Editore"s Note
Tilting at Windmills

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April 11, 2006
By: Kevin Drum

MINIMUM WAGE....The LA Times has a pair of op-eds today about the minimum wage. The first is by a Republican state senator who supports a modest increase but opposes a Democratic proposal to index the minimum wage to inflation and accuses Dems of "political posturing." The second is by a Republican state senator who opposes any hike in the minimum wage and declares Democratic arguments in support of an increase to be the "soothing and smarmy rhetoric of leftist populism."

Some balance, eh? But speaking of smarmy rhetoric, you can tell when minimum wage opponents have completely run out of steam when they make the following argument:

If a simple legislative act increasing the minimum wage to $7.75 is all that is needed to improve the lot of the working poor by just a little, then why not raise it to $10 an hour and get them to the poverty level? For that matter, why not raise it to $50 an hour?

Good question, Tom. Likewise, if cutting taxes is good for the economy, why not get rid of them entirely? If three strikes send you to prison, why not one? If business is too tied up in regulations, why not ditch them all?

How tired and threadbare. If this kind of juvenile flailing is the best that opponents can come up with, there truly must not be any arguments left against raising the minimum wage. So how about if we stop listening to fatuous stuff like this and just give the working poor a helping hand instead? Raising the minimum wage a buck or two is the least we can do for them.

Kevin Drum 12:10 PM Permalink | Trackbacks | Comments (140)

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Comments

Al Gore is essentially the same as Bush. Nader 2000!

Posted by: gq on April 11, 2006 at 12:15 PM | PERMALINK

You fool! Only Bush can save the nation from endless reinvention with earth tones!

Posted by: Boronx on April 11, 2006 at 12:18 PM | PERMALINK

Reducto ad absurdum, Too loosely translated as 'We reduced it, and we are absurd.'

Posted by: MaryCh on April 11, 2006 at 12:21 PM | PERMALINK

Don't kid yourself, Kevin. An increase to $10.00 an hour would not make the difference for any working family. Increase it to $12 an hour - this family is still in trouble.

The author is making an obvious point - which is lost to you - that increasing the minimum wage will not pull families out of poverty.

Posted by: Frequency Kenneth on April 11, 2006 at 12:22 PM | PERMALINK

Isn't this more like increasio ad absurdum?

Posted by: Boronx on April 11, 2006 at 12:23 PM | PERMALINK

Minimum wages are bad because they raise the cost of labor and therefore employers hire less workers and we have a bigger unemployment rate. That's why minimum wages laws are bad.

Posted by: Al on April 11, 2006 at 12:27 PM | PERMALINK

Increasing the minimum wage to only 7.25 an hour will increase wages for about 7.3 million Americans. There are 37 million Americans living in poverty, many more just barely getting by. Even accounting for teenage workers who are otherwise well-off and workers who merely supplement other income with low-income work, a million or more Americans who are living in poverty and making less than 7.25 an hour would see an increase in their income by such a raise. Raise it more and more Americans see the benefit. The current 5.15 wage has been around since 1997, and if it's not raised by 2007, it will become the longest period of minimum wage stagnancy since the wage was introduced in 1938. Also, the wage is currently at its lowest buying power since the 1950s. Political posturing, indeed.

Posted by: Jeremy on April 11, 2006 at 12:27 PM | PERMALINK

Frequency Moron:

Poverty = lack of money.

Increase in wages = more money.

Now do you get it?

Idiot.

Posted by: jprichva on April 11, 2006 at 12:29 PM | PERMALINK

Geez, I'd hate to try and live on $7.75 an hour in California. Next door in Arkansas they are raising the min wage to $6.25, and that is freakin' *Arkansas*, not exactly a high cost of living state.

Posted by: MJ Memphis on April 11, 2006 at 12:30 PM | PERMALINK

"Raising the minimum wage a buck or two is the least we can do for them."

And never let it be said we didn't do the least we could do.

For Freq: When you're only makng $5.15 an hour, a raise to $7 and hour is a 20% increase in wages. For the working poor, that's a MAJOR difference. For most companies that employ minimum-wage workers, the overall payroll difference is minor.

Which leads us to Al's specious argument. I'm sure it's just his breathtaking ignorance that prevents him from realizing that EVERY SINGLE MINIMUM WAGE INCREASE has been met by this argument. And every time the minimum wage has gone up, overall unemployment has eithr remained unchanged or actually fallen. But I guess facts are just too inconvenient for people like you.

Posted by: Derelict on April 11, 2006 at 12:32 PM | PERMALINK

"because they raise the cost of labor and therefore employers hire less workers"

Naw, they just hire some illegal immigrunts to do the work. Then say americans WON'T do it.

Posted by: Lurker42 on April 11, 2006 at 12:33 PM | PERMALINK

Kevin said: "If this kind of juvenile flailing is the best that opponents can come up with, there truly must not be any arguments left against raising the minimum wage."

How about the notion that the government does not need to set wage rates? I doubt that millions will be thrown out of work with an increase and I doubt that an increase will have noticeable effect on poverty. A minimum wage increase does not occur in a vacuum. It will spur other changes that will blunt any possible spectacular effects one way or the other. The gov. just does not need to get involved.

Posted by: Brian on April 11, 2006 at 12:38 PM | PERMALINK

Brian:

Why not?

Bob

Posted by: rmck1 on April 11, 2006 at 12:40 PM | PERMALINK

increasing the minimum wage will not pull families out of poverty.

So, if we can't get them past the poverty line, we shouldn't try to help them at all? I don't know if it's possible to support a family on $10/hour. I do know it would be a lot easier to try to support a family on $10/hour than $7/hour.

Posted by: ibid on April 11, 2006 at 12:46 PM | PERMALINK

Bob:

Because the market will take of it.

Posted by: Brian on April 11, 2006 at 12:47 PM | PERMALINK

Wow, I didn't think it was possible to incorporate

a straw man (who's asking for a $50 minimum wage?)

and

a non-sequitir (you want to increase min. wage, therefore you don't want any min. wage limit whatsoever)

all into one hyperbolic argument.

Posted by: a fundie's fundamentalist on April 11, 2006 at 12:49 PM | PERMALINK

"Frequency Moron:
Poverty = lack of money.
Increase in wages = more money.
Now do you get it?
Idiot."

Here's another couple of equations for you:
increased minimum wage = fired workers
no job = no money

And before you dismiss this the ravings of a conservative troll, consider that many businesses cut costs by firing workers and shifting more work onto the employees they keep (preferably in unpaid overtime).

I'm all for wokers getting paid more money, so I hope they do raise the minimum wage. I'll be interested in seeing if jobs do start disappearing though. If that's the case, then the wage hike will obviously have failed to improve the lot of workers.

Posted by: Tom on April 11, 2006 at 12:49 PM | PERMALINK

The author is making an obvious point - which is lost to you - that increasing the minimum wage will not pull families out of poverty.

Posted by: Frequency Kenneth on April 11, 2006 at 12:22 PM

No, but it sure makes poverty more bearable. You've obviously never been there Ken or you would write drivel like that. Oregon voters passed an initiativea decade ago that raise the minimum wage and indexed it to inflation. It passed despite a multimillion dollar opposition campaign by the usual suspects.

The result? The number of Oregonians needing two or more jobs to make it actually dropped.

Nothing wrong with Kevin's reasoning.

The minium wage is a floor under all wages. Raise the floor and it shores up everyone's wages

Posted by: Russell Aboard M/V Sunshine on April 11, 2006 at 12:51 PM | PERMALINK

The author is making an obvious point - which is lost to you

I believe the expression is "lost upon you," but if your English is anything like your logic, Frequency, then I'm afraid there is little hope for you.

Posted by: a fundie's fundamentalist on April 11, 2006 at 12:51 PM | PERMALINK

Actually, why not raise it to $10/hr and bring people up to the poverty level?

Until then we should all get badges. People supporting minimum wage increases will be allowed to buy gas, produce, eat from clean dishes when they go out, etc. People who don't will have to raise their own food, take care of their own children, was their own dishes when they want to go out to eat. In the odd workings of my mind, that seems fair.

The point is that a lot of the jobs that don't pay so well are just as if not more important to the operations of a business than the people who are sitting at the top and paid the most. What would a dining experience be like if there were no one there to wash dishes? Its time to start paying people and you could even say its time to start paying people what they're worth.

Posted by: Scooter on April 11, 2006 at 12:53 PM | PERMALINK

So, if we can't get them past the poverty line, we shouldn't try to help them at all?

That's right. We only gave the richest Americans a tax break because we were able to leave them with hundreds of thousands of dollars more each year. Wouldn't have been worth it if we couldn't have at least provided them with another vacation home.

If we can't get those minimum wage workers a house in the suburbs and two cars, one a recent model with GPS, just forget it. They might as well be dead.

Posted by: cowalker on April 11, 2006 at 12:53 PM | PERMALINK

Note to all Wingnuts:

EVERY time there has been an increase in minimum wage in this country, the Republicans have cried bloody murder and claimed that this wage adjustment would lead to mass firings, businesses closing, etc. etc.

And every time, they've been wrong.

And why, oh why, do you have such a problem with poor people making a buck or two more per hour, but no problem whatsoever with CEOs that earn hundreds of times more than their average employees, even when these CEOs are monumentally bad or even mendacious (Ken Lay)?

Why?

Posted by: a fundie's fundamentalist on April 11, 2006 at 12:55 PM | PERMALINK

Why are you even letting the straw man of a $10 minimum wage into the debate? The only person who's talking about raising the minimum wage to $10 is a state senator who could use some debating lessons.

The Democrats want to index the minimum wage to inflation, and I can't understand why the conservo-trolls are against this. Why not let the market determine what the minimum wage should be? Wouldn't this be added incentive to keep inflation low? Please explain.

