Minimum Wage Study - No Loss In Jobs

[Cheerful Charlie]

https://www.alternet.org/news-amp-p...-significant-gains-low-income-workers-and-few

A new study on the minimum wage confirms previous research that found the policy raises wages for low-income workers without reducing total employment. The paper may even finally start to convince conservative critics of the minimum wage to reconsider their views.

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When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses. A few years ago, a study endorsed by no less than 6 Nobel Laureate economists rebutted that claim, but was widely ignored by conservatives. Now we have a study that shows that the rise of minimum wages in states that did raise minimum wages did not result in job losses as predicted by conservative pundits and economists.

Giving workers a better living wage does no create massive job loss and thus Makes America Great Again.

 

[Tom Sawyer]

The paper may even finally start to convince conservative critics of the minimum wage to reconsider their views.

Ha!

Good one.

That made my afternoon.

 

[dismal]

When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses.

No, other than the word "massive", economics textbooks claim this. And dozens of studies show it.

 

[Jolly_Penguin]

When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses.

No, other than the word "massive", economics textbooks claim this. And dozens of studies show it.

It really depends on where you set that minimum wage. Even if it didn't result in job losses, it would still be wrong to demand employers subsidize the welfare system through higher wages than work is worth, and letting the idle rich and employment-light companies off without paying their fair share.

Employers should not be responsible for paying for the health care of employees beyond workplace caused injuries and ailments. Pushing that is pushing away from universal single payer, where the whole of society shoulders the burden as it should.

 

[dismal]

When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses.

No, other than the word "massive", economics textbooks claim this. And dozens of studies show it.

It really depends on where you set that minimum wage. Even if it didn't result in job losses, it would still be wrong to demand employers subsidize the welfare system through higher wages than work is worth, and letting the idle rich and employment-light companies off without paying their fair share.

Employers should not be responsible for paying for the health care of employees beyond workplace caused injuries and ailments. Pushing that is pushing away from universal single payer, where the whole of society shoulders the burden as it should.

Yes, if the minimum wage is set below the prevailing market wage we would expect no job losses. If the minimum wage is set substantially above we could see up to 100% job losses.

Anyone with a decent level of economics education can show this using supply demand charts.

 

[Cheerful Charlie]

When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses.

No, other than the word "massive", economics textbooks claim this. And dozens of studies show it.

Only very poorly done studies show anything like that. better studies do not show that at all.

https://www.epi.org/minimum-wage-statement/

In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

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What we have here are professional economist who present proof that MW does not create job losses. And right winged economists and out fits like the restaurant industry presenting poorly done alarmist claims. But this study demonstrates that the alarmists and conservative claims that raising MW causes job losses are false. But we knew that years ago.

What do we do when we have duelling claims like this? One looks at the results of raising MW to see what happens when we do raise MW.

The "dozens of studies" you refer to show no such thing and are not worth the paper they are written on. They amount to partisan bullshit and nothing more. But the conservatives have never lacked in wrongheaded economic policies. Many are still peddling supply side bullshit. This new study is another study that demonstrates that MW does not kill jobs.

The conservatives think our economic problems come from the rich not having enough money and the poor having too much.

 

[dismal]

We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.

http://www.nber.org/papers/w12663

 

[laughing dog]

Citing an 11 year review of the literature is not terribly convincing for two reasons. First, it necessarily ignores the literature after 2007 which is when the use of more sophisticated techniques, better research design and better data which shows the negligible effects of minimum wages. Second, even the cited blurb is not helpful since it admits that the negative effects are not always statistically significant. If minimum wage increases were as necessarily harmful as conservatives claim, one would expect strong statistically significant negative effects.

 

[Emily Lake]

Wouldn't it depend on the materiality of the wage increase, relative to prevailing wage levels, as well as the ability of the population to absorb and redistribute the inflationary effects of that supply cost impact?

I'm not particularly surprised that it doesn't result in job loss. While that's a possible outcome, I suspect it's only plausible when the increase in minimum wage is substantial compared to other supply costs... enough so that it interferes with a company's ability to price it's products higher than it's costs.

