The True Story of the Minimum-Wage Fight - Freakonomics - "In 1976, a survey by the American Economic Association found that 90 percent of its members agreed that if you raise minimum wages, you decrease employment for younger and less-skilled workers. The idea was that employers don’t want to overpay workers who they think aren’t worth the wage. Another survey in 1990 found this was still the consensus view, with 80 percent of economists saying that higher minimum wages are bad for what they call total employment.
NEUMARK: When I was starting out in graduate school, the professor, Jim Medoff, came in, and he plopped down these five volumes, like the old New York phone book for those who remember what those are. And this was the report of the Minimum Wage Study Commission, and it was, I don’t know, 100 papers. And he said, “One thing you shouldn’t work on is minimum wages because we know everything.”
This may shock you, but it turns out that economists didn’t know everything. But also: things were changing. In the late 1980s, with rising inflation and a stagnant minimum wage, some states started raising their wages.
NEUMARK: Suddenly you had this multitude of different strategies for estimating minimum-wage effects.
Meaning: there were new data — and new research methods — to address the old minimum-wage question. In 1994, the economic consensus was abruptly overturned in a paper by the economists Alan Krueger and David Card. They took advantage of the fact that New Jersey had raised its wage while neighboring Pennsylvania didn’t. Analyzing employment data from fast-food chains on either side of the border, Krueger and Card found that the new law did boost the earnings of low-income workers without reducing employment. So: did the economics profession begin to converge around a new consensus, a pro-minimum-wage consensus? They did not. At this moment the field is, essentially, split. In a recent survey of academic economists, 45 percent agree that a federal minimum wage of $15 would lower employment; but 33 percent said they were uncertain, with the remainder mostly disagreeing. Even when asked if it would be good to peg the federal minimum wage to some kind of cost-of-living index, an astonishing 42 percent of economists were uncertain. And let me say this: economists almost never profess uncertainty around anything — even non-economic issues — so a 42-percent uncertain vote on this question is bizarre...
David Neumark is not a big fan of a $15 federal wage. Why?
NEUMARK: So my research on the minimum wage, one of the things it tends to say is there definitely is some job loss. And I’m quite convinced of that. So on net, there are winners and there are losers. I think then the question is, how do you add those up? So one reasonable metric is to say, “Well, okay, do we reduce poverty?” If we do, then maybe the costs are acceptable relative to the benefits. My reading of the evidence is that it’s pretty hard to find convincing evidence that poverty will fall... there’s a lot of minimum-wage workers who — they’re not in poor families. They’re not even in low-income families. Who are they? Well, like my daughter when she was in high school and had a job. I’m upper-middle income or upper income, depending on your definition... The second reason it’s a blunt instrument is because the single biggest reason people are poor is that nobody in the family works. More than half of poor families have zero workers. So raising the minimum wage, unless it somehow brings some of them into the labor market, it’s not doing anything for them at all...
So if Neumark thinks a $15 federal minimum wage is a bad policy to reduce poverty, what does he suggest?
NEUMARK: We could write checks to the poor. Or we could expand the earned-income tax credit, which basically writes checks to the working poor — which is something conservatives can get behind too, because at least they have to work, and it encourages work. Why are small business owners the ones who have to pay to fix this problem? The owner of the laundromat down the street from me has to pay more because we have a high minimum wage in San Francisco and in California and would everywhere if this bill passes. But the guy who works at Goldman Sachs who makes way more than the person who owns my laundromat isn’t going to pay anything for it...
Among economists who support a $15 target, Dube is one of the most prominent voices. And some of the high-quality research he mentioned is his own. One study looked at wages over 18 years in counties that border each other.
DUBE: Imagine a control group and imagine a treatment group. One side of the border raises the minimum wage, the other side does not. The bet here is that the side not raising the minimum wage is a good proxy to what would have happened had the treatment side not raised their minimum wage.
In this 2010 study, Dube and his coauthors looked at restaurants across 316 county borders — and found no negative employment effects after the introduction of a higher minimum wage. In more recent research, he’s come up with new analytic methods...
VIGDOR: From the first runs of the data to today, the story has remained remarkably consistent: We see evidence that when the minimum wage goes up, hours decline.
These declines in hours worked were primarily driven by whether a business was busy or not.
VIGDOR: It’s periods of time where there’s not as much work, where it might make more sense to send people home, to not have as many people working.
