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Strawman

Written By: - Date published: 5:38 pm, March 11th, 2009 - 56 comments
Categories: dpf, workers' rights - Tags: , ,

I’m always amazed at the intellectual hoops the neoliberal right will jump through to try and deny low income workers minimum wage increases.

David Farrar has a piece up today highlighting the case of Honduras, where they’ve apparently raised the minimum wage by 60% in one go, causing higher unemployment.

This, he says, highlights the dangers of raising the minimum wage and should

“serve as a lesson for those who think you can make everyone richer simply by increasing the minimum wage”.

I couldn’t think of a stupider strawman argument if I tried.

No one sensible suggests lifting the minimum wage here by 60% immediately – even Labour’s policy to lift it to $15 an hour by 2011 amounts to a 25% increase phased in gradually over three years.

And there’s no evidence that such a moderate phase-in of a higher minimum wage would lead to higher unemployment. After all, under the last Labour government the minimum wage increased by 70% over nine years, yet unemploment actually halved in that time.

Of course, Davids’ right that you can’t make everyone richer by increasing the minimum wage, but he misses the point. The minimum wage isn’t there to “make everyone rich”, it exists to ensure that people on low incomes are able to live their lives with some basic dignity and security. That’s something the neoliberal right seems to have a hard time understanding.

[The graph below is something I whipped up a while ago plotting the real minimum wage against unemployment. You’ll see there’s no real correlation between the two, despite what your orthodox neoliberals might tell you.]

unemploy-vs-min-wage-2

56 comments on “Strawman ”

  1. IrishBill 1

    If there is a correlation it would have to be that unemployment goes down as minimum wage goes up. As usual the new right don’t let the facts get in the way of a good story. If by “good story” you mean one aimed at redistributing wealth upward.

    • SHG 1.1

      Don’t you mean “minimum wage goes up as unemployment goes down”?

      Post hoc non est propter hoc.

      • IrishBill 1.1.1

        I was being facetious. As someone else has pointed out you can’t prove causation with stats but you can disprove it. In this case you can see that the thesis that raising the minimum wage causes unemployment to increase is empirically not true.

  2. John Dalley 2

    Seen as DPF is just a mouth piece for the National Government, what else could you expect from him.
    Nationals performance to date has been under-whelming and lately i get the distinct impression that John Key is losing control of his more Right Wing cohorts. Policy seems to be getting made “on the hoof” and i predict that within the next 6 month major cracks will start to show. Can’t wait to see the next set of polls.

  3. djp 3

    This is not a very scientific study.

    For one there are multiple factors at play. And it is possible to cherry pick data

    for example one could almost argue that between 92 and 96 we had the fastest drop in unemployment because the real min wage was decreasing.

    • Ag 3.1

      Yes, but you’d be talking as much rubbish as Farrar was.

      Someone needs to send him a large cork.

      • djp 3.1.1

        I think he likes corks

      • Pascal's bookie 3.1.2

        …one could almost argue that…

        That’s a new one.

        Usually the “One could argue..” line gets used when one knows one is on pretty thin ice.

        ie.The point one is arguing against is fairly strong, and one is not actually prepared to argue the only defence one can think of. Usually because one is not at all confident about a premiss or the logic. So one throws the argument out without claiming to make it oneself, as it were.

        It’s best responded to along the lines of “Well is one arguing that then?”, the traditional response to which is “Not that I’m aware of” and a shuffling of the feet.

        …one could almost argue that…” is just fail.

    • Ari 3.2

      One would of course have to completely ignore the long-term trend and be completely ignorant of basic data analysis to argue that, but hey, there’s no law against being stupid, so yes, one can argue obviously dumb points. That this is not data with a good correlation was precisely what Tane was saying, and the only point he made was that the strongest trend here was unemployment falling as the real minimum wage rose- all of which is perfectly factual and ought to be of no controversy.

      Don’t try and weasel around the fact that David had no point, and that the minimum wage can be safely raised without increased unemployment in at least some circumstances.

  4. George Darroch 4

    Not a scientific argument, certainly. But a pretty good counter example – unless DPF and friends are prepared to argue that unemployment would have dropped even further and we would have had 2.0% unemployment with lower minimum wages, or some such.