There are other possible outcomes that should be considered as well. In particular, what effect has that minimum wage increase had on inflation? And what is the real purchasing power of that increased wage? Has it increased the quality of life and purchasing power for minimum wage earners?

The only assumption that I've consistently thought to be naive is the assumption that businesses will take the increase in minimum wage out of profits alone, and that no effects will be felt by consumers.

 

[Elixir]

Wouldn't it depend on the materiality of the wage increase, relative to prevailing wage levels, as well as the ability of the population to absorb and redistribute the inflationary effects of that supply cost impact?

I'm not particularly surprised that it doesn't result in job loss. While that's a possible outcome, I suspect it's only plausible when the increase in minimum wage is substantial compared to other supply costs... enough so that it interferes with a company's ability to price it's products higher than it's costs.

There are other possible outcomes that should be considered as well. In particular, what effect has that minimum wage increase had on inflation? And what is the real purchasing power of that increased wage? Has it increased the quality of life and purchasing power for minimum wage earners?

The only assumption that I've consistently thought to be naive is the assumption that businesses will take the increase in minimum wage out of profits alone, and that no effects will be felt by consumers.

I think that's right in large part. Different dynamics operate in different sectors where minimum wage mandates apply, and vary with geographic and socioeconomic environments. That's why it's so easy to make a case either way based on examples scrutinized from various angles. One can almost always come up with an equal and opposite expert to refute any broad brush assertion about its effects.

 

[Cheerful Charlie]

Wouldn't it depend on the materiality of the wage increase, relative to prevailing wage levels, as well as the ability of the population to absorb and redistribute the inflationary effects of that supply cost impact?

I'm not particularly surprised that it doesn't result in job loss. While that's a possible outcome, I suspect it's only plausible when the increase in minimum wage is substantial compared to other supply costs... enough so that it interferes with a company's ability to price it's products higher than it's costs.

There are other possible outcomes that should be considered as well. In particular, what effect has that minimum wage increase had on inflation? And what is the real purchasing power of that increased wage? Has it increased the quality of life and purchasing power for minimum wage earners?

The only assumption that I've consistently thought to be naive is the assumption that businesses will take the increase in minimum wage out of profits alone, and that no effects will be felt by consumers.

The thing to remember is that a rise in minimum wage is not magic pixie dust. If minimum wage is raised in a area where one is suffering some species of recession, statistics may show a drop in employment that is not due to raising the minimum wage. And of course we have the converse. It would be easy to cherry pick statistics and ignore such complications. Which is the problem with small studies using very localized areas to draw large scale conclusions from. By selecting studies taken during a bad economic cycle, say the 2008 meltdown, one could draw conclusions that are actually meaningless.

 

[Bomb#20]

https://www.alternet.org/news-amp-p...-significant-gains-low-income-workers-and-few

A new study on the minimum wage confirms previous research that found the policy raises wages for low-income workers without reducing total employment. ... Now we have a study that shows that the rise of minimum wages in states that did raise minimum wages did not result in job losses as predicted by conservative pundits and economists. ...

So the basic strategy here is to have a partisan find a paper for you that's sufficiently technical that hardly anybody will read it, and then make wildly inflated claims about what it shows, claims not only far in excess of the claims of the authors, but far in excess of what their methods are even in principle capable of showing...

The "dozens of studies" you refer to show no such thing and are not worth the paper they are written on. ... The conservatives think our economic problems come from the rich not having enough money and the poor having too much.

... and then heap mindless abuse on everyone who disagrees with you.

We impute zero earnings to individuals who lack a DER record in a given year if they appear in the data with positive earnings in at least one year both before and after the year in question.

 

[Bomb#20]

When it comes to raising minimum wages, conservatives have long claimed that would lead to massive job losses.

No, other than the word "massive", economics textbooks claim this. And dozens of studies show it.

Only very poorly done studies show anything like that. better studies do not show that at all.

