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November 3, 2006

THE MINIMUM WAGE IN OREGON....If the radical, business-hating, crypto-socialist Democratic Party takes over Congress next week, one of their first orders of business will be to raise the federal minimum wage. As we all know, this would likely cripple the American economy and send us spinning into a recession. After all, look at what happened to Oregon after they raised their minimum wage:

During the 2002 debate in Oregon, foes of a minimum-wage increase argued that it would chase away business and cripple an economy that traditionally had higher unemployment than the national average. "With so many Oregonians already unemployed, raising the minimum wage and then increasing it annually would devastate our economic recovery," Bill Perry, head of the Oregon Restaurant Association, wrote at the time.

Four years later, though it is impossible to say what would have happened had the minimum not been raised, Oregon's experience suggests the most strident doomsayers were wrong. Private, nonfarm payrolls are up 8% over the past four years, nearly twice the national increase. Wages are up, too. Job growth is strong in industries employing many minimum-wage workers, such as restaurants and hotels. Oregon's estimated 5.4% unemployment rate for 2006, though higher than the national average, is down from 7.6% in 2002, when the state was emerging from a recession.

Read the whole thing. Deborah Solomon provides both sides of the story, but it's worth noting that virtually all the evidence on the anti-minimum wage side is either anecdotal or theoretical. The evidence on the pro-minimum wage side is concrete and statistical. You can decide for yourself which kind of evidence to believe.

POSTSCRIPT: As a side note, it's interesting that the only industry that's still throwing around doomsday claims is the agricultural industry. "Why grow a potato here when you can do it in Idaho for $5.15 an hour?" asks one farmer.

It's true that agriculture is in a unique position, since even if a higher minimum wage were federalized, farmers would still have to compete with cheaper foreign labor. But guess what? Higher wages are what we're going to get if we seriously cut down on immigration too. So conservatives need to make up their mind: either we need cheap fruit pickers, in which case agriculture should be exempt from the minimum wage and we should allow plenty of immigrants across the border to follow the harvests, or cheap labor isn't critical and we do neither. Which is it?

Kevin Drum 11:24 AM Permalink | Trackbacks | Comments (52)
 
Comments

but it's worth noting that virtually all the evidence on the anti-minimum wage side is either anecdotal or theoretical.

But that's the only kind that matters!

"Facts" are for losers, and Democrats.

Posted by: craigie on November 3, 2006 at 11:28 AM | PERMALINK

As Homer Simpson famously observed, "facts, schmacts! Why, you can use facts to prove anything that's true!"

Posted by: Stefan on November 3, 2006 at 11:30 AM | PERMALINK

Ok, seriously - has the Right ever actually been right about anything? Anything at all?

From slavery to the minimum wage, from civil rights to war mongering, do they have any actual credibility left? Shouldn't they all go hang out in a cave somewhere for a generation or two, until they figure out why they are so consistently wrong about everything?

Just trying to help, guys...

Posted by: craigie on November 3, 2006 at 11:30 AM | PERMALINK
Read the whole thing. Deborah Solomon provides both sides of the story, but it's worth noting that virtually all the evidence on the anti-minimum wage side is either anecdotal or theoretical.

No, it is not theoretical, it is purely speculative. If it was theoretical, it would be based on theory—tested empirical hypotheses—not unverified ideological assumptions.

Posted by: cmdicely on November 3, 2006 at 11:32 AM | PERMALINK

but it's worth noting that virtually all the evidence on the anti-minimum wage side is either anecdotal or theoretical.

Replace "anti-minimum wage" with "Republican" and "theoretical" with "downright delusional" and we've got something....

Posted by: Stefan on November 3, 2006 at 11:32 AM | PERMALINK

Very few legal workers make only the minimum wage today. Those who do would be being paid more if they were not competing against illegal imigrant labor.

Raising the minimum wage is likely to increase employment of legal workers rather than decrease it. Paying an illegal immigrant less than the minimum wage shows up in the accounts, it is impossible to explain as an innocent mistake.

If you have to pay the worker a fair wage you might as well pay that wage to a legal worker.

Posted by: Phill on November 3, 2006 at 11:34 AM | PERMALINK

As wingnuts everywhere would say, "Who are you going to believe - me or your own lying statistics?"

Posted by: Uncle Jeffy on November 3, 2006 at 11:34 AM | PERMALINK

"If only we could make the poor poorer, then we'd all be better off - including the poor."

-by A. Wingnut

Posted by: craigie on November 3, 2006 at 11:34 AM | PERMALINK

Man, the first five points in a thread are made by myself, craigie and cmdicely? What's up with the trolls, guy? Early warning system not working?