    A lot of economists say that if you have no minimum wage, unemployment will eventually reach zero – if you abolish social security too. Cause paid employment for $5 per hour is more attractive than starving, I’m sure.

    Actually, that was the point of National cutting the unemployment benefit to starvation levels… and Labour keeping it there.

    Incidentally, Denmark has some of the highest minimum wages in the world, equivalent to approx NZD$28 and 2.3% unemployment. And 2% inflation. Go figure.

  5. Greg 5

    To counter:

    Of course there is going to be very little corrolation between the minimum wage and overall unemployment. But give me a graph that shows unemployment for minimum wage workers and I guarentee you’ll see an effect.

    Yes unemployment dropped while the minimum wage was rising under Labour. However, thats because they did it during a time of massive economic growth. George gets it exactly right. Had the minimum wage not been raised unemployment would have dropped by more.

    What the left can’t seem to understand is a job is much better than no job at all.

  6. Lew 6

    GD,

    A lot of economists say that if you have no minimum wage, unemployment will eventually reach zero – if you abolish social security too.

    Technically, this is quite correct.

    Whether it’s a social good or not is a matter of political debate. People who say 100% employment is necessarily a social good beg the question of whether the collateral effects of crime, disease, dysfunction and human tragedy derived from abject poverty are worth it. I don’t think they are, and thankfully, neither do most other people with a say.

    L

  7. Tim Ellis 7

    IB wrote:

    If there is a correlation it would have to be that unemployment goes down as minimum wage goes up.

    I think you would be very hard-pressed to provide a causative relationship or reason for that IB.

    I understand your point, Tane, but in my view raising the minimum wage is only viable if demand for labour is increasing. All of the minimum wage increases during the last labour government occurred as labour demand was rising. That is not the case now. If you increase labour costs when labour demand is falling, then you will see greater unemployment. If labour costs are higher than the worker’s outputs, then that is also a recipe for increased unemployment.

    I don’t believe that increasing the minimum wage has a significant effect on workers’ incomes. If there is high labour demand, then the market will increase the price of labour. The difficulty with a minimum wage mechanism is that once you have raised the minimum wage when labour demand is high, then it is very difficult to lower the minimum wage again when labour demand is low to encourage businesses to take on more workers.

  8. r0b 8

    I think you would be very hard-pressed to provide a causative relationship or reason for that IB

    Well umm yeah – that’s why IB carefully said “correlation”, not causation.

    In general (outside closed formal systems) you can’t “prove” hypotheses, you can only disprove them. The real world data doesn’t prove the claim that “raising the minimum wage causes increased employment” (of course), but it does disprove the claim that “raising the minimum wage causes decreased employment”. Damn those facts eh, and their well known left wing bias.

    I don’t believe that increasing the minimum wage has a significant effect on workers’ incomes

    That’s the silliest thing I’ve heard in a long time. You need a wider circle of friends.

    • Tim Ellis 8.1

      r0b, I thought somebody might pick that comment up. My point is that if demand for labour rises, then so too will wages. In my view, the minimum wage increases over the last few years have only followed periods of increasing labour demand. It is the increasing demand for labour that has pushed up wages, not the minimum wage increases. If the minimum wage had stayed at $8 an hour, it would have been irrelevant since in a labour-scarce market nobody would have accepted wages of less than the market price. It’s the market price that dictates wage levels, not the minimum wage.

      I agree there is a point particularly with vulnerable, un-unionised, unsophisticated and/or unskilled workers where a minimum wage does protect their base wage levels and protects them from being paid significantly below the market value of their labour. But these are by far the minority of workers.

      I’m not arguing against having a minimum wage. I’m just suggesting that while it’s nice to think that the minimum wage is what drives an increase in workers’ incomes, I don’t believe it does. Where rises in the minimum wage increase the price of labour above its market value, that tends to lead to job losses.

      • r0b 8.1.1

        Where rises in the minimum wage increase the price of labour above its market value, that tends to lead to job losses.

        If that were so then obviously the “market value” for low wage jobs has been set too low for too long.

