Minimum Wage Study - MW Does Not Kill Jobs

[Elixir]

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

Oh, I see. You're NOT claiming that raising the MW kills jobs. What's the problem with raising it, then?
Unless you can show that it kills jobs, there is no reason not to raise the MW, since there are host of social and fiscal benefits projected to result from it.
If there is any argument against it, it is NOT that it kills jobs according to your denial above.
So try again, Loren. WHY NOT RAISE THE MINIMUM WAGE?

 

[Loren Pechtel]

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?

Where has it been pointed out that the American Samoa data is wrong??

And just because something is undetectable doesn't make it not a problem. Suppose HIV had emerged 50 years earlier--completely undetectable by the technology of the era, would that have avoided all the deaths??

We are finding a variety of health issues that were thought to be spontaneous are actually reasonably low probability consequences of viral infections that were not detected at the time. (And, personally, I think we have only found the tip of the iceberg in this regard.)

 

[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.

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.

Eventually the change will percolate through the economy and it becomes an x% increase in prices. The situation is unstable enough you'll never actually return to exactly where you started but the pattern applies anyway--the market always tries to unwind minimum wage increases.

 

[Loren Pechtel]

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

Oh, I see. You're NOT claiming that raising the MW kills jobs. What's the problem with raising it, then?
Unless you can show that it kills jobs, there is no reason not to raise the MW, since there are host of social and fiscal benefits projected to result from it.
If there is any argument against it, it is NOT that it kills jobs according to your denial above.
So try again, Loren. WHY NOT RAISE THE MINIMUM WAGE?

1) American Samoa says it kills jobs.

2) Basic economics says it kills jobs.

Thus the burden of proof is on the side that claims it's harmless.

 

[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?

Where has it been pointed out that the American Samoa data is wrong??

And just because something is undetectable doesn't make it not a problem. Suppose HIV had emerged 50 years earlier--completely undetectable by the technology of the era, would that have avoided all the deaths??

We are finding a variety of health issues that were thought to be spontaneous are actually reasonably low probability consequences of viral infections that were not detected at the time. (And, personally, I think we have only found the tip of the iceberg in this regard.)

Following a rule of "all novel viruses cause mass fatalities" because one did would be just as stupid.

 

[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.

Eventually the change will percolate through the economy and it becomes an x% increase in prices. The situation is unstable enough you'll never actually return to exactly where you started but the pattern applies anyway--the market always tries to unwind minimum wage increases.

If minimum wage earners are less than 1% of workers, you need to carefully explain how their x% wage increase gets transformed into x% inflation. Because your response appears to have many implicit unrealistic assumptions.

 

[bilby]

Where has it been pointed out that the American Samoa data is wrong??

The Story Of How An Ill-Conceived Minimum Wage Hike Destroyed The Samoan Economy

www.businessinsider.com

So from the American Samoa case, we can conclude that, as it would be disastrous to raise minimum wage in an economy with a GDP of half a billion US$, where 45.6% of workers are employed in a single industry, wherein there are just two companies, 75% of whose employees earn less than the new minimum wage level; Therefore it would also be disastrous to raise minimum wage in an economy with a GDP of fourteen and a half TRILLION US$, where there are a couple of hundred different industrial sectors, representing over ten million employers, 2% of whose employees earn less than the new minimum wage level.

We know this, because there's really not a lot of difference between these situations. As long as you accept that:
0.5 is approximately 14,500;
1 is roughly 200;
2 is much the same as 10,000,000;
and 75% is pretty close to 2%.

Re the American Samoa tuna cannery, the firms in question aver that:

"Chicken of the Sea (headquarters in El Segundo, California)​

According to Chicken of the Sea officials, limited tuna supply was key factor in the decision to close the cannery. The American Samoa minimum wage increases were a minor factor, but not as significant as other factors related to tuna supply, labor availability, logistics, and utility costs in contributing to the cannery’s closure.​

​

(...)​

​

Tri Marine (headquarters in Bellevue, Washington)​

Tri Marine explained that the American Samoa minimum wage increases were a minor factor—not as significant as rising price competition and high production costs, such as for utilities—in contributing to Samoa Tuna Processors’ closure. "​

https://www.gao.gov/assets/gao-20-467.pdf

In both cases, operations were relocated - some to Thailand and the Solomon Islands (lower wages); some to the US state of Georgia (higher wages, better situated) - i.e. no aggregate increase in unemployment.

..not that you can generalise from some little island with a single industry anyway

They raised the minimum wage, the economy crashed.

Are you trying to move the goal posts? In a previous post we were looking at change to unemployment levels, not "the economy".

BTW I am still stuck on my phone and would still appreciate a link to the relevant facts and figures.

Bilby already posted them.

Can you link to bilby's post? I can't find a post where he has done this.

Are you actually referring to Canard DuJour's post, which links to the GOA report?

Is that your source for your information on American Samoa? That report is from 2020 but you've been posting about American Samoa since 2014.

