Fast-food minimum wage, lies and lying liars ...

This Internet meme makes a bold point about the macro economics of mimimum wage:

foodstamps.jpg

I wonder if they also add up the future welfare and unemployment insurance payments of those people who lose their jobs?

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

Robin,

Do you believe everything on the internet? Do you believe numbers never lie?

It looks official and really gets your attention...I agree with that.....but

I would really like to know the assumptions of that study because the math just does not seem to add up me.

Is there a factor for the loss of jobs due to the increase in minimum wage? Is there a factor for the number of small businesses closed down.

The matter is not that simple.

[Robin Garr]

I wonder if they also add up the future welfare and unemployment insurance payments of those people who lose there jobs?

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

Doug is doing a better job than I care to spend the time on doing to muster politically neutral evidence demolishing the anti-wage propaganda, but I'll respond by asking a different question:

I wonder if anyone has examined the economic impact of restoring the 1979 marginal income tax rates as a simple and direct response to growing income inequality. If you argue that it's unwise to start at the bottom, why not start at the top? "From those to whom much is given, much is expected."

I wonder if they also add up the future welfare and unemployment insurance payments of those people who lose there jobs?

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

Doug is doing a better job than I care to spend the time on doing to muster politically neutral evidence demolishing the anti-wage propaganda, but I'll respond by asking a different question:

I wonder if anyone has examined the economic impact of restoring the 1979 marginal income tax rates as a simple and direct response to growing income inequality. If you argue that it's unwise to start at the bottom, why not start at the top? "From those to whom much is given, much is expected."

The French Government is running an experiment along these lines right now. It is not working out so well for them, as capital is mobile and fungible.

Also, I don't see why high incomes are immoral. If someone invents a better mouse trap or a better Facebook, they deserve the rewards that come their way. So, as long as there's no stealing involved in their riches and people pay them voluntarily, then I'm at a loss to understand the moral objection. Envy is not about morality. It has been known as a deadly sin in some circles though.

So, I can't see any practical or moral reason to increase the progressiveness of our tax code.

I wonder if they also add up the future welfare and unemployment insurance payments of those people who lose there jobs?

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

Doug is doing a better job than I care to spend the time on doing to muster politically neutral evidence demolishing the anti-wage propaganda, but I'll respond by asking a different question:

I wonder if anyone has examined the economic impact of restoring the 1979 marginal income tax rates as a simple and direct response to growing income inequality. If you argue that it's unwise to start at the bottom, why not start at the top? "From those to whom much is given, much is expected."

Fair point Robin! I am all for a simplified tax system without loopholes. Tax the rich but not to give it to the poor. Give help where needed but not a permanent fix.

I wonder if they also add up the future welfare and unemployment insurance payments of those people who lose there jobs?

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research

Doug is doing a better job than I care to spend the time on doing to muster politically neutral evidence demolishing the anti-wage propaganda, but I'll respond by asking a different question:

I wonder if anyone has examined the economic impact of restoring the 1979 marginal income tax rates as a simple and direct response to growing income inequality. If you argue that it's unwise to start at the bottom, why not start at the top? "From those to whom much is given, much is expected."

The French Government is running an experiment along these lines right now. It is not working out so well for them, as capital is mobile and fungible.

Also, I don't see why high incomes are immoral. If someone invents a better mouse trap or a better Facebook, they deserve the rewards that come their way. So, as long as there's no stealing involved in their riches and people pay them voluntarily, then I'm at a loss to understand the moral objection. Envy is not about morality. It has been known as a deadly sin in some circles though.

So, I can't see any practical or moral reason to increase the progressiveness of our tax code.

But the loopholes in the tax system are only available to the rich.....and there probably is not a corporation in America that does not take advantage of those loopholes.

Also, our tax system is a volunteer tax. You report your income and you pay your tax. However, most companies overstate their expenses by allowing personal expenses to be run through the company.....and there is not enough manpower in the IRS to look at every deduction and companies know this so they take the extra expenses and reduce their taxes along the way. I would hate to guess how much tax revenue they are stealing by doing so.