Posted by: mmy on April 11, 2006 at 12:57 PM | PERMALINK

Some balance, eh?

Some "liberal" media, eh?

Posted by: Ringo on April 11, 2006 at 12:58 PM | PERMALINK

That sliding slope reductio is the absolute shitiest refuge of scoundrels. We always have to make judgments about how much to spend on just about anything! It could be defense, it could be space, it could be what tax rate to apply, etc. This is trash, and the LAT is disgraced by its lack of balance (why is that the case?)

Also, having something keep up with inflation is not raising it anyway, since dollars are not constant units of measure.

Posted by: Neil' on April 11, 2006 at 12:59 PM | PERMALINK

Brian,
The 'market' is what is drawing in illegal workers to this country by the millions, because 3 bucks an hour is more than 3 bucks a day. The same dynamic works internally. Without a gov't imposed minimum wage, this increased labor supply would drive actually paid wages below current minimums. As things now are, not only are the illegals being exploited by employers, many Americans are being subjected to illegal labor practices (unpaid overtime, working off the clock to keep a job).

The reason that no previous raise in the minimum wage resulted in increased unemployment is that the wage set has always been at or below the aggregate market minimum. If it were set at, say, $20/hour, then one would expect it to effect employment. What a legal minimum does is help prevent the formation of 'company towns' in which every potential employer forms a cartel refusing to pay more than X dollars. But unenforced laws are worse than useless; they encourage criminal behavior by showing that there is no penalty for it.

Posted by: nightshift66 on April 11, 2006 at 12:59 PM | PERMALINK

CEO's have been getting double digit (percnetage) raises for several years now and none of them have been laid off (not counting indictments). Let's just say that to be equitable the minimum wage should rise at the same percentage as CEO compensation.

Posted by: tomeck on April 11, 2006 at 1:02 PM | PERMALINK

The minimum wage and union wages. As most union liberals realize there wages are directly effected by the minimum wage. Most union pay negotiations use a formula i.e. 2 1/2 * the minimum wage when calculating how much the union wages should be. Thus it you move the minimum wage up $1 then the union employee will get $2.50 raise. The unions and libs could care less about the minimum wage, as it does not effect them, they care about the dollar amount of the minimum wage and how it effects them. This is why unions are loossing stature and members quicker than the democratic party, as was just shown when the big unions split at their last convention. So please don't insult us with how much unions care about the poor working class, it is all about what it will do for them.

Posted by: daveyo on April 11, 2006 at 1:04 PM | PERMALINK

Slightly off the subject but wouldn't it nice if a "rule" could be put in place that whenever a member of one party accusses the other of "political posturing" or "playing politics" or whatever, they are banned from all media coverage for set period of time. It's such a lame and weak-minded argument.

Posted by: Round Goby on April 11, 2006 at 1:04 PM | PERMALINK

"I'll be interested in seeing if jobs do start disappearing though."

It is maddening. One would be forced to assume from the regular right wing comments on minimum wages that the idea had just been conceived. "Oh my, who knows what effects this new 'minimum wage' will have? Such an unprecedented thing is completely unpredictable!"

They are raised all the time! Every few years some state raises thier minimum wage. It has happened dozens of times!

Hold on to your hat! I would like to make the BOLD PREDICTION that this minimum wage increase will work out about the same as the many others in the past.

Posted by: jefff on April 11, 2006 at 1:05 PM | PERMALINK

"Bob:

Because the market will take of it."

How do you know that? Taken to the extreme, we wouldn't need any labor laws, since the market will set the optimal price (including things like provided working conditions, overtime, holidays, accident compensation) for labor. If you are a principled free marketist/libertarian, I expect that you will endorse this.

Two things to consider though, are that the "market" is an abstract, theoretical construct that rarely exists in practice (how many cosumers do you know that have perfect information about their choices?). Second the "optimal" price for labor may not be one that provides an acceptable quality of life for a lot of people, or even results in the economy being healthy in the long-term.

Posted by: Tom on April 11, 2006 at 1:05 PM | PERMALINK

The relationship between the minimum wage can be described by a curve which is like an inverted Laffer curve. Consequently neither the shape of the curve nor the number of minima it has is known, but its existence proves that the Republican position on the subject is absolutely correct. This simple concept is clear to all except the liberals for whom the words like abscissa and ordinate appear to be appopriate names for gay bars in San Francisco.

Posted by: tbrosz on April 11, 2006 at 1:14 PM | PERMALINK

"all into one hyperbolic argument."
Posted by: a fundie's fundamentalist

Should we be worried about the space-time continuum?

Posted by: Lurker42 on April 11, 2006 at 1:15 PM | PERMALINK

"all into one hyperbolic argument."
Posted by: a fundie's fundamentalist

Should we be worried about the space-time continuum?

Posted by: Lurker42 on April 11, 2006 at 1:16 PM | PERMALINK

When I started working, way back in the 1960s, the minimum wage was $1.65 which, by all the cost of living calculators I've seen, would be rougly equivalent to about $8 per hour today. My first real, over-the-table, hourly wage job paid minimum wage for the first 90 days and then shot all the way up to $2.15/hour, a 30% increase, and boy o boy did I feel rich. It was, for a 17 year old, a fair shake and I appreciated it. Don't see why workers today shouldn't get a fair shake too.

Obviously, with the minimum wage all the way up to $5.15/hour, I've lived through several increases in the minimum wage and have yet to see any major economic repercussions. Never heard of any significant layoffs because sudden increased labor costs. What I have heard is the backpedaling that you will hear this time around too. "No, no, no...I never said that people would be laid off, I said that employers would think twice about bringing on new workers and creating new jobs." Well, if all of a sudden a lot of people who have been working two jobs to make ends meet, can suddenly pull those ends together with only a job and a half, there will be employers out there looking to hire people to take up the slack. The arguments for an increased minimum wage actually increasing the labor force are even more compelling than the arguments the other way. You put more cash into the hands of people at the poverty level and all they do is recycle that cash right into the economy, buying goods and services that encourage employers to hire more workers.

Inflationary pressures? Well, given the increases in productivity that we have seen since the last time the minimum wage was increased, there should be no significant inflationary pressure. Of course some CEOs might have to forgo their double digit increases in compensation this year, but what the hey, everyone should take a turn at suffering. And the working stiff has been getting stiffed long enough.

Posted by: Majun on April 11, 2006 at 1:19 PM | PERMALINK

Chew on this: critics often complain that "increasing" (actually, just keeping it up with inflation) the minimum wage will inhibit employment. Maybe, but Hmmm.... The Fed raises interest rates in part to inhibit employment when the economy is supposedly heating up too much. Well, raise the minimum wage a good chunk and prevail on them to keep interest rates low.

Posted by: Neil' on April 11, 2006 at 1:23 PM | PERMALINK

As long as outsourcing and insourcing of low-wage labor continues, poverty will climb no matter what the mininum wage is. Trying to help low wage American citizens by stopping the flow of people from third world companies seems to be a reasonable cause to me. The basic laws of supply and demand have a much greater effect on low-wage America than minimum wage laws do.

That's why the immigration debate is so hot. Once a guest worker legalization plan is implemented corporate America will simply recruit more illegals. Wage isn't the main issue, as anyone who employs people knows. Besides rotten working conditions, it's workers' compensation, overtime labor laws, unemployment that's the killer. Complying with these laws costs a legitimate law abiding company huge amounts of money and they will continue their efforts to bypass these laws if the ignorant american public lets them.

Posted by: undersiege on April 11, 2006 at 1:29 PM | PERMALINK

"The relationship between the minimum wage can be described by a curve which is like an inverted Laffer curve."

The relationship between the minimum wage and what?
Wasn't the Laffer curve parabolic? If so, then number of minima will be pretty obvious, even to liberals.

Posted by: Tom on April 11, 2006 at 1:31 PM | PERMALINK

About three percent of hourly employees work for the Federal minimum wage, or less.

The number of people working for minimum wage in general will be higher, since some populous states have higher state minimum wages, but I suspect the total will not be that much higher.

You can look at the rest of the BLS link to find the characteristics of minimum wage workers.

The minimum wage controversy is largely driven by unions, which use it to drive their own wages upward.

Of course increasing the minimum wage will change employment levels, particularly at the low end. It's particularly hard on entry-level workers and teenagers. The Card/Krueger study, often cited in this argument, has some holes in it.

Indexing the minimum wage to inflation would create a classic positive feedback loop, like connecting your car's accelerator to the speedometer, and nobody who actually knew anything about economics would suggest it.

Posted by: tbrosz on April 11, 2006 at 1:33 PM | PERMALINK

""Bob:

Because the market will take of it."

How do you know that? Taken to the extreme, we wouldn't need any labor laws, since the market will set the optimal price (including things like provided working conditions, overtime, holidays, accident compensation) for labor. If you are a principled free marketist/libertarian, I expect that you will endorse this."
-Tom

Sounds good to me.

Posted by: Brian on April 11, 2006 at 1:35 PM | PERMALINK

The problem with liberals is that they want to create a welfare society that fosters government dependency. Conservatives, on the other hand, believe in hard work and earning your way to a decent wage. That's why conservatives support the minimum wage - as opposed to welfare, it rewards work and provides dignity, especially for those hard working families trying to raise children.

What, conservatives don't support the minimum wage? Oh, um, please ignore what I just said.

Posted by: Crossed Talking Points on April 11, 2006 at 1:50 PM | PERMALINK

Wouldn't beefing up the earned income tax credit be the same helping hand for the working poor, but more equitably distributed, so it doesn't harm small-business owners and give teenagers working at the mall some extra cash they don't really need?

Posted by: MDS on April 11, 2006 at 1:52 PM | PERMALINK

A minimum wage increase just forces businesses to agressively recruit illegal aliens. Forging papers, digging tunnels under the border, paying off enforcement agencies. Democratic politicians may have their heart in the right place put oppressive government regulations always have their unintended consequences.