That report is very informative, but it isn't clear which specific events you have been referring to.

1. The report notes several minimum wage increases, where the largest occurred incrementally from 2007 to 2009. I presume this is the one since the more recent increases happened after 2014?
2. The report mentions a couple of cannery closures, the closest to 2007 being Chicken of the Sea, which closed in 2009. Is this the loss of jobs that you're referring to?
3. If so then how have you measured the change in (un)employment related to each change in minimum wage? Which years following 2007 have you included? Did you just cherry-pick 2010 where employment dropped by a large margin?

 

[Worldtraveller]

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.

No. No he can't.

 

[Elixir]

1) American Samoa says it kills jobs.

2) Basic economics says it kills jobs.

Thus the burden of proof is on the side that claims it's harmless.

1) already addressed
2) Is your name “Basic Economics”?

The burden is on YOU to prove MW kills jobs. Not to make shit up about what Samoa “says”, or flaunt your lack of understanding of basic economics.

 

[Jimmy Higgins]

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.

Eventually the change will percolate through the economy and it becomes an x% increase in prices. The situation is unstable enough you'll never actually return to exactly where you started but the pattern applies anyway--the market always tries to unwind minimum wage increases.

So what. That issue only becomes a potential problem when the wage hikes influence the price increase to the point they reflect a near equal loss in buying power.

Labor is not the only cost of production (for the trillionth time). So increase wages doesn't lead to equivalent product price increases. And if prices go up a little to allow wages to go up a decent amount, there is a net gain and the customer is paying what could be a more fair value for the labor in the production of the product they are buying. Yes, this will lead to automation, but automation is an on going process that doesn't need minimum wages to create its existence.

Our economy has people using their own cars as taxis, food delivery, and part-time parcel delivery. That isn't good. The austerity that the Reaganites convinced America was good is in full swing these days. We are in dire need of medical assistant and home care labor, but we've decided cheaper is better and instead of using people that need better paying jobs to train for those fields, they are driving around, barely making money as self-employed contractors, so the companies that use their labor don't even need to contribute to benefits or FICA.

The economic priorities of too many Americans are in the gutter and we are developing shortfalls in areas we need to address, and have the labor to do it, just not the will to see it through, or to pay a couple bucks.

 

[Worldtraveller]

I did some googling around and found some explanation sites, but couldn't find the data I was looking for.

We know that increasing income at lower levels has a multiplicative effect almost always >1. Basic economics, right Loren?

We also know that there are multiple studies from multiple sources that show that increasing MW in different areas (not just cities, for example) does not depress jobs or increase unemployment. I know LP claims there are issues with this, but given his reliance on a single data point to dispute it, that seems significantly more flawed than any of his criticisms, there seems to be enough 'basic economic' arguments (and data) indicating that we should simply find a way to index MW to some other economic indicator. Or otherwise make it an automatic thing, and not dependent on the whims of a bunch of old rich white guys in congress.

I think we should simply cap the max that any one person in a company can make as a multiplier of what the least paid person makes. For smaller companies, a regular minimum wage needs to apply because cost of living....

 

[Elixir]

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

Oh, I see. You're NOT claiming that raising the MW kills jobs. What's the problem with raising it, then?
Unless you can show that it kills jobs, there is no reason not to raise the MW, since there are host of social and fiscal benefits projected to result from it.
If there is any argument against it, it is NOT that it kills jobs according to your denial above.
So try again, Loren. WHY NOT RAISE THE MINIMUM WAGE?

1) American Samoa says it kills jobs.

So you now you DO believe MW KILLS JOBS, and agree with “American Samoa” (one flawed study on an island halfway around the world from its “owner”).

Which is it Loren? Are you making the assertion that MW kills jobs, or only that it’s possible (esp on an island) that it might kill jobs because … American Samoa? You can’t have it both ways, and “American Samoa” is not a magic chant.

 

[southernhybrid]

The average ratio of CEO to average paid worker in a corporation, was about 20-1 in 1965. Now, it's as high as 300 to 1, and always at least 70 to 1. Look it up, if you don't believe me. WTF! Nobody is worth that much pay and how many millions does one need to live? Yet, we shouldn't raise the minimum wage? I've got news for Loren. Even Walmart is now starting it's new employees at 14 to 15 dollars per hour, not great but about twice what the legal minimum wage has been since about 2009. So, while it certainly does need to be increased, supply and demand has already increased it to some extent. There is a small nonprofit in my town that has been begging for help for well over a year. The starting pay is only 11 dollars per hour, poor pay but still more than the current minimum wage, and at least this organization provides good benefits and a pension. It's crazy to say that raising the minimum wage, which is currently pauper pay is gong to cause job losses. There are too many jobs that can't be filled, from retail to nursing assistants, to entry level mechanics etc. etc. Does Loren even realize what companies are paying these days? I don't think anyone is paying 7.25 an hour because nobody is going to work for that pittance. It needs to be 15 dollars an hour at a minimum, which most employers are already paying.