        • Draco T Bastard 8.1.1.1

          I think that comes down to a question that I don’t believe has ever been adequately answered:

          What is the minimum cost of supplying labour?

          This is where we would get a massive argument between the political right and left. The right seems to think that you can live on whatever the job pays no matter how little and the left believes that there’s more to life than dying for your employer.

  9. TightyRighty 9

    where did you get the graph tane? looks like you whipped it up on MS paint before plastering some titles on the axis. got a source? got anything remotely looking like a reference? or is it just what you think happened?

    IrishBill: That’s just desperate.

    • Matthew Pilott 9.1

      Yeah IB, anyone with an IQ bigger than their shoe size would realise that the Minimum Wage and Unemployment Rate aren’t exactly national secrets…what a tool.

    • Tane 9.2

      The figures are all publicly available from Stats NZ and have been published on this site and others before. If you dispute them then feel free to offer up your evidence for everyone to see.

      As Bill says, desperate.

  10. deemac 10

    mmm, Honduras… not exactly a model economy. Reminds me of what Mr Toad (aka Rodney Hide) said on Back Benches last week about North Korea – seems deregulation didn’t cause the economic crisis, as North Korea has heaps of regs and their economy is rubbish. Either he’s completely stupid or he thinks voters are.

  11. tsmithfield 11

    Your graph shows the problems with including only two variables when in reality there are numerous variables that could have contributed to the results. For instance, a third variable that could be responsible for both figures is likely the expanding world economy over the period which undoubtably contributed to a reduction in unemployment and most probably generated enough tax revenue to allow an increase in the minimum wage as more people were generating taxable income. Notice the lag between the minimum wage and the drop in unemployment that tends to support this argument. You need to think a bit more deeply before throwing up stats.

    So far as strawman arguments go, seen plenty of those here.

  12. I’ve never argued against raising the minimum wage in some circumstances – that is the real strawman argument.

    When there is a healthy growing economy,the minimum wage can be increased with a minimal impact on employment levels.

    That is massively different to advocating a 25% increase in the minimum wage during the biggest economic recession of the last 70 years.

    The absolutists on both ends are wrong.

  13. Pascal's bookie 13

    “I’ve never argued against raising the minimum wage in some circumstances – that is the real strawman argument.”

    Who said you had?

    Mr.Straw? 😉

    Tane’s post was quite specific about what claims of yours he was calling straw.

    (Hint: It’s the quote)

  14. NeillR 14

    It’s a trailing, not a leading, indicator – sheesh.

  15. ben 15

    Something like 98% of the work force is not affected by minimum wage legislation. For the 2% who are, and all the people forced out of the labour market because of it and therefore missing from your chart, minimum wage can be devastating.

    Nobody, certainly not labour economists, think there is much relationship between total unemployment and the minimum wage. You are testing a theory with your chart that nobody believes in.

    Straw man, anyone?

    • Felix 15.1

      For the 2% who are, and all the people forced out of the labour market because of it…

      You mean all those people who really, really want to work for $5 an hour? Yeah, they find the minimum wage terribly restrictive.

      Nobody, certainly not labour economists, think there is much relationship between total unemployment and the minimum wage.

      If you had bothered to read the post rather than just look at the pictures I doubt you would have felt the need to comment.

      • ben 15.1.1

        You mean all those people who really, really want to work for $5 an hour? Yeah, they find the minimum wage terribly restrictive.

        Heck Felix, I’d take more if someone would pay me it. The point is a person’s labour has a finite value. If you’re 18, looking for part time work and lack any qualifications then the minimum wage may well be pricing you out of the market. It may be illegal for an employer to pay you what you’re worth. Think about that while you’re sucking down your latte tomorrow morning.

        I remember looking for work as an 18 year old. I was offered a casual position at $3/hour IIRC in 1993. I was 18 and bored in the holidays and was desperate for work experience and to improve myself. I would have taken $0. Not for one second was I being exploited. I had the right to leave any time, no consequences. That arrangement would now be illegal. How completely f***ed up. Think about that while you’re sucking down your latte tomorrow morning.

