Minimum Wage Study - MW Does Not Kill Jobs

[DBT]

If a firm is unable or unwilling to pay a fair market rate for the work performed by its employees, or generally manage its running costs, which includes wages, it should not be in business.

 

[Loren Pechtel]

An absence of a detectable signal is not evidence of the absence of the signal!

The absence of a detectable signal is not evidence of a signal.

In essence , you are maintaining faith-based economics: it’s true regardless of the evidence to the contrary.

Increase price, demand drops. Economics 101. The only question is how elastic the response is.

It is certain that the effect is not zero, all these studies prove is that it's below the detection threshold. However, the nature of the available data means the detection threshold is beyond anything we will actually see except in extreme cases (American Samoa.)

 

[bilby]

The thing is we have no measurement of unemployment-rate-of-minimum-wage-workers.

Yeah, that's because it's an absurd concept, like the number of vertices in a square triangle.

By definition, minimum wage workers (like all workers) aren't unemployed.

And while you can define a labour's force as (workers)+(unemployed people who are looking for work), that latter group cannot be divided up by income, for reasons that I hope are obvious.

A burger flipper on minimum wage who then gets fired becomes an unemployed person. But as you don't know anything at all about what wage he might earn in his next role, it's absurd to consider him "minimum wage unemployed".

Indeed, one of the benefits of workers being laid off is that it breaks their inertia - in my personal experience, the biggest increases in my income have resulted from changing employers. rather than from getting a raise or even a promotion.

Lots of people out there will keep working for less than they might get elsewhere, if only because they're too busy working to go looking for a better paid job. Although (misplaced) loyalty to their employer also plays a big part.

 

[bilby]

Increase price, demand drops. Economics 101.

That's true of commodities.

Workers aren't commodities. Their value varies from job to job and from time to time.

There is no price for "workers". Each instance of a worker is unique, and what they will accept, what they can achieve, and what they will actually achieve, changes constantly.

Your assumptions here, that minimum wage workers are all interchangeable; and that they are all incapable of anything other than minimum wage work, are nonsensical - but you don't even state them, much less examine them.

 

[laughing dog]

An absence of a detectable signal is not evidence of the absence of the signal!

The absence of a detectable signal is not evidence of a signal.

In essence , you are maintaining faith-based economics: it’s true regardless of the evidence to the contrary.

Increase price, demand drops. Economics 101. The only question is how elastic the response is.

Technically, in Econ 101, increase price, quantity demanded ( not demand) drops. But in ECON 101 that is a partial equilibrium result- it is the effect in the market with the price increase.

The real world includes the ripple effect in other markets.

It is certain that the effect is not zero, all these studies prove is that it's below the detection threshold. However, the nature of the available data means the detection threshold is beyond anything we will actually see except in extreme cases (American Samoa.)

It is not certain the effect is not zero. An increase in the minimum wage may induce a small reduction in hours worked but no job losses. An increase in the minimum wage that keeps the minimum wage below the market wage will have no effect.

Nor is it the case that the nature of available data means the detection is not possible. At the national level that is true but not necessarily at the state or local level.

 

[Loren Pechtel]

The thing is we have no measurement of unemployment-rate-of-minimum-wage-workers.

Yeah, that's because it's an absurd concept, like the number of vertices in a square triangle.

By definition, minimum wage workers (like all workers) aren't unemployed.

And while you can define a labour's force as (workers)+(unemployed people who are looking for work), that latter group cannot be divided up by income, for reasons that I hope are obvious.

Of course it's absurd. That's why we can't measure it.

The problem is that if you are actually going to show that raising the minimum wage doesn't cause unemployment you need to measure this or come up with some good proxy of it. Unemployment rate overall is not a usable proxy, any study that uses it isn't worth the paper it's printed on.

A burger flipper on minimum wage who then gets fired becomes an unemployed person. But as you don't know anything at all about what wage he might earn in his next role, it's absurd to consider him "minimum wage unemployed".

Indeed, one of the benefits of workers being laid off is that it breaks their inertia - in my personal experience, the biggest increases in my income have resulted from changing employers. rather than from getting a raise or even a promotion.

Lots of people out there will keep working for less than they might get elsewhere, if only because they're too busy working to go looking for a better paid job. Although (misplaced) loyalty to their employer also plays a big part.

