UC San Diego - New Study Finds Minimum Wage Reduces Employment

[fromderinside]

Post 41.

So after posting this turd maxparrish has yet to join join the discussion. Could it be the time data were collected went through the worst unemployment increase since the great depression. Over 700,000 jobs a month were being lost. Yet the authors want us to believe employment was increasing for these low paid workers over that interval.

Good enough to get maxparrish back the discussion this defection?

 

[ZiprHead]

I see they used data from 2008-2012. I cannot for the life of me figure out any outside factors that would contribute to the unemployment rate.

You're such a Debbie-downer.

 

[Loren Pechtel]

Well, if you have two neighboring states with different minimum wage then it's pretty obvious that jobs will be leaking from state with higher minimum wage to one with lower minimum wage.
Same as with gun control "studies" where they find that lax gun control "decrease" crime. It does not, it merely redistribute it.

Yep. They also appear to be doing the old trick of multiplying "target" data up to "estimate" an effect on aggregate employment. The uncritical reader thinks a reduction in employment by a MW hike has been proven, when the authors are in fact positing a counterfactual : how much more employment there would have been if there hadn't been a MW hike. Aggregate employment needs no such "estimate" since the statistics exist - only they don't show what some authors set out to show.

Without having something to compare it against there can be no comparison and thus no conclusion.

Since we have basically no real-world data to compare against (we don't have enough samples of minimum wage increases to average out other factors) it's about the only way to reach any meaningful conclusion. You just don't like it because it says what you don't want to hear.

 

[Loren Pechtel]

Yes, this is the choice. Almost nobody on the left will admit this, though, they continue to insist that it can be done basically cost-free.

I don't know anyone left or right who says any such thing. Certainly if you keep raising MW, you'll get unemployment. What people (who aren't all on the left) dispute is that the relation is continuous and linear i.e. that you can keep pushing wages down cost-free. As wages approach zero, unemployent would approach, not 0%, but 100%.

You are making the erroneous assumption that minimum wage is what everyone gets. The last data I saw on this was only 1% of Americans do.

My own policy preference would be to raise wages until no -or few- employed need welfare, along with a guarantee of public sector employment for any displaced worker who wants a job. If I'm subsidising them anyway, I don't want a middle man skimming a profit and bidding others' wages down. I would indeed expect some private sector disemployment.

Reality: The biggest cause of welfare is not enough hours, not a low hourly rate. Raising the hourly rate doesn't help this.

 

[Loren Pechtel]

Yes, this is the choice. Almost nobody on the left will admit this, though, they continue to insist that it can be done basically cost-free.

no. The primary thing about wages is that the same amount of work still needs to be done. A person selling toyotas will have just as many people coming to buy his cars regardless of what he pays his workers, and so needs the same number of workers to help him. The only question is how much the glorified accountant walks away with. In fact there are a lot of really good examples like Ford which show that paying more to the workers means they'll buy MORE cars. The world has a finite amount of work that needs to be done outside the research and development markets. That amount goes up when we raise the bar for the lowest wage workers, but ultimately we will still reach 'peak labor'.

If more people are provided a higher standard of living, there Necessarily will need to be more people working to make that happen, because higher standards of living necessitate more work. Period. A higher minimum wage means more jobs. It literally CAN'T not, at least until we hit peak labor.

Your "primary thing" is totally wrong.

The reality is that no business does only one thing. The different things they do have different yields. Raise the cost, some of them will become of negative value and the business will quit providing them or provide lesser versions.

For a simple example of this at work, note what's happened to customer service at most places.

 

[laughing dog]

I looked at the reported statistical results. Unless I am mistaken (which is truly possible), I did not see that the authors presented any goodness of fit results for their regressions (the estimated equations they used to derive their results). Either they are being sloppy or their underlying estimations did not explain very much.

 

[Canard DuJour]

Is the increase in minimum wage, however, really affecting the bottom line that much? You have the existing cost for labor, which includes a lot of people not making minimum wage, your full-time staff costs you health care and FICA which can add up substantially and dwarfs a minimum wage hike, then you add the cost of equipment/services, etc... Just how much would it actually affect the outlays for a company?

It has an effect at the margin. That effect is negative.

If we raised the price of broccoli 10 cents a pound you could ask the same questions. How many people spend all that much on broccoli anyway?

But at the margin we know it will mean 1) people deciding they don't really need that broccoli after all; 2) people using a little less broccoli in their stir fry; 3) substitutes for broccoli (e.g., cauliflower) becoming more attractive options. Your demand for broccoli may be resilient for a 10 cent move but not for a $1 move. Someone else may love broccoli so much they won't bail out at a $5 move. But somewhere in the economy wide there are some people that bail out at $0.10.