So what’s the net effect for workers? Is the higher wage enough to offset the reduction in hours?...
VIGDOR: The estimates from our data suggest that when you raise the minimum wage by what Seattle did in the period we studied, which is about 34 percent, that the more experienced workers were seeing their total incomes go up on the order of 9 percent at most. So as a tool for delivering more money to these families, it does deliver some. But it’s a real leaky bucket. And the leaks come from the forms of cutbacks in hours... If you are looking for your first job, never been employed before, and therefore you’ve never been in our data, it looks like it’s become harder to find your way into our data... A teenage worker comes up to you on Thursday and says, “Can I have Saturday night off? You know, I want to hang out with my friends.” The manager says back, “No, I need you to work Saturday night.” And the teenager says back, “Well, I quit.” And what we heard over and over again from the business owners and managers is that with a higher minimum wage, I want someone experienced. I need someone who I can rely on, who I don’t have to train on the job, who I can expect to be reliable day in and day out. And the older workers who have the track record, they have the references that you can check, and when you get right down to it, they need the job. They have to have the job. And that’s going to lead them to be a more reliable worker than the kid who is sort of indifferent between showing up for work and playing Fortnight.
Not all teenagers, of course, would treat a job so cavalierly. But Vigdor’s research suggests that a higher minimum wage may lead employers to treat all teenagers as a risk. And what happens when a young person who wants to work can’t get in the workforce? Walter Williams, the prominent Black economist who died last year, argued that minimum-wage laws contributed to the high rate of unemployment among Black men, since kids who used to get their first job at 13 or 15, like he did, were now getting priced out of the market by employers. And then many of them, especially those with low education, would never enter the labor force...
NEUMARK: Two huge contributors to wage growth, why people earn more, are schooling and job experience. And there’s actually some evidence on that. I have a paper that looks at if you’re a teenager where minimum wages are high, how are you doing later, like 30 or so? And the answer is a little bit worse.
Libertarians are going to be claiming that the economists who are skeptical of the literature finding that the minimum wage is bad are ignorant and don't know basic economics, since they are very good at Economics 101
Optimal Minimum Wage Policy in Competitive Labor Markets - "This paper provides a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. We show that a binding minimum wage -- while leading to unemployment -- is nevertheless desirable if the government values redistribution toward low wage workers and if unemployment induced by the minimum wage hits the lowest surplus workers first. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations the low skilled labor that is subsidized by the optimal tax/transfer system, and improves upon the second-best tax/transfer optimum. When labor supply responses are along the extensive margin, a minimum wage and low skill work subsidies are complementary policies; therefore, the co-existence of a minimum wage with a positive tax rate for low skill work is always (second-best) Pareto inefficient. We derive formulas for the optimal minimum wage (with and without optimal taxes) as a function of labor supply and demand elasticities and the redistributive tastes of the government. We also present some illustrative numerical simulations."
The Minimum Wage and the Market for Low-Skilled Labor: Why a Decade Can Make a Difference - "It is helpful to take a step back to consider what economic forces will tend to mediate the minimum wage’s effects and why. I emphasize the relevance of inflation, productivity growth, and factors specific to employers’ demand for the skill sets common among low-skilled workers."
Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants - "We use price and wage data from McDonald's restaurants to provide evidence on wage increases, labor-saving technology introduction, and price pass-through by a large low-wage employer facing a flurry of minimum wage hikes from 2016-2020. We estimate an elasticity of hourly wage rates with respect to minimum wages of 0.7. In 40% of instances where minimum wages increase, McDonald's restaurants' wages are near the effective minimum wage level both before and after its increase; however, we also uncover a tendency among a large subset of restaurants to preserve their pay 'premium' above the minimum wage level. We find no association between the adoption of labor-saving touch screen ordering technology and minimum wage hikes. Our data imply that McDonald's restaurants pass through the higher costs of minimum wage increases in the form of higher prices of the Big Mac sandwich. We find a 0.2 price elasticity with respect to wage increases, which implies an elasticity of prices with respect to minimum wages of about 0.14. Based on a listing of all US McDonald's restaurants from 2010 to 2020, we also find no effects of minimum wages on McDonald's restaurant entry and exit."
