentions! They only have good intentions! Aaaaarrgggghh!

            1. Actually, I have seen some arguments to the effect that “if you can’t afford to pay a living wage, you have a bad business model and don’t deserve to have employees/be in business.”

              What the people who make this argument seem to be missing is that
              a) it’s kind of stupid to ask every small business to hold off on hiring even its first, most junior employee until it can pay them $30,000
              b) why is it the employer’s fault if the employee does not bring in $15+/hour in value? Are employers supposed to pay more to the employee than they’re actually bringing in?

              1. “if you can’t afford to pay a living wage, you have a bad business model and don’t deserve to have employees/be in business.”

                I love that one. It’s kind of like if I stabbed someone in the neck and said, “if you can’t handle your lungs being choked with blood, you’re too weak to be alive anyway!”

          2. As usual, Leftist policies are *really* geared toward the support of established corporations and wealthy businessmen who have already made it and want to pull the ladder up after them. I am constantly astounded at what dupes they are.

        2. And pass laws. Yes, it’s a fact well known to progressives that the laws of supply and demand can be superseded by well (and not so well) intentioned legislation. And wishes. You just have to wish hard enough for the right outcome and it will come true. Come on, people, if we all just wish hard enough for fairness we can change the world!

      3. Why in the hell would I be an apologist for millionaires?

        Because that’s the best argument they have.

        And liberals na?vely believe that liberalism is the default belief anyone opposing it is doing it out of malicious intent (millionaires) or as a paid agent thereof.

        1. They have good intentions. The only explanation for disagreeing is bad intentions. No one could disagree and also have good intentions. If they had good intentions then they would agree. So they must have bad intentions. It is the only possible explanation.

          1. People on the right think people on the left have bad ideas.
            People on the left think people on the right are bad people.

            This is why it is so hard to ever convince the left of anything, because intentions, social signaling and who you think you are means everything to them.

            1. To be fair, EVERYONE thinks the other side are bad people these days.

          2. That’s why you should agree with bad intentions.

            Raising the minimum wage to a living wage would allow married women to leave the workforce, opening up jobs for more men so they afford to marry and raise a family.

      4. They have an ulterior motive, therefore you MUST have one too.

      5. I am solidly in the middle class, yet if I argue against a MW I’m accused of being an apologist for millionaires. Why in the hell would I be an apologist for millionaires?

        Because you, as a middle class person, are suffering from false Class Consciousness. That’s how the capitalists convince the bourgeois to oppress the proletariat, silly!

    3. I just don’t understand why they don’t advocate for a guaranteed minimum salary for everyone, regardless of work. That’s where the real feels are. The fact that Bernie isn’t pushing this indicates that he has at least some small amount of common sense. (That or he realizes that enough of his supporters have enough common sense to not support him if he started calling for this.)

      If $15/hr is a “living wage”, then $31200/yr is a “living salary”. It would only cost ten trillion a year. We could cover that by taxing rich. Get on this Bernie!

      1. Because if they actually pushed for a guaranteed minimum salary, or a “negative income tax” a la Milton Friedman, they’d have to either raise the net tax burden so high to afford it that there’d be blood in the streets or they’d have to (as Friedman proposed) eliminate most of the rest of the welfare state, which would put a lot of well-meaning experts and bureaucrats out of work and, god forbid, require that they trust poor people to make decisions for themselves and allow them to suffer the consequences of poor choices.

        1. Because if they actually pushed for a guaranteed minimum salary, or a “negative income tax” a la Milton Friedman, they’d have to either raise the net tax burden so high to afford it that there’d be blood in the streets or…

          I don’t think the tax burden would be that enormous or have to be any more than it is now. Imagine you had a really high negative income tax at $7,000 for a person earning $0 and being graded out until earnings of $18,000 or something.

          These numbers are going to be grossly inaccurate, but they shouldn’t be too low. The poverty rate is supposed to be at 15% of the population (which includes the elderly who receive social security and medicare but probably doesn’t include young people from wealthy families). Even if you paid all those people a full $7000 per year, 15% of 320 million people times $7000 comes to $336 billion per year. Imagine administrative costs of an additional 18% and you’ve got a little less than $400 billion per year. Federal anti-poverty spending is supposed to be around $650 billion per year or something. So even if just the majority of programs were replaced with a rather high negative income tax, the spending on it wouldn’t have to be any more.