Posted by: tbrosz on April 11, 2006 at 1:52 PM | PERMALINK

"What, conservatives don't support the minimum wage? Oh, um, please ignore what I just said."

I think conservatives believe that it's not the government's job to pick winners and losers. Rather, the market will reward people according to their merits. So there is no philosophical contradiction in opposing minimum wage. But I should probably let the conservatives here speak for themselves.

Posted by: Tom on April 11, 2006 at 1:55 PM | PERMALINK

The irony is that mimimum wage laws don't affect employment as long as they are set below what the labor market is generally providing anyways. When the minimum wage is set at a point where it would actually force employers to pay more than what they are generally paying, however, then the people the law is ostensibly desgined to help will actually be harmed.

The conceit possessed by those who support labor price fixing by government is that a majority of 535 people plus one sitting in Washington D.C. can consult "experts", and then optimally price labor for several dozens of millions of individuals working in an extraordinarily complex and diffuse economy, without negative unintended consequences.

This is the same sort of thinking that results in air travel being an unaffordable luxury for most citizens well past the time when it should be a commodity that nearly anyone can enjoy, or how people paid a lot more goods that were transported by trucks. The difference is that poor laborers can't lobby as effectively as airline or trucking executives who seek to erect barriers to entry, and thus stifle competition, thus they aren't able to raise prices in the manner of executives in price-regulated industries can. Therefore, the price of sweeping a parking lot in Topeka doesn't climb to $25/hour, in the manner that flying from Minnesota to Florida once cost $800 dollars (inflation adjusted), no matter when one purchased a ticket.

Minimum wage laws will be forever with us as long as they don't really attempt to accomplish hardly anything, except to make some people feel good about themselves. If such laws are actually ever used to really attempt to benefit a substantial amount of low income workers, however, then those who still fervently believe in the efficacy of central planning will simply relearn lessons
that transportation price fixing, by the state,
among other examples, has already provided. At this point, however, labor price fixing is pretty benign, even with most of the proposals on the table.

Posted by: Will Allen on April 11, 2006 at 2:04 PM | PERMALINK

Rather, the market will reward people according to their merits. So there is no philosophical contradiction in opposing minimum wage.

The Market died for our sins. Have faith in the Market.

Posted by: Crossed Talking Points on April 11, 2006 at 2:05 PM | PERMALINK

"Of course increasing the minimum wage will change employment levels, particularly at the low end.

Indexing the minimum wage to inflation would create a classic positive feedback loop"

If raising a minimum wage results in increased unemployment and increased wage levels for some workers, then the net influence on general wage inflation is ambiguous at best.

It's also unclear that an inflation indexed minimum wage would cause runaway inflation. Monetary theory defines inflation as occurring when the money supply grows at a faster rate than GDP. Increasing the purchasing power of the working poor could conceivably spur economic growth by increasing demand.

Posted by: Tom on April 11, 2006 at 2:08 PM | PERMALINK

"Because the market will take of it."

Here's the problem with that argument: those employers that hire minimum or close to minimum wage labor (like Walmart) often have market power in the purchase of labor (monopsony power). This is the same idea as a monopoly on the selling side, and why we have historically regulated electric power distribution.
Under these circumstances, increasing the minimum wage can improve societal welfare by addressing a market inefficiency, and in some cases actually increase employment.

Posted by: smuggler on April 11, 2006 at 2:08 PM | PERMALINK

The relationship between the minimum wage and poverty rate can be described by a curve which is like an inverted Laffer curve. Consequently neither the shape of the curve nor the number of minima it has is known, but its existence proves that the Republican position on the subject is absolutely correct. This simple concept is clear to all except the liberals for whom the words like abscissa and ordinate appear to be appopriate names for gay bars in San Francisco.

Posted by: tbrosz on April 11, 2006 at 2:10 PM | PERMALINK
I think conservatives believe that it's not the government's job to pick winners and losers.

Conservatives oppose government contracts? Conservatives oppose criminal law? Conservatives oppose government-run courts in general? Conservatives oppose selective immigration criteria?

Conservatives believe it is the government's job to pick winners and losers plenty, they just get upset when they aren't the chosen winners.

Posted by: cmdicely on April 11, 2006 at 2:12 PM | PERMALINK

Low wages help big corportations stay competitive in world markets, but wages sufficiently low for corporations do not provide a living wage for individuals. One facet of presidential leadership would be to address and debate this problem, but we won't get that with the Bush family idiot.

Posted by: Hedley Lamarr on April 11, 2006 at 2:13 PM | PERMALINK


KEVIN DRUM: ..give the working poor a helping hand . . . Raising the minimum wage a buck or two is the least we can do for them.

This is elitist dogshit. Give them? A helping hand? How generous you think yourself. How charitable. As if you'd be giving anything. Even better for you, this won't happen, so you can appear generous with complete lack of risk that you'll have to give anything. With long-suffering toil, backbreaking repetition, mind-numbing monotony and soul crunching indignity, the poor give to the rich every damn day of their lives--as well as to pompous, aspiring members of the middle class. Though they mock and abuse them, the rich exist by virtue of the poor. The poor are asked to slave and die for the rich and to endure their insults and demands for worship. The market? It is nothing but another construct of the rich to justify their exploitation of the poor. Do you suppose God practices capitalism in heaven? Government is man-made also. It can as well be just as not. Minimum wage, you say? Another buck or two? A few more crumbs of cake? Keep it! It's time for workers to take what is rightfully theirs: A living wage for all. If everyone got $30,000/year do you really think it would cause doctors or lawyers or politicians or pundits to give up their padded chairs to stoop over a skid somewhere piling boxes on it at an ever faster, productivity increasing pace?


Posted by: jayarbee on April 11, 2006 at 2:14 PM | PERMALINK

Every time I visit this blog, I know I'll find two things:

Kevin (or a guest) expressing frustration at the venality, stupidity, or ignorance of the nominal conservatives of the world; and

Al and his ilk saying something stupid.

Since the Federal minimum wage hasn't been raised since 9/1/97, while the CPI (1982-84 = 100) has risen from 161.2 to 198.7 over the same period, it's hard to ascribe "increases in unemployment" to the existence of the minimum wage. It's even harder when you realize that, adjusted for inflation, the minimum wage (historical values available at http://www.dol.gov/esa/minwage/chart.htm) peaked at$4.67 per hour in February 1968 and has since declined to its current value of $2.59 per hour. Deterrent to hiring, my butt.

"Learn the facts. Then try on the stories like clothes."

Posted by: Uncle Jeffy on April 11, 2006 at 2:16 PM | PERMALINK

""Because the market will take of it."

Here's the problem with that argument: those employers that hire minimum or close to minimum wage labor (like Walmart) often have market power in the purchase of labor (monopsony power). This is the same idea as a monopoly on the selling side, and why we have historically regulated electric power distribution.
Under these circumstances, increasing the minimum wage can improve societal welfare by addressing a market inefficiency, and in some cases actually increase employment."
-smuggler

Workers are free to sell their labor to anyone. They are not serfs bound to some piece of land. I think you may be seeing a market inefficiency that does not exist. As for Walmart, don't they average paying about $3 above the minimum wage?

While I don't much buy the doomsaying about job losses that would accompany a min. wage increase, I don't know how it would increase employment.

Posted by: Brian on April 11, 2006 at 2:20 PM | PERMALINK

(1:19pm) "Well, given the increases in productivity that we have seen since the last time the minimum wage was increased, there should be no significant inflationary pressure."

Make that "given the increases in productivity BECAUSE the minimum wage was increased..." and you have it right.

Productivity goes up. Real incomes go up. Firms educate their employees. More tax revenues. More growth. Less inflation.

A real magic lever. $50 an hour could actually make very good sense.

Posted by: Fast Pete on April 11, 2006 at 2:20 PM | PERMALINK
The irony is that mimimum wage laws don't affect employment as long as they are set below what the labor market is generally providing anyways.

This isn't irony; the same thing is true of most laws. Murder laws only work because they punish killing in conditions most people wouldn't kill anyway. Laws generally work where they act to implemented generally accepted social norms and constrain the small minority that would otherwise defect from those norms, rather than trying to prohibit behavior most would engage in in the absence of law (speed limits, not so effective at changinge behavior), though in those cases a prohibition plus fine has historically been a frequent de facto tax, rather than a real prohibition.

This isn't really an argument against minimum wages, or increasing them to remain approximately the same in constant dollars.

Posted by: cmdicely on April 11, 2006 at 2:20 PM | PERMALINK

No, jayarbee, but it would cause a lot of employers to not hire people that they are currently employing. Not every task is worth $14 an hour, and those tasks will not get done under your proposal, at least not by human beings. Your proposal would greatly improive the lot of software engineers, skilled machinists, and a lot of other people already making more than $14 dollars an hour, however. Somehow I don't think that is your intent.

Posted by: Will Allen on April 11, 2006 at 2:23 PM | PERMALINK

(1:19pm) "Well, given the increases in productivity that we have seen since the last time the minimum wage was increased, there should be no significant inflationary pressure."

Make that "given the increases in productivity BECAUSE the minimum wage was increased..." and you have it about right.

So. Productivity goes up. Real incomes go up. Firms educate their employees. And they invent more. Less imports. More exports. More growth. Less inflation.

A real magic lever. $10-$20 an hour could actually make very good sense. From all political points of view.

Posted by: Fast Pete on April 11, 2006 at 2:25 PM | PERMALINK

Site is loading slow today. Sorry for the (almost) duplicate comment. Seemed like nothing was happening.