You aren't addressing my point at all.

And I do agree that changing employers is typically your best route to getting more money. (And what makes unions bad for workers--they deprive workers of their best tool to get a raise.)

 

[Loren Pechtel]

Increase price, demand drops. Economics 101.

That's true of commodities.

Workers aren't commodities. Their value varies from job to job and from time to time.

There is no price for "workers". Each instance of a worker is unique, and what they will accept, what they can achieve, and what they will actually achieve, changes constantly.

Your assumptions here, that minimum wage workers are all interchangeable; and that they are all incapable of anything other than minimum wage work, are nonsensical - but you don't even state them, much less examine them.

I am making no such assumption, although minimum wage workers are generally pretty interchangeable as they rarely have specialized skills.

And I certainly don't think they are incapable of improving themselves. That's what most minimum wage workers do--complete their education and get a better job. It still does not address the fact that you're replacing minimum wage jobs with unemployment. If the jobs aren't there it doesn't matter how diligent their job search is. We saw that with the housing collapse--companies simply weren't hiring anywhere near as many people as were unemployed. Diligence has basically zero effect on how many are hired, only on who is hired. You're engaging in some very Republican thinking on this.

 

[Loren Pechtel]

It is certain that the effect is not zero, all these studies prove is that it's below the detection threshold. However, the nature of the available data means the detection threshold is beyond anything we will actually see except in extreme cases (American Samoa.)

It is not certain the effect is not zero. An increase in the minimum wage may induce a small reduction in hours worked but no job losses. An increase in the minimum wage that keeps the minimum wage below the market wage will have no effect.

An increase in the minimum wage below market clearing price has zero effect good or bad. Why are you even bringing it up other than to disrupt the discussion?

Nor is it the case that the nature of available data means the detection is not possible. At the national level that is true but not necessarily at the state or local level.

Yeah, American Samoa. That's the only data point we have.

 

[Elixir]

The problem is that if you are actually going to show that raising the minimum wage doesn't cause unemployment you need to measure this…

There’s a big part of your problem. Demanding proof of a negative is a feeble retreat. It is incumbent upon you not only to imagine a mechanism, but to demonstrate its operation IRL and prove that your hypothetical cause (raised minimum wage) always has the same outcome (reduced workforce). You now know that semantically that’s not true (unemployed are still in the workforce) but insist that net possible productivity goes down. The counter argument is that higher minimum wage enables people at the bottom to do more work because they can eat, and they might be more available to more employers because might have access to transportation, they become more active consumers etc etc. and so raised minimum wages produce an overall positive impact on the health of the economy.
I would challenge you Loren to show that that is not the case, if we’re going to indulge in proving negatives.

 

[laughing dog]

It is certain that the effect is not zero, all these studies prove is that it's below the detection threshold. However, the nature of the available data means the detection threshold is beyond anything we will actually see except in extreme cases (American Samoa.)

It is not certain the effect is not zero. An increase in the minimum wage may induce a small reduction in hours worked but no job losses. An increase in the minimum wage that keeps the minimum wage below the market wage will have no effect.

An increase in the minimum wage below market clearing price has zero effect good or bad. Why are you even bringing it up other than to disrupt the discussion?

First, it shows that your claim that a minimum wage increase causes a loss in jobs. Second, it shows that the effect of a minimum wage increase depends on the context. Third, it shows the effect of a minimum wage increase is an empirical question. Fourth, there are multiple minimum wages in some area - the national minimum wage, the state minimum wage and perhaps a local one. It is entirely possible that an increase in the national minimum wage has no effect on jobs in states where the state minimum wage is higher than the national one.

Nor is it the case that the nature of available data means the detection is not possible. At the national level that is true but not necessarily at the state or local level.

Yeah, American Samoa. That's the only data point we have.

And that point is muddled because there were a number of influences affecting Samoa at that time.