          This seems too good to be true. Is there something enormous I missed?

      2. I just don’t understand why they don’t advocate for a guaranteed minimum salary for everyone, regardless of work.

        I’ve tried to tell people this kind of thing, but they come back with “But then everybody would be subsidizing McDonald’s for paying slave wages to their workers. Everybody would be punished to support McDonald’s greed.”

    4. Why not triple it then?

    5. Good point. We need to work harder at generating feelz. “What? Raise the minimum wage? You cold-hearted bastard! Why do you hate the young, the poor, and the unskilled? Why do you want to make everyone pay more for stuff, except for the people who’ll lose their jobs and can’t afford to pay for any of it anyway?? How can you be so cruel and heartless?”

  2. Let’s say you’re making $7 an hour now. I sure hope that doesn’t include any adults. Anyway, let’s say you make $7 and hour now, and you and everyone else in the country who is now making $7 gets a raise to $15. Guess what that $15 an hour will buy you? If you guessed exactly the same thing that $7 an hour bought you, you get 5 gold stars and a free pony.

    1. Meanwhile some poor shmuck who is making $25/hr will see their paycheck go much less further than it did before.

      1. Of course. Not to mention all the pissed off people who are making $15 an hour now see their lower skilled co-workers making the same. Are you going to give them an $8 an hour increase also? These people are idiots.

        1. That has been my argument all along. People just don’t understand we are only sliding the ENTIRE pay scale up, not just the pay of low-skill workers. The dental tech who went to school for two years and is now making $12/hr will not be happy with a “raise” to $15, the same as a HS grad. She would have to have her pay move accordingly, say to $20/hr. It is a never ending loop. And then what about the exceptional employees at McDonald’s? Say a person has worked at McDonald’s for five years. He started at $7.75/hr, but because of his exceptional work, he has received a $0.25 raise each and is now making $9/hr. Yes he will be happy to receive his “raise” to $15, but will be unhappy that he “lost” his raises for the last five years and now makes the same as someone starting day one. Or, McDonald’s would have to scale his pay to $16.25 to compensate that employee.

          1. People just don’t understand we are only sliding the ENTIRE pay scale up, not just the pay of low-skill workers.

            Indeed…price of goods and services go up to cover the labor cost. Who’s left holding the bag? Granny on her fixed income.

            These people are fucking evil!

            1. They’ve just about screwed the fixed income crowd as much as they can with financial repression (artificially low interest rates), so now they’ve got to find new ways to screw them, I guess.

            2. Not evil – just stupid.

              1. When Force enters the equation, they are evil.

                1. never attribute to evil, what can be explained by stupidity. at least at first.

                  1. ^This. Evil means that they are doing it intentionally, which means that they have thought it through and are aware of the consequences and accept the blowback. Stupid, or at lease economically ignorant, fits the bill so much more accurately.

                    1. Funny how they are fully aware that artificially raising the price of cigarettes (tax) reduces cigarette use, but are ignorant of the fact artificially raising the price of labor (min wage) reduces labor use.

                    2. And yet that’s what they argue. The laws of supply and demand supposedly don’t apply to labor. And some economists say that.

        2. But they’re protecting you, fool.

    2. Nevermind that pretty much no one makes minimum wage for more than 6 months at a time. After six months you’ve either been fired for cause, quit because you’re lazy, or earned a raise.

      1. How dare you inject personal responsibility into this? People deserve a living wage! Period!

        1. Isn’t a minimum wage supposed to be a starting wage – for non-skilled workers with no job experience?

          Just how did a “minimum wage” morph into a “living wage”?

          1. Back in the glorious 60s and 70s, when America was at its economic peak, someone could comfortably support a family of four with a minimum wage job. Everyone knows this. It was a living wage then, and it should be a living wage now. Only apologists for the rich would suggest otherwise.