Posted by: Fast Pete on April 11, 2006 at 2:27 PM | PERMALINK

"Workers are free to sell their labor to anyone. They are not serfs bound to some piece of land. I think you may be seeing a market inefficiency that does not exist. As for Walmart, don't they average paying about $3 above the minimum wage?

While I don't much buy the doomsaying about job losses that would accompany a min. wage increase, I don't know how it would increase employment."

Brian,
Sounds like you need to learn some econ.
The possibility I raised is basic economics, and you can find a discussion of it in some of the more popular intermediate microeconomics texts, like Pindyck and Rubinfeld or Varian.

Posted by: smuggler on April 11, 2006 at 2:28 PM | PERMALINK

"Consequently neither the shape of the curve nor the number of minima it has is known, but its existence proves that the Republican position on the subject is absolutely correct."

Doesn't it prove the opposite?
The Laffer curve is typically regarded as being an inverted parabola. I assume the Republican position you refer to is the abolition of the minimum wage. If poverty is a parabolic function of minimum wage, then abolition would result in greater poverty. Of course, one could argue that greater poverty is appropriate, as that is the true market result and will spur people to increase their value as laborers, etc. But I don't that's what you are arguing.

Posted by: Tom on April 11, 2006 at 2:28 PM | PERMALINK

Haven't you heard, there is no such thing as "working poor". Why, look, they even have COLOR TVs!

(Figured it would only be a matter of time before some liberloon dropped this particular turd so here it is.)

Posted by: R.Porrofatto on April 11, 2006 at 2:29 PM | PERMALINK
Indexing the minimum wage to inflation would create a classic positive feedback loop, like connecting your car's accelerator to the speedometer, and nobody who actually knew anything about economics would suggest it.

I can see what you're saying, but I'm skeptical. This tends to contradict what you said above - if so few people actually receive the minimum wage, I have trouble believing that periodic inflation-driven wage increases for this apparently limited group of poor people would have that much of an impact on the larger economy. Though it would have a substantial positive impact on their personal finances, of course.

Two states - this lifelong northwesterner is proud to say that's Oregon and Washington - have indexed their min. wages to the consumer price index. (Vermont has too, but the law doesn't kick in till 2007) Wonder if they've caused inflation there?

Posted by: cdc on April 11, 2006 at 2:29 PM | PERMALINK

I wonder if those who worry that a minimum wage makes the cost of labor unaffordable support universal health care.

After all, if companies did not have to spend all those thousands on health care, I'm sure they could afford to hire more people, and maybe even afford to pay more, too.

Posted by: moderleft on April 11, 2006 at 2:30 PM | PERMALINK

It is ironic, cmdicely, to the extent that those who support minimum wage laws do so out of belief that such laws actually benefit a substantial percentage of wage-earners. In my experience, many such supporters have that belief.

In any case, discussing labor price fixing proposals without discussing immigration policy is pointless. Not that I have any brilliant proposals for immigration policy.

Posted by: Will Allen on April 11, 2006 at 2:32 PM | PERMALINK

Increasing the minimum wage does not reduce employment rates. this has been demonstrated with every minimum wage increase.

It does not affect a large number of workers directly, because most low wage places hire at a buck or buck and a quarter higher than minimum (to try to reduce turnover) or they don't care a bit about the skill of their workforce and hire illegals or under the table for a buck or two less than the minimum wage. Raising the minimum wage will raise the wages of nearly everyone at the bottom of the payscale, to keep this dynamic in play, except for the illegals. Arresting business owners who hire illegals would stop that dead in its tracks.

Raising the minimum wage can increase inflation, as prices compensate for increased cash availability, and business pass along the cost of labor. This is much less than a direct relationship, because worker productivity is very high in the US, and because the increase in money in the lower and working classes gets immediately spent on more goods and services.

A healthy economy is driven by the spending of the lower and middle classes. If you put more money into the bottom, it all gets spent, locally or in the US. Money never trickles downward, it flows upward, and as it aggregates into fewer hands its power to draw money towards it gets increased. It is just like gravity. It is why unfettered free markets fail, because it inevitably leads to a black hole of superwealth monopoly, destroying all of the benefits of the competion in a free market. We have seen this in our past, and its why the regulatory and wealth redistribution apparatus exist - the system can't survive without it.

Put more money into the upper class, and it just gets sucked away into meaningless stock price increases, real estate price increases, offshore spending schemes, and ostentatious displays of wealth that rarely reflect any real value. Put it into the middle and lower classes, and it fuels the engine of the economy while raising the overall standard of living.

This is also why the canard of "tax increases on the rich hurt the economy" is such bullshit, and has been consistently disproven by reality. Almost every dollar the government takes in is spent right back out into the economy.

Obviously there is a point where it can remove the incentives of struggling for wealth, but that point is way above 50% on the top tax bracket.Paying 50% on your second million dollars of income is still so much better than $100,000 total income a year - the incentives are still in place.

Posted by: Mysticdog on April 11, 2006 at 2:36 PM | PERMALINK

Increasing the minimum wage does not reduce employment rates. this has been demonstrated with every minimum wage increase.

It does not affect a large number of workers directly, because most low wage places hire at a buck or buck and a quarter higher than minimum (to try to reduce turnover) or they don't care a bit about the skill of their workforce and hire illegals or under the table for a buck or two less than the minimum wage. Raising the minimum wage will raise the wages of nearly everyone at the bottom of the payscale, to keep this dynamic in play, except for the illegals. Arresting business owners who hire illegals would stop that dead in its tracks.

Raising the minimum wage can increase inflation, as prices compensate for increased cash availability, and business pass along the cost of labor. This is much less than a direct relationship, because worker productivity is very high in the US, and because the increase in money in the lower and working classes gets immediately spent on more goods and services.

A healthy economy is driven by the spending of the lower and middle classes. If you put more money into the bottom, it all gets spent, locally or in the US. Money never trickles downward, it flows upward, and as it aggregates into fewer hands its power to draw money towards it gets increased. It is just like gravity. It is why unfettered free markets fail, because it inevitably leads to a black hole of superwealth monopoly, destroying all of the benefits of the competion in a free market. We have seen this in our past, and its why the regulatory and wealth redistribution apparatus exist - the system can't survive without it.

Put more money into the upper class, and it just gets sucked away into meaningless stock price increases, real estate price increases, offshore spending schemes, and ostentatious displays of wealth that rarely reflect any real value. Put it into the middle and lower classes, and it fuels the engine of the economy while raising the overall standard of living.

This is also why the canard of "tax increases on the rich hurt the economy" is such bullshit, and has been consistently disproven by reality. Almost every dollar the government takes in is spent right back out into the economy.

Obviously there is a point where it can remove the incentives of struggling for wealth, but that point is way above 50% on the top tax bracket.Paying 50% on your second million dollars of income is still so much better than $100,000 total income a year - the incentives are still in place.

Posted by: Mysticdog on April 11, 2006 at 2:37 PM | PERMALINK

Increasing the minimum wage does not reduce employment rates. this has been demonstrated with every minimum wage increase.

It does not affect a large number of workers directly, because most low wage places hire at a buck or buck and a quarter higher than minimum (to try to reduce turnover) or they don't care a bit about the skill of their workforce and hire illegals or under the table for a buck or two less than the minimum wage. Raising the minimum wage will raise the wages of nearly everyone at the bottom of the payscale, to keep this dynamic in play, except for the illegals. Arresting business owners who hire illegals would stop that dead in its tracks.

Raising the minimum wage can increase inflation, as prices compensate for increased cash availability, and business pass along the cost of labor. This is much less than a direct relationship, because worker productivity is very high in the US, and because the increase in money in the lower and working classes gets immediately spent on more goods and services.

A healthy economy is driven by the spending of the lower and middle classes. If you put more money into the bottom, it all gets spent, locally or in the US. Money never trickles downward, it flows upward, and as it aggregates into fewer hands its power to draw money towards it gets increased. It is just like gravity. It is why unfettered free markets fail, because it inevitably leads to a black hole of superwealth monopoly, destroying all of the benefits of the competion in a free market. We have seen this in our past, and its why the regulatory and wealth redistribution apparatus exist - the system can't survive without it.

Put more money into the upper class, and it just gets sucked away into meaningless stock price increases, real estate price increases, offshore spending schemes, and ostentatious displays of wealth that rarely reflect any real value. Put it into the middle and lower classes, and it fuels the engine of the economy while raising the overall standard of living.

This is also why the canard of "tax increases on the rich hurt the economy" is such bullshit, and has been consistently disproven by reality. Almost every dollar the government takes in is spent right back out into the economy.

Obviously there is a point where it can remove the incentives of struggling for wealth, but that point is way above 50% on the top tax bracket.Paying 50% on your second million dollars of income is still so much better than $100,000 total income a year - the incentives are still in place.

Posted by: Mysticdog on April 11, 2006 at 2:37 PM | PERMALINK

Washington State idexes.

http://www.nwprogressive.org/weblog/2006/04/higher-minimum-wage-helps-us-all.html

" Higher minimum wage helps us all

Notice how unemployment spiked when we began indexing the minimum wage? Not.

A recent column from John Burbank reminded me that Washington is almost civilized in its treatment of low wage workers. Burbank is head of EOI, the Economic Opportunity Institute, based in Seattle. He and EOI were prime proponents of initiative 688, which garnered two-thirds of the vote in 1998 and tied the minimum wage to inflation. He is, and should be, justifiably proud of the measure. The wage rate is now $7.63, highest in the nation, two and a half dollars above the federal minimum of $5.15.

Watch out! The sky has not fallen! Quite the contrary. Jobs are plentiful."

Posted by: Fast Pete on April 11, 2006 at 2:39 PM | PERMALINK

Raising the minimum wage a buck or two is the least we can do for them.

Which, for the Republicans, is reason enough not to do it. The least they can do is far too much for them.

