I do too. I am now wondering what is going on in VT that UE is so low. Am I out of the loop on something? They pay a higher than federal minimum wage!
Montpelier is the only state capital in the country without a McDonalds. Maybe that has something to do with it. Actually probably not, but I wanted to share Vermont trivia that related to the minimum wage.
To be fair, though, Montpelier is super tiny. I mean, my mom lives in a village of 1500 and they don't have a McDonalds (or any fast food, unless you count the one and only gas station, or the pizza place. Lots of sit down restaurants and antique shops, though).
Montpelier is bigger, but not so big that they probably have a lot of fast food.
Here's a study that was done when states were raising their minimum wages all over the place, because the federal minimum wage remained stagnant so long.
What the study did is compare neighboring counties across state lines (to sort of control for the NYC vs. ND factor). ALL neighboring counties with differences in state minimum wage laws between 1990 and 2006 were considered.
They found no adverse employment effects to higher minimum wages.
oohh, that's interesting. bookmarking to read later...
totally unrelated: I want to find a similar study with gun control and violent crime stats. comparing adjacent counties w/ similar demographics across state lines. Not that there aren't still a pile of confounding factors there, but it's an interesting approach.
I am sad that no one wants to talk about how states with higher minimum wages also have higher unemployment. I had to make a whole spreadsheet for that one.
But statistics schmatistics I guess.
Y4M, that is very interesting, and seems to support Alan Reynold's view later in my reply.
I have skimmed the 8 pages, not as closely as I should, so my view may be redundant.
As to the original question, why is minimum wage a bad thing...someone dear to me is an econ nerd and he has broadened my thinking on some of this. When MO voted on raising the min. wage a few years ago (I voted for, he voted against) we got in a heated discussion about it. I couldn't see this as anything but an uncallous and unkind move. But once I unclenched and let him talk, he made some excellent points.
So inspired by some of his views, and others I've read along the way:
Our workers need a place to start. There must be a place for the zero experience, zero skill teenager to begin building their resume. And it is mostly part-time teens and young adults we're talking about, per stats already stated. If the minimum wage is raised to a level necessary for a head of household earner, then why would anyone hire the no skills, no experience kid? If someone is going to pay $15/hour (insert whatever wage you consider "livable" for a head of house earner), then there are people with better experience who can be had for that amount. Thus, Susie Job Creator has no incentive to take on a truly entry-level employee.
Another thing to consider is that there is only so much value to a job. Susie can only pay a person to do it for her because it is valuable to do so. So when the minimum wage exceeds the value of the job the employee is doing, it is not sustainable. Susie looks to technology to replace this low skill worker (running an elevator, handing out towels in the washroom, handwashing cars), or simply eliminates the position and require more duties of her other employees (the cashier now needs to bag, too). Not because she's a cold-hearted CEO, but because if she pay more for a job than it's worth, she'll be out of business fast and the employees in question will be out on the street anyway.
According to the economist linked later in reply, the majority of this nations impoverished are not the working poor, they are the unemployed (including disabled). So raising the wage from $7 to $10 is going to do nothing to help the already unemployed person escape poverty. If they can't land a job at $7/hr, they aren't going to be able to land one at $10. That hurts, not helps, the poorest among us.
I think at the heart of this is what entry-level is supposed to be. For most people, it's simply the first stop on your way to supporting yourself. It's not where a 40 year old father of four is likely to be. If he is looking to an unskilled job to support his family, then let's address the reasons that he has no skills at 40 years old. He may be disabled, uneducated and/or has zero experience. We can help with many of these issues. Which I think is better than artificially tampering with wages (earned largely by dependent minors) so that the very low percentage of able-bodied adults with no skills and no education who also rely on minimum wage will be better able to support themselves. I'd rather see more support for remedial education, subsidized job training programs, more comprehensive resources for disabled adults, etc.