            1. Plus, if we don’t have massive redistribution, we’ll have an aristocracy. Thomas said so.

              1. It’s true. Once a family is rich, they will always be rich. That’s how capitalism works. If you have money then your money makes money for you, otherwise you work for a capitalist. If it wasn’t for massive redistribution, then there would be a handful of extremely wealthy people owning everything, and everyone else would be living in wage slavery. That is the end result of libertarian economics. Corporate fiefdoms, where peasants toil under their corporate masters. That is what libertarians want. Corporate feudalism. Duh. Everyone knows this.

                1. Except I’m a Throckmorton. Yes, THOSE Throckmortons. So where’s my castle?

                2. Rich people have money playpens where money magically produces more money, like rabbits! That’s how it works, right?? 😉

    3. “I sure hope that doesn’t include any adults. ”

      Why not? Some adults (retirees, for example) want a pleasant, low stress job to keep them busy more than they need the extra money (volunteers work for $0/hr after all). This classic coyoteblog post is particularly good on that subject:

      http://www.coyoteblog.com/coyo…..es_on.html

  3. Let’s ask the folks in Puerto Rico and Samoa what the minimum wage did for them:

    The impact on the economies of American Samoa and the Northern Mariana Islands was devastating. In American Samoa, by 2009, after only three of the ten scheduled minimum-wage increases, overall employment dropped 30 percent ? 58 percent in the critically important tuna-canning industry. Real per capita GDP in American Samoa fell nearly 10 percent from 2006 levels. In the Northern Mariana Islands, by the end of 2009, employment was down by 35 percent, and real per capita GDP off by 23 percent.

    The law had a similar effect in Puerto Rico where the mandatory increases resulted in a minimum wage that was greater than 75 percent of the Puerto Rican median wage. And the results were predictably catastrophic for the economy. Economic activity declined and Puerto Rican unemployment surged. Between 2007 and 2013, Puerto Rico’s GDP per capita declined by nearly 7 percent, while over the same period it was unchanged nationwide. As a result, many Puerto Ricans left for the U.S. mainland. The migration of young, mobile, working-age Puerto Ricans created an imbalance as the aged and less ambitious remained behind.

    Progress!

    1. Tourists were reluctant to absorb the 30 percent premium for a Puerto Rican hotel room relative to other Caribbean destinations. Tourist arrivals in 2012 were identical to arrivals in 1992, while tourist visits over the same period doubled in the Dominican Republic and tripled in Cuba. Today, tourism contributes only 6 percent to Puerto Rico’s GDP compared with 27 percent in Jamaica and 16 percent in the Dominican Republic.

      1. “Today, tourism contributes only 6 percent to Puerto Rico’s GDP compared with 27 percent in Jamaica and 16 percent in the Dominican Republic.”

        Minimum wage increases make Hispanics less reliant on white tourist money, great social justice ensues.

        1. Why be dependent on white tourist money, when you can be dependent on white tax money?

          1. Well, you know, they deserve the tax money because of colonialism, or social justice, or something. It’s insulting to expect them to sully their hands providing services to someone else. And tourists, no less!

    2. The law had a similar effect in Puerto Rico where the mandatory increases resulted in a minimum wage that was greater than 75 percent of the Puerto Rican median wage.

      While this statement is probably factually correct, it is also statistically meaningless. There is a reason people say above or below the median value and not some fraction of median value. The author should have given the percentile score of the amount, or else a lower value with a known percentile score in order to illustrate the spread.

      1. Wouldn’t the previous minimum wage be the zero point for the median wage, assuming that the median wage was calculated by ignoring the unemployed?

        1. You would also have to ignore under-the-table employment, but yes. However, it still doesn’t tell you anything about the statistical distribution of wages.

        2. Also, if you’re interested in some blatant “raise the minimum wage” propaganda, check out this Wikipedia “article”. It’s laughably biased but has all the hallmarks of a “good” article.

    3. According to this chart from the Bureau of Labor Statistics (you know, the statistical arm of that ultra-right wing institution called the Federal Department of Labor), the median income from 2015 was 20 $/hr to 20.50 $/hr.

      So raising the minimum wage to 15 $/hr would be raising it to ? of the median wage.

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    1. FAIL! You have to not only bold all of that bullshit, you have to TYPE IN ALL CAPS, YOU FUCKING RETARD!