Posted by: Stefan on November 3, 2006 at 11:35 AM | PERMALINK

The Right was right about one thing--they said campaign finance reform would not make our government more responsive. Their batting average is .002 rather than .000.

The most strident Great Depression arguments the Right made came when the Democrats passed the 1993 budget. They predicted that the late 1990s would show no economic growth and even economic shrinking. Oops!

Posted by: reino on November 3, 2006 at 11:36 AM | PERMALINK

Early warning system not working?

It's hard work being wrong all the time - hard work. Want some wood?

Posted by: craigie on November 3, 2006 at 11:37 AM | PERMALINK

CLICK THE LINK! ALWAYS CLICK THE LINK!

Any Link! No matter which one you click, Al will still be a pointless retard!

Posted by: craigie on November 3, 2006 at 11:38 AM | PERMALINK

Kevin, asking these guys for internal consistency is like trying to explain to a 2 year old why they can't have cake for dinner every night. They just don't want to hear it, and if they don't have an adult willing to enforce it, they'll gorge themselves to death.

Posted by: Doug-E-Fresh on November 3, 2006 at 11:38 AM | PERMALINK

Sorry, Phill, there are plenty of jobs in Oregon that pay only minimum wage.

Posted by: Gene O'Grady on November 3, 2006 at 11:39 AM | PERMALINK

Stephan,

Well dotted eyes and well crossed tees up thread at 11:32.

Posted by: thethirdPaul on November 3, 2006 at 11:39 AM | PERMALINK

The checks the RNC sends out to the trools been bouncing? I can't believe only ex-liberal is about, and hanging on a dead thread.

That liberal bitch reality keeps rearing her head at inappropriate times for them this election cycle. It's like a harmonic convergence or something.

Posted by: Global Citizen on November 3, 2006 at 11:40 AM | PERMALINK

How much would it cost to ship a potatoE from IdahoE to Oregon?

My guess is more than the difference in labor input.

Posted by: yep on November 3, 2006 at 11:41 AM | PERMALINK

It feels so very Truthy to just keep claiming the same thing over and over!

Gay marriage will destroy the world!

Posted by: Al's Mommy on November 3, 2006 at 11:44 AM | PERMALINK

It's like a harmonic convergence or something.

Maybe it's a sign of the End Times. Next week, the mother ship comes to take them all home to the planet Incompetus.

Posted by: craigie on November 3, 2006 at 11:46 AM | PERMALINK

Very few legal workers make only the minimum wage today.

Incidentally, is there any research on the impact of minimum-wage increases upon wages in non-minimum-wage jobs?

It seems at least hypothetically like it would lead to an overall bump upwards - if the minimum wage goes from $5 to $7, someone who had been making 7 is probably going to be inclined to ask for $9 - but I've never seen anything cited.

Posted by: Dan on November 3, 2006 at 11:46 AM | PERMALINK

So conservatives need to make up their mind:

I'm sorry, but this statement makes so many invalid assumptions that it's just not meaningful.

Posted by: craigie on November 3, 2006 at 11:47 AM | PERMALINK

POSTSCRIPT: As a side note, it's interesting that the only industry that's still throwing around doomsday claims is the agricultural industry. "Why grow a potato here when you can do it in Idaho for $5.15 an hour?" asks one farmer. —Kevin Drum

That's fucking nonsense as potatoes are an almost entirely automated crop. They are planted by machine, watered by overhead mechanical sprinklers, and harvested by machine.

In any case, Washington produces more potatoes than either Idaho or Oregon, and the minimum wage is higher in Washington than it is in Idaho.

Spud production

Posted by: JeffII on November 3, 2006 at 11:48 AM | PERMALINK

What's up with the trolls, guy?

the wingnuts are all busy proclaiming to the heavens that Iraq had WMDs, in 2003.

they'll be here, with new talking points, just as soon as they get done changing their panties.

Posted by: cleek on November 3, 2006 at 11:53 AM | PERMALINK

Man, the first five points in a thread are made by myself, craigie and cmdicely? What's up with the trolls, guy? Early warning system not working?
Posted by: Stefan

The Diceman may not be a troll, but he's usually just as annoying as one.

Posted by: JeffII on November 3, 2006 at 11:54 AM | PERMALINK

JeffII,

How dare you, Sir! Why, only I can produce the finest with the cheapest labor available. We Are America, not some land of heathens such as those to the west and northwest of us.

Just ask my personal toady, Larry Craig.

