OT: Minimum wage proposal in SD

[SK in CV]

[quote=EconProf][quote=SK in CV][quote=EconProf]We economists are largely in agreement about raising the minimum wage: it will kill jobs.
[/quote]

No, we economists are NOT largely in agreement that it will kill jobs. There is little evidence that it ever has before. At very best, economists have no f’ing clue whether it will kill jobs. At worst, they know exactly what will happen.

A plurality of economists think that the costs of raising the minimum wage are outweighed by the benefits.

At least 600 phd economists think that increases in the minimum wage “have had little or no negative impact on employment of minimum-wage workers:

In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.

http://www.epi.org/minimum-wage-statement/%5B/quote%5D
Economists range from far right to far left, so the fact that the Economic Policy Institute could find 600 economists, out of tens of thousands, to support a minimum wage increase does not say a lot.
I noticed that those 600 included some distinguished notables as well as junior college instructors.
Please remember that I said economists are “largely in agreement” about the harmful effects of a minimum wage hike–meaning a majority. SK carefully says a “plurality” of economists favor a hike–meaning a minority. Glad we agree on that.
And let’s take a closer look at that neutral-sounding Economics Policy Institute. Turns out it is headed up by Richard Trumpka, head of the AFL-CIO. And ten of the Board of Directors are union heads. Nothing suspicious there.[/quote]

We don’t agree. “largely in agreement” would imply a majority. There is no majority. There is no agreement.

[CA renter]

EconProf,

I’ve read a number of studies that have shown that there are negligible or beneficial outcomes as a result of minimum wage increases.

Since you’re so sure of the harmful effects of minimum wages increases (just as sure as you were about the erroneous belief that the private market delivers superior results at a lower cost, and as sure as you were that teachers leave the profession because of unions…which could not be more absurd), please show us some evidence, based on historical facts (not right-wing talking points or “economic models”), showing that minimum wage increases have a negative overall effect on the economy.

[urbanrealtor]

[quote=EconProf]
UR, you are citing busy fast food places in Hillcrest, but the range of minimum wage workers in America covers a wide swath of industries–agriculture, leisure, lodging, mom and pop stores, etc. The jobs are entry level, and almost no one stays at minimum wage for long. Also, almost never is the minimum wage earner the only income source for the household. The handicapped and the risky hire, especially minority youths and high school dropouts get these jobs at the bottom of the income ladder in order to prove themselves and move up from there. I’d rather not cut off the bottom rung of the income ladder for these people.[/quote]

2 problems with your position:

1: We are not talking about a global increase.
I will not assert that raising wages in Mississippi is important. This conversation is exclusively about the city of SD.

2: The assertion that this removes the lower rung of income is faulty. That minimum has been reduced dramatically in the last few years just from inflation. And not even high or galloping inflation.
By your logic a nonexistent min wage would be preferable for lower-skilled workers.
One has only to look at the fact that virtually every developed economy has adopted min wages to determine the overall benefit (or lack thereof) of this faulty thinking.

Bonus point:
I was not making the assertion earlier that economists are a diverse and non-homogeneous group. That reality is so obvious as to be absurd.

[EconProf]

Sure, CAR.
I have found a lot of facts and figures, pro and con, at Forbes.com. Search under “James Dorn” for several articles showing data.
Warning: Forbes is a pro business magazine. You will get the viewpoint of actual employers.

[no_such_reality]

Low wage employment is a form of negative externality like pollution that allows a manufacturer or service provider to exploit the market by passing costs unto non-consumers given them an advantage over those that don’t leverage the same externality

[CA renter]

[quote=EconProf]Sure, CAR.
I have found a lot of facts and figures, pro and con, at Forbes.com. Search under “James Dorn” for several articles showing data.
Warning: Forbes is a pro business magazine. You will get the viewpoint of actual employers.[/quote]

Okay, I just googled “James Dorn minimum wage increase” and the first article I got stated this:

“When President Obama advocates a higher minimum wage in his State of the Union Address, he will no doubt argue that by increasing the minimum to $10.10, workers will have fatter pay checks and spend more, thus stimulating the economy and creating more jobs. In fact, economic logic tells a different story.”

“…Proponents of the minimum wage argue that those workers who do retain their jobs will consume more, which will increase aggregate demand and increase GDP. But that line of argument is a case of upside-down economics. Consumption is not a determinant of economic growth; it is the result of a prior increase in production. Workers cannot be paid what they haven’t first produced.”

http://www.cato.org/blog/mr-president-increasing-minimum-wage-wrong-medicine-ailing-economy

————–

In other words, it’s exactly what I said you would try to put forward in order to back up your views: right-wing talking points based on already disproved right-wing economic theories.