      1. Is t he supposed to replace some of the s’s with $’s and o’s with 0’s? This fucker isn’t gonna last long on places with decent spam filters.

        C609075 is certainly no LimpoSimpo.

        1. And they’re just getting random numbers for their screen names now? These fuckers aren’t even trying anymore. H&R needs a better breed of spambot.

          1. They’re not sending us the best spambots. They’re lazy, unbolded, proper-case spellers. Some of them, I assume, are good bots.

            I think it’s past time we build a firewall around H&R and make the spambots pay for it.

            1. probably minimum wage spambots…

  6. “…For example, sometimes employers don’t respond to minimum wage hikes by laying off workers, but instead by raising prices for consumers….”

    Employers are also not in the habit if waiting for the axe to fall before moving their heads.
    Scrooge McDuck, on learning a new M-W proposal is going to be on the ballot, and understanding that many people are stupid enough to believe in free shit, is not going to wait for it to pass. Right now, Mr. McDuck is researching what new mechanization or out-sourced services are available to replace some of his employees. They’ll be hitting the bricks long before the low-info voters decide they can stick it to the rich employer.

    1. Like replacing cashiers with kiosks or self-checkouts and burger flippers with automated burger flippers.

    2. Actually, some of the employers are going to wait. There are a lot of unsophisticated burger joint owners out there. They’re operating on thin margins and don’t have the cash (or the creditworthiness) to make big investments in automation. They have their savings tied up in depreciating equipment and leases they can’t walk away from, so they’ll have little choice but to wait and see and try to make a go of it in the brave new world of $15 burger flippers. They may know already that their chances are poor, but why not put off bankruptcy as long as possible?

      1. It’s not just that they are unsophisticated. I owned an ice cream shop where there wasn’t much I could automate. My wife and I had 16 employees all performing very manual tasks. These included making the ice cream, dipping the ice cream, making sundaes and shakes. No one in my business earned $15/hr, especially me. If this had happened while I was in business, I would have just shut it down and filed for bankruptcy. I couldn’t raise prices as I had complaints about what I charged currently. I did provide a premium product, super premium ice cream made on the premises with fresh ingredients. What I learned is that labor-intensive low margin businesses are a bad business model as you have little control over costs. These are the types of businesses that succumb to minimum wage increases.

  7. Card and Krueger should’ve been banned from ever teaching or publishing again after that nonsensical “study” they did. It was pandering drivel with presupposed conclusions designed entirely to support this mendacious crap about positive effects of the minimum wage. It’s the economic equivalent of Andrew Wakefield’s stupidity.

    1. What do you mean? Ignoring total employment numbers and labor mobility is totally sound!

      1. Somewhere, I have the paper I wrote on this for grad school- I don’t remember the specifics at the moment, but I remember getting angry and incredulous that this sort of idiocy was being used to impact public policy. At the very least, comparing New Jersey to a random portion of Pennsylvania for no other reason than that they happened to be close-ish was ridiculous to begin with.

  8. “This consensus began to fray with a 1992 study by economists David Card and Alan Kreuger, who found that New Jersey’s minimum wage hike?from $4.25 to $5.05?did not lead to expected job losses in the state’s fast food restaurants. This finding has been hotly contested, but even if it were true, it doesn’t mean there are no other downsides to minimum wage laws.”

    That minimum wage increase is also only an increase of like 15%. What they’re talking about now is effectively doubling the minimum wage.

    If a 15% increase doesn’t do that much damage, it doesn’t follow that a 100% increase will also not do much damage. If I drink one beer in a day I won’t get drunk. If I drink 50 beers I will die.

    1. If I drink 50 beers I will die.

      Lightweight.

    2. But you won’t die right away! It could take years for 50 beers a day to kill you and years for these economically challenged dimwits to totally wreck the economy! So drink up!

    3. Won’t this decrease legal employment and increase “off the books & under the table” employment?

      Gee, if Pedro works for $10 off the books but LaToya wants $ 15 . . .

      1. Without a doubt. It’s not any different than cigarette taxes driving the black and “grey” markets for untaxed cigarettes.

    4. 50% increase in California.

      I’m hoping California feels the effect quickly so this foolishness doesn’t spread.