Posted by: J R Simplot on November 3, 2006 at 11:56 AM | PERMALINK

Agriculture in Oregon means not only sustainable foods and the finest Marion Berries in the land, but tree farms, shrubs and perrennial growers. Many of those items you purchase across the land, were grown in Oregon and shipped throughout America. Oregon has some of the finest propegators of flora and provides some of the best on-line sales in the industry.

At least when you purchase your next tree or plant from Oregon, you can rest assured that the workers were, at least, paid just slightly better than those in other states. However, to paraphrase John Edwards, "We Can Do and Should Do Better"

Posted by: thethirdPaul on November 3, 2006 at 12:05 PM | PERMALINK

Whatever employment is, it would have been higher without a higher minimum wage. Period. Progressive suggestions that somehow price does not effect demand are just as ignorant of science as a Kansas evangelical denying evolution.

Posted by: coyote on November 3, 2006 at 12:19 PM | PERMALINK

Ah, a thread lacking in Kevin's pet trolls... so refreshing!

Anyway, I'd like to see some numbers to back up your claim about Washington leading in potato production, Jeff II. From the latest information I could find, 2003-2004, Idaho is still tops.

Link is to a pdf, relevant chart is at the bottom.

Posted by: S Ra on November 3, 2006 at 12:20 PM | PERMALINK

As I understand it, the concern of business owners is not the increase in the minimum wage, per se, so much as the automatic annual increase due to indexing.

While Kevin says the negative evidence is simply anecdotal or theoretical, is this because there has been no data gathered that point to negative effects or is it simply that none was cited in the article?

It would be interesting to discover, for example, if the cited rise in wages (up 8% in four years, twice the national average) was due solely or mostly to the minimum wage indexing. Likewise, have the increased wages been matched by increases in comsumer prices at twice the rate of the rest of the country, as well? If so, then the recipients of the higher minimum wage haven't gained much.

Perhaps a better way to frame the question is this: Doesn't indexing of the minimum wage amount to shutting off further debate on the issue? And is it possible, or even probable, that indexing will eventually raise the minimum wage past what had been journeyman (rather than entry level) wages? What will be the effects of that?

Sorry, I don't have any insults to share. Merely questions.

Posted by: Trashhauler on November 3, 2006 at 12:22 PM | PERMALINK

S Ra,

Thank you, Sir. Will have Larry send you a spud, when he finishes spit shining my boots.

Posted by: J R Simplot on November 3, 2006 at 12:29 PM | PERMALINK

I agree with Kevin. The statistics show that the 2002 rise in minimum wage in Oregon didn't do any harm, or, not enough harm to measure.

Now, are there any statistics showing that it did any good?

Posted by: ex-liberal on November 3, 2006 at 12:31 PM | PERMALINK

Man, the first five points in a thread are made by myself, craigie and cmdicely? What's up with the trolls, guy? Early warning system not working?
Posted by: Stefan on November 3, 2006 at 11:35 AM

They had to call their boss to get the correct talking points.

Posted by: slanted tom on November 3, 2006 at 12:32 PM | PERMALINK

"Incidentally, is there any research on the impact of minimum-wage increases upon wages in non-minimum-wage jobs?

It seems at least hypothetically like it would lead to an overall bump upwards - if the minimum wage goes from $5 to $7, someone who had been making 7 is probably going to be inclined to ask for $9 - but I've never seen anything cited."

Oh there probably is actual research about it, but anecdotally I got a raise exactly like that in college. Minimum went from six to seven and my pay went from $7.50 to $8.50. Didn't even have to ask. I think it is actually quite common for low end pay rates to be literally tied to the minimum wage like that.

Another job I had, I am certain, would have worked the same way. The basic pay rate was minimum wage, but forklift drivers got $.75 more an hour. So if the minimum went up thier pay would have gone up by the same amount.

So thats 2/3 of the hourly low wage jobs I have ever had. The other one had a pay rate well above the minimum, but only 3-4 hours per day.

Posted by: jefff on November 3, 2006 at 12:35 PM | PERMALINK

It is interesting to me how the human mind works. It has a great ability to ignore evidence in favor of belief. We have a limited ability to unlearn falsehoods.

If one has a broad nation-as-team view, instead of an individual-as-sociopath view of economics: we would reasonably find that we would all be well served by a minimum national standard of education, employment/retirement, and healthcare.

But we would have to unlearn the notion that money is itself value, or that the stock market creates wealth, or that retires live on anything other than current production, no matter that they have forgone consumption for x years. The economy is not additive, it is dynamic.