Posted by: Stefan on April 11, 2006 at 2:40 PM | PERMALINK

Likewise, if cutting taxes is good for the economy, why not get rid of them entirely? If three strikes send you to prison, why not one? If business is too tied up in regulations, why not ditch them all?


Hee, hee. Excellent. And if some mean-spirited bigots (and statistical liars) are upset by the working poor demanding a cleaner, safer, healthier and happier society for themselves and their children then let's get rid of all the mean-spirited bigots.

Regarde what the French have accomplished in the past few weeks. Excellent healhcare, job security (and stylish living) even for young workers.

Libert, galit, fraternit!

Posted by: Hotspur on April 11, 2006 at 2:42 PM | PERMALINK


WILL ALLEN: No, jayarbee, but it would cause a lot of employers to not hire people that they are currently employing. Not every task is worth $14 an hour, and those tasks will not get done under your proposal, at least not by human beings.

You planning on bringing monkeys in to do your dirty work? If you're saying that advances in automation would come more quickly if labor prices made it economically feasible, those same advances would open opportunities to workers in labor that was non-manual. But the workers aren't trained to perform such duties? Train them. Do machines have to train themselves? And pay for it themselves? The rich and "professional" classes are a drain on society, a tax those who produce must pay. It's long past time for tax relief to those who have done the work of building the modern world.


Posted by: jayarbee on April 11, 2006 at 2:53 PM | PERMALINK

Jayarbee, we are ever closer to having robotics do all manner of "dirty work", and, in fact, the pace of change even over the next three decades will likely astound us. Yes, yes, I know you just hate those wreckers who are draining socety with their wealth and "professional" behavior, whatever the hell you mean, but that doesn't mean that every person who uses a broom for pay today can be trained to design robotics tomorrow.

Posted by: Will Allen on April 11, 2006 at 3:02 PM | PERMALINK

tbrosz: Of course increasing the minimum wage will change employment levels, particularly at the low end. It's particularly hard on entry-level workers and teenagers. The Card/Krueger study, often cited in this argument, has some holes in it.

What garbage. "Of course" not. At least you know enough to disparage the Card/Krueger study by name, though I seem to recall you not being any sort of economist. Have you actually read it, or are you just regurgitating what your Dogma Mill information sources feed you? Have you read the Neumark/Wascher II study? How about any of the recent critiques of both?

Increasing the minimum wage is entirely unproven to decrease employment. Creating a minimum wage, which happened once, may benefit skilled workers at the expense of the unskilled, but the empirical data is, although of mixed quality, entirely on the side of practical minimum wage increases having no impact, or positive impact, on employment levels.

At the same time as they boost income, I note you entirely fail to mention.

tbrosz: Indexing the minimum wage to inflation would create a classic positive feedback loop, like connecting your car's accelerator to the speedometer, and nobody who actually knew anything about economics would suggest it.

Actually, a number of people who know a great deal about economics - of which you are not one - feel that it's a pretty good idea.

The effect on inflation of the minimum wage, given the number of people it affects and the miniscule effect an increase in their earnings would have on the CPI, is lost in the rounding errors of effects from supply shocks and demand changes driven by the economic climate.

Economists don't like minimum wages, but that's like saying that doctors don't like bad-tasting medicine. The market is not perfect; to pretend otherwise is naive at best and mendacious at worst.

Posted by: S Ra on April 11, 2006 at 3:05 PM | PERMALINK


MYSTICDOG: Put more money into the upper class, and it just gets sucked away...

Sure, your long post seems to have shown up three times. But it could have appeared ten times and each copy of it still should have been read, since good sense bears repeating.

But some market genius will come along with frightening tales of losing all our best people to our competitors in foreign countries where tax rates treat them more "fairly." So ignorant. As if talent is in short supply. It's opportunity that is scarce. Good riddance to all greedy bastards.


Posted by: jayarbee on April 11, 2006 at 3:12 PM | PERMALINK

S Ra:

I didn't see any empirical evidence on your links that indexing the minimum wage to inflation would have no feedback into inflation. work.

Others mentioned a couple of states, like Washington, that have done this. Unfortunately, Washington did it in 1998, so any employment or inflationary impact would have been lost in the noise of the general recession. Does anyone have data on how other wages in these states have been driven by this?

One person made the valid point that there aren't enough minimum wage workers to have a significant inflationary impact, but once the union contracts start riding on this idea--and they will--it may be more of a problem.

Posted by: tbrosz on April 11, 2006 at 3:18 PM | PERMALINK

Because the market will take of it. Posted by: Brian on April 11, 2006 at 12:47 PM

Ah yes, the magical market fairy will make things all better. Funny that this mythological beast never seems to show up.

When employers face a market where they have about a thousand competitors to each buyer (about the ratio the average wage earner faces) will "market forces" come close to providing a fair wage.

And that is never going to happen. So all this absurd appeals to the "magic of free markets" are as realistic as frictionless surfaces and ideal gases. None of these entities exist in the real world.

Posted by: Dr. Morpheus on April 11, 2006 at 3:26 PM | PERMALINK


WILL ALLEN: but that doesn't mean that every person who uses a broom for pay today can be trained to design robotics tomorrow

What a load of nonsense. Do you envision some futuristic world when the only jobs remaining will require an engineer's IQ? If so, we'll be plugging our intelligence in, rather than acquiring it naturally and nurturing it. We're all created equal, remember? Having a low IQ is as worthy of dignity as is being brilliant . . . which means we all have an equal share of this planet as a birthright. Those who invest their efforts increase their share by virtue of the effort, not by a made-up valuation of that effort.


Posted by: jayarbee on April 11, 2006 at 3:28 PM | PERMALINK

"So how about if we stop listening to fatuous stuff like this and just give the working poor a helping hand instead? Raising the minimum wage a buck or two is the least we can do for them."

There is no consensus amoung economists about the effects of raising the minimum wage. The academic literature is divided. Many economists believe that raising the minimum wage would do more harm to low-income workers than good.

Posted by: GOP on April 11, 2006 at 3:31 PM | PERMALINK

Since only about half of minimum wage workers are adults and 30% of people earning minimum wage live in families near or below the poverty line and the average workweek for all minimum wage workers was less than 10 hours (in 1998 according to HHS study), raising the minimum wage is a rather hamfisted approach to helping the working poor.

A better solution, as MDS mentioned above, is to beef up the EITC, which actually does a good job of benefitting the poor.

Posted by: Jeff on April 11, 2006 at 3:35 PM | PERMALINK

"A real magic lever. $50 an hour could actually make very good sense."

Ha ha ha ha ha! Find me one economist who thinks a minimum wage of $50/hour would "make very good sense."

I'm used to seeing absurd economic claims from liberals here. They're a dime a dozen. But this is by far the most stupid one I've seen in a while.

Posted by: GOP on April 11, 2006 at 3:38 PM | PERMALINK

tbrosz: I don't think "inverted Laffer curve" means what you think it means. An inverted Laffer curve with respect to minimum wages & the poverty rate means that there exists some optimum level for the minimum wage - above which there are negative returns (i.e. the minimum wage is so high that it forces down overall employment & pushes the poverty rate up rather than down) and below which there are positive returns (i.e. the minimum wage is low enough that it can be increased without driving down employment & drives the poverty rate down). I'm willing to accept that such a relationship exists (although i've never seen an actual, as opposed to theoretical, proof of that), but if so that "proves" that an increase in the minimum wage will increase poverty ONLY if we're currently at or above the optimum level. Since the wage is currently so low that it only covers about 3% of the workforce, and is very close to an all-time low in terms of real value, it's hard to believe that's the case. Given that we're more likely below the optimum than above it, your point seems to show that increasing the minimum wage will reduce poverty - and that in fact allowing it to continue to degrade in value will steadily increase poverty.

So your assertion "proves" the correctness of the Republican position, only if you accept that increasing poverty is a desirable policy goal. Outside of whatever wingnut hatchery you occupy, most of us would prefer to see poverty go down.

Posted by: TW on April 11, 2006 at 3:43 PM | PERMALINK

TW, that was the fake tbrosz writing about the "inverse Laeffer curve".

Always check the email before responding!

Posted by: Dr. Morpheus on April 11, 2006 at 3:50 PM | PERMALINK

Yes, Jayarbee, in the future people with low intelligence will have a lower percentage of people asking for their services, just as a lower percentage of people today ask for the services of those with lower intelligence than was the case 100 years ago. Also, the rate at which this occurs in the future will be much faster than it has in the past. There is nothing you can do about this, short of having a dramatic reduction in living standards for all, including the people you purport to care most about. Also, would you please explain, in detail, how you propose to quantify effort, and how it is any less "made-up" than what you decry?

Finally, as to diginty, as long as nobody is unable to acquire sufficient calories or shelter (btw, when shelter is difficult to acquire, it mostly due to government efforts to regulate housing. This results in the poor having a much more difficult time purchasing housing in bastions of compassion like Portland , than in dens of selfishness like Houston), then the rest of what is commonly associated with dignity is nothing but status-seeking.

Posted by: Will Allen on April 11, 2006 at 3:51 PM | PERMALINK

We could have a soundly running economy with a $50 a hour minimum wage.


Of course, we'd have fewer multi-billionaires, but that's not something I'd lose sleep over.

I'm sure they could find some way of surviving as mere multi-millionaires.

Posted by: Dr. Morpheus on April 11, 2006 at 3:52 PM | PERMALINK

While I don't much buy the doomsaying about job losses that would accompany a min. wage increase, I don't know how it would increase employment.

I love this. Just as jefff (and, to a degree, a fundie's fundamentalist) noted above, here's someone who "[doesn't] much buy the doomsaying about job losses that would accompany a min. wage increase" - as if the jury was still out, no one can tell what the effects might be, and we'd better be cautious.

