Thursday, February 21, 2013

On the Minimum Wage

1) Forcing an employer to pay a worker $9 an hour (and, really, why be so damned miserly about it - $15 an hour would obviously be better and much more "stimulative", no?) when that worker only produces $7.25 an hour is nonsensical economics. We really need to get off of this price-fixing bullshit and focus a hell of a lot more on economic growth. I mean, just look at Hong Kong and Singapore. Those countries didn't minimum wage themselves to prosperity, now did they?............2) As for all of these studies that supposedly support the minimum wage, the one that most liberal politicians seem to point to as the gold-standard is the one from the '90s by Alan Krueger and David Card that studies fast-food restaurants in New Jersey....Yeah, well, guess what, folks, it's flawed, majorly flawed. It seems as if these two authors (as devastatingly pointed out by David Neumark, William Wascher, Mark Schweitzer, and may other economists) never actually drew their data from the payroll records of the restaurants that they claimed to have studied. Nope, what they did instead was to get their data strictly from interviewing the managers and even with this technique they ended up getting a third of their data points wrong. Needless to say, their conclusion were way off and the minimum wage (increase) actually did increase unemployment when compared to the control state (Pennsylvania).............3) And then of course you have clowns like Jared Bernstein and Paul Krugman going around saying that the minimum wage doesn't even hurt teenagers, this despite the fact that teenage unemployment has consistently been double to triple that of adults. Easily batting this one away, economist Robert Murphy did a quick comparison of the teenage unemployment rates between those states that had a higher minimum wage than the federal minimum wage and those states that did not. His findings were thus: Those states that had a higher minimum wage than that of the federal government (there was a grand total of 19 of them) had an overall teenage unemployment rate of 25.2% while those that did not have a higher minimum wage than that of the federal government had an overall teenage unemployment rate of 21.5%....So, there it is, folks. Those states that jacked up the minimum wage had a 17% HIGHER teenage unemployment rate than those states which did not. Not that this is any sort of scientific proof of causality, mind you, but you gotta know that if the results had gone the other way the pro minimum wage folks would be singing it from the mountain tops.............4) Murphy (http://consultingbyrpm.com/blog/2013/02/i-get-empirical-on-minimum-wage.html) also looked at the distribution of these states and found that a) six of the top eight states in terms of teenage unemployment were precisely those that had a higher minimum wage than the federal rate and b) only two of the bottom (i.e., those states that had the lowest teenage unemployment rate) 18 states in terms of teenage unemployment had a higher minimum wage than the federal rate. Again, it doesn't look all that good for the pro minimum wage advocates here.

8 comments:

Unknown said...

I saw much of that debate Bob Murphy had between him and the pro-minimum wage supporters. New Keynesian Daniel Kuehn and the persistent Post-Keynesian blogger "Lord Keynes" added their thoughts. LK said this:

"Because labour markets are still in the aftermath of the worst real output collapse since the 1930s."

and made this intriguing post.

http://socialdemocracy21stcentury.blogspot.com/2013/02/the-easiest-argument-for-minimum-wage.html

I think Daniel made a few posts too on this minimum wage issue. I'm really fascinated by this LK fellow that comments on a lot of economics blogs that I read. His blog has actually grown on me, despite his past behavior towards the people that he's debated with, more specifically Austrians. I like Daniel best because I know he's actively trying to seek the truth in his own way, despite the disagreements that people have with him.

I think there are much bigger problems out there than worrying about the minimum wage, like the stagnating economy and structural problems that the U.S. is still dealing with. Minimum wage is a pretty awkward way of trying to help the poor and I'm sure there are much better ways of going about doing so.

Did you hear the news about Soledad O'Brien? Saw a story about it on The Young Turks, which you can see here. From the clips, all I saw was an obnoxious woman trying to talk all over her guests and they see it as some type of way of owning "the rich." It seems unprofessional regardless and it's a reason why journalism has been on the decline for a while and CNN is going down the toilet. I'll continue to read these stories on my own and do my own analyses in my head and not relying on figureheads like O'Brien on what to think.

http://www.youtube.com/watch?v=Zq3i3FJuQ1E

dmarks said...

"$15 an hour would obviously be better and much more "stimulative""

Why not? America's small business owners (remember Obama specifically said they didn't build their businesses) are all each sitting on untold millions: all you have to do is kick one and the gold coins shower out from under their coats.

Rusty Shackelford said...



Why stop at $15.....make it 20...

Maybe with that rate even WD and Clif would get off the dole and seek employment.

Will "take no prisoners" Hart said...

I'm not sure that they could bring in that much value, though, Russ. I mean, would you pay 'em 20?

dmarks said...

How much would it cost to get them to move to some place like Burma or Burkina Faso?

Will "take no prisoners" Hart said...

These are the teenage unemployment rates from the Bureau of Labor Statistics. Some of the states that have a minimum wage higher than the federal minimum; California - 35.2%, Missouri - 32.7%, Nevada (Russ country) - 31.9%, Washington - 30.4%, Oregon - 29.7, and Rhode Island - 29.0%. Some of the states that don't have a minimum wage higher than the federal; Nebraska - 12.4%, Iowa - 14.2%, North Dakota - 15.6%, Pennsylvania - 15.7%, Kansas - 16.0%, and Maryland - 17.7%.......Now, there are obviously some other factors that could be in play here. I, unlike certain individuals, refrain from inferring causality when I cannot. But like I said before, if the data had in fact gone in the other direction....

Will "take no prisoners" Hart said...

I have zero problem chipping in, dmarks.

dmarks said...

And ship out the rest of the Occupy-type beggars, who bash anyone who is good at what they do as 'plutocrats' and believe the way to succeed is not to earn your keep, but to get the government to steal from productive people and hand it to you.