Question about the effect of Minimum wage law on emplyment

[fskimospy]

...You are forgetting one major huge fucking element of economics 101 when you say "we shud have seen more unemployment!11"...

inflation. And we have certainly seen plenty of that.

No we haven't.

 

[s0me0nesmind1]

No we haven't.

Really? I seem to recall a time when a damn good home used to cost ~$20k. How much would that home cost now? :whiste:

I also seem to recall when anyone could fill up their tank of gas for < $50.... Now you're lucky if it's under $100 for some people in trucks.

 

[fskimospy]

Really? I seem to recall a time when a damn good home used to cost ~$20k. How much would that home cost now? :whiste:

I also seem to recall when anyone could fill up their tank of gas for < $50.... Now you're lucky if it's under $100 for some people in trucks.

Do you just mean inflation throughout history? Mild inflation is a good thing.

Maybe you should clarify how much higher inflation is than what you think it should be and how much of that you attribute to minimum wage laws.

 

[s0me0nesmind1]

Do you just mean inflation throughout history? Mild inflation is a good thing.

Maybe you should clarify how much higher inflation is than what you think it should be and how much of that you attribute to minimum wage laws.

...doubling...trippling...and quadrupling+ prices...aren't.... "mild".... do you need help with math?

 

[nehalem256]

Really? I seem to recall a time when a damn good home used to cost ~$20k. How much would that home cost now? :whiste:

Maybe if you are 90-100 years old which I somehow doubt.

 

[s0me0nesmind1]

Maybe if you are 90-100 years old which I somehow doubt.

...they were as cheap as that during the 60's - 70's hate to break it to you... :|

 

[fskimospy]

...doubling...trippling...and quadrupling+ prices...aren't.... "mild".... do you need help with math?

Over what time frame? Do you need help with economics?

 

[sandorski]

...doubling...trippling...and quadrupling+ prices...aren't.... "mild".... do you need help with math?

Over time they are. Late 70's/early 80's Inflation was very high. Prices doubled in 7ish years. Since that time and especially the last decade or so Inflation has been very low.

 

[s0me0nesmind1]

Over time they are. Late 70's/early 80's Inflation was very high. Prices doubled in 7ish years. Since that time and especially the last decade or so Inflation has been very low.

And this is a topic that isn't about history? Exactly....

 

[rudder]

Here is a well written paper... if someone could translate into english and repost:

http://econweb.tamu.edu/jmeer/Meer_West_Minimum_Wage.pdf

 

[fskimospy]

And this is a topic that isn't about history? Exactly....

Inflation over what time frame and how much is attributed to minimum wage?

 

[EagleKeeper]

Except your example is just plain wrong, you just say if you increase the minimum wage by 10%, that increases cost by 10%. Which is flatly wrong, and doesn't make any sense.

It does not increase the overall cost of a product by 10%.
However, any sub parts of the product will be affected as well as transportation costs to deliver/store the product.

There is a ripple effect that happens; the more labor is involved in the product; the better the ripple.

 

[dank69]

It does not increase the overall cost of a product by 10%.
However, any sub parts of the product will be affected as well as transportation costs to deliver/store the product.

There is a ripple effect that happens; the more labor is involved in the product; the better the ripple.

Why would transportation costs increase?

 

[glenn1]

Because that doesn't fit with my preconceived notion that minimum wage bad because socialism. As an American citizen, it is my God given right to believe that our duty is to fuck the lower class in pursuit of the holy dollar. Profit margin is righteous, labor costs are wicked. The First Congressional Church of the NYSE tells us so. Besides, how else are my kids going to learn the value of the dollar if they aren't forced to work for slave wages? I certainly can't be bothered to teach them.

Yep, because if you raise the minimum wage, the only impact it will have is that business owner employers will have less $100 bills to light their Cuban cigars with. There's a near infinite pool of "rich person money" being horded under mattresses that could be given to workers instead, and if the owner is in a low profit margin business then fuck him since he obviously needs a better business plan.

Let us know how raising the minimum wage further works once you've driven every single business out of the inner city areas instead of just leaving a handful of liquor and convenience stores like now. Sure folks will need to take 6 different buses to go 25 miles to the suburbs for a grocery store, but those lucky few who do have a job will be a whole $1 or so an hour better off.

 

[jackstar7]

I'm curious when the last time someone here was working for the minimum wage...



And sweet christmas there is a lot of active ignorance on display in this thread.

 

[fskimospy]

Yep, because if you raise the minimum wage, the only impact it will have is that business owner employers will have less $100 bills to light their Cuban cigars with. There's a near infinite pool of "rich person money" being horded under mattresses that could be given to workers instead, and if the owner is in a low profit margin business then fuck him since he obviously needs a better business plan.

Let us know how raising the minimum wage further works once you've driven every single business out of the inner city areas instead of just leaving a handful of liquor and convenience stores like now. Sure folks will need to take 6 different buses to go 25 miles to the suburbs for a grocery store, but those lucky few who do have a job will be a whole $1 or so an hour better off.

Okay, earlier a whole bunch of meta-analyses were posted that found no relationship between the minimum wage and unemployement, at least as it has been enacted in the US. Your rant aside, can you explain why they are wrong?