The supply-side, trickle-down dogma has been debunked. Witness no less than the past ~30 years of our grossly deteriorating economy and middle class as proof. Reagan and was an idiot and a tool for powerful interests whose sole desire was, and is, to funnel more and more of our world’s wealth and resources into the hands of these already very wealthy and powerful interests. He led us down a path that we may never be able to recover from.

Again, I’m asking for some kinds of evidence based on historical FACTS, not talking points.

[CA renter]

Seriously, reading James Dorn’s drivel makes me wonder how he ever managed to get an audience outside of those whose interests he is serving.

Look at this nonsense (from the linked article, above):

A higher minimum wage—without a corresponding increase in the demand for labor caused by an increase in labor productivity (due to more capital per worker, better technology, or more education)—will mean fewer jobs, slower job growth, and higher unemployment for lower-skilled workers. Higher-skilled workers and union workers will benefit, but only at the expense of lower-skilled workers, especially the young and minorities. There is no free lunch.

He doesn’t even seem to get the irony there. If you increase labor productivity, all else being equal, it will result in a *reduction* in the demand for labor. The ONLY things that will increase demand are changes in fashion/trends, or having a customer base that grows in population, or whose wealth/income increases, or some combination of these things.

Lowering taxes for the wealthy does NOT increase demand, nor does it benefit the economy. Increasing the wealth of the already wealthy does NOT stimulate the economy. History shows us this time and time, again. Increasing the wages of the greatest number of people (usually via taxes or other regulations), and reducing the wealth/income gap DOES stimulate the economy.

[SK in CV]

[quote=CA renter][quote=EconProf]Sure, CAR.
I have found a lot of facts and figures, pro and con, at Forbes.com. Search under “James Dorn” for several articles showing data.
Warning: Forbes is a pro business magazine. You will get the viewpoint of actual employers.[/quote]

Okay, I just googled “James Dorn minimum wage increase” and the first article I got stated this:

“When President Obama advocates a higher minimum wage in his State of the Union Address, he will no doubt argue that by increasing the minimum to $10.10, workers will have fatter pay checks and spend more, thus stimulating the economy and creating more jobs. In fact, economic logic tells a different story.”

“…Proponents of the minimum wage argue that those workers who do retain their jobs will consume more, which will increase aggregate demand and increase GDP. But that line of argument is a case of upside-down economics. Consumption is not a determinant of economic growth; it is the result of a prior increase in production. Workers cannot be paid what they haven’t first produced.”

http://www.cato.org/blog/mr-president-increasing-minimum-wage-wrong-medicine-ailing-economy

————–

In other words, it’s exactly what I said you would try to put forward in order to back up your views: right-wing talking points based on already disproved right-wing economic theories.

The supply-side, trickle-down dogma has been debunked. Witness no less than the past ~30 years of our grossly deteriorating economy and middle class as proof. Reagan and was an idiot and a tool for powerful interests whose sole desire was, and is, to funnel more and more of our world’s wealth and resources into the hands of these already very wealthy and powerful interests. He led us down a path that we may never be able to recover from.

Again, I’m asking for some kinds of evidence based on historical FACTS, not talking points.[/quote]

You picked a great paragraph to quote there CAR. Your analysis is spot on. That last sentence is absolutely hysterical.

Consumption is not a determinant of economic growth; it is the result of a prior increase in production. Workers cannot be paid what they haven’t first produced.

it is pure gibberish. A lot of fancy sounding words strung together that mean at best absolutely nothing and at worst, an absolute falsity. Consumption IS a determinant of economic growth. It has absolutely nothing to do with an increase in production. If it did, then wages would have risen much much faster than they actually have over the last 3 decades. Productivity has more than doubled since 1975. Wages, after adjusting for inflation, have been flat or down.

[Anonymous]

[quote=EconProf]We economists are largely in agreement about raising the minimum wage: it will kill jobs.
The recently proposed mild increase in the federal minimum wage would cost about a half-million jobs, according to federal officials.
But the huge jump to $13.09 for San Diego only would have a far more powerful impact on employment within our city limits.[/quote]

We US Senators employ many economists. My favorite 3 or 4 are all in favor of raising the minimum wage. One crazy bastard wants to peg it at $15 in a podunk place like Altoona PA and adjust it by COLA across the board.

The economist who carries my bag from the parking lot says that Krueger convinced him of the inadequacy of the simple supply-and-demand model when applied to the labor market for low-wage workers. I said “hurry up, Jimmy, we’re gonna miss the elevator.” Good times.

[CA renter]

Pretty amazing that they are still trying to foist this stuff on the ignorant (but slowly waking up) American public, isn’t it?