How about a compromise and have an income tax moratorium on all minimum wage earners? The minimum wage would go up 15%.

Doug, you obviously need an understanding of how to read long-term financial reports. By converting everything to 2012 $s they have factored out inflation so the median income for those age groups actually went up the percentage showing beyond the rate of inflation. Thus the buying power grew over that period of time! If you take the numbers shown and added the inflation index over that period of time you would get the total increase in the income for those age groups!

You're right I misstated that. Thank you for pointing that out.
There has in fact been the total 5% gain in that time period with inflation factored in. So in a 30-40 year span we have seen a 5% pay raise.
In the shorter term (since 1999) we have now had a -10% decline in the last 15 years from a high median income of $56k down to the present $51k.

In reality a given job should always pay the same when inflation is factored out. Information provided shows that the wages have increased which means those people have more spending power today than they did previously. It's a very simple economic principle to understand.

No actually a given job shouldnt ALWAYS pay the same when inflation is factored out because that ignores the labor market and labor shortages, which also drives wages up or down.
Its a very simple economic principle to understand.
And it ignores that, the same data shows wages have fallen 10% in the last 15 years.

Stuff

You have no idea what you are talking about which is apparent to me and everyone reading the thread based on the flood of PMs Im getting thanking me for putting you in your place. Enjoy the rest of your week.
You are a perfect example of the old maxim, "You can lead a horse to water, but you can make him drink."

Doug Davis....why do you feel the need to talk down to people?

I dont. But if you were a physicist how long would you put up with someone arguing with you (not asking questions mind you) about physics principles and theories with no education or training in the subject matter?

Public policy and economic policy are real fields of study. With real professional journals. With thousands of graduates in the field. Yet in this country any idiot with access to the internet, seems bound and determined to erase the difference between facts and opinion, and offer repeated ad nauseum the latest sound bites they got from some pundit or conspiracy theory website as fact.

It gets infuriating after a while.

Things like market trends, labor markets, exchange rates, inflation rates, etc etc are all easily studied and quantifiable facts. "Debating" with some neanderthal who cant understand that but whom has been given access to the internet, so they can spew their verbal diarrhea, is more than we should have to bear.

Some right wing politician says one of the following, because they were paid to by their corporate donors, and rather than applying even the smallest smidgen of independent thought to what you are repeating you simply lap it up and spit it back out any time the topic of the economy comes up:
1. Raising the minimum wage will ALWAYS increase inflation and decrease jobs.
2. Cutting taxes will ALWAYS (or even moderately) lead to job creation.
3. Regulations are killing small business creation.
4. Or who could forget the old favorite of the 80's "Trickle Down" economics.

But at the end of the day they have freedom of speech to espouse their opinions, no matter how wrong they may be. In turn I have the same freedom to tell them they are idiots. I intend to exercise that right as much as possible when confronted by idiots.

Stuff

You have no idea what you are talking about which is apparent to me and everyone reading the thread based on the flood of PMs Im getting thanking me for putting you in your place. Enjoy the rest of your week.
You are a perfect example of the old maxim, "You can lead a horse to water, but you can make him drink."

Why do you act like you speak for the entire field of economics? And you haven't cited any economic papers nor have you posted any links, so no, you actually haven't led me to any water.

Here's a link I posted AGAIN. Which is still one more than you have posted to economic papers. One of the authors is an economist at the UC-Irvine, clearly a hot bed of right wing radicals. The other is an economist at the Federal Reserve, another institution clearly without any bonafides.

It's interesting that you mention some PMs that support you. So, let me get this right. Anonymous Internet posters who disagree with you don't know what they are talking about, but Anonymous internet PMers are marvelously qualified to discuss the subject? Is that right? There is a pattern here, but it isn't what you think it is.

BTW, You still haven't said why you don't support a $50 minimum wage. Any while we're at it, can you explain to me, slow learner as I am, why the supply curve doesn't apply when raising the minimum wage?