Yep, and consumers will have correspondingly more to spend. Either the affected workers themselves or others to whatever extent the raise lifts workers out of dependence. They won't necessarily consume more broccoli but they'll be marginally more inclined to consume products of other labour - directly affected workers significantly more so.

This is why demand curves slope downward. A higher prices causes people to do with less and or use substitutes.

But not independently of wages.

 

[Canard DuJour]

Yep. They also appear to be doing the old trick of multiplying "target" data up to "estimate" an effect on aggregate employment. The uncritical reader thinks a reduction in employment by a MW hike has been proven, when the authors are in fact positing a counterfactual : how much more employment there would have been if there hadn't been a MW hike. Aggregate employment needs no such "estimate" since the statistics exist - only they don't show what some authors set out to show.

Without having something to compare it against there can be no comparison and thus no conclusion.

Since we have basically no real-world data to compare against (we don't have enough samples of minimum wage increases to average out other factors) it's about the only way to reach any meaningful conclusion. You just don't like it because it says what you don't want to hear.

Well, no, even then the meaningful and obvious conclusion remains that any effect - positive or negative - is insignificant. Teasing out any such effect might or might not then be possible, but rarefied cherry-picking is always possible. I've seen similarly contrived "studies" touting positive effects.

 

[Canard DuJour]

I don't know anyone left or right who says any such thing. Certainly if you keep raising MW, you'll get unemployment. What people (who aren't all on the left) dispute is that the relation is continuous and linear i.e. that you can keep pushing wages down cost-free. As wages approach zero, unemployent would approach, not 0%, but 100%.

You are making the erroneous assumption that minimum wage is what everyone gets. The last data I saw on this was only 1% of Americans do.

My assumption was that the discussion - hence my comment - concerned supply and demand for a just that. Not the the entire labour maket. Otherwise your comment was utterly mystifying.

My own policy preference would be to raise wages until no -or few- employed need welfare, along with a guarantee of public sector employment for any displaced worker who wants a job. If I'm subsidising them anyway, I don't want a middle man skimming a profit and bidding others' wages down. I would indeed expect some private sector disemployment.

Reality:

Opinion:

The biggest cause of welfare is not enough hours, not a low hourly rate.

Yeah, even at 50c/hr there'd be no welfare problem if they'd just work a few hundred hours a week.

Raising the hourly rate doesn't help this.

Or hurt. An employer cuts hours because he can't afford a total wage bill of more than $x. If a MW rise means cutting hours to get the wage bill down to $x, the employee gets $x for fewer hours. The employee is still better off and might use those hours to train/earn additional income.

 

[Jimmy Higgins]

Yep. They also appear to be doing the old trick of multiplying "target" data up to "estimate" an effect on aggregate employment. The uncritical reader thinks a reduction in employment by a MW hike has been proven, when the authors are in fact positing a counterfactual : how much more employment there would have been if there hadn't been a MW hike. Aggregate employment needs no such "estimate" since the statistics exist - only they don't show what some authors set out to show.

Without having something to compare it against there can be no comparison and thus no conclusion.

Since we have basically no real-world data to compare against (we don't have enough samples of minimum wage increases to average out other factors) it's about the only way to reach any meaningful conclusion. You just don't like it because it says what you don't want to hear.

Actually it is because the study takes place during the Great Recession which akin to studying the effects of global warming on ocean levels.... during a hurricane. There is way too much noise to filter out.

An honest look at the numbers seems to indicate that increase in company cost will not lead to a 1 to 1 increase in service prices.

 

[ksen]

Yep. They also appear to be doing the old trick of multiplying "target" data up to "estimate" an effect on aggregate employment. The uncritical reader thinks a reduction in employment by a MW hike has been proven, when the authors are in fact positing a counterfactual : how much more employment there would have been if there hadn't been a MW hike. Aggregate employment needs no such "estimate" since the statistics exist - only they don't show what some authors set out to show.

Without having something to compare it against there can be no comparison and thus no conclusion.

Since we have basically no real-world data to compare against (we don't have enough samples of minimum wage increases to average out other factors) it's about the only way to reach any meaningful conclusion. You just don't like it because it says what you don't want to hear.

So you're telling us there can be no comparison or conclusion and then just assume your own conclusion.

ok

 

[dismal]

Without having something to compare it against there can be no comparison and thus no conclusion.

