3 ms·

It was never "the conventional wisdom", as the article postulates, that raising wages would suppress job creation. It was a position held by a few people, which

It was never "the conventional wisdom", as the article postulates, that raising wages would suppress job creation. It was a position held by a few people, which suited those with the power and will to amplify.

pauldenton 3y ago
It prices low skill or younger workers out of the market Why hire a highschooler who never had a job before for 15$ an hour if you can get a guy with 7 years experience at the same price?
- 3np 3y ago
  Do you have anything to back that up or would it be some of the good old "common sense"?
imtringued 3y ago
In classical and neoclassical economics, lowering wages stimulates employment. If there is unemployment, it is because wages are above equilibrium prices and should be lowered. That is the current mainstream of economics but you are right. People who benefit from the status quo need a theory that justifies the status quo.
- panick21_ 3y ago
  Are you actually an economist with real insight about the current and the last decades of labor economics? Literally all economics practices, with the exception of a few hard core marxists, and a few others is Neoclassical. The people who wrote study are also neoclassical. Its seems you have a ridiculously oversimplified view of economics and the field.
- xyzzy123 3y ago
  If you model only the first-order effects (supply and demand of labour as a good, only) then sure, price goes up, it seems pretty clear that demand will go down. If you model the economy in more detail (with stocks and flows of money, and where money in different places has different propensity to be spent and so on) then you can start to talk about second or third order effects which may result in an increase in demand for labour if minimum wages rise. I think ideologically the problem is that simpler models align with "classical / neoclassical" thinking, while more detailed models - even though they may be better (of course this is not a given) - tend to be less convincing firstly because they're harder to explain, and secondly because they tend to incorporate more parameters (so you run the risk of "fitting an elephant"). Personally I have my doubts that complex economies are actually amenable to simple explanations that fit human intuition at all - perhaps we'd be better off treating the whole field more like the weather, fewer elegant theories / word explanations and a lot more computational brute force and observation. I guess a big problem with that is that economics is inherently political, and politics demands narrative.
mrjin 3y ago
If wage is the only variable, raising wages would for sure suppress job creation. But there are many more factors linked to job creation, e.g. surging demand of certain services/products. I'm not sure if I scanned the article too quickly and I missed some of the points, I never see a discussion around those.
laratied 3y ago
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pauldenton 3y ago

It prices low skill or younger workers out of the market Why hire a highschooler who never had a job before for 15$ an hour if you can get a guy with 7 years experience at the same price?

3np 3y ago
Do you have anything to back that up or would it be some of the good old "common sense"?

imtringued 3y ago

In classical and neoclassical economics, lowering wages stimulates employment. If there is unemployment, it is because wages are above equilibrium prices and should be lowered. That is the current mainstream of economics but you are right. People who benefit from the status quo need a theory that justifies the status quo.

panick21_ 3y ago
Are you actually an economist with real insight about the current and the last decades of labor economics? Literally all economics practices, with the exception of a few hard core marxists, and a few others is Neoclassical. The people who wrote study are also neoclassical. Its seems you have a ridiculously oversimplified view of economics and the field.
xyzzy123 3y ago
If you model only the first-order effects (supply and demand of labour as a good, only) then sure, price goes up, it seems pretty clear that demand will go down. If you model the economy in more detail (with stocks and flows of money, and where money in different places has different propensity to be spent and so on) then you can start to talk about second or third order effects which may result in an increase in demand for labour if minimum wages rise. I think ideologically the problem is that simpler models align with "classical / neoclassical" thinking, while more detailed models - even though they may be better (of course this is not a given) - tend to be less convincing firstly because they're harder to explain, and secondly because they tend to incorporate more parameters (so you run the risk of "fitting an elephant"). Personally I have my doubts that complex economies are actually amenable to simple explanations that fit human intuition at all - perhaps we'd be better off treating the whole field more like the weather, fewer elegant theories / word explanations and a lot more computational brute force and observation. I guess a big problem with that is that economics is inherently political, and politics demands narrative.

mrjin 3y ago

If wage is the only variable, raising wages would for sure suppress job creation. But there are many more factors linked to job creation, e.g. surging demand of certain services/products. I'm not sure if I scanned the article too quickly and I missed some of the points, I never see a discussion around those.

laratied 3y ago

[dead]