I see in this thread a lot of speculation about the race to the bottom, how a low min. wage would ripple through the whole pay scale. So you are supposing that as Susie is running her business, and the min. wage is eliminated, she's now going to drop the bottom on her employee's wages, not just the minimum wage earners, simply because she can. Correct? Because all of her salary levels are essentially tied to the MW. So, she reduces everyone's pay because she's now paying the cleaning crew only $2/hr. First thing that happens, all of her decent employees, from entry level through managerial, leave, because someone will pay them better. Ok. So now, she has her new pool of applicants. Which is small because her advertised crappy wages aren't competitive enough for skilled, experienced workers. So what she end up with is a lot more trouble on her hands (and decreased efficiency) because everyone will need more training and supervision because they have no prior job experience. A lot more turnover, attendance issues, and general managerial head aches for Susie.
Here is a good, albeit outdated, NPR interview with Alan Reynolds, a senior fellow with the Kato Institute, a Washington, D.C.-based think tank:
"At some point, if you raise the cost of simple labor - the kinds of jobs that young people with no skills do and no education, or your new immigrants with no education - what you're basically doing is just cutting them off, and they can't even begin to climb the ladder of opportunity. They're cut off at the start. And that's not a good idea."
Just for fun - Y4M's spreadsheet with a COL factor added. The source of the COL data might be questionable. I didn't really look at their methodology - it was just the first source I had with a simple numerical factor for all 50 states.
LMAO. I was driving back in from lunch thinking "I wonder if Y4M included COL in that. Surely she did. Being a number junkie and all. I gotta see that when I get back to my desk."
I am sad that this thread fell apart because I felt like there was (after the first couple of pages) a good discussion going on & it was definitely making me think about things. I like to see the 'other' side (even though I'm not even sure which side I'm on here) and I would love to see more data/info/theory about what would happen if we removed minimum wage laws - not just to those currently making minimum wage but to salaries across the board, the price of goods/services, impact on government resources, etc. Are there any studies that look at what would (theoretically) happen?
Threads usually devolve once the F word is introduced (and that was about page 3) and/or someone posts the ole "Why dont you answer my question!?!??!?!!?" as if it is either a) I must be right because no one has answered or b) see a.
Tef, I love you for your gif. Did you know there is a freaking SEQUEL coming out?!
Here's a study that was done when states were raising their minimum wages all over the place, because the federal minimum wage remained stagnant so long.
What the study did is compare neighboring counties across state lines (to sort of control for the NYC vs. ND factor). ALL neighboring counties with differences in state minimum wage laws between 1990 and 2006 were considered.
They found no adverse employment effects to higher minimum wages.
I can't even get past the 2nd paragraph in this link because it cites the Card & Krueger study, which was discredited after their work, which relied on unreliable phone surveys, was repeated with actual payroll data. This link also admits there is a very strong correlation between unemployment and increases in the minimum wage. It just hypothesizes this is due to spacial heterogenity. I'd be glad to find studies that disprove this, but I have a feeling it would be ignored.
I disagree. There are simply way too many examples to dismiss Min Wage increasing unemployment. At some point it just becomes finding excuses to explain away the obvious.
I missed some large chunks of the thread, so forgive me if this was addressed previously. But are you saying that it is indisputable that having a minimum wage period leads to increased unemployment or an increased minimum wage leads to increased unemployment? Your statement seems to imply the former, in which case has there been a graphic or statistic tracking both since the inception of the fair labor standards back in the 30s? Maybe that's what we should be talking about then.
Like I said, I don't think it's as simple as X increase in the min wage = Y increase in unemployment. It's not something one can use to predict at a one-firm, or one type of firm level. But the overall trend happens often enough that it's a generally accepted consensus among economists.
Y4M - I don't know about this. I'm seeing 10 states that are at min wage with over 8% unemployment rates.
What do we consider to be an ideal UE rate? 6%
Ideal is about 5-6% as I understand it--you can't really get lower than that because there will always be frictional unemployment (people who get fired rightfully, my MIL who walks off the job because her boss looks at her the wrong way, etc.)
All statistics have outliers. The point is statistical analysis accounts for those things, because the outliers are presumed to be part of the normal distribution. If you could discredit any statistic by saying "well, it's not true for this one example," there would be no field of statistics.
Y4M - I don't know about this. I'm seeing 10 states that are at min wage with over 8% unemployment rates.
What do we consider to be an ideal UE rate? 6%
4% was considered full employment when I was in school. I don't think y4m is arguing that the min wage is solely responsible for the UE rate in a given state, it's just shows the general trend still holds up. A lot of labor laws can and do have the same effect.