        I did read the story, thanks, and the chart is simply useless at explaining anything. The one thing it cannot prove is that minimum wages have no effect on employment.

        • Felix 15.1.1.1

          Jesus ben, the “right to leave any time, no consequences” or lack thereof is not what defines exploitation – it’s the $3 a fucking hour that makes it exploitative.

          Of course you may be a special case. Based on the level of intellect and the basic comprehension skills you’ve displayed so far I doubt you’re even worth $3 an hour. Thankfully for the rest of the workforce the minimum wage is not set at the value of an hours work by a retarded sloth.

          And what’s your obsession with lattes? Get a proper drink you wet blanket.

          • ben 15.1.1.1.1

            Felix, no.

            It is not $3/hour that makes it exploitative. Not when I have alternatives. Not when the value of my production was low. Not when I wanted to be there in the full knowledge of the deal. Not when the wage was the smallest part of the value of that job to me. No. You’re 100% wrong. Your generalisations are worse than useless.

          • Felix 15.1.1.1.2

            What you don’t appear to understand is that you are quite welcome to volunteer your services for no charge at all – I do that quite regularly because I’m a helpful sort of guy.

            The minimum wage prevents employers from trying to get everyone to work for the token wage you were so happy to be paid.

            Do you really think every worker should be starting on $3 an hour? Remember, many minimum wage jobs don’t have opportunity for advancement attached, and many are fairly static in terms of output. Often (not always) these type of jobs can be performed equally well in the 1st week as in the 100th. Do you think people who have been working at the same job for 100 weeks should still be paid $3 an hour if their output hasn’t massively increased?

            I don’t think you have any understanding of the type of jobs we’re talking about. How many burgers per hour should you have to make for $3? How many for $6? How many for $12.50? 4 times as many as when you were on $3?

  16. Interestingly Harvard economist Greg Mankiw has a list of things that economists agree on in chapter 2 of his first year textbook. Number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers” and 79% of economists agree. I make a couple of comments on the strawman argument here.

  17. ben 17

    Felix there is plenty of data out there which shows workers starting on minimum wage don’t stay there for long.

    For people whose skills and experience are so limited that $3 (or, these days, $10) per hour is all a firm can offer, then minimum wage locks them out of the labour market and one important route to advancement.

    My preference is simply that workers be given the opportunity to take the highest offer for the labour they can get, free of blanket rules which virtually all the evidence shows is harmful to workers at the bottom. For some that will be $3. But not for long. For others that will be $10. And for others that will be $25.

    Why make it illegal to hire workers who cannot, for now and only temporarily, command a wage at least as high as the minimum wage? Why force employers to discriminate against them and demonstrably leave many unemployed? Tell me. The weight of evidence is unambiguous: minimum wage causes unemployment among the young and unskilled. Why lock them out of the labour market?

    • Felix 17.1

      Felix there is plenty of data out there which shows workers starting on minimum wage don’t stay there for long.

      Then show some.

      For people whose skills and experience are so limited that $3 (or, these days, $10) per hour is all a firm can offer, then minimum wage locks them out of the labour market and one important route to advancement.

      Please show some evidence. Or at least concoct a realistic scenario to demonstrate how this works in real life.

      My preference is simply that workers be given the opportunity to take the highest offer for the labour they can get

      We can. Any amount above $12.50 per hour.

      Why make it illegal to hire workers who cannot, for now and only temporarily, command a wage at least as high as the minimum wage?

      Because that’s not a realistic scenario. You’re assuming that everyone can advance to better paying work.

      Why force employers to discriminate against them

      No, employers are simply required to pay a livable wage.

      and demonstrably leave many unemployed?

      You have yet to demonstrate this.

      The weight of evidence is unambiguous: minimum wage causes unemployment among the young and unskilled.

      Nonsense, if there were a weight of evidence you’d provide some instead of just stating your opinion as if it were fact.

      You seem to be suffering under the illusion that as individuals improve their circumstances the whole of society is somehow better off – as if no-one need take their place.

      Let us be clear: You are suggesting a society in which at any given time there are over 120,000 people earning $120 per week before tax. Where do you think these people and their families will live? On the streets? What do you think they will eat? How many wouldn’t resort to crime?