It's like the punchline of that joke someone quoted here the other day: "Yeah, it works in practice, but does it work in theory?"

Brian, you can safely reject the "doomsaying" because it has never held true before. The last minimum wage increase was in 1997 - wow, the economy sure tanked right after that, didn't it?

As far as "increasing employment" goes - I wasn't even aware we were discussing that. I thought the idea was to raise the minimum wage to (a) help those who are earning that amount, and (b) to create pressures on those who hire at near the minimum wage (say, Wal-Mart or 7-11 just for examples) to raise their starting wages. One big draw with such employers, after all, is that they pay more than the minimum.

Posted by: Alek Hidell on April 11, 2006 at 4:03 PM | PERMALINK
It is ironic, cmdicely, to the extent that those who support minimum wage laws do so out of belief that such laws actually benefit a substantial percentage of wage-earners.

Well, no, its not ironic in that sense because that's a completely unrelated idea, and your idea that there is a fundamental contradiction is based on a false premise. The few people working at (or below) minimum wage are not the only people affected by minimum wage increases; there is both a security impact on others, and an upward pressure placed on all other wages (less so the farther above the pre-increase minimum they are) resulting from minimum wage increases.

In my experience, many such supporters have that belief.

Since the belief is correct, that's hardly surprising.

In any case, discussing labor price fixing proposals without discussing immigration policy is pointless.

I wasn't aware we had stopped the parallel discussion of immigration policy.

Posted by: cmdicely on April 11, 2006 at 4:25 PM | PERMALINK

Ned Flanders: Others mentioned a couple of states, like Washington, that have done this. Unfortunately, Washington did it in 1998, so any employment or inflationary impact would have been lost in the noise of the general recession.

The 1998 recession? Must have missed that one amidst the economic boom.

Does he never tired of embarrassing himself?

Posted by: Stefan on April 11, 2006 at 4:27 PM | PERMALINK

I believe that the inverted Laeffer Curve theory is more brilliant than the positive feedback theory, though I have the unique honor of discovering both of them.

Posted by: tbrosz on April 11, 2006 at 4:38 PM | PERMALINK

No, cmdicely, the belief is not correct, unless you want to get into a semantic debate about the meaning of the term "substantial". The primary purpose of minimum wage laws is to allow people with your beliefs to feel good about yourselves. There is nothing intrinsically wrong with this; it is only when regulations do active harm to poor people, such as most housing regulation, that it becomes wrong.

I haven't participated in the immigration thread, but my point was that the two issues are inevitably linked. As long as there are millions of people living in relative poverty in Mexico, low skilled wages will be suppressed here, short of very, very, draconian measures to stop people from coming over the border. I really don't support such measures, for many of the reasons I oppose the the War on Drugs, so the task becomes to increase the median level of wealth in Mexico, and I really don't have any ideas of how the U.S. can play a big role in that task.

Posted by: Will Allen on April 11, 2006 at 5:06 PM | PERMALINK

Along those lines, overturning most zoning laws and other housing regulation would do far more to improve the material well-being of the working poor than minimum wage laws.

Posted by: Will Allen on April 11, 2006 at 5:12 PM | PERMALINK
No, cmdicely, the belief is not correct, unless you want to get into a semantic debate about the meaning of the term "substantial".

The belief is correct whether or not I am interested in such a debate.


The primary purpose of minimum wage laws is to allow people with your beliefs to feel good about yourselves.

Er, no, its not. Minimum wages laws don't make people with my beliefs feel good about themselves, so they would be a very bad strategy to do that.

But ascribing ill motives to the proponent of a policy in place of debate on its substantive effects is a rather common form of ad hominem.

There is nothing intrinsically wrong with this; it is only when regulations do active harm to poor people, such as most housing regulation, that it becomes wrong.

Raising non sequiturs (like bringing up "housing regulation" in a discussion of mininum wage laws) is another common fallacy used to avoid dealing with the substance of the issue at hand.

Posted by: cmdicely on April 11, 2006 at 5:24 PM | PERMALINK
Along those lines, overturning most zoning laws and other housing regulation would do far more to improve the material well-being of the working poor than minimum wage laws.

As the two policies are not exclusive or even in any way opposed or inconsistent, that's wholly irrelevant, even granting, arguendo, that it might be true.

Posted by: cmdicely on April 11, 2006 at 5:25 PM | PERMALINK

Golly gee, cm dicely, I thought the issue at hand was improving the material well being of the working poor. Perhaps you are interested in something else. Or perhaps you are operating under the fallacious belief that political capital and energy are resources in infinite supply, and thus there is no need to prioritize between those measures which actually would do the most to materially benefit the working poor, and those measure which have an insubstantial impact. Well, to each their own, I guess. When did it become ad hominem to note that policy A was better designed to obtain outcome x, as opposed to outcome y?

Posted by: Will Allen on April 11, 2006 at 5:50 PM | PERMALINK

"We could have a soundly running economy with a $50 a hour minimum wage."

This is a joke, right? Find me even one professional economist who agrees with this prepostrous claim.

You think people are going to $30 for a Big Mac, so McDonalds can pay its burger-flippers $50 an hour, do you?

Posted by: GOP on April 11, 2006 at 5:54 PM | PERMALINK

How about setting a maximum wage, which would be fixed as a multiple of the minimum wage? Perhaps 100 times the minimum wage. Any income (including income from capital as well as from labor) above the maximum wage would be taxed at 100 percent.

Posted by: Groucho on April 11, 2006 at 6:14 PM | PERMALINK

You think people are going to $30 for a Big Mac, so McDonalds can pay its burger-flippers $50 an hour, do you?

There is a point to be made there; in many of these economic arguments a lot of people tend to forget that money has a psychological value, as well as economic value.

But your particular example is really a minor quibble. Remember, that $20 bill you hand to the cashier at McDonalds to feed your family represented two weeks worth of wages for your great-grandfather.

Posted by: dr sardonicus on April 11, 2006 at 6:20 PM | PERMALINK

"Remember, that $20 bill you hand to the cashier at McDonalds to feed your family represented two weeks worth of wages for your great-grandfather."

Huh? So what?

Posted by: GOP on April 11, 2006 at 6:29 PM | PERMALINK

"How about setting a maximum wage, which would be fixed as a multiple of the minimum wage? Perhaps 100 times the minimum wage. Any income (including income from capital as well as from labor) above the maximum wage would be taxed at 100 percent."

Brilliant. That giant sucking sound you'll be hearing is American companies moving to countries with sane tax policies.

Posted by: GOP on April 11, 2006 at 6:34 PM | PERMALINK

"Because the market will take of it. Posted by: Brian on April 11, 2006 at 12:47 PM

Ah yes, the magical market fairy will make things all better. Funny that this mythological beast never seems to show up.

When employers face a market where they have about a thousand competitors to each buyer (about the ratio the average wage earner faces) will "market forces" come close to providing a fair wage.

And that is never going to happen. So all this absurd appeals to the "magic of free markets" are as realistic as frictionless surfaces and ideal gases. None of these entities exist in the real world."
-DrM

who decides what is fair wage? i don't know magic markets, but free markets have a long and documented history of working exceptionally well. They certainly beat the heck out of extensive central planning.

Posted by: Brian on April 11, 2006 at 6:50 PM | PERMALINK


WILL ALLEN: in the future people with low intelligence will have a lower percentage of people asking for their services, just as a lower percentage of people today ask for the services of those with lower intelligence than was the case 100 years ago. Also, the rate at which this occurs in the future will be much faster than it has in the past. There is nothing you can do about this

The equivalent to what you're saying is that the current system insures that an ever-increasing number of people will be driven into poverty no matter what we do. I agree, because the inevitability of capitalism eventually crushing the masses is as sure as is the collapse of any pyramid scheme. But capitalism itself isn't inevitable; neither is an invincibility of its masters' allergy to regulations.
There is nothing you can do about this short of having a dramatic reduction in living standards for all, including the people you purport to care most about.

So your answer is to insist that those people I "purport to care most about" should simply accept their worsening fate, holding on as best they can till the fall comes, eh? This way we can protect the living standards of those at the top, and prolong the inevitable for at least some of those whose intelligence levels haven't yet become obsolete. Remind me again why we're doing this? To protect the "market?" Is this a more efficient form of genocide, or what?
Also, would you please explain, in detail, how you propose to quantify effort, and how it is any less "made-up" than what you decry?

In detail? It doesn't need details. People know effort when they see it. When someone spends a full day--whether it's eight hours or twelve or whatever--diligently focusing mind or body or both to the accomplishment of a task or tasks that others agree needs to be done, that's effort in its maximum quantity--no need to make anything up to see it for what it is.

Finally, as to diginty, as long as nobody is unable to acquire sufficient calories or shelter (btw, when shelter is difficult to acquire, it mostly due to government efforts to regulate housing. This results in the poor having a much more difficult time purchasing housing in bastions of compassion like Portland , than in dens of selfishness like Houston), then the rest of what is commonly associated with dignity is nothing but status-seeking.
Leaving your "btw" by the wayside in the interest of time, brevity and non-distraction, your definition of dignity, besides being incomplete, makes the false assumption that nobody is unable to acquire sufficient calories or shelter. 38.2 million Americans live in households that suffer directly from hunger and food insecurity, including nearly 14 million children. 3.5 million people are homeless at some time during each year. 2 million are imprisoned. All of these numbers will increase with your "nothing you can do about this" logic. But dignity is more than food and shelter. It's good health as well. 46 million have no insurance. And it's dignity, not status-seeking, that demands respect from others, no matter their economic station--no matter even their hierarchy placement. Employers and their lieutenants routinely berate, belittle and cruelly drive those who are providing elites their comforts and luxuries.