      1. Jerry Brown will be comfortably dead before anyone pays a political price.

  9. There is only one scenario, according to Naval Postgraduate School economist David Henderson, under which a […] minimum wage might do more good than harm: when employers enjoy monopsony power […] in the labor market[.] Employers then have a relatively free hand to hold wages down.

    But the only way a monopsony can exist is if the labor market is restricted by force, i.e. through state power, so it defies credulity to read that an economist would argue for a state-imposed wage after creating the situation it the first place. So even this justifiation for a minimum wage is a stretch.

    But it doesn’t diminish a company’s productivity or its incentive for additional hiring?thereby actually boosting job growth.

    Bu that’s not possible even in a case of monopsony. A change in labor cost means ipso facto the labor becomes LESS productive overnight since profits from labor are reduced. So this contention is false. In order to justify any extra hiring, a worker would be asked to perform more tasks than a worker hired at the lower rate – this is what Henderson is likely talking about but this is an effect after the fact and it woud mean LESS hiring, not more.

    But genuine monopsony isn’t common[…]

    It’s actually quite uncommon, most of the time being a very local and ephemeral situation.

    1. And monopsony never exists on the national level in the US. There are no situations in a country of 320 million people where there is only one employer, even in a particular industry.

      1. First, single payer. Next, single employer!

        1. The cat is out of the bag

          1. You didn’t build that, so there’s no reason you should own that. The state will own all businesses and be the sole employer. Yay! Utopia to follow.

      2. Most of the time, companies accused of being monopsonies only happen to be very big, and they usually offer the better wages than the smaller companies, which is why the bigger companies get the pick of the litter, so to speak. The only true monopsonies that get to control wages are still totalitarian governments that control wages as a matter of central planning and force.

      3. NFL.

        1. That depends on how you define “industry”. I would say the NFL has no monopoly, because its “industry” is “professional sports” where it has competition from the NBA, the MLB, the NHL, etc.

          1. I’m glad you didn’t say MLS. Because they need to put “” around professional if they’re planning on using it as a descriptor of the MLS.

            1. Well, what is the definition of “professional”? Half the NFL has or should have a criminal record; a good many MLS players are paid in the millions.

              However, MLS and NFL are not really competitors, in the way that Boost Mobile and Verizon are not really competitors.

              1. Very few MLS players make millions. 47% of MLS players make less than 100k, 7% make more than 500k, much less millions according to Forbes.

                Now if you are talking the big European leagues it’s as you stated.

                1. According to the players’ union, 20 players make at least $1 million. That looks to be about 3% of their players, or about half of those making at least $500,000. Their lowest-paid players make $50,000 but far more players make $60,000.

                  Like I said, not competitive with the NFL but if making median household income at worst is “not professional” then I’d like to know what you consider a profession.

            2. They don’t get paid?

              1. I don’t get it either.

                1. I use trying to cleverly say that the MLS sucks so bad they ought to put professional in air quotes.

                  Looks like I failed at the “clever” part of it.

        2. Okay, valid point. Pro-sports are a bit different.

        3. Each franchise within the NFL is able to spend various amounts per player up to a cap, correct? So there is some limited competition between the teams for the best players.

      4. Ma Bell was the last, right?

        1. Re: sloopyTEXAS,

          Ma Bell was a government-protected monopoly but even then it wasn’t a monopsony, i.e. a sole employer.

      5. da Feds’s is the only ones whose can do dis…

      6. Monopsony might exist in Hawaii? the top 5 employers are branches of the government.

        WalMart is #6.

  10. I ask,If the minimum wage goes to 15$ does that mean the dems will want to eliminate most welfare and all the tax credits for families? Color me doubtful.

    1. Since everyone making $15 an hour will be in the exact same state financially as they were making $7 an hour, or even more likely, be out of a job, I’m going to guess we’ll be spending more on welfare.

      1. Feature, not bug.

      2. Plus all of those government functionaries that have their wages tied to the median are gonna have to,get a raise. Meaning the cost of administering those programs will go up.

        1. … Which in turn means that those government employees will draw higher pensions as well, since pension benefits are usually tied to the wage they earned while working.

