Thursday, July 17, 2014

On the Minimum Wage

A boon to white middle-class teenagers living at home and a death knell to inner-city black youngsters who've dropped out of school. A racist law, in other words.

22 comments:

dmarks said...

I just think it is terrible that ignorant outsiders intervene in the decision of what a fair wage is (one best made between those who know it: the employer and employee) to the point where these ignorant, arrogant, outsiders (the government) give thousands and thousands of low-skill workers a pay cut from $13,000 a year (the amount from minimum wage) to $0 a year (the amount people get when the government forces companies to fire workers whose skills earn them this amount).

Will "take no prisoners" Hart said...

Remember when we used to have teenage kids come out and pump our gas for a couple of bucks an hour? And it wasn't just a job, either, in that when there weren't any customers these kids used to hang out with the mechanics and actually learn stuff. Now they just sit at home and play video games or worse still, get into trouble.

Rational Nation USA said...

Executive Summary

The employment effect of the minimum wage is one of the most studied topics in all of economics.
This report examines the most recent wave of this research – roughly since 2000 – to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage.

The report reviews evidence on eleven possible adjustments to minimum-wage increases that may
help to explain why the measured employment effects are so consistently small. The strongest
evidence suggests that the most important channels of adjustment are: reductions in labor turnover;
improvements in organizational efficiency; reductions in wages of higher earners ("wage
compression"); and small price increases.

Given the relatively small cost to employers of modest increases in the minimum wage, these
adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for
employers with a large share of low-wage workers.


SOURCE href="

dmarks said...

"improvements in organizational efficiency" i.e. self serve gas stations, when the owners let the teenagers who pumped the gas go.

dmarks said...

Will: With the President having supported deficit-busting job-killing stimulus packages, health care "reform" which punishes companies for hiring full-time or more than 50 workers, and his pushing for large minimum wage increases.... what do you think his interpretation of "jobs crisis" is?

Isn't he acting like the "crisis" is that there are too many people employed?

BB-Idaho said...

I'm guessing the large number of
single mothers trying to work
3 jobs would be helped by a higher minimum wage. Nor am I the only person to note the economic
benefits of the 'trickle up' theory:
"Wal-Mart is weighing the impact of additional payroll costs against possibly attracting more consumer dollars to its stores, David Tovar, a company spokesman, said today in a telephone interview. Increasing the minimum wage means that some of the 140 million people who shop at the chain weekly would “now have additional income,” Tovar said."
We ponder the impact given the demographics: 2.8% of American
workers make minimum wage.
"People at or below the federal minimum are:
◾Disproportionately young: 50.6% are ages 16 to 24; 24% are teenagers (ages 16 to 19).
◾Mostly (78%) white; fully half are white women.
◾Largely part-time workers (64% of the total)." Pew Research

Rational Nation USA said...

"improvements in organizational efficiency" i.e. self serve gas stations, when the owners let the teenagers who pumped the gas go.

dmarks, that is one of the most ridiculous statements I've heard today.

f you are going to argument against minimum wage increase or establishment of it out right why not argue it or provide a link to support Will and your contention.

Never mind, here's a source for you... SOURCE

Rational Nation USA said...

Should read abolishment not establishment.

Will "take no prisoners" Hart said...

I think that the operant word here, Les, is "modest". Yes, if you increase the minimum wage 10-20 cents an hour then the effect will probably be minimal. But an 87% increase the likes of which we saw in 1949 or even a 38% increase the likes of which Mr. Obama and the Democrats are proposing I would be a little more hesitant to get behind.......That, and there are always, ALWAYS, side effects to government policies of this sort; Hoover's wage supports of 1930, the devastation of the Samoan economy in response to their minimum wage hikes, Nixon and his moronic wage and price controls, etc........The way that I see it, if you really want to help the poor people, beef up the Earned Income Tax Credit and let the pricing system work the way that it's supposed to.

Will "take no prisoners" Hart said...

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 in other words, 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 hard cientific 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.

dmarks said...