So you claim that the Census Bureau study you linked is a very poorly done study, do you? Your authors are perfectly upfront about the fact that raising minimum wages causes job losses. They even attempt to quantify it (though some data is unavailable and what they have is noisy and the error bars are large.)

When we measure earnings growth by taking the difference in log earnings between the base year and some
year in the future, this potential response would be reflected in our measure as long as an individual has
positive earnings in both years. However, some individuals do go entire years without any wage or salary
earnings, and to the extent that they do so because of changes in the minimum wage, we would want our
estimates to incorporate that response as well. Because the natural logarithm is not defined at zero, our
baseline specification excludes individuals who have zero earnings in either the base year or the year we use
to measure earnings growth and do not capture earnings changes due to full-year non-employment induced
by changes in the minimum wage.

In order to capture earnings changes arising from full years of non-employment, we re-estimate our
baseline specification with the change in earnings calculated using the inverse hyperbolic sine transformation
instead of the log transformation. The percent difference approximation associated with differences in logged
values also holds for the inverse hyperbolic sine, but the inverse hyperbolic sine has the additional benefit
of being defined at zero.
...
We also consider how increases in the minimum wage might differentially affect the probability of having
no wage and salary earnings in the years we use to assess earnings growth for people with base year earnings
at different points in the distribution. Figure 13 shows changes in the probability of having zero wage and
salary earnings one year ahead, while Figure 14 reports analogous estimates looking five years ahead. Most
of these estimates are not statistically significant, especially five years ahead, and they are relatively small in
magnitude once contextualized as in Section 4.3, but the point estimates align with the baseline and inverse
hyperbolic sine estimates in intuitive ways. Regions of the distribution in which the inverse hyperbolic
sine estimates (which incorporate observations with zero earnings for the full year) are more negative/less
positive than the baseline estimates (which do not) also tend to have higher probabilities of having no wage
and salary earnings, and vice versa.

What we have here are professional economist who present proof that MW does not create job losses. And right winged economists and out fits like the restaurant industry presenting poorly done alarmist claims. But this study demonstrates that the alarmists and conservative claims that raising MW causes job losses are false. But we knew that years ago.

What do we do when we have duelling claims like this? One looks at the results of raising MW to see what happens when we do raise MW.

The "dozens of studies" you refer to show no such thing and are not worth the paper they are written on. They amount to partisan <expletives deleted> This new study is another study that demonstrates that MW does not kill jobs.

See figures 13 & 14. Your professional economists presented quantitative evidence that MW creates lob losses. That's what having more gray below the zero line than above it in the leftmost 15% on the "Base Year Earnings Percentile" scale means. (And, as noted above, this doesn't even count the people who lose their jobs and drop permanently out of the labor force. Also, "job losses" underestimates the magnitude of the problem because it doesn't count the teenagers prevented from getting a job in the first place.)

Your own linked study demonstrates that the alarmists and conservative claims that raising MW causes job losses are true. But we knew that years ago.

The conservatives think our economic problems come from the rich not having enough money and the poor having too much.

When you have no substantive argument, making up a vile motivation and imputing it to your enemy is a popular strategy.

 

[Loren Pechtel]

Once again, looking where they can't hope to find it and then claiming it's useful data.

The total employment data is simply too noisy to see anything less than a huge effect. You need to separate the noise out first--look only at the workers that could be affected by the change.

Only two data points come to mind:

1) The observed result in American Samoa. There was a big hike in the minimum wage in an area with a large percentage of minimum wage workers. Result: Major declines in employment.

2) Seattle.


"Looking" at the general employment data is an attempt to preordain the outcome, not proper research.

 

[dismal]

I'm curious if our illustrious economic brain trust think the Law of Demand (I.e. The more something costs the less of it will be demanded) generally does not apply, or if it is just (by unknown forces) suspended in the case of unskilled labor.

In your daily lives do prices have no effect on your decisions to but things? If movies suddenly started charging $50 per ticket you'd see just as many movies as if tickets were $2?