Here's a study that was done when states were raising their minimum wages all over the place, because the federal minimum wage remained stagnant so long.
What the study did is compare neighboring counties across state lines (to sort of control for the NYC vs. ND factor). ALL neighboring counties with differences in state minimum wage laws between 1990 and 2006 were considered.
They found no adverse employment effects to higher minimum wages.
I can't even get past the 2nd paragraph in this link because it cites the Card & Krueger study, which was discredited after their work, which relied on unreliable phone surveys, was repeated with actual payroll data. This link also admits there is a very strong correlation between unemployment and increases in the minimum wage. It just hypothesizes this is due to spacial heterogenity. I'd be glad to find studies that disprove this, but I have a feeling it would be ignored.
What? The â€discrediting†by Neumark and Wascher? That was pretty problematic...
I've been looking for it on the BLS site, but is there a breakdown by state of U6 unemployment rate? I think that'd be equally valuable for y4m's awesome-sauce table.
All statistics have outliers. The point is statistical analysis accounts for those things, because the outliers are presumed to be part of the normal distribution. If you could discredit any statistic by saying "well, it's not true for this one example," there would be no field of statistics.
I understand that, but 10 is a lot more than a SD of 3% +/-. That's 20% of your field.
All statistics have outliers. The point is statistical analysis accounts for those things, because the outliers are presumed to be part of the normal distribution. If you could discredit any statistic by saying "well, it's not true for this one example," there would be no field of statistics.
I understand that, but 10 is a lot more than a SD of 3% +/-. That's 20% of your field.
I'm not sure what you mean. Normally 3% +/- is a measure of sampling error. We have none of that, since this is a census.
Alternatively, the PDF link momi posted also mentions that Card & Krueger redid their original study in 2000 and that time, unsurprisingly, found "no significant effects".
Alternatively, the PDF link momi posted also mentions that Card & Krueger redid their original study in 2000 and that time, unsurprisingly, found "no significant effects".
sweet. thanks. I only read the first page or so of momi's link. Her previous one, that one, and now this one are all joining my bookmarked list of "to-reads."
I understand that, but 10 is a lot more than a SD of 3% +/-. That's 20% of your field.
I'm not sure what you mean. Normally 3% +/- is a measure of sampling error. We have none of that, since this is a census.
True, but 10 states is high to me. Maybe this would work better if it were in a graph. If we decide that 6% is ideal employment, then anything over 7% would be considered higher than normal right? National UE is at 8.2%, so that's why I singled out the states over 8%. But, if we say 75 is high, then the numbers look like this:
So - bear with me, I need to type it out to visualize it
States w/ min wage < 6% = 14 States w/min wage > 7% = 20 States under min wage < 6% = 4 States over min wage > 7% = 12
Y4M - do you understand what I'm saying here? The trend would make sense if you just account for the states that pay over min wage? Is that what you're doing?
I missed some large chunks of the thread, so forgive me if this was addressed previously. But are you saying that it is indisputable that having a minimum wage period leads to increased unemployment or an increased minimum wage leads to increased unemployment? Your statement seems to imply the former, in which case has there been a graphic or statistic tracking both since the inception of the fair labor standards back in the 30s? Maybe that's what we should be talking about then.
Like I said, I don't think it's as simple as X increase in the min wage = Y increase in unemployment. It's not something one can use to predict at a one-firm, or one type of firm level. But the overall trend happens often enough that it's a generally accepted consensus among economists.
For the record, I do not disagree with you that it is generally accepted among economists. I just wish there was more concrete "HOW" and "WHY" evidence that I could wrap my head around. This is just me postulating, by the way, but I have trouble looking at the stats of who actually earns minimum wage and who would be impacted without questioning the reality of why it wouldn't technically impact a greater proportion of people.
I understand that only X% of the workers truly earn minimum wage and would be impacted by a decrease, based on the statistics. But then I think about real life, and knowing that there are other minimum wage workers that aren't accounted for in those statistics (like those whose employers don't offer them full-time hours because then they would need to offer other benefits, as an example or people who work just under full-time for whatever other reason). I wonder how to truly account for everyone.
After 10 pages of useless snipping and "why do you hate the poors" and martyr juice, you people made a group google doc to share stats and multiple people contributed to it?!?!?!?!