RN: Why is it so strange, and har to understand, that companies will be have to be more "efficient" to survive if minimum wage hikes force them to trim their workforce? It's quite obvious, and the expected result, not "ridiculous". When the government does stuff like this, the expected result is downsizing and offshoring.

I was going to source it, but Will was very quick and beat me to it.

BB: Your Wal-Mart example, and Jerry mentioning grocery store workers earlier are arguments against the government-mandated minimum wage: if it actually makes good sense, it will happen anyway, no need for regulations.

Will said:
"...even a 38% increase the likes of which Mr. Obama and the Democrats are proposing ..."

The cynic in me would say that Obama is trying to divert attention from the of jobs lost during his administration.

Will, as you know, unlike the President, there is a jobs crisis. Which means we need to get more people back to work.... i.e. "It's the jobs, stupid!!!"

Question:

Has there been anything, any study at all, that shows that minimum wage increases reduce unemployment, and causes more hiring?

Isn't the discussion always an argument between some jobs lost and a massive amount of jobs lost?

dmarks said...

Will said: "The way that I see it, if you really want to help the poor people, beef up the Earned Income Tax Credit"

Exactly: Shouldn't the focus be on helping the poor.

The minimum wage does a poor job of this: as a large proportion of those who receive unearned welfare from employees under the minimum wage aren't even in poverty situations (teenagers from upper middle class families in starter jobs, etc),

The EITC filters this out.

dmarks said...

Will asked: "Remember when we used to have teenage kids come out and pump our gas for a couple of bucks an hour?"

If we get these minimum wage increases and the McDonalds protesters get their way, soon you will ask "Remember when some kid would ask Would You Like Fries With That?" as you go to an almost entirely automated fast food restaurant.

BB-Idaho said...

Since our town is under a dark pall of smoke from forestfires
to the west and south, and in light of dmarks 'fair wage' concept, we note that the job of
wildland firefighter is available to
those over 18. Few kids seem interested, although some college students do it. Must walk up a
3 mile hill with a 40 lb vest and take some classroom work to get a
'red card'. Although much of the work is on steep hillsides in 100
degree weather and shifts run up to 26 hours straight, those that
do it seem to like it and sign up
the next year for $13.50 an hour.
There are disadvantages (A local 20 year old girl working
on a hotshot crew lost her life from a flaming snag last year) and advantages (free meals and tents, and 6 months off during the winter)

Will "take no prisoners" Hart said...

Yeah, dmarks, the minimum wage is a very blunt instrument in that a lot of folks making it aren't poor and a lot of folks making more than the minimum wage ARE. We really just need to let the market work (and stop distorting it) and help the folks who need the help much more directly.

Rational Nation USA said...

It's not hard to understand, but viewing everything through biased lenses is not good either.

Remember, I managed for years. I start with a conditioned business bias of 40 years.

Rational Nation USA said...

I am happy to say I have not eaten McDonald's or Burger King's poison in years.

dmarks said...

BB: Fair wage, real value,etc is hardly my concept. It's how things work out if there are not draconian interventions.

Not sure where this fits in.. you don't name anything close to min wage. Is this a job they are having trouble filling or something?

dmarks said...

I worked minimum wage, in retail. When I was there, one of the min wage hikes came along. The owner of the store reduced his staff. It has hardly rocket science that this happened.

dmarks said...

Will: Thanks for pointing out the "wages" of the President's economic policy, and its disproportionate negative impact on minority populations. Have you ever checked into the sharp rise in Black unemployment overall during the Obama recession?

dmarks said...

Will: Have you seen link?

"Alarming figures about the state of our economy in regards to teenagers have been released. In Chicago, ninety-two percent of African American male teenagers are unemployed. Overall, eighty-three percent of black male teens in the country are without a job."

From earlier this year. Don't you agree that it is a bad idea for the President to push for a policy that will unequivocally make this number worse (even if there is disagreement on the number who will lose jobs under it)?

Will "take no prisoners" Hart said...

I knew about the Chicago numbers but had no idea that the national figures (for black male teens) were that high (I had thought that it was about 50% nationally).......And, yes, I strongly disagree with President Obama on this particular issue.