 

[ZiprHead]

I'm curious if our illustrious economic brain trust think the Law of Demand (I.e. The more something costs the less of it will be demanded) generally does not apply, or if it is just (by unknown forces) suspended in the case of unskilled labor.

In your daily lives do prices have no effect on your decisions to but things? If movies suddenly started charging $50 per ticket you'd see just as many movies as if tickets were $2?

Of course you'd go to huge extremes when that actual ticket price might go from $9.50 to $9.75 or $10. I don't think that kind of increase will discourage many theater goers.

 

[dismal]

I'm curious if our illustrious economic brain trust think the Law of Demand (I.e. The more something costs the less of it will be demanded) generally does not apply, or if it is just (by unknown forces) suspended in the case of unskilled labor.

In your daily lives do prices have no effect on your decisions to but things? If movies suddenly started charging $50 per ticket you'd see just as many movies as if tickets were $2?

Of course you'd go to huge extremes when that actual ticket price might go from $9.50 to $9.75 or $10. I don't think that kind of increase will discourage many theater goers.

So you'd argue that would have no effect, or that since the change was small the effect would be small?

And if it's "no effect", can they also change from $10 to $10.25 with no effect? Then from $10.25 to $10.50 with no effect? Can they get all the way from $9.50 to $50 with no effect as long as they do it $0.25 at a time?

And if they could raise the price from $9.50 to $10.00 with no effect on sales why would the price ever be $9.50?

 

[Lumpenproletariat]

Your minimum wage "studies" cannot measure the real impact of minimum wage increase.

Wouldn't it depend on the materiality of the wage increase, relative to prevailing wage levels, as well as the ability of the population to absorb and redistribute the inflationary effects of that supply cost impact?

I'm not particularly surprised that it doesn't result in job loss.

It does result in job loss. But the number lost is too small to be detected, plus also the higher prices to consumers cannot be measured. But the benefit to some workers who keep their jobs and enjoy the higher wage is easy to recognize and mistakenly take as indicating a net benefit, which it is not.

While that's a possible outcome, I suspect it's only plausible when the increase in minimum wage is substantial compared to other supply costs... enough so that it interferes with a company's ability to price it's products higher than it's costs.

There are other possible outcomes that should be considered as well. In particular, what effect has that minimum wage increase had on inflation? And what is the real purchasing power of that increased wage? Has it increased the quality of life and purchasing power for minimum wage earners?

The only assumption that I've consistently thought to be naive is the assumption that businesses will take the increase in minimum wage out of profits alone, and that no effects will be felt by consumers.

The thing to remember is that a rise in minimum wage is not magic pixie dust. If minimum wage is raised in a area where one is suffering some species of recession, statistics may show a drop in employment that is not due to raising the minimum wage. And of course we have the converse. It would be easy to cherry pick statistics and ignore such complications. Which is the problem with small studies using very localized areas to draw large scale conclusions from. By selecting studies taken during a bad economic cycle, say the 2008 meltdown, one could draw conclusions that are actually meaningless.

But this is the flaw in ALL the minimum wage "studies" which have been done on both sides, some pretending to prove the harm, others the net benefit (no job loss) of the MW increase.

But in one minimum-wage-increase case we have real results that can be measured because the impact was enough so that it can be detected, unlike all the various "studies" which have been done where the impact was always too small to show the real results. In all these "studies" it has been possible for advocates on both sides to distort the numbers and claim to have proved either the detrimental or the negligible effects of minimum-wage increases, depending on which side of the argument they were crusading for.

But in the case of Samoa there is no dispute about the results and no denying that increasing the MW did harm. Since it was enacted in 2007, it has been delayed repeatedly, by Democrats (not just Republicans) who favored the original 2007 increase, and the delay was approved and signed by President Obama, who had to recognize the damage done.

https://acton.org/pub/commentary/2011/07/06/minimum-wage-law-backfires-american-samoa


Washington Examiner, September 28, 2015:

https://www.washingtonexaminer.com/dems-vote-to-delay-minimum-wage-hike-for-american-samoa

House Democrats on Monday supported a Republican bill that would delay a scheduled increase in American Samoa's minimum wage for more than a year.