      Jesus I hope you’re just trolling. I can’t imagine you’re as stupid as you seem.

      • Paul Walker 17.1.1

        “The weight of evidence is unambiguous: minimum wage causes unemployment among the young and unskilled.

        Nonsense, if there were a weight of evidence you’d provide some instead of just stating your opinion as if it were fact.”

        Check out the recent book, “Minimum Wages” by David Neumark and William L. Wascher, The MIT Press, 2008.

        In chapter 9 “Summary and Conclusions” they write

        “Three conclusions, in particular, stand out. First, as indicated in chapter 3, the literature that has emerged since the early 1990s on the employment effects of minimum wages points quite clearly – despite a few prominent outliers – to a reduction in employment opportunities for the low-skilled and directly affected workers”. (p. 286)

        Also from Table 9.1 page 287 when dealing with the effects on employment, under the ‘Summary of evidence’ heading Neumark and Wascher write

        “Minimum wages reduce employment of low-skilled workers; adverse effects even more apparent when research focuses on those directly affected by minimum wages.”

        Greg Mankiw has a list of things that economists agree on in chapter 2 of his first year textbook. Number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers’ and 79% of economists agree. So this result is widely accepted by economists.

        • Felix 17.1.1.1

          That’s not “a weight of evidence. That’s 3 people.

          • Paul Walker 17.1.1.1.1

            Good God!!! It isn’t 3 people. It’s the result of research carried out by many people on the topic. The Neumark and Wascher book is a comprehensive overview of the international evidence on the economic effects of minimum wages. It’s 24 pages of references cover around 250 books and papers on different aspects of the effects of minimum wages. Chapter 3 is on “The Effects of Minimum Wages on Employment”. Neumark and Wascher do give us the “weight of evidence”. The Mankiw list is based on various polls of economists, not just one person.

      • ben 17.1.2

        And further to Paul’s reply, there are many studies listed here with summaries:

        http://www.heritage.org/research/labor/minimumwage.cfm

        As noted, the weight of evidence is that minimum wage causes unemployment.

        Always fun to argue with someone who doesn’t realise this is one of the most studied economic phenomena.

        • Felix 17.1.2.1

          The Heritage Foundation – don’t make me laugh.

          Care to address any of the questions I raised? Same to you, Paul.

          • ben 17.1.2.1.1

            Felix, here’s another 50 or so citations, this time via the US government:

            http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm

            Something like 100 academic references for you to look at. How many’s enough?

            Questions you raised:

            Where do you think these people and their families will live? On the streets? What do you think they will eat? How many wouldn’t resort to crime?

            There is no or almost no relationship between poverty and minimum wage. Why?

            a) the people on minimum wage are disproportionately likely to be teenagers living with their parents in relatively high income homes, not main breadwinners (see Bell (1981), Datcher and Loury (1981), Johnson and Browning (1981), Kohen and Gilroy (1981)).

            b) minimum wage increases the risk of problems you cite occurring. Why? First, because it causes unemployment. Second, for those who do not lose their job, while minimum wage increases hourly rates, it lowers earnings because hours worked declines (see Meyer and Wise 1983). So even for those lucky enough to keep their job, minimum wage makes it harder to eat and harder to house themselves. Hashimoto (1987) and Phillips (1981) found minimum wage makes people more likely to resort to crime.

            And that’s just the beginning of all the problems with minimum wage identified in the literature.

            Pwned.

          • Felix 17.1.2.1.2

            ben you terminal fool,

            You’ve linked to a 1995 american report from the joint economic committee of house republicans. You might as well link to a report from the nazi party to prove the superiority of the aryan race.

            Have you ever been to New Zealand?

            the people on minimum wage are disproportionately likely to be teenagers living with their parents in relatively high income homes

            You haven’t been anywhere near a factory floor or large retailer in New Zealand if you think that’s a remotely relevant quote.

            Let’s hear some thoughts of your own. I’d still like to know how long you think a factory worker should be paid $3 an hour for before they get a pay rise and why.