 

[Loren Pechtel]

The problem is that if you are actually going to show that raising the minimum wage doesn't cause unemployment you need to measure this…

There’s a big part of your problem. Demanding proof of a negative is a feeble retreat. It is incumbent upon you not only to imagine a mechanism, but to demonstrate its operation IRL and prove that your hypothetical cause (raised minimum wage) always has the same outcome (reduced workforce). You now know that semantically that’s not true (unemployed are still in the workforce) but insist that net possible productivity goes down. The counter argument is that higher minimum wage enables people at the bottom to do more work because they can eat, and they might be more available to more employers because might have access to transportation, they become more active consumers etc etc. and so raised minimum wages produce an overall positive impact on the health of the economy.
I would challenge you Loren to show that that is not the case, if we’re going to indulge in proving negatives.

Not my problem--the claim is that it doesn't kill jobs. I'm simply pointing out that they're trying to prove a negative.

And I was saying productivity goes down because you have people idle instead of working in low-pay jobs. You're trying to claim there's an increase elsewhere but there's no evidence for this.

 

[Elixir]

I'm simply pointing out that they're trying to prove a negative.

"MW kills jobs" would be the fallacious positive statement IMO.
But it should be provable as a principle via consistent and measurable quanta of workers at a given wage level within an area. If it's is below detection limits/noise threshold, then it serves as poor excuse for foregoing the predicted positive benefits of raising the fucking minimum wage (at least to a ballpark level where a couple could conceivably raise a kid on two incomes).
Remember - you're going to need those (uneducated) kids to be fit and healthy when they show of for workforce duty!

 

[robnisch]

I'm no economist, but I would think that if someone got paid more they would spend more. Thus, creating more jobs.

 

[bilby]

I'm no economist, but I would think that if someone got paid more they would spend more. Thus, creating more jobs.

Indeed; And the lower their pay was to begin with, the more pronounced the effect will be.

 

[Loren Pechtel]

I'm simply pointing out that they're trying to prove a negative.

"MW kills jobs" would be the fallacious positive statement IMO.

American Samoa. It most certainly did.

But it should be provable as a principle via consistent and measurable quanta of workers at a given wage level within an area. If it's is below detection limits/noise threshold, then it serves as poor excuse for foregoing the predicted positive benefits of raising the fucking minimum wage (at least to a ballpark level where a couple could conceivably raise a kid on two incomes).
Remember - you're going to need those (uneducated) kids to be fit and healthy when they show of for workforce duty!

What I'm saying is that the detection limits are incredibly coarse and incapable of seeing even large signals. It takes something like American Samoa to rise above the detection threshold.

 

[Loren Pechtel]

I'm no economist, but I would think that if someone got paid more they would spend more. Thus, creating more jobs.

Indeed; And the lower their pay was to begin with, the more pronounced the effect will be.

The problem here is that you are assuming a static environment.

In the real world wages rise, prices rise -- in other words, inflation. The people higher up the ladder demand more also. You end up with the original scale except now the economy has suffered damage from inflation.

 

[Politesse]

American Samoa. It most certainly did.

The faults in that case study have been pointed out to you over and over in this thread. Do you think banging the same gong over and over is the same thing as proving that it is somehow relevant?

It takes something like American Samoa to rise above the detection threshold.

Why should anyone care more about a undetectable fault than they do about their livelihoods? Why should anyone?

 

[Elixir]

American Samoa. It most certainly did.

Faulty data point one.

detection limits are incredibly coarse and incapable of seeing even large signals

So it’s a useless exercise, except when used in one single faulty study?
C’mon Loren, you can do better.

 

[laughing dog]

I'm no economist, but I would think that if someone got paid more they would spend more. Thus, creating more jobs.

Indeed; And the lower their pay was to begin with, the more pronounced the effect will be.

The problem here is that you are assuming a static environment.

In the real world wages rise, prices rise -- in other words, inflation. The people higher up the ladder demand more also. You end up with the original scale except now the economy has suffered damage from inflation.

Actually, you are the one assuming a static world with your assumption that prices rise at the same rate as inflation.

The real world is much more dynamic than your imaginary world. The degree to which prices rise in response to an increase in wages depends on a variety of factors. Assuming that an x% in wages causes an x% in increase in prices is ignorant economic reasoning. The degree of competition in domestic markets and from international competitors, the degree of flexibility in production, changes in productivity, the share of labor in production costs ,etc…. all affect the response of prices.

 

[ZiprHead]

Actually, you are the one assuming a static world with your assumption that prices rise at the same rate as inflation.

Are you sure that is what you wanted to say or should the word wages be used instead of the word inflation?