    2. I wish to Christ a mainstream politician, or hell, someone with significant media presence would play chicken with these people in the national media and offer to support a negative income tax that matches current welfare expenditures (to include things like food stamps, housing subsidies, etc.). Seriously, if this is really about providing a security net for people then let’s be serious about it, cut people below a certain income a quarterly check for them to spend however they see fit on whatever they want, and eliminate the current system. It would be cheaper, more efficient, easier to manage for the government and for the beneficiaries, and it would at least treat people as adults capable of making their own choices.

      1. And all of those recently unemployed government bureaucrats could take advantage of it.

  11. until I saw the paycheck ov $9727 , I be certain …that…my mother in law had been really bringing home money in their spare time on-line. . there friend brother had bean doing this for only twenty one months and recently repaid the mortgage on their cottage and bourt a top of the range BMW 5-series .
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    1. But does that come out to $15 an hour?

  12. Part of me thinks maybe we should just let these fucktards have their pony. Maybe they’ll actually learn something when everything goes to shit, but then I remember we’re dealing DERP on a level never before known to man. These dumbfucks are incapable of ever learning anything. If employment goes down once they get their pony, it’ll be those EVUL KKKOCHPORAYSHUNZ fault. If prices increase as a result of increased labor costs, it’ll be those EVUL KKKOCHPORAYSHUNZ fault.

    “If only those EVUL KKKOCHPORAYSHUNZ weren’t allowed to make EVUL PROFITSEZ then everything would be unicorns and rainbows, so let’s just go ahead and SOSHALIZE EVERYTHINGZ!11!!!11!!11!!!!!!” /DERP

    1. If we’re really lucky*, we’ll get a minimum wage hike and a an illegal immigrant crackdown around the same time, and we can spend the next two decades watching the responsible parties avoid all blame for the ensuing economic shitshow by deflecting blame to the other policy.

      * = We’ll probably be so lucky as to get a tariff and income tax hike as well; we’ll have so much luck we won’t know what to do with it all…

      1. There’s no need for an income tax hike if minimum wage goes up. Everyone will get a tax hike as income levels readjust.

        1. True. But they might push the brackets upward, too. And I wouldn’t rule out an(other) EITC expansion.

    2. The optimistic part of you is wrong. They’ll never learn. It’s like religion: they’ll find a way to explain away any evidence contrary to their beliefs. Look at this Guardian column, if you dare.

      “Only Bernie Sanders can break the power of capitalism in the US”

      http://www.theguardian.com/com…..ry-clinton

      1. I think I’ll pass. I’m at work, so screaming obscenities at my monitor and hurling it against a wall in disgust isn’t really an option, and that’s about the only response to that level of derpiness.

    3. “If only those EVUL KKKOCHPORAYSHUNZ weren’t allowed to make EVUL PROFITSEZ then everything would be unicorns and rainbows, so let’s just go ahead and SOSHALIZE EVERYTHINGZ!11!!!11!!11!!!!!!” /DERP

      Oh, you call that derp, but it’s true. The reason why government is more efficient than the private sector is that it doesn’t waste money on profits to the rich. That’s why we need single-payer. It will cost less because it won’t divert money into the pockets of rich insurance companies. Duh.

    4. Part of me thinks maybe we should just let these fucktards have their pony. Maybe they’ll actually learn something when everything goes to shit, but then I remember we’re dealing DERP on a level never before known to man.

      This is where I’m at, and I’m willing to ride the sinking ship all the way to the bottom of the ocean just to watch these idiots eat themselves.

      I want to see the most successful nation in recorded history laid to waste by a ruinous government. I want the slow decline chronicled on the nightly news, the 24/7 infotainment networks, blogs, stone tablets if necessary. I want the failure of the American to be so complete that it leaves an indelible stain on history; something to be studied for generations.

      1. Like the Golden Path from the Dune books?

        1. Unlike the God Emperor of Dune, I will neither crush civilization, nor care about it achieving any kind of new renaissance.

    5. Maybe they’ll actually learn something when everything goes to shit,

      Experience with _(insert name of socialist hellhole country here)_ suggests that the population as a whole is completely immune to education on this topic.