            I’d also like to hear what you think about the minimum wage rising for the past 9 years while unemployment has fallen.

            Second, for those who do not lose their job, while minimum wage increases hourly rates, it lowers earnings because hours worked declines

            Let’s put some numbers on that. A 40 hour week at the min wage earns $500 gross. At your preferred $3 an hour you’d work 165 hours to earn that. Are you seeing the problem with that theory yet?

            Please don’t waste my time with any more bullshit from ultra-right-wing american think tanks with a mission to drive down wages. And don’t say “pwnd”, it’s so undignified.

          • Paul Walker 17.1.2.1.3

            Let me add to Ben’s comments on the link between poverty and the minimum wages this comment from Neumark and Wascher, p. 286

            “Second, the research on the distributional effects of minimum wage, though far less extensive, finds virtually no evidence that minimum wages reduce the proportion of families with income near or below the poverty line, and some of it indicates that minimum wages adversely affect low-income families.”

  18. ben 18

    No, you’ve been pwned Felix. You asked for evidence, and you’ve been given 100 references to literature. That literature is not authored by either the Heritage Foundation or a committee of the US Congress (=Nazis? please). You asked for answers and when you got them you shift the goal posts.

    The fact is that the question of whether the minimum wage alleviates poverty and helps the young, unskilled and poor has been subject to massive research, and the evidence is clear that it doesn’t. The answers from that research don’t change just because the Heritage foundation, US Congress, or the Nazi party links to it.

    So you’ve been pwned. What’s undignified is your childish insults, your total unfamiliarity with the research on this, and your complete certainty in your ignorance of that research that you’re right.

    Pwned.

    • Felix 18.1

      Nonsense. You’ve found a bunch of research to support your extreme right-wing views but you haven’t argued a case for it beyond simply stating those views as fact. I doubt you’ve even read any of the guff you linked to as all your references come straight from the summary.

      I didn’t compare the U.S. Congress to Na*is either, it was an analogy and a fairly simple one. The report you linked to was from the U.S. House Republicans (in 1995). They have a clear interest in driving down wages for workers. Same for The Heritage Foundation.

      It’s like linking to the National Party to show proof that National policies are swell.

      You still haven’t answered any of my questions.

      And that’s not how you spell pwnd.

      • Paul Walker 18.1.1

        You have been pointed to the evidence to back up all the claims made here by both Ben and myself. The literature is so large now, as already noted there has to be 250 or so books and papers referenced by Neumark and Wascher alone, that to give a summary of it would take a book, you know, like “Minimum Wages’ by David Neumark and William L. Wascher, The MIT Press, 2008. Why not just go and read it and learn something. I have noted a couple of the important conclusions they reach:

        “First, as indicated in chapter 3, the literature that has emerged since the early 1990s on the employment effects of minimum wages points quite clearly – despite a few prominent outliers – to a reduction in employment opportunities for the low-skilled and directly affected workers’. (p. 286)

        and

        “Second, the research on the distributional effects of minimum wage, though far less extensive, finds virtually no evidence that minimum wages reduce the proportion of families with income near or below the poverty line, and some of it indicates that minimum wages adversely affect low-income families.’ (p. 286)

        If you want all the details just check out their book.

        It has also already been pointed out to you that such conclusions are agreed upon by most economists. On the Mankiw list noted above, based on a number of surveys of economists, number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers’ and 79% of economists agree. So this result is widely accepted by economists.

      • ben 18.1.2

        I actually haven’t given you my views, Felix. I’ve pointed to a body of research and told you what they found. And further, I am not aware of any body of work which contradicts it – so I am not distorting by omission, and neither is the Heritage Foundation or the Congressional committee. The most significant dissenting view, at least on employment effects, is from a 1994 paper by Card and Krueger, and the Congressional committee referenced that paper up front.

        You, on the other hand, have supplied zero evidence. You’ve blustered plenty. Your prejudices apparently run deep, but absent evidence it’s just prejudice. You and I can, I think, agree that it makes no sense to make it any more difficult for the unskilled and the young and the poor – but if that is what the minimum wage does then it makes no sense to inflict that on them. I have not personally studied minimum wage, but hundreds of economists have. You could at least explain why you think that small army of researchers is wrong. As far as I can tell your objection is simply that you don’t like the answer.