That's two simple points for you to address:
1) $50 minimal wage.
2) No supply curve effects when the minimum wage is increased.

Instead of saying I don't know what I'm talking about. Show me, and everyone here that I don't know what I'm talking about.

No actually a given job shouldnt ALWAYS pay the same when inflation is factored out because that ignores the labor market and labor shortages, which also drives wages up or down.
Its a very simple economic principle to understand.
And it ignores that, the same data shows wages have fallen 10% in the last 15 years.

Wow! This actually sounds like you know about the supply curve! In that context, can you discuss how raising the cost of employees (like raising the minimum wage) effects how many employees are hired?

See my previous post. This is not a new question.

I dont. But if you were a physicist how long would you put up with someone arguing with you (not asking questions mind you) about physics principles and theories with no education or training in the subject matter?

I have asked you several times why you don't support a $50 minimum wage. You have never answered. It's an error to imply that I haven't asked any questions. I have now added another question asking you why the supply curve doesn't apply when the minimum wage is raised. These seem like fairly simple questions.

Public policy and economic policy are real fields of study. With real professional journals. With thousands of graduates in the field. Yet in this country any idiot with access to the internet, seems bound and determined to erase the difference between facts and opinion, and offer repeated ad nauseum the latest sound bites they got from some pundit or conspiracy theory website as fact.

It must really suck to be you, having to live in a participatory democracy. Dream of yourself among the technocratic elite leading a command and control economy with the hoi polloi kept far from your furrowed brow. That image will sooth and sustain you.

And yeah, you keep repeating those 'facts' like a talisman. But you don't actually cite them or link them so anyone can go see for themselves where they came from. And when I post links to papers by respected economists, you ignore them. I'm not trying to ignore the difference between facts and opinion, but it sure seems that you are.

It gets infuriating after a while.

I know you see your duty as correcting mistakes on the Internet. But, really, you should stop if it's not fun for you. Life is too short to be infuriated all the time.

Things like market trends, labor markets, exchange rates, inflation rates, etc etc are all easily studied and quantifiable facts. "Debating" with some neanderthal who cant understand that but whom has been given access to the internet, so they can spew their verbal diarrhea, is more than we should have to bear.

It seems recent analyses indicate that Northern European populations might have a few percent of their genome from Neanderthal sources. So, you description might actually be accurate!

No one is forcing you to debate anything. You can quit anytime you want. Even we Neanderthals can't argue with someone who isn't arguing back.

Some right wing politician says one of the following, because they were paid to by their corporate donors, and rather than applying even the smallest smidgen of independent thought to what you are repeating you simply lap it up and spit it back out any time the topic of the economy comes up:

You have no clue about me. None. So I'll fill you in a little...

I'm a registered Democrat. Mainly due to inertia now, but also because the Republican party is not that attractive to me either. And I have always been an independent thinker. And I never lap up opinions and spit them out. You can use your experience with me here as an example of that. I quit agreeing with Democrats because facts changed my mind. When was the last time you changed your mind?

You try to claim the moral high ground, but spew ad homonym and Argumentum ad verecundiam with every breath. You can't find the time to provide links to the sources of your extracted quotes, but you have plenty of time to find links to articles toward a feeble attempt to psychoanalyze a person you don't even know. You are indeed a very classy person who is only interested in debating the "facts". Yeah, right.

Now I shall address your point about minimum wage, as that is the topic of this thread.

1. Raising the minimum wage will ALWAYS increase inflation and decrease jobs.

It is my opinion that raising the minimum wage above their market clearing level will result in fewer entry jobs THAN THERE WOULD HAVE BEEN OTHERWISE. There is no effect if the minimum wage is below the market clearing level. Likewise, there could be other factors in the overall economy that would allow for entry level employment to increase in the face of a substantive minimal wage increase, BUT, this increase would most likely be less than it would have been otherwise.

This all gets back to the supply curve question. I'm anxiously waiting for you to address that, by the way.