Since we have basically no real-world data to compare against (we don't have enough samples of minimum wage increases to average out other factors) it's about the only way to reach any meaningful conclusion. You just don't like it because it says what you don't want to hear.

Actually it is because the study takes place during the Great Recession which akin to studying the effects of global warming on ocean levels.... during a hurricane. There is way too much noise to filter out.

An honest look at the numbers seems to indicate that increase in company cost will not lead to a 1 to 1 increase in service prices.

Didn't all 50 states go through the "Great Recession"? Why would the "noise" systematically affect only those that were directly affected by the federal increase?

And, if it only affects those states, is it really "noise"?

 

[Jarhyn]

If an activity necessitates wage slavery and worker abuse, if it necessitates not paying workers 40/hours*living wage, or necessitates (total hours between jobs < 40), then there is no ethical justification for it. It is literally saying 'well, it's ok to enslave or rob people if it gives us IPhones!'

No. If it can't be done by you ethically, then you have no right to do it anyway.

 

[Jimmy Higgins]

Actually it is because the study takes place during the Great Recession which akin to studying the effects of global warming on ocean levels.... during a hurricane. There is way too much noise to filter out.

An honest look at the numbers seems to indicate that increase in company cost will not lead to a 1 to 1 increase in service prices.

Didn't all 50 states go through the "Great Recession"? Why would the "noise" systematically affect only those that were directly affected by the federal increase?

Minimum wage went up for both bound and unbounded states.

 

[dismal]

Didn't all 50 states go through the "Great Recession"? Why would the "noise" systematically affect only those that were directly affected by the federal increase?

Minimum wage went up for both bound and unbounded states.

They compared job losses in states that already had a state minimum wage above the federal level (not affected) to job losses in states that didn't (affected).

 

[Jimmy Higgins]

Minimum wage went up for both bound and unbounded states.

They compared job losses in states that already had a state minimum wage above the federal level (not affected) to job losses in states that didn't (affected).

Both had their minimum wage increased.

 

[dismal]

They compared job losses in states that already had a state minimum wage above the federal level (not affected) to job losses in states that didn't (affected).

Both had their minimum wage increased.

Whaaa?

If you have an existing state minimum wage of $8 and the feds raise the federal minimum wage to $7.50 did the minimum wage go up in your state?

I mean, I know you are required to ignore basic economics in this thread but must we ignore basic math and logic as well?

 

[untermensche]

Both had their minimum wage increased.

Whaaa?

If you have an existing state minimum wage of $8 and the feds raise the federal minimum wage to $7.50 did the minimum wage go up in your state?

I mean, I know you are required to ignore basic economics in this thread but must we ignore basic math and logic as well?

If employers had to pay workers $8 to attract them to the job then in reality the minimum wage went up.

If people flee to the states with the higher minimum wage then it goes up for them.

We understand how greed fucks thing up.

Some greedy owner who sees his earnings shrink a little because he must pay the people who make him his money more, who decides to reduce his work force and demand the remaining workers do more, is a problem.

He is the root of the problem.

A system built around him and his petty greed is a system worth very little for most people.

 

[Jimmy Higgins]

Both had their minimum wage increased.

Whaaa?

Figure 2 in the report.

I mean, I know you are required to ignore basic economics in this thread but must we ignore basic math and logic as well?

I'm just going by what the report shows. Unbounded states generally saw increases between '06 and '08. These increases don't particularly appear on the employment plots in Figure 3.

 

[dismal]

Whaaa?

If you have an existing state minimum wage of $8 and the feds raise the federal minimum wage to $7.50 did the minimum wage go up in your state?

I mean, I know you are required to ignore basic economics in this thread but must we ignore basic math and logic as well?

If employers had to pay workers $8 to attract them to the job then in reality the minimum wage went up.

If people flee to the states with the higher minimum wage then it goes up for them.

We understand how greed fucks thing up.

Some greedy owner who sees his earnings shrink a little because he must pay the people who make him his money more, who decides to reduce his work force and demand the remaining workers do more, is a problem.

He is the root of the problem.

A system built around him and his petty greed is a system worth very little for most people.

So, that's a "yes"? We do have to ignore basic economics, math and logic?

If the problem was that people in low minimum wage states were fleeing to high minimum wage states shouldn't an increase in the federal minimum wage (which makes the playing field more level) cause them to stop fleeing so much? (i.e., cause higher employment in the low minimum wage states and lower employment in the high minimum wage states -- aka the exact opposite of what this study found...)