Posted by: Tom on November 3, 2006 at 12:42 PM | PERMALINK

Well, sorry that this is not Opinion Journal, or National Journal, or NRO, but, perhapsexone, peruse http://www.epi.org/content.cfm/bp178 of the Economic Policy Institute - eek, they support labor, oh mein gott in 1600ville.

And JeffII, if Ritzville Spuds are so great, why does Heinz Ketchup sometimes say on their labels, "Will work for Ore-Ida"?

Posted by: thethirdPaul on November 3, 2006 at 12:51 PM | PERMALINK

"...though it is impossible to say what would have happened had the minimum not been raised..."

Nothing like raising the minimum wage at an economic low and riding the trend upwards with the rest of the economy, then taking credit for the growth.

The anecdotal evidence, whatever its worth, is local. The "concrete and statistical evidence" is the result of national trends that would have been there no matter what they had done with their minimum wage.

"Wages are up?" Duh.

Posted by: hayek on November 3, 2006 at 1:02 PM | PERMALINK

And JeffII, if Ritzville Spuds are so great, why does Heinz Ketchup sometimes say on their labels, "Will work for Ore-Ida"? Posted by: thethirdPaul

Oh yeah! You and what army? In any case, Ritzville is wheat country. Moses Lake, now thems sum special spuds!

Posted by: JeffII on November 3, 2006 at 1:24 PM | PERMALINK

Minimum wage has an odd doomsday cousin--smoking bans. Business associations always offer the same doomsday response to raising the minimum wage and to restaurant smoking bans. The evidence on both has been exactly the opposite and, still, politicians opposed to either change continue to cite the same nonexistent data. To the best of my knowledge, there is not one municipality where restaurant business suffered any setbacks after a smoking ban passed. And the same is true of minimum wage raises. Business picks up, oddly enough. How long are we going to suffer this nonsense--reporters always use the ridiculous quotations for "balance". The only other argument I've ever heard against smoking bans is the basic libertarian drivel, but libertarians completely reject any possibility that second hand smoke is a health hazard and that it bothers people. The argument against minimum wage increases frequently boils down to the same thing, but here it makes for a very short slippery slope to social darwinism.

Posted by: buck turgidson on November 3, 2006 at 1:26 PM | PERMALINK

Kevin

How in the world does this -

"...it's worth noting that virtually all the evidence on the anti-minimum wage side is either anecdotal or theoretical. The evidence on the pro-minimum wage side is concrete and statistical.

Square with this -

Academic economists traditionally have argued that raising the minimum wage inevitably leads employers to hire fewer workers. The experience of the late 1990s and a landmark study of employment in the fast-food industry by economists David Card and Alan Krueger in New Jersey (which raised its wage) and Pennsylvania (which didn't), has undermined that view.

But they haven't won over everyone. In a new report, economists David Neumark of the University of California at Irvine and William Wascher of the Federal Reserve Board say a review of more than 90 studies in more than 15 countries since the early 1990s shows nearly two-thirds of the studies find a "consistent" though not always statistically significant negative impact on employment. Fewer than 10 found a consistently positive impact.

Let me try and make it clearer for you.

The very well balanced article states that one study done in one industry by Card and Krueger has tried to argue against the traditional view that raising the minimum wage negatively effects employment.

A survey study by Neumark et al. finds that "...'the weight of empirical evidence' supports the traditional view.

In other words the academic studies still line up on the side that raising the minimum wage negatively effects employment.

Please Read more Carefully!!!!!

Posted by: John Hansen on November 3, 2006 at 1:33 PM | PERMALINK

Regarding Drum's PS, labor costs are only a small part of the cost of veggies, so if growers were forced to pay more some of them might go offshore, and others might be forced to mechanize. What's happening now is they team up with "liberals" to push for more cheap labor.

Paying an illegal immigrant less than the minimum wage shows up in the accounts

Not in many cases. For instance, L.A. has a multi-billion dollar "shadow economy" with people being paid in cash. Aided and abetted, of course, by "liberals".

If there were less illegal labor available, wages would naturally rise and no minimum wage hike would be needed. And, innovation would increase as well. Two main groups stand in the way of that: business, and "liberals".

-- In other news: Here's Part 1 of my list of 2006 Endorsements. In less recent news, did you know that ACLU chapters, MALDEF, and the SPLC have indirect links to the Mexican government?

Posted by: TLB on November 3, 2006 at 1:56 PM | PERMALINK

Several posters touched on it, but I'll say it directly:

"Higher wages are what we're going to get if we seriously cut down on immigration.."