While we wait for you to noodle that over, here's an article about raising the minimum wage in Louisville. It says employment will INCREASE, but that increase will be 2700 jobs fewer with the proposed minimum wage increase in place.

So, there will be 2700 people who could've had a job but won't, and they don't even know it. This is a perfect example of a Public Choice problem that politicians love to exploit to garner votes. And it's no accident that this always comes up around election time. And the 2700 people without jobs in the future don't even know they've been screwed, leaving the politicians unaccountable.

But at the end of the day they have freedom of speech to espouse their opinions, no matter how wrong they may be. In turn I have the same freedom to tell them they are idiots. I intend to exercise that right as much as possible when confronted by idiots.

I'll gladly stipulate that I'm an idiot if you will discuss my questions:
1. Why don't you support a $50 minimum wage?
2. Why doesn't the supply curve apply when the minimum wage is increased?

I'll gladly stipulate that I'm an idiot if you will discuss my questions:
1. Why don't you support a $50 minimum wage?
2. Why doesn't the supply curve apply when the minimum wage is increased?

#1.
I would support a $50 minimum wage increase, but it would be dependent on its implementation. And would hinge on a number of factors, not the least of which would be the current jobs and labor market.
You cant simply increase the minimum wage to $50 tomorrow without expecting ripples in the economy, and yes with such a large immediate increase it would likely lead to both inflation and even more offshoring of jobs. But if that same $50 increase was incrementally increased over a thirty year time span with no single year contributing more than a 5% increase? We would most likely see minimal inflationary effects over the standard 2-3% annual inflation, and in all likelihood see an increase in jobs.
Why an increase in jobs?
Because since the mid-70's starting with our garment industry, corporate management, has been offshoring US manufacturing jobs to low wage markets with fewer regulatory controls. This has gutted the high paying, union supported, middle class of the US, which is what drove our consumer industry. It is that consumer spending which accounts for 75% of our entire economy on an annual basis! It was a corporate bet that emerging markets such as China, India, Brazil and such would make up for the losses in the US sector. Unfortunately they bet wrong. US products have not done as well overseas as they anticipated and the emerging markets didnt grow as fast as they assumed. Consequently, its turned into a race to the bottom with corporate management trying to squeeze more and more profits out by cutting labor costs lower and lower, thereby keeping their inflated (in relation to their P/E ratio) stock prices up. Which is why you see the Stock Exchange booming since the Great Recession even while the Middle Class falls further and further behind.
So by starting the process of returning our minimum wage, to a livable wage (one that at least keeps the employed above the poverty line), we would see a resurgence in consumer spending which would lead to greater production needs and higher employment. This would also be dependent on manufacturers bringing consumer product manufacturing jobs back to the US labor market, which is happening as China and Asia have started seeing more of a demand for better wages and the fuel costs associated with shipping from foreign markets have grown.
So long story short....my answer is I might support such an increase.

#2. It does. But what effect it has on that curve depends where we start on the scale based on what wages are currently at (where are they at compared to subsistence levels), where are consumer spending levels at, and what is the labor market currently doing.
Currently minimum wage is less than the subsistence level (in nearly all markets in the US an adult cannot survive working a typical full time job earning minimum wage).
Currently consumer spending is down, which one can pin on the declining middle class and median wages.
Currently the labor market is down due to off shoring jobs and depressed consumer demand.


This is why you cant listen to some pundit or politician or corporate mouthpiece say something to the effect of, "Raising the minimum wage will have a disastrous effect on job growth!" Because its never that simple.

[Robin Garr]

This is why you cant listen to some pundit or politician or corporate mouthpiece say something to the effect of, "Raising the minimum wage will have a disastrous effect on job growth!" Because its never that simple.

There is also the simple issue of historical perspective: Ever since WWII, every time there is a proposed increase in the minimum wage, industry whines and shrieks "It will destroy joooobbbbsss!!" Every single time. And it never does. Not one single time. It's a selfish, greedy theme that has been shown untrue in the real world.

What Santayana said about the lessons of history.