The employment effect of minimum wage using 77 international studies since 1992: A meta-analysis - "Until the early 90’s a strong consensus existed among economists that minimum wage has negative employment effects. However, in 1992, the studies by Card (1992a) and Katz and Krueger (1992), who found insignificant and slightly positive effects, respectively, came to create a schism. Since then a divergence of views expressed by conflicting empirical studies exists in the literature. In our paper, we use a meta-sample of 77 international studies from 18 countries to investigate this relationship. Our analysis suggests that there is evidence of publication selection, but no effect of minimum wages on employment measures. Additionally, using 27 moderators as potential explanatory variables in order to explain the variation among studies, we find that study characteristics related to the data, the model specifications and the group concerned, diversify the degree of the effect."
Publication Selection Bias in Minimum‐Wage Research? A Meta‐Regression Analysis - "Card and Krueger's meta-analysis of the employment effects of minimum wages challenged existing theory. Unfortunately, their meta-analysis confused publication selection with the absence of a genuine empirical effect. We apply recently developed meta-analysis methods to 64 US minimum-wage studies and corroborate that Card and Krueger's findings were nevertheless correct. The minimum-wage effects literature is contaminated by publication selection bias, which we estimate to be slightly larger than the average reported minimum-wage effect. Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."
Does the UK Minimum Wage Reduce Employment? A Meta‐Regression Analysis - "The employment effect from raising the minimum wage has long been studied but remains in dispute. Our meta-analysis of 236 estimated minimum wage elasticities and 710 partial correlation coefficients from 16 UK studies finds no overall practically significant adverse employment effect. Unlike US studies, there seems to be little, if any, overall reporting bias. Multivariate meta-regression analysis identifies several research dimensions that are associated with differential employment effects. In particular, the residential home care industry may exhibit a genuinely adverse employment effect."
The lack of reporting bias suggests there is an ideological difference in British and American economists
The impact of the National Minimum Wage on employment: A meta-analysis - "Increases in the UK national minimum wage since 1999 had no negative employment effects on the overall UK labour market. Many of the effects following these increases were largely positive in terms of reducing pay inequality and improving the standards of living for low-paid workers. However, a further sub-group analysis of the UK labour market found some adverse negative employment effects on certain sub-groups as a result of increases in the national minimum wage. This included part-time employees who have endured some adverse negative employment effects compared to other labour market groups. Only during the recession in 2008 were young employees adversely affected, with a decrease in employment retention probabilities. However, it is hard to link this solely to increases in the national minimum wage, as other factors linked to the recession may have contributed to this decrease."
Germany’s minimum wage boosted productivity but hit small companies | Financial Times - "Germany’s introduction of a minimum wage in 2015 drove workers from small businesses to larger, more productive companies, helping to boost overall productivity at the expense of smaller organisations, new research has shown. The policy led to a 6.7 per cent increase in wages for workers who had previously been paid below the minimum, reducing inequality without any substantial effect on either unemployment or the employment rate, researchers at University College London and Nuremberg’s Institute for Employment Research found. This is broadly in line with previous studies. About a quarter of the increase could be explained by workers moving to larger companies that paid higher average wages, with more full-time jobs, a more skilled workforce and a lower level of staff turnover, according to the research... it also suggested that the minimum wage caused some small companies to go out of business — potentially leading to reduced competition and less choice for consumers... It also found that workers earned more at the expense of a longer commute — with men being far more likely to make this trade-off. After the minimum wage was introduced the average commuting distance increased by 1.5km for low-wage workers relative to the high-paid; men were more likely both to travel further and to switch to a higher paying company... In the UK, the Low Pay Commission found that although employers often intend to offset a higher wage bill by raising productivity, most fail to do so in practice, with some simply asking staff to work harder."
Meme - "But I was told this hamburger would be $38
Now Hiring. Starting at $17.00 per hour. Earn up to $19.50 per hour. apply at In-N-Out.com
Double-Double - $4.50
Cheeseburger - $3.15
Hamburger - $2.85"
Meme - "Minimum Wage Should Be $55.80 per hour
Bogota Books: Min Wage was $3.10/hr in 1980. The circulating money supply was $1 trillion in 1980. Today it is $18 trillion. 18x$3.10 = $55.80 per hour. Minimum Wage should be $55.80 per hour. No equivocation. No further discussion."