The future you predict is more of this for more people. But your assertion that there's "nothing you can do about this" is only accurate if we do nothing to veer from the course that has been set by the billionaires in their never ending effort to keep and increase those billions--which do not belong to them, despite how you quantify effort. No need to explain that to me, though. Unlike my simple definition, yours does require a lot of detail. That's why it's been reduced to the mantra of "markets" and to the indoctrinated benevolence of "capitalism," including its false synonym, "democracy." But the truth behind all those lies is that the market is nothing more than a cancerous growth on mankind, criminally devouring our planet. It makes slaves of the people for whom it was conceived to serve. It must be stopped or fundamentally altered. Time is short.


Posted by: jayarbee on April 11, 2006 at 6:51 PM | PERMALINK

"the inevitability of capitalism eventually crushing the masses is as sure as is the collapse of any pyramid scheme."
-jayarbee

What's wrong with capitalism? it is, without legitimate question, the most beneficial economic system known to man.

Posted by: Brian on April 11, 2006 at 7:03 PM | PERMALINK

Rather than a global maximum wage (or income) with draconian enforcement, how about creating tax incentives for corporations formed as democratically governed labor cooperatives with a limited ratio in compensation differential (so, a maximum 10:1 ratio.) -- and perhaps with other requirements above and beyond the general mandatory requirements for labor conditions -- with a substantial penalty for companies reorganizing out of such forms once they've organized in them for the tax benefits?

Policies here don't need to be all stick.

Posted by: cmdicely on April 11, 2006 at 7:05 PM | PERMALINK

"How about setting a maximum wage, which would be fixed as a multiple of the minimum wage? Perhaps 100 times the minimum wage. Any income (including income from capital as well as from labor) above the maximum wage would be taxed at 100 percent."

MAXIMUM WAGE?!? Ingenius! This would have the effect of making productivity of the poorest a factor in the ecomomics decisions of the richest. Has it ever been tried in a capitalist setting? Scandinavian, Pehaps. Would a 100 percent estate tax have a similar same effect?

Posted by: Hotspur on April 11, 2006 at 7:08 PM | PERMALINK

Stefan:

The 1998 recession? Must have missed that one amidst the economic boom.

Does he never tired of embarrassing himself?

I was, as anyone of reasonable intelligence would have assumed, referring to the 2000/2001 recession, around the same time any effects of the wage indexing would have started showing up. I assumed it would take a few years for effects, if any, to be noticable, and the larger economic swing would make it hard to pick out.

Posted by: tbrosz on April 11, 2006 at 7:15 PM | PERMALINK

Dr. Morpheus:

TW, that was the fake tbrosz writing about the "inverse Laeffer curve".

Still, you have to admit, TW's comment was pretty good.

Posted by: tbrosz on April 11, 2006 at 7:18 PM | PERMALINK

How about just leaving the national minimum wage where it is, and allowing states to raise theirs as they see fit? If the liberals are right, the states with high minimum wages will prosper at the expense of the others, and soon everyone will follow suit.

Posted by: tbrosz on April 11, 2006 at 7:22 PM | PERMALINK


GOP: You think people are going to $30 for a Big Mac, so McDonalds can pay its burger-flippers $50 an hour, do you?

You're not exactly a math whiz, are you? Let's say the average "burger-flipper" makes $7.50/hr. The Big Mac I bought today would have been $2.69 had I purchased it alone, but with a meal it breaks down to less than that--as do their frequent specials. But using these figures, $2.69 is about 36% of $7.50; whereas, $30 is 60% of $50. 36% of $50 is only $18, not $30. But you don't want to pay even $18 for a Big Mac, do you? You wouldn't. Wages are only one component of business expenses and the others, though they'd be affected by $50 wages paid by suppliers, etc., would not go up by the same percentage because they are no employers only expense. We can't accurately compute what would be the actual ultimate price, of course, but it would surely be dollars below $18. How's $15 sound to you, knowing that you (and everyone) is making at least $50/hr.? Still too steep? Make your own damn burger.


Posted by: jayarbee on April 11, 2006 at 7:23 PM | PERMALINK

The skills needed to get elected are obviously not the skills needed to govern.

Posted by: zeph on April 11, 2006 at 7:24 PM | PERMALINK

"Rather than a global maximum wage (or income) with draconian enforcement..."

Hardy har har! A global maximum wage? Even more absurd than a national one. Who's going to enforce it, the UN?

Posted by: GOP on April 11, 2006 at 7:25 PM | PERMALINK

I normally try to stay away from personal insults, but my God Will Allen, you really are a pretentious prick. You speak of people that work hard for a living, but for some reason or other don't want to or can't be some "professional" class of worker, as if they are disposable. Remember, it's always academic until it affects you or your family. And don't think it can't affect you.

Posted by: OhNoNotAgain on April 11, 2006 at 7:32 PM | PERMALINK

"You're not exactly a math whiz, are you? Let's say the average "burger-flipper" makes $7.50/hr. The Big Mac I bought today would have been $2.69 had I purchased it alone, but with a meal it breaks down to less than that--as do their frequent specials. But using these figures, $2.69 is about 36% of $7.50; whereas, $30 is 60% of $50. 36% of $50 is only $18, not $30."

I wouldn't claim to be a "math whiz," but you are just dumb. The idea that you can compute the required price of a Big Mac under a $50 minimum wage using the calculation you make above is nonsensical.

The market value of unskilled labor in our economy isn't remotely close to $50 an hour. If you force businesses to pay their employees vastly more than their labor is worth, the businesses will go out of business. Don't you understand even the most basic principles of economics?

Posted by: GOP on April 11, 2006 at 7:42 PM | PERMALINK

"Remember, that $20 bill you hand to the cashier at McDonalds to feed your family represented two weeks worth of wages for your great-grandfather."

Huh? So what?

My point exactly. You said nobody would be willing to pay $30 for a Big Mac. But set the minumum wage at $50 per hour, everybody else's wages go up with respect to that, and the burger eater pays $30 for his Big Mac and says, "Huh? So what?"

Posted by: dr sardonicus on April 11, 2006 at 7:49 PM | PERMALINK

First, Jayarbee, you write...

"The equivalent to what you're saying is that the current system insures that an ever-increasing number of people will be driven into poverty no matter what we do."

...which is extraordinarily dubious (I'm trying to be polite), in that a lower percentage of people live in poverty than ever before, if poverty is defined as being unable to obtain adequate food and shelter. This is true in both India and Indiana. You are dwelling in an alternate universe, Jayarbee.

Next, beyond the silliness of defining thirty eight million mostly obese Americans (as most Americans are obese) as having difficulty in obtaining sufficient calories (and please don't get into the fatuity of claiming that they can only afford junk food) , I never once stated that obtaining shelter was not a challenge for anyone, although it must be noted that home ownership is at an all-time high. I stated that degree to which obtaining shelter was a problem was largely due to housing regulations, which greatly inhibits the creation and use of housing stock, driving up prices. That this occurs most frequently in regions where people more likely vote for the political party ostensibly most concerned with the plight of the poor would also be amusingly ironic, if the consequences weren't so dire for those most in need. If you wish to argue with someone that housing markets in this country are distorted in ways which harm the poor, you'll have to find someone who disagrees with that proposition, 'cuz, I'm not your guy.

Finally, the point about not having to detail how one quantifies effort is simply ridiculous, to be generous.

Posted by: Will Allen on April 11, 2006 at 7:51 PM | PERMALINK

Oh No, I try to avoid personal insults until illiterate boobs such as yourself substitute mindless yammering for critical thought. I never once stated anyone was "disposable". I stated a fact; that rate at which machinery, increasingly smart machinery, supplanted human labor was going accelerate, and that this inevitably meant that people with low intelligence would have their services asked for with decreasing frequency. This happens to be true, you ignorant, dim-witted, numbskull, and no, this is not the equivalent of saying that anybody is "disposable" unless you have absolutely idiotic, materialistic, notion that the only value a person has is limited to what others ask the person to do. Are you normally such an imbecile, or do you practice diligently?

Posted by: Will Allen on April 11, 2006 at 8:04 PM | PERMALINK


GOP: Don't you understand even the most basic principles of economics?

Yes. And I understand Dianetics also. I am likewise reasonably well acquainted with the Bible. I even know supply side fantasy. I also know how slavery works. But it's not economics you're talking about, only a constructed frame for it: capitalism. It's a system contrived by men, used and abused by powerful, dishonest men to maintain and increase their power. It is not a commandament from God. It is not a law of nature. It is not relativity revisited. Unlike gravity it goes both up and down. It is an arrangement of policies fashioned by government. If we had a government that answered to its citizens, it could and would be changed .. or eliminated altogether eventually.

Not that I would have a knee-jerk opposition to it, but I never proposed a $50/hr. minimum wage. I merely pointed out the gross inaccuracy of your extrapolation regarding prices. If you can be so far off when it comes to simple arithmetic, what makes you think you have any understanding at all of a complex field like economics?


Posted by: jayarbee on April 11, 2006 at 8:08 PM | PERMALINK

"You said nobody would be willing to pay $30 for a Big Mac. But set the minumum wage at $50 per hour, everybody else's wages go up with respect to that,"

No, everyone else's wages would not go up with respect to that. The only way you could do that would be through centralized wage and price controls throughout the economy. Is that what you're advocating?

Posted by: GOP on April 11, 2006 at 8:08 PM | PERMALINK

"Yes. And I understand Dianetics also. I am likewise reasonably well acquainted with the Bible. I even know supply side fantasy. I also know how slavery works. But it's not economics you're talking about, only a constructed frame for it: capitalism. It's a system contrived by men, used and abused by powerful, dishonest men to maintain and increase their power."
-jrb

first, i'll admit that i don't understand dianetics or even that xemu stuff. capitalism is the best economic system going, unless you know of some secret system i've never heard of.