[CA renter]

[quote=US Senator][quote=EconProf]We economists are largely in agreement about raising the minimum wage: it will kill jobs.
The recently proposed mild increase in the federal minimum wage would cost about a half-million jobs, according to federal officials.
But the huge jump to $13.09 for San Diego only would have a far more powerful impact on employment within our city limits.[/quote]

We US Senators employ many economists. My favorite 3 or 4 are all in favor of raising the minimum wage. One crazy bastard wants to peg it at $15 in a podunk place like Altoona PA and adjust it by COLA across the board.

The economist who carries my bag from the parking lot says that Krueger convinced him of the inadequacy of the simple supply-and-demand model when applied to the labor market for low-wage workers. I said “hurry up, Jimmy, we’re gonna miss the elevator.” Good times.[/quote]

Give workers the same power and voice that corporate America has and let’s see how that “free market” supply and demand affects labor prices, shall we?

[CA renter]

BTW, I think that the ever-shrinking labor force participation rate is showing us, loud and clear, that wages aren’t nearly high enough. Those who are able to stay out of the workforce are staying out. Working no longer makes sense when the cost of working (for mothers, in particular, this can be very high) is greater than the wages one would earn.

I expect to see more and more people choosing to consolidate families/housing, retire earlier, and drop out of the workforce to provide caretaking services for the family.

[EconProf]

[quote=CA renter]Seriously, reading James Dorn’s drivel makes me wonder how he ever managed to get an audience outside of those whose interests he is serving.

Look at this nonsense (from the linked article, above):

A higher minimum wage—without a corresponding increase in the demand for labor caused by an increase in labor productivity (due to more capital per worker, better technology, or more education)—will mean fewer jobs, slower job growth, and higher unemployment for lower-skilled workers. Higher-skilled workers and union workers will benefit, but only at the expense of lower-skilled workers, especially the young and minorities. There is no free lunch.

He doesn’t even seem to get the irony there. If you increase labor productivity, all else being equal, it will result in a *reduction* in the demand for labor. The ONLY things that will increase demand are changes in fashion/trends, or having a customer base that grows in population, or whose wealth/income increases, or some combination of these things.

Lowering taxes for the wealthy does NOT increase demand, nor does it benefit the economy. Increasing the wealth of the already wealthy does NOT stimulate the economy. History shows us this time and time, again. Increasing the wages of the greatest number of people (usually via taxes or other regulations), and reducing the wealth/income gap DOES stimulate the economy.[/quote]
Thank you SK and CAR. You are both revealing two common mistakes about the economy that cloud your thinking. One is that the economy’s output is a fixed amount to be divided up, like a pie. That’s true in the short run, but in the long run, which is what really counts, it is dynamic and grows. So increased productivity tends to benefit all groups, albeit disproportionately. Your comment about wages being flat or declining for three decades shows this mindset. Total compensation, including health and other fringe benefits are clearly up, and actual living standards, which include technological changes in goods and services we buy push up living standards further. Secondly, you are ignoring incentives, for both workers and employers. Supply-side advocates, like myself, stress incentives and expanding the overall economy, while your demand-side approach only divides what exists in the short run.
We have now had six years of demand side monetary and fiscal policies, begun by Bush and expanded by Obama. We all know the dismal results in terms of employment, the growth in poverty, and weak increase in living standards. The increased taxes and regulations are the exact opposite of what supply-siders advocate. Result–1/10 of one percent growth in the latest quarter. Perhaps it is time to try something different.

[SK in CV]

[quote=EconProf]Thank you SK and CAR. You are both revealing two common mistakes about the economy that cloud your thinking. One is that the economy’s output is a fixed amount to be divided up, like a pie. That’s true in the short run, but in the long run, which is what really counts, it is dynamic and grows. So increased productivity tends to benefit all groups, albeit disproportionately. Your comment about wages being flat or declining for three decades shows this mindset. Total compensation, including health and other fringe benefits are clearly up, and actual living standards, which include technological changes in goods and services we buy push up living standards further. Secondly, you are ignoring incentives, for both workers and employers. Supply-side advocates, like myself, stress incentives and expanding the overall economy, while your demand-side approach only divides what exists in the short run.[/quote]

Where has the benefit of increased productivity over the last 35 years gone? Not to employees. Total compensation has barely budged. The only thing that has increased is profits enuring to equity holders. The fallacy of supply side theory is that increased productivity will be shared. It hasn’t been shared. Living standards have not increased. Total compensation has not even kept pace with inflation.

Beyond that, I’m a bit flabbergasted by your description of demand-side economics. You should be embarrassed if you actually teach your students that garbage.

[ltsddd]

Here’s a data point. Rent for a studio in a SD community where I grew up is renting for $900+/month. That same studio rented for $75/month 34 years ago. Today’s minimum wage – $9/hour, 34 years ago $3.10/hour.

Let me know if you seriously believe that living standards has gone up for those earning minimum wages.

[Author]

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