    6. The thing you’ll notice about “progressive” policies is that they leave some shred of private sector involvement so that people can still get mad at evil corporations. Look at Obamacare. All the problems are being blamed on greedy health insurance companies, just like the bad effects of minimum wage hikes would be blamed on money-hungry KKKapitalists who don’t want to share with their poor workers.

      Whatever shred of private enterprise is left will always be blamed for these programs not working out. People will get angrier and angrier at corporations until they push for a total nationalization of whichever industry we’re talking about. Then, any problems can just be blamed on “lack of funding” or “obstructionists in Congress”.

  13. I remember learning in High School that Mussolini cut the minimum wage in half, and that was one of the reasons Italy bounced back from the depression the fastest.

    Oh and the nice graph showing FDR’s spending did jack shit, because after he had to scale it back in 1937 the economy went right back to where it was before his massive deficit spending

    1. Which high school did you learn this in??? Not that I’m disputing your statement at all, but rather I’m wonder which school, textbook, or whatever, touted Mussolini and bashed FDR.

      1. Read George Orwell’s review of Mein Kampf, chuckling over how shocked the Conservatives were shocked that Adolf, the good Christian Chancellor who taught uppity labor goons their place, suddenly betrayed their faith in his goodness.

    2. The GOP supports prohibition and the individual income tax. FDR’s party followed the Liberal Party platform and repealed some prohibition, so he and the LP both became “liberals” in the Mein Kampf sense of the word (liberal capitalist repealers). The GOP want prohibition of beer, abortion and birth control reinstated, and will round up morons to vote Prohibition and Tea Party until the Rapture.

  14. Disappointed in Dalmia. She quotes Robert and Michael in two of points but apparently could not find a third Reich for the others.

    1. Where’s Swiss? “I need some muscle a *narrowed gaze* over here!”

    2. Economics: So straightforward even Shikha couldn’t fuck it up.

  15. Why don’t we make everyone rich and mandate a $100/hour minimum wage?

  16. The $15 minimum wage is going to be devastating to Appalachia, where wages and cost of living are low and unemployment is high.

    1. I was thinking this myself. Not just there, but the rural midwest and the desert. Hell, I’d hazard a guess that it’ll do a number on most rural areas.

      1. What party do rural voters vote for again? Probably a coincidence that this policy totally fucks them, amirite?

        1. Probably a coincidence that this policy totally fucks them, amirite?

          It has fucked the inner cities at least as much. Puerto Rico will be in dire straits if a national $15/hr minimum wage is passed.

          If they’re doing this to fuck the GOP, they are cutting off the face to spite the nose.

  17. Card and Krueger issued their study in 1992. But NJ did not raise its minimum wage to $5.05 until 1994. Am I missing something or are they claiming to have been fortune tellers?

    1. Card and Krueger “Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania” was published in October, 1993. The minimum wage rose in NJ on April 1st, 1992. For some idiotic reason, they felt like that was a long enough time to examine the long-term employment impacts of the law. Keep in mind- their experiment design was to call fast food restaurants and ask “How many people work there?” and “How many are full time and part time?” but exclude the largest fast food chain in the world, McDonalds.
      I’m getting angry again just scanning this crap.

      1. According to the website I checked, which purports to track minimum-wage laws across the country and across time, New Jersey raised the minimum wage to $5.50 in 1994. I will defer to your reading of their article.

  18. This analysis is fine as far as it goes, but it leaves out one of the biggest arguments the progressives try to use … employers WOULD “do what’s right” to everyone’s benefit if ALL of them had to comply with the (higher) minimum wage. No one wants to be the first to pay her employees a “living wage” because it would put them at a competitive disadvantage. Just sayin’ …

    1. Oh, and don’t forget, “Well, if you can’t afford to pay a living wage (and provide health insurance) to your employees maybe you shouldn’t be in business.”

      I can’t even.

    2. it would put them at a competitive disadvantage

      This kind of gives away the game, though, doesn’t it?

      The only way an employer could be at a “competitive disadvantage” by paying less is if the supply of labor exceeds the employers’ demand for it. If you raise the price of labor by fiat, you eliminate this “competitive disadvantage” by pricing applicants out of jobs.

      In other words, this argument is flat-out saying that raising the minimum wage increases unemployment and moreover that such an outcome is desirable.

