5 ms·

That's not a "simple fact." Minimum wage also transfers money to low-wage workers, who tend to spend every cent they're given, which acts as an economic boost

by mos1 17y ago

That's not a "simple fact." Minimum wage also transfers money to low-wage workers, who tend to spend every cent they're given, which acts as an economic boost for the area, and creates job. All the research I've seen shows that there are two conflicting effects, and even well-educated experts, who have spent long periods of time studying it, have a very hard time determining if the effect is net positive, negative, or neutral.

yummyfajitas 17y ago
It only transfers money to low wage workers if they still have a job. Fortunately, minimum wage cuts very few jobs; market rate is usually significantly higher than $7.25 an hour. However, when you pass a minimum wage higher than market rate, you do have significant effects. Take American Samoa, for example, which recently lost several thousand tuna canning jobs to the recent minimum wage hike: http://www.washingtonexaminer.com/opinion/columns/Ask-American-Samoa-how-minimum-wage-killed-jobs-82117032.html http://www.washingtonexaminer.com/opinion/columns/Ask-Americ...
- mos1 17y ago
  Yes, there are edge cases. Yes, if you jack it to levels that are substantially higher than market rates there are negative effects. None of that demonstrates that reasonable minimum wage laws, in the aggregate, cost jobs.
  - yummyfajitas 17y ago
    Exactly. When a minimum wage is higher than market rate, it costs jobs. When it is below market rate, it has no effect on jobs (or wages); it is essentially a law saying "keep doing what you are already doing". So tell me, what is the purpose of minimum wage laws?
    - mos1 17y ago
      The key word in my post was substantially.
      - yummyfajitas 17y ago
        If you jack it up to a level insubstantially higher than market rate, then the number of jobs lost will probably also be insubstantial (and statistically insignificant in most studies). I agree with this statement. So basically, an insubstantial increase in minimum wage hides the harm in statistical noise. On the other hand, the (also insubstantially small) benefits will be completely visible. Sounds like a political win to me: an invisible cost but a visible (albeit small) benefit.
        mos1 17y ago
        No. Once again you are misrepresenting the alternate hypothesis. Simply put, the economic effects of modest increases in the minimum wage floor are sufficiently complex that it is difficult to conclusively prove that there is a negative aggregate effect on unemployment. Further, a useful analysis of the matter would also consider effects on labor force participation, distribution of wages, the poverty rate, entitlement expenses, the cost of living, incentives to attain education, incentives to work, consumer expenditures, prices, etc, in addition to unemployment. Minimum wage laws cannot be usefully discussed by saying "increasing the minimum wage increase unemployment, it's that simple." Because it's not that simple. And even if that one variable did change that simply, it still would not be a useful policy analysis. That said, I no longer get paid for presenting or analyzing policy, and your personal opinions have no effect on me, so I'm going to go spend my time doing something more useful and profitable.
jswinghammer 17y ago
You can't sit through an econ 101 course in college where the effects of minimum wage aren't thoroughly discussed as being negative. It's just a fantasy to suggest that it isn't harmful to marginalized workers like minorities.
- prodigal_erik 17y ago
  Econ 101 gives a very easily understood prediction of huge, obvious disemployment effects which do not occur in reality. Something much more subtle, hard to measure, and not yet understood is happening instead.
- mos1 17y ago
  Your Econ 101 class must've been far more definitive than my Econ 600 classes. Econ 100 -- Keeping all other variables the same, if the cost of wages goes up, demand for workers goes down. Econ 600 -- When wages go up, the other variables do not remain the same, so a useful comparison must analyze the second-order effects to determine the change in aggregate demand for workers.

by mos1 17y ago

yummyfajitas 17y ago

It only transfers money to low wage workers if they still have a job. Fortunately, minimum wage cuts very few jobs; market rate is usually significantly higher than $7.25 an hour. However, when you pass a minimum wage higher than market rate, you do have significant effects. Take American Samoa, for example, which recently lost several thousand tuna canning jobs to the recent minimum wage hike: http://www.washingtonexaminer.com/opinion/columns/Ask-American-Samoa-how-minimum-wage-killed-jobs-82117032.html http://www.washingtonexaminer.com/opinion/columns/Ask-Americ...

mos1 17y ago
Yes, there are edge cases. Yes, if you jack it to levels that are substantially higher than market rates there are negative effects. None of that demonstrates that reasonable minimum wage laws, in the aggregate, cost jobs.
- yummyfajitas 17y ago
  Exactly. When a minimum wage is higher than market rate, it costs jobs. When it is below market rate, it has no effect on jobs (or wages); it is essentially a law saying "keep doing what you are already doing". So tell me, what is the purpose of minimum wage laws?
  - mos1 17y ago
    The key word in my post was substantially.
    - yummyfajitas 17y ago
      If you jack it up to a level insubstantially higher than market rate, then the number of jobs lost will probably also be insubstantial (and statistically insignificant in most studies). I agree with this statement. So basically, an insubstantial increase in minimum wage hides the harm in statistical noise. On the other hand, the (also insubstantially small) benefits will be completely visible. Sounds like a political win to me: an invisible cost but a visible (albeit small) benefit.
      - mos1 17y ago
        No. Once again you are misrepresenting the alternate hypothesis. Simply put, the economic effects of modest increases in the minimum wage floor are sufficiently complex that it is difficult to conclusively prove that there is a negative aggregate effect on unemployment. Further, a useful analysis of the matter would also consider effects on labor force participation, distribution of wages, the poverty rate, entitlement expenses, the cost of living, incentives to attain education, incentives to work, consumer expenditures, prices, etc, in addition to unemployment. Minimum wage laws cannot be usefully discussed by saying "increasing the minimum wage increase unemployment, it's that simple." Because it's not that simple. And even if that one variable did change that simply, it still would not be a useful policy analysis. That said, I no longer get paid for presenting or analyzing policy, and your personal opinions have no effect on me, so I'm going to go spend my time doing something more useful and profitable.

jswinghammer 17y ago

You can't sit through an econ 101 course in college where the effects of minimum wage aren't thoroughly discussed as being negative. It's just a fantasy to suggest that it isn't harmful to marginalized workers like minorities.

prodigal_erik 17y ago
Econ 101 gives a very easily understood prediction of huge, obvious disemployment effects which do not occur in reality. Something much more subtle, hard to measure, and not yet understood is happening instead.
mos1 17y ago
Your Econ 101 class must've been far more definitive than my Econ 600 classes. Econ 100 -- Keeping all other variables the same, if the cost of wages goes up, demand for workers goes down. Econ 600 -- When wages go up, the other variables do not remain the same, so a useful comparison must analyze the second-order effects to determine the change in aggregate demand for workers.