The left has very bizarre logic
Meme - Warren Gunnels: "The owner of Pizza Hut, Yum! Brands, made a $1.3 billion profit last year. In the past 2 years, it paid its CEO, David Gibbs, $44.25 million. Pizza Hut isn't laying off delivery drivers because it can't afford to pay drivers $20 an hour. It's doing it because of corporate greed."
"California Pizza Hut franchises announce layoffs of delivery drivers before new $20 minimum wage: report"
"New Fully Auto MCDONALD'S with NO EMPLOYEES! Has Opened in Denver."
As usual, left wingers don't understand how franchises work, and can't calculate how much the CEO's pay would be if divided among workers
Steve Horwitz - "My two cents on the $15 minimum wage discussion: One question is what it will do to workers in the relevant industries, and there I think it's right to say it will be an upward redistribution away from lower-skilled workers toward higher-skilled ones. Fewer people at the McD's counter, more in the backroom running the tech and making sure the kiosks are working. How large this effect would be isn't clear, but it won't be zero. But the other potential beneficiaries are owners, managers, and even workers in the industries that produce the capital that will likely replace labor. Yeah, you want to be making the kiosks for fast-food places, or the robots that will slowly replace hotel housekeepers, and the like. And this effect will be larger in poorer areas where $15 is even higher relative to the median wage. So yes, poorer/lower-skilled workers get the bottom rungs (and in some areas, many) of the employment ladder cut off while the owners of tech stocks (aren't they known as "capital"?) see the demand for their products grow. Capital gains, the modern day lumpenproletariat loses. I don't think that's really what the proponents of the $15 minimum wage want, but economic laws don't care about your feelings."
ELDER: Liberals love minimum wage though it hurts people they love - "the “groundbreaking” Card-Krueger study referred to in the New York Times 2019 editorial did, in fact, refute the consensus among economists that government-imposed minimum wage increases cause unemployment and higher prices and give added incentive to cut labour costs through automation. But about the study, Times columnist, economist and Nobel winner Paul Krugman, wrote: “Indeed, much-cited studies by two well-regarded labour economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages, but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive. Exactly what to make of this result is a source of great dispute. Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages ‘do,’ in fact, reduce employment. …” (Krugman now supports a minimum wage.) Other economists attacked the “groundbreaking study,” noting its researchers simply asked employers whether they hired more or fewer workers post-minimum wage hike. When, however, the same employers were asked to provide payroll records, it turned out the state with the higher minimum wage saw lower employment relative to the adjacent state that did not raise its minimum wage. This confirmed the consensus view that those hurt the most are the so-called unskilled, and that many of these would-be workers are the very black and brown liberals like the New York Times editorial board purports to care about. Ohio University economist Lowell Galloway examined the study and denounced it: “The Card-Krueger study is still cited because it is useful politically. … It still has legs because the minimum-wage notion is an idea that just will not die. You cannot put it to rest by any amount of evidence demonstrating its problems. Whenever people want to believe something strongly enough, any study that supports that belief — no matter how bad it is — will be accepted.”"
Meme - The Economy:
"Jobs that generate more than $15/hr in revenue" *houses higher up on beach*
"Jobs that generate less than $15/hr in revenue" *houses lower down on beach*
"$7/hr minimum wage" *beach*
How people think the minimum wage works
"Magic boats" *$15/hr Minimum Wage, floating on sea*
How the minimum wage actually works
*$15/hr Minimum Wage, underwater*
Meme - End Wokeness @EndWokeness: "California hiked the minimum wage to $20 per hour for fast food workers this week. You'll never guess what happened next.
March 29th prices
April 1st prices"
Damn greedy companies raising prices!