      Overpaid jobs for some, welfare dependency for the rest!

      1. should read “by not paying less/by paying more”

    3. Of course this assumes they’re ONLY competing with people who hire minimum wage earners. Otherwise the comparative disadvantage doesn’t disappear because your competitors have to abide by it too.

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  20. Maybe it doesn’t and shouldn’t matter either way. Maybe the argument for minimum wages should be purely economic and not social. There are always going to be social disruptions to raising the minimum wage not the least of which workers are are paid slightly more than the proposed new wage get nothing at all out of it often at the cost of years of seniority.

  21. The left believe value should be placed on the worker, not the production of the worker. Proving the lefts inability to understand even the most basic of economics.

    1. It makes sense if you think of their goals as getting the most pay for the least work. The truly laughable part is they think you can build a society on that basis. Everyone getting paid a king’s ransom for slacking off is not a “sustainable” economic model.

      1. I have yet to meet anyone who doesnt want to make more money for less work, but I tend to prefer people who don’t use force to achieve their goals.

  22. my kindle offered me this for 99 cents earlier (easier enough on the eyes it’s worth a little money sometimes), and it is the most succinct takedown of socialist ideas I’ve ever read. It’s very ends (so intentions)-focused which, despite just being guesses about the future, seem to be more convincing to liberals at least.

    like tila tequila says, “we all want the same thing”

  23. Shikha Sahib is observing a political party buying the votes of parasitical government aiders and abettors–the very “unproductive hands” Adam Smith warned were the ruin of nations when These States and The Raj were still babies. Where’s the mystery? They bought them votes, the economy be damned!

  24. It will (and always has) lead to automation that *replaces* humans. American Machine and Foundry (AMF) built at least three almost fully automated fast food restaurants in 1964, calling the system AMFare.

    Here’s a promo film shot at one https://www.youtube.com/watch?v=FmXLqImT1wE

    There are some magazine articles on the web about that location, identifiable by pictures of the man in the back who loads supplies and puts the finished food onto the trays. The other two locations I found from other documents about AMFare.

    One document recommended AMFare for locations bringing in at least $200K a year. Massive for any restaurant in 1964. Adjusted for inflation that’s a bit over $1.5 million in 2016 money. A manager at the McDonalds in the small town I live in (under 6,000) told me they average $6,000 a day and it’s much higher during the 3rd full week of June due to a music competition that brings in people from across the USA and many other countries.

    $6K a day is $2.1 million dollars. Looks like almost any fast food restaurant could support an AMFare type system today.

    But wait, automation would likely cost less now, even inflation adjusted. Touch screens for customers would replace the trained button pusher and manipulators like the ABB Flexpicker could handle loading the trays. How about robots to carry the trays to the cars and tables?

    What good will a $15 minimum wage be if there are no $15 jobs?

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  31. Fiat money! nuff said?

  32. Ah, ‘doubling of labor costs’ might be an overkill statement. The real ‘effect’ would be a function of what percentage of the employees are being paid lower than the New Minimum Wage now, and probably not all of them are being paid at minimum wage…

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  34. One important consequence of raising minimum wage is the it will likewise raise employer’s expectations for minimum production !

    The profile of job candidates will shift to now include workers who potentially can be more productive, more educated, more reliable and therefore more valuable employees. The consequences which nobody realizes are that entry-level jobs will disappear. Through attrition the lower skilled workers will be pushed out of the work force and into government assistance programs.

    The counter staff at McDonalds will no longer be high school part-timers but those college educated who cannot find jobs in their field of study, or retired engineers, teachers and professionals subsidizing their government pensions !

    None of the policymakers ever recognize the overwhelming power of the market to dictate ‘ the efficient allocation of scare resources ‘

  35. “The argument that former Labor Secretary Robert Reich offers ”
    If that’s not a derp alert I don’t know what is. Seriously that guy is the most economically illiterate person I know of that isn’t a youtuber.

  36. “The argument that former Labor Secretary Robert Reich offers ”
    If that’s not a derp alert I don’t know what is. Seriously that guy is the most economically illiterate person I know of that isn’t a youtuber.????? ???
    ???????

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