3 ms·

This is proven false. When more people are given more money, they spend more on average [0] https://www.epi.org/publication/bp357-federal-minimum-wage-increase

by culi 3y ago

This is proven false. When more people are given more money, they spend more on average [0] https://www.epi.org/publication/bp357-federal-minimum-wage-increase/ https://www.epi.org/publication/bp357-federal-minimum-wage-i... [1] https://www.nber.org/system/files/working_papers/w25761/w25761.pdf https://www.nber.org/system/files/working_papers/w25761/w257... This is why—despite what your econ 101 models might lead you to believe—modern, data-driven economic research suggests that increases in the minimum wage almost always lead to increased GDP. Worth noting that there's also many other effects that may contribute to this observed impact[2] [2] https://www.piie.com/blogs/realtime-economic-issues-watch/higher-wages-low-income-workers-lead-higher-productivity https://www.piie.com/blogs/realtime-economic-issues-watch/hi...

MontyCarloHall 3y ago
The studies you link to only consider effects of raising the federal minimum wage. While their conclusions may be valid, minimum wage workers only constitute a tiny fraction (~1%) of the labor market. It is unclear how well the studies' conclusions would extrapolate beyond minimum wage workers.
- catboybotnet 3y ago
  Is that min. wage workers working at the min. wage, or workers within the min. wage zone? Fed. min. wage means jack all when states have their own, which is what we should be looking at.
  - culi 3y ago
    The first study looks at federal > Increasing the federal minimum wage to $10.10 by July 1, 2015, would raise the wages of about 30 million workers, who would receive over $51 billion in additional wages over the phase-in period. > Across the phase-in period of the minimum-wage increase, GDP would increase by roughly $32.6 billion, resulting in the creation of approximately 140,000 net new jobs (and 284,000 job years) over that period. 30 million out of 156 million workers is ~19.2% of the workforce. Not nothing and not to mention the knock-on effects it'll have for workers just barely above that The second link specifically analyzes both localized and federal minimum wage increases and explicitly tackles the question "Are the Effects Bigger When More Workers are Affected?" > The pattern of results for nominal consumption growth are similar—the direct spending response is somewhat stronger than when we do not control for the share of low-wage workers across locations, and there is evidence of a small but positive differential effect in areas with a higher share of low-wage workers The third is a collection of research looking at wage increases in general, not just minimum wage (contrary to OP's comment)
MoreSEMI 3y ago
If that’s true why not raise the minimum wage to 30$? Why not 100$?
- culi 3y ago
  I completely agree! The minimum wage is not automatically adjusted for inflation (unlike the $12.92 million estate tax exemption, the $17k gift tax exemption, etc). If we go as far as to adjust for productivity, then the minimum wage would stand at $26/hr, matching the relative value it had in 1968 — a time remembered as a golden era for the American economy
  - MoreSEMI 3y ago
    I meant to ask if the theory is true, it should work for any number, until marginal propensity to spend is equal amongst everyone. My point being that a theory should be general. One person could argue for 17$ while the other argues for 15$. I don’t see how one would using a general principle would decide which value is correct.

by culi 3y ago

MontyCarloHall 3y ago

The studies you link to only consider effects of raising the federal minimum wage. While their conclusions may be valid, minimum wage workers only constitute a tiny fraction (~1%) of the labor market. It is unclear how well the studies' conclusions would extrapolate beyond minimum wage workers.

catboybotnet 3y ago
Is that min. wage workers working at the min. wage, or workers within the min. wage zone? Fed. min. wage means jack all when states have their own, which is what we should be looking at.
- culi 3y ago
  The first study looks at federal > Increasing the federal minimum wage to $10.10 by July 1, 2015, would raise the wages of about 30 million workers, who would receive over $51 billion in additional wages over the phase-in period. > Across the phase-in period of the minimum-wage increase, GDP would increase by roughly $32.6 billion, resulting in the creation of approximately 140,000 net new jobs (and 284,000 job years) over that period. 30 million out of 156 million workers is ~19.2% of the workforce. Not nothing and not to mention the knock-on effects it'll have for workers just barely above that The second link specifically analyzes both localized and federal minimum wage increases and explicitly tackles the question "Are the Effects Bigger When More Workers are Affected?" > The pattern of results for nominal consumption growth are similar—the direct spending response is somewhat stronger than when we do not control for the share of low-wage workers across locations, and there is evidence of a small but positive differential effect in areas with a higher share of low-wage workers The third is a collection of research looking at wage increases in general, not just minimum wage (contrary to OP's comment)

MoreSEMI 3y ago

If that’s true why not raise the minimum wage to 30$? Why not 100$?

culi 3y ago
I completely agree! The minimum wage is not automatically adjusted for inflation (unlike the $12.92 million estate tax exemption, the $17k gift tax exemption, etc). If we go as far as to adjust for productivity, then the minimum wage would stand at $26/hr, matching the relative value it had in 1968 — a time remembered as a golden era for the American economy
- MoreSEMI 3y ago
  I meant to ask if the theory is true, it should work for any number, until marginal propensity to spend is equal amongst everyone. My point being that a theory should be general. One person could argue for 17$ while the other argues for 15$. I don’t see how one would using a general principle would decide which value is correct.