Posted by: Brian on April 11, 2006 at 8:15 PM | PERMALINK

You wouldn't need centralized wage and price controls (although I can think of worse things). Throughout this thread people have been arguing pro and con that the minimum wage sets a wage floor, and that raising the floor creates a ripple affect which leads to raises for people making far above the minimum.

My point is that those opposed to minimum wage increases, when all is said and done, are opposed because they believe that will lead to runaway inflation. And there are all kinds of arguments that reasonable people can have concerning what the proper rate of inflation should be in a healthy economy. That is the sort of discussion we should be having, instead of telling bullshit stories about Big Macs.

Posted by: dr sardonicus on April 11, 2006 at 8:22 PM | PERMALINK


Pssst, GOP and Will Allen? Together, even ignoring your insecure insults, your arguments have devolved to nothing more than indecipherable contradictions and irrelevant grunts about long remembered verses from capitalism catechism classes.

So, um, bye!


Posted by: jayarbee on April 11, 2006 at 8:22 PM | PERMALINK

"Al Gore is essentially the same as Bush. Nader 2000!
Posted by: gq"

except that gwb is the duly elected (and duly re-elected) president. adios, folks.

Posted by: Brian on April 11, 2006 at 8:28 PM | PERMALINK

except that gwb is the duly elected (and duly re-elected) president.

Perhaps he is. God help us all.

Posted by: dr sardonicus on April 11, 2006 at 8:33 PM | PERMALINK

jayarbee,

"But it's not economics you're talking about, only a constructed frame for it: capitalism."

No, it is most definitely economics that I'm talking about. The principles of economics govern the effect of a ten-fold increase in the minimum wage on our economy. A minimum wage of $50 per hour is not remotely feasible in our economy, because the market value of unskilled labor in that economy is vastly lower than $50 per hour.

I merely pointed out the gross inaccuracy of your extrapolation regarding prices."

You didn't "point out anything." You made an unjustified claim about the effect of a $50 per hour minimum wage on the price of a Big Mac, a claim based a meaningless calculation that you invented out of thin air.

Posted by: GOP on April 11, 2006 at 8:41 PM | PERMALINK

jayarbee, before making comments about the catechism that others supposedly embrace, you may wish to avoid such howlers as "an ever increasing number of people being forced into poverty" (unless you are so silly as to to look at nominal figures instead of percentages), for the simple reason that such comments indicate an immense amount of ignorance, which will lead a reasonable person to suspect that it is you who have abandoned reason in favor of a fervent adoption of Faith, divorced from empirical observation.

Posted by: Will Allen on April 11, 2006 at 8:48 PM | PERMALINK

"You wouldn't need centralized wage and price controls"

Of course you would. Without centralized wage and price controls, the market would determine wages and prices, and the market value of labor is on the order of ten times less than you are proposing. If you force a massive increase in costs in one sector of the labor market, the market will respond by massively reducing the demand for that labor. Again, you are just completely economically illiterate.

Posted by: GOP on April 11, 2006 at 8:56 PM | PERMALINK

To those upthread complaining that paying low-paid workers more make X more expensive etc.: why don't you complain about how expensive everything is because of all the workers who are already paid that much?

Posted by: Neil' on April 11, 2006 at 9:59 PM | PERMALINK

San Francisco has the highest minimum wage in the country -- $8.50/hour -- and we're doing just fine. Businesses didn't shut down and the economy is adjusting well:
http://www.berkeley.edu/news/media/releases/2006/01/02_livingwage.shtml

For those of you who are convinced that a few extra bucks an hour doesn't help, listen to this NPR piece about the living wage law in Los Angeles: http://www.npr.org/templates/story/story.php?storyId=5331348

Posted by: storiesinamerica on April 11, 2006 at 10:20 PM | PERMALINK

"why don't you complain about how expensive everything is because of all the workers who are already paid that much?"

They do.

You should hear my grandmother go on about what a travesty it is that police officers are able to afford to own houses.

Posted by: jefff on April 11, 2006 at 10:41 PM | PERMALINK

"San Francisco has the highest minimum wage in the country -- $8.50/hour -- and we're doing just fine. Businesses didn't shut down and the economy is adjusting well"

You can't generalize from San Francisco to the entire country. The prevailing market wage in different parts of the country and in various sectors of the economy will differ depending on local conditions of supply and demand and differences in the cost of living. It may be that in San Francisco, with its high cost of living and large concentration of wealth, the minimum market wage is at or above $8.50/hour. That doesn't mean you could impose that minimum in, say, rural Alabama without seriously disrupting the economy in that region and creating substantial unemployment. There is some elasticity in the demand for labor, and a modest increase in the federal minimum wage may be possible without producing serious adverse effects, but economists don't even agree about that. A minimum wage of $50/hour, or even $20/hour, is so far beyond what the market could possibly support that it's just achingly stupid.

Posted by: GOP on April 11, 2006 at 11:03 PM | PERMALINK

Lots of trolls on this thread. A hearty FUCK YOU to all of them.

Good question, Tom. Likewise, if cutting taxes is good for the economy, why not get rid of them entirely? If three strikes send you to prison, why not one? If business is too tied up in regulations, why not ditch them all?

Absolutely true, Kevin.

I have worked a few MW jobs, and a couple jobs just barely over MW. They all sucked. I can't tell you how horrible it is working your ass off in a thankless job that pays you as much as it does only because it's illegal to pay you less.

I've heard the term "cheap labor conservative" thrown around before, and I think whomever coined it is on to something, and we just need to find a more roll-off-the-tongue synonym, and the meme will take off.

Posted by: nota bene on April 11, 2006 at 11:49 PM | PERMALINK

In the part of the country I live in (Fairfield County, Connecticut), the minimum wage is irrelevant. There is no employer here who does not pay significantly more than the minimum wage - that goes for all kinds of manual labor, store clerks, movie ushers, fast-food restaurant workers, you name it. To me this is pretty good evidence that the market works. Where there's a shortage of labor relative to the demand for it, the price goes up. And vice versa.

You may not like the laws of supply and demand, but attempts to legislate around them usually have all sorts of unintended and unwanted consequences.

Posted by: DBL on April 12, 2006 at 12:21 AM | PERMALINK
capitalism is the best economic system going, unless you know of some secret system i've never heard of.

Strange, then, that all the best performing economies are mixed economies that, while capitalist in broad outline, have many features drawn from socialism; stranger still that many of them had less socialist systems in the past, and changed them because they were unhappy with the results.


Posted by: cmdicely on April 12, 2006 at 10:58 AM | PERMALINK

"why not raise it to $50 an hour?"
but isn't this how CEO wages are fixed? Board of director thinks: 'Company is tanking, need new CEO, must get the best, so pay more than anybody else, new rate x + 50 mill!

Posted by: Stewart Dean on April 12, 2006 at 11:26 AM | PERMALINK

"Strange, then, that all the best performing economies are mixed economies that, while capitalist in broad outline, have many features drawn from socialism; stranger still that many of them had less socialist systems in the past, and changed them because they were unhappy with the results."

Heaven on Earth: The Rise and Fall of Socialism

Quote:

"Socialism was man's most ambitious attempt to supplant religion with a doctrine claiming to ground itself in "science." Indeed, no religion ever spread so far so fast. Yet while socialism had established itself as a fact of life by the beginning of the 20th century, it did not create societies of abundance or give birth to "the New Man." Each failure inspired new searches for the path to the promised land: revolution, communes, social democracy, Communism, Fascism, Third World socialism. None worked, and some exacted staggering human tolls. Then, after two hundred years of wishful thinking and fitful governance, socialism suddenly imploded in a fin du siecle drama of falling walls and collapsing regimes."

Posted by: GOP on April 12, 2006 at 1:10 PM | PERMALINK

Did anyone mention that the historic peak minimum wage in the U.S. in 1968 was $9.15 an hour in 2006 dollars? Somehow I don't recall the massive economic problems that must have caused.

Posted by: mja11223 on April 12, 2006 at 1:57 PM | PERMALINK

I'm not sure what you think that quote proves, other than that AEI resident "scholars" have a rather creative view of history where it concerns socialism.

Posted by: cmdicely on April 12, 2006 at 2:02 PM | PERMALINK

"Did anyone mention that the historic peak minimum wage in the U.S. in 1968 was $9.15 an hour in 2006 dollars? Somehow I don't recall the massive economic problems that must have caused."

Another stupid comparison. The U.S. economy was very different in 1968. Unskilled and manual labor provided a much larger share of GDP then than they do now. The relative value of such labor has steadily declined with technological advances and increasing globalization.

Posted by: GOP on April 12, 2006 at 2:10 PM | PERMALINK

cmdicely,
"I'm not sure what you think that quote proves"

It doesn't "prove" anything. It's an illustration of the fact that socialism is effectively dead.

Your dismissal of it as conservative propaganda is of course entirely predictable. Perhaps you should tell PBS.

Posted by: GOP on April 12, 2006 at 2:15 PM | PERMALINK

Normally one expects to see some jobs lost as rising minimum wages pressure employers to find ways to absorb the increased cost. And, one does find instances of losses. One rarely finds evidence that employment rates _increase_ due to minimum wage increases.

The fact that there are no large scale job losses should not be taken as a point of comfort by minimum wage supporters. It _could_ mean the increases in minimum wages simply and eternally lag behind market wage pressures, and the effects of minimum wages are washed out by greater influences in the labour market.

Here's an interesting question which I don't believe has received much attention: what if statutory minimum wages are holding wages _down_? The statutory minimum provides a visible benchmark - a point of information for the otherwise free market; a reserve position for employers to seek (because, after all, they have no choice by law). Yes, the lack of a posted minimum wage for all to see could result in employers demanding lower wages. It could also result in employees demanding higher wages.

Posted by: VRWC on April 12, 2006 at 6:37 PM | PERMALINK




 

 

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