Major Burger King California Franchisee Adding Order Kiosks Over $20 Wage - "A major fast-food franchisee in California says he's rushing to roll out digital order kiosks as part of plans to cut costs over the state's new $20 minimum wage for fast-food workers. "We can't move fast enough on this," Harsh Ghai told Business Insider in an interview in early April. "We have kiosks in probably about 25% of our restaurants today," he said. "However, the other 75% are going to have kiosks in the next probably 30 to 60 days."... The new minimum wage, which applies to limited-service restaurant chains with at least 60 locations nationwide, came into effect on April 1. It's 25% higher than the state's general minimum wage of $16 an hour, though many cities and counties in California have set theirs higher... Some fast-food franchisees say that the higher payrolls could make it challenging to remain profitable. Many are desperately looking for ways to bring in more revenues and cut costs. Ghai said that in a typical year his restaurants would put up their prices by between 2% and 3% but that he's raised them by between 8% and 10% in the last 12 months. "The majority of that is going to get absorbed in the inflation of our food costs," he said. "So we're not even compensating for most of the labor costs that we're going to be experiencing with this legislation." And he doesn't want to raise prices any further. "I can't take more price than that," Ghai said. "Anything more than that is going to result in [a] significant impact to our traffic." Instead, he's taking a number of different measures to help offset the higher wage, including cutting workers' hours, eliminating overtime, pausing the development of new restaurants, and adding kiosks, he said... Ghai said that under his previous strategy, which included adding kiosks to new restaurants and ones he was remodeling, it would have taken him between five and 10 years to introduce kiosks to all his restaurants. "But now we are just going ahead and installing the kiosks in every single restaurant in response to the legislation to be able to balance some of these labor costs that are hitting us," Ghai said. "We've done the financial analysis and it makes more sense for us to spend the capital expenditure on the technology, and obviously when you're buying large amounts of the hardware, you obviously get it for a cheaper price as well," he continued."
WHO KNEW? Fast food restaurants are quickly replacing cashiers with kiosks after California's new $20 minimum wage - "Say goodbye to cashiers. Say goodbye to indoor dining in many places (who wants to pay someone to clean a dining room?)."
Time for California to ban self-ordering kiosks so greedy companies can't take advantage of workers!
CA Fast-Food Franchisees Fear Losing Diners to Chili's, Applebee's - "California recently raised its minimum wage for fast-food workers to $20, and franchisees raising prices to offset this fear they could send some diners into the arms of casual dining chains like Chili's and Applebee's. These chains aren't subject to the new minimum wage and, therefore, aren't expected to raise prices as much. This could potentially cause the price difference between fast-food and casual dining restaurants to shrink... Paul said that transactions at his restaurants "are already trending down." He speculated some of the diners could be going to casual dining restaurants like Chili's or Applebee's instead, which he said had deals that meant diners could have a sit-down meal for "a dollar or two more than us.""
They Make Minimum Wage. They Could Save Your Life. - "JENA: The first thing is she shows that higher minimum wages increase the earnings among the low-wage workers in the nursing homes. So that should make sense, right? That’s not surprising. The second thing she finds, which is I think a very interesting labor economics finding, but it has implications for health in a way that we’ll talk about in a second, is that those higher minimum wages lead people to remain employed by that same nursing home for longer. Now, here’s where the health stuff comes in. She finds that the minimum wage increases reduce the number of health inspection violations. The second thing that she finds, is that the fraction of nursing home residents with moderate to severe pressure ulcers — these are ulcers that happen usually on the bottom of the body because you’re laying in bed for long periods of time — falls, after the minimum wage increase goes into effect in certain facilities. And then the last thing that she finds is that nursing home mortality, so how likely are people who live in the nursing home to die — that probability falls in facilities where the minimum wage increases. So to summarize, we see a decline in inspection violations, we see a decline in things like pressure ulcers, and we see a decline in mortality. Those are three really interesting measures of healthcare outcomes or quality that all seem to improve when the low-wage staff in nursing homes are paid more.
Evidence on efficiency wages
People with disabilities are paid less than minimum wage - "Deepa Fernandes: “For decades, it has been legal for employers to pay people with disabilities less than the minimum wage. Even today, it's not uncommon for some workers to earn less than $3.50 an hour. “The Labor Department has been engaging with advocates on the harms of paying what's called a subminimum wage and what reform could look like. Joining us now is Marissa Ditkowsky, an attorney who focuses on disability economic justice with the National Partnership for Women and Families.”...
“But it is true that this was passed in 1938 and it's not relevant to our present-day standing of disability or work. It really views disabled work as less valuable even though productivity can vary among nondisabled workers too. “These really are capitalist beliefs about value that are rooted in sexism, racism, ableism. All of this is work that the National Partnership for Women and Families works on.”"
Left wingers really believe that everyone is equally capable and there's no link between pay and value/productivity. Clearly, if disabled employment goes down with an equal minimum wage for them, this will be discriminatory, oppression and proof that capitalism has failed
Obviously, productivity can only vary upwards, never downwards, and no one is less productive than the minimum wage