 

[Atreus21]

This chart, after some investigation, shows minimum wage reflected in current dollars (not adjusted for inflation). However, the correlation is pretty clear.

 

[fskimospy]

I wonder if anything else happened from say... the second half of 2007 onward?

 

[dank69]

I wonder if anything else happened from say... the second half of 2007 onward?

OMG a $0.70 raise in minimum raise caused the whole recession?! D:

 

[nextJin]

Okay, earlier a whole bunch of meta-analyses were posted that found no relationship between the minimum wage and unemployement, at least as it has been enacted in the US. Your rant aside, can you explain why they are wrong?

Well for starters all of those statistics were regional I believe and limitied to only 2 chains in one of the examples, also a state minimum vs federal minimum. There have been two major papers written in at least the last year both with drastically different conclusions.

http://www.nber.org/papers/w18681

http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

I believe the cepr link is the one referenced in the wiki but I could be wrong, I just remember those names from that paper link after reading it a few months ago. Paul Krugman has referenced the CEPR paper alot recently but he is also involved with the NBER.

Human Action > Predicting Economics

 

[Atreus21]

I wonder if anything else happened from say... the second half of 2007 onward?

The question was if there is a correlation. Causation is another matter.

Year |Current |Constant 1996 Dollars
1966 $1.25 $6.05
1967 $1.40 $6.58
1968 $1.60 $7.21
1969 $1.60 $6.84
1970 $1.60 $6.47
1971 $1.60 $6.20
1972 $1.60 $6.01
1973 $1.60 $5.65
1974 $2.00 $6.37
1975 $2.10 $6.12
1976 $2.30 $6.34
1977 $2.30 $5.95
1978 $2.65 $6.38
1979 $2.90 $6.27
1980 $3.10 $5.90
1981 $3.35 $5.78
1982 $3.35 $5.78
1983 $3.35 $5.28
1984 $3.35 $5.06
1985 $3.35 $4.88
1986 $3.35 $4.80
1987 $3.35 $4.63
1988 $3.35 $4.44
1989 $3.35 $4.24
1990 $3.80 $4.56
1991 $4.25 $4.90
1992 $4.25 $4.75
1993 $4.25 $4.61
1994 $4.25 $4.50
1995 $4.25 $4.38
1996 $4.75 $4.75
1997 $5.15 $5.03
1998 $5.15 $4.96
1999 $5.15 $4.85
2000 $5.15 $4.69
2001 $5.15 $4.56
2002 $5.15 $4.49
2003 $5.15 $4.39
2004 $5.15 $4.28
2005 $5.15 $4.14
2006 $5.15 $4.04
2007 $5.85 $4.41
2008 $6.55 $4.77
2009 $7.25 $5.30
2010 $7.25 $5.22
2011 $7.25 $5.06
2012 $7.25 $4.97

This is the minimum wage rate in both current and constant 1996 dollars since 1955. All we have to do now is find teenage or unskilled unemployment numbers by year, which for some reason is not as easy to find.

 

[fskimospy]

The question was if there is a correlation. Causation is another matter.

This is the minimum wage rate in both current and constant dollars since 1955. All we have to do now is find teenage or unskilled unemployment numbers by year, which for some reason is not as easy to find.

Right, but I think we both know that showing a correlation that involves increasing unemployment from 2007-present is probably not a very informative way of looking at things.

 

[nehalem256]

This chart, after some investigation, shows minimum wage reflected in current dollars (not adjusted for inflation). However, the correlation is pretty clear.

Actually it looks like it increased in 2008 the same as for everyone else.

Maybe there was other economic events that were influencing the unemployment rate at that time?

 

[Atreus21]

Right, but I think we both know that showing a correlation that involves increasing unemployment from 2007-present is probably not a very informative way of looking at things.

Agree somewhat, that's why we should create our own graph if anybody knows where to find unemployment data for unskilled labor.

 

[sm625]

It is impossible to simply look at numbers and draw conslusions. Take that chart posted above. It does appear at first glance that minimum wage laws had something to do with the rise in teenage unemployment. But come on, we had a major recession and teenage unemployment would have risen even if minimum wage had declined. How do I know that? I just do, because an economics education is more than jsut the sum of a bunch of charts. I also know that if we didnt have absurd minimum wage laws, we would not have exported a whole bunch of jobs to China, and we would still be making stuff here. Our exports would be much higher, and because of that our economy would be far more resilient. Especially when the Fed goes and prints a trillion dollars to "hold rates low" and "boost exports". For my first job I started at $3.25 an hour. There is nothing wrong with that. Forcing wages high forces more activity onto the black market where it cannot be taxed, and it also encourages more people to apply for welfare. Once they are on welfare they have more incentive to keep operating in the black market. In the black market there are no legal protections, therefore crime is bound to increase. That in itself raises the cost of things like police and fire services. It is all a vicious cycle of stupidity and it has pretty much singlehandedly destroyed this country. The government has no business interfering in the labor market, beyond upholding environmental protection regulations. Of course a great deal of those regulations are a bunch of crap too, but that's another issue.