Democrats routinely clamor for a higher minimum wage in the U.S. and higher wages abroad, and have said these increases would help working families. But even Democrats have accepted the need for lengthy delays in American Samoa, where wage hikes required under federal law have been blamed for killing jobs.

After a brief debate in the House, the bill was passed easily in a voice vote, with no apparent opposition. . . .

Congress passed legislation in 2007 requiring steady minimum wage hikes in American Samoa. But in 2011, the Government Accountability Office released a report indicating that those increases were largely to blame for a huge drop in employment.

"In American Samoa, employment fell 19 percent from 2008 to 2009 and 14 percent from 2006 to 2009," the report said. "Private sector officials said the minimum wage was one of a number of factors making business difficult."

That same report also warned that implementing future wage hikes on schedule would crush tuna canneries, a major industry of the remote U.S. territory.

"In the tuna canning industry, future minimum wage increases would affect the wages of 99 percent of hourly-wage workers employed by the two employers included in GAO's questionnaire," it said. "The employers reported taking cost-cutting actions from June 2009 to June 2010, including laying off workers and freezing hiring. The employers attributed most of these actions largely to the minimum wage increases." . . .

President Obama has already signed legislation into law in 2010 and 2012 that delayed the minimum wage hike in American Samoa.

And based on the strength of today's vote, it seems likely Obama will sign a third bill. During debate on the bill, both Republicans and Democrats called on members to support it.

"It would delay for 15 months a minimum wage increase that will take effect in American Samoa in just two days," said Rep. Mike Bishop, R-Mich., who added that American Samoa itself has asked for the delay. "If this increase takes effect, it will harm the very people it was intended to help, the hardworking men and women of American Samoa."

Democrats didn't send up any voting members of Congress from their side to debate, and instead had Del. Gregorio Sablan, D-Northern Mariana Islands, defend the bill. Sablan said he supports minimum wage hikes in general, but agreed that realities in American Samoa have to be considered.

Everyone recognizes (liberals/Democrats grudgingly, silently) that this MW increase did net damage, after the results became apparent.

The reason is that in this case there was a large impact, not a small one. The MW had to be increased by a larger degree than usual, and, more importantly, the percent of the economy to be affected was much greater. The intent was to bring Samoa into line with the MW level in the 50 states, requiring some greater push than normal with these increases.

The rationale of the MW crusader is that the negative effect happens only in an extreme case where the increase is too great. However, there's no basis for this logic. The real explanation is that the negative effect of the increase is not detectable when the increase is very small, or the impact is only on a small percent of the economy.

E.g., there would be a negative impact on the economy if one cent were subtracted from 100 million savings accounts by a computer hacker who deposits all those into his one account. The benefit to him is noticeable as he steals one million dollars, but is unnoticeable to the 100 million who lose only one penny each.

The positive effect of the MW increase is the obvious increased income to those workers who keep their jobs and are paid the higher wage. But the negative effect is spread around to millions of consumers who have to pay marginally higher prices, and to some workers who get laid off or fail to get hired under the new higher wage level. This negative effect is too small to be measured because of the small amount of money lost by each individual consumer or the non-identifiability of the job-seekers harmed.

But in the case of Samoa where the impact was much larger, the negative effect of higher minimum wage could be measured.

So the case of Samoa shows us the real consequence of the MW increase, while the various "studies" done over many decades never measure the real results, which are always too small.

 

[Tigers!]

Would an increase in MW result not is job losses but in less hours for some people i.e. your boss gives you the extra money per hour but gives you less hours.

Are there studies that look at whether take home pay has been reduced or increased in some industries?
Or could an increase in MW make some employers decide not to hire extra staff?

 

[Horatio Parker]

Isn't Samoa an outsourcing center? Cheap contract labor, Chinese IIRC, are brought in to do manufacturing work that can legally carry a "made in America" tag.