 

[Jimmy Higgins]

My experience is that people arguing against $15 an hour minimum wage think it is still 1995.

 

[robnisch]

I see a lot of elitism in the arguments against raising the minimum wage.

 

[Loren Pechtel]

If minimum wage earners are less than 1% of workers, you need to carefully explain how their x% wage increase gets transformed into x% inflation. Because your response appears to have many implicit unrealistic assumptions.

Because the higher wage workers see the gap between them and the ones below going away and demand more.

 

[Loren Pechtel]

Where has it been pointed out that the American Samoa data is wrong??

The Story Of How An Ill-Conceived Minimum Wage Hike Destroyed The Samoan Economy

www.businessinsider.com

So from the American Samoa case, we can conclude that, as it would be disastrous to raise minimum wage in an economy with a GDP of half a billion US$, where 45.6% of workers are employed in a single industry, wherein there are just two companies, 75% of whose employees earn less than the new minimum wage level; Therefore it would also be disastrous to raise minimum wage in an economy with a GDP of fourteen and a half TRILLION US$, where there are a couple of hundred different industrial sectors, representing over ten million employers, 2% of whose employees earn less than the new minimum wage level.

We know this, because there's really not a lot of difference between these situations. As long as you accept that:
0.5 is approximately 14,500;
1 is roughly 200;
2 is much the same as 10,000,000;
and 75% is pretty close to 2%.

These are differences in scale, not in kind. Bigger input, bigger output. Our ability to detect job loss due to minimum wage increases is incredibly noisy and under normal conditions only able to detect overwhelming signals. American Samoa had a much larger percent of the economy effected, it produced a signal that was not only detectable statistically but actually obvious.

 

[Loren Pechtel]

1) American Samoa says it kills jobs.

2) Basic economics says it kills jobs.

Thus the burden of proof is on the side that claims it's harmless.

1) already addressed
2) Is your name “Basic Economics”?

The burden is on YOU to prove MW kills jobs. Not to make shit up about what Samoa “says”, or flaunt your lack of understanding of basic economics.

Please note the title of this thread. An assertion that MW does not kill jobs. That's a claim of proving a negative--I'm simply pointing out that the data is utterly inadequate to prove this. It's like proving normal speech can't be understood by trying to listen to someone on the flight deck of an aircraft carrier during operations. (Hint: They don't talk. It's hand signals or written information.)

 

[Loren Pechtel]

Labor is not the only cost of production (for the trillionth time). So increase wages doesn't lead to equivalent product price increases. And if prices go up a little to allow wages to go up a decent amount, there is a net gain and the customer is paying what could be a more fair value for the labor in the production of the product they are buying. Yes, this will lead to automation, but automation is an on going process that doesn't need minimum wages to create its existence.

Yeah, you've claimed this before.

All costs of production are either labor or taxes. Sure, companies buy things--but you have to follow the chain all the way up (careful, it's recursive.) Eventually you'll either find labor or tax.

Our economy has people using their own cars as taxis, food delivery, and part-time parcel delivery. That isn't good. The austerity that the Reaganites convinced America was good is in full swing these days. We are in dire need of medical assistant and home care labor, but we've decided cheaper is better and instead of using people that need better paying jobs to train for those fields, they are driving around, barely making money as self-employed contractors, so the companies that use their labor don't even need to contribute to benefits or FICA.

The economic priorities of too many Americans are in the gutter and we are developing shortfalls in areas we need to address, and have the labor to do it, just not the will to see it through, or to pay a couple bucks.

Of course it's not good. This comes back to the fundamental problem I've been pointing out--bad jobs exist. Good jobs drive out bad jobs, thus it's clear that there are not enough good jobs to go around. Minimum wage laws can't create good jobs, they'll just convert bad jobs into unemployment.

 

[Loren Pechtel]

I did some googling around and found some explanation sites, but couldn't find the data I was looking for.

We know that increasing income at lower levels has a multiplicative effect almost always >1. Basic economics, right Loren?

We also know that there are multiple studies from multiple sources that show that increasing MW in different areas (not just cities, for example) does not depress jobs or increase unemployment. I know LP claims there are issues with this, but given his reliance on a single data point to dispute it, that seems significantly more flawed than any of his criticisms, there seems to be enough 'basic economic' arguments (and data) indicating that we should simply find a way to index MW to some other economic indicator. Or otherwise make it an automatic thing, and not dependent on the whims of a bunch of old rich white guys in congress.

If you could increase minimum wage in isolation from everything else it might be a good thing. You can't, though.

I think we should simply cap the max that any one person in a company can make as a multiplier of what the least paid person makes. For smaller companies, a regular minimum wage needs to apply because cost of living....

That would simply result in a huge level of outsourcing and actually make the situation worse.

Price fixing always harms the economy. (And minimum wage is a form of price fixing.)