Not immigration, illegal immigration. There is a very real difference and it's way past time to acknowledge it.

Posted by: zak822 on November 3, 2006 at 2:10 PM | PERMALINK

As I understand it -- and I may be wrong -- a lot depends on the timeframe. In the short run, raising the minimum wage has no negative effect on employment as long as the level is below the value to the employer of that labor. It just reduces the employer's profits. But it increases the incentive for employers to look into substituting automation or offshore labor for labor that is covered by the minimum wage.

So one thing to look at is how easily a job can be offshored. Call centers? No problem. Waitstaff? Not very practical for a restaurant to have someone in Bangalore take your dinner order and not possible for them to bring it to your table. The same dynamic applies when it comes to automation. Some jobs are easier to get done by a machine than others.

On the other hand, to the extent that it increases private consumption because minimum-wage workers have more money to spend (See Ford, Henry), it acts as an economic stimulus, creating growth and more jobs. So even when there are direct job losses, there are some offsetting gains.

Then there's the effect on nutrition, education and the raising of emotionally healthy children, all of which are improved by the direct effect a rise in the minimum wage has on poor people and all of which have long-term, positive effects on productivity.

So while the picture isn't clear, one thing is certain: It's a little more complicated than the wingnuts who only got as far as Econ 101 would have you believe.

Posted by: expatjourno on November 3, 2006 at 2:22 PM | PERMALINK

Still trying to figure how all of those undocumented workers got into Aerospace and screwed up Tom's rockets.

Hey, John Hansen, is Elaine Bennett still typing for you!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

Posted by: thethirdPaul on November 3, 2006 at 2:46 PM | PERMALINK

Here's a tip: almost everything Republicans say is wrong. They think raising taxes will cause a tailspin. They think allowing poor people access to help will increase poverty. They think not killing murderers will increase murder rates. They think outlawing abortion will protect life. They think bombing people will make them like us. They thought outlawing flag-burning was necessary to save our way of life. They thought ending the gold standard was the ending of American business. They thought ignoring New Orleans would help them to re-build.

They. Are. Always. Wrong.

It's hard to believe, but easy to remember.

Posted by: Jim Pharo on November 3, 2006 at 2:56 PM | PERMALINK

why does Heinz Ketchup sometimes say on their labels, "Will work for Ore-Ida"?

Clearly because they've never had Long Island potatoes. It should say "Will work for Tiger Spuds"!

Posted by: thalarctos on November 3, 2006 at 3:59 PM | PERMALINK

They. Are. Always. Wrong.

indeed

Posted by: craigie on November 3, 2006 at 4:00 PM | PERMALINK

Most Pac NW tater farmers are hard-core right wing Mormons. Think Albertson's, Simplot, etc.

Posted by: SocraticGadfly on November 3, 2006 at 5:14 PM | PERMALINK

from above: They. Are. Always. Wrong.

Let's start with Rush Hudson Limbaugh III.

Rush was so damn sure the Clinton economic plan would be a disaster that he offered to bet the Democratic National Committee $1 million that at least three of the following five things would happen by 1996:

The deficit would grow;

unemployment would increase;

inflation would rise; interest rates would surge;

and the President's (Clinton) approval rating would be no higher than 45 percent.

Hey, Rush, you whiffed on all five!

James Carville - 1999 Salon.com

Posted by: mr. irony on November 3, 2006 at 5:42 PM | PERMALINK

People who have jobs that pay a buck or two over minimum wage do not, in my experience, have much success in "demanding" or even just asking for more. Those jobs are not often subject to compensation negotiation sessions -- it's generally a "take it or leave it" proposition from the management.

Posted by: nyclept on November 3, 2006 at 5:54 PM | PERMALINK

The article doesn't explain whether employment in min wage jobs is up or down in Oregon, and probably couldn't account for all the variables which affect employment.

Ever notice how Card and Krueger is frequently cited by min wage proponents? Does the absence of any reinforcing citations to go along with that one ever raise the obvious question in anyone's mind?

Posted by: VRWC on November 3, 2006 at 6:20 PM | PERMALINK

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Posted by: 手机图片 on November 4, 2006 at 9:46 AM | PERMALINK

Always remember that it isn't "raising" something anyway unless you do it in real, CPI adjusted dollars. So actually, the MW has declined. So-called opponents of "raising the minimum wage" should have to be asked why they are in favor of continued decline in real MW value.

Posted by: Neil' on November 4, 2006 at 1:28 PM | PERMALINK




 
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