        Grow up.

  19. Felix 19

    No views? how strange, I could have sworn you’ve been advocating the removal of the minimum wage and the legalisation of paying workers as little as $3 an hour.

    The problem I keep running into is that when I ask you a straight question about real world events such as the rising minimum wage coinciding with the falling rate of unemployment in New Zealand over the past decade, you respond by insisting that ultra-conservative American political groups don’t think it would be likely to happen in a theoretical scenario.

    Perhaps you should try actually reading some of the docs you link to. Then you might be able to tell me how they relate to some of the questions I’ve been putting to you.

    • ben 19.1

      The problem I keep running into is that when I ask you a straight question about real world events such as the rising minimum wage coinciding with the falling rate of unemployment in New Zealand over the past decade, you respond by insisting that ultra-conservative American political groups don’t think it would be likely to happen in a theoretical scenario.

      Wrong, wrong, wrong. As I said up front, economist do not think total unemployment should have much or any relationship to minimum wage because so few people are caught by it. Research shows those that are, however, are disadvantaged by it.

      I’ve answered your real world questions with references. That would satisfy anybody interested in simply finding out about the evidence.

      Perhaps you should try actually reading some of the docs you link to. Then you might be able to tell me how they relate to some of the questions I’ve been putting to you.

      I actually have read some fraction of the literature, which is not trivial. What exactly would I be looking for? Evidence of a vast right wing conspiracy? These researchers do actually look at hard data. Its not theory only that you find in most papers on this.

      • Felix 19.1.1

        Unfortunately ben your “references” are all quoted directly from the summary page of a collection of reports compiled by a hard right-wing political organisation. You might be too stupid to click links and read but don’t assume everyone else is.

        If you don’t have any responses you can actually articulate then just say so.

        • ben 19.1.1.1

          Ugh.

          Take the first three references on the Congress page. The author summarised those papers’ findings as:

          “The minimum wage reduces employment.”

          The first paper referenced is by Currie and Fallick (1993), whose abstract in part says:

          “Using panel data on individuals from the National Longitudinal
          Survey of Youth, we find that employed individuals who were
          affected by the increases in the federal minimum wage in 1979 and
          1980 were 3 to 4% less likely to be employed a year later, even
          after accounting for the fact that workers employed at the
          minimum wage may differ from their peers in unobserved ways.”

          I can’t find abstracts for Gallasch (1975), Gardner (1981). The next reference I can find to quote from is Peterson (1957). It has no abstract but he concludes:

          “A re-examination of FLSA minimum wage experience…supports the hypothesis that employment changes will be inversely related to wage increases imposed by a minimum among firms in the same industry.”

          Which is what the Republican sommittee said.

          The next reference I can find is for Adie (1973). The Republicans summarised his work as saying:

          “Finds that the minimum wage is responsible for a considerable amount of teenage unemployment. ”

          What does Adie say in his conclusion?

          “The results of this study indicate that (1) increases in the federal minimum wage cause unemployment among teen-agers; (2) the effects tend to persist for considerable periods of time; and (3) the effects seem to be increasing through time… In conclusion, it appears the minimum wage is repsonsible for a considerable amount of teen-age unemployment.”

          What’s the next objection?

  20. “The problem I keep running into is that when I ask you a straight question about real world events such as the rising minimum wage coinciding with the falling rate of unemployment in New Zealand over the past decade, you respond by insisting that ultra-conservative American political groups don’t think it would be likely to happen in a theoretical scenario.”

    No, people pointed out to you that the minimum wage will have little or no effect on the overall unemployment rate. I expand on this idea at http://antidismal.blogspot.com/2009/03/unemployment-and-minimum-wage.html. What was also pointed out was the position that most economists take, which is that the effects of the minimum wage will be on those at the bottom of the wage distribution. As Neumark and Wascher summarise it

    “First, as indicated in chapter 3, the literature that has emerged since the early 1990s on the employment effects of minimum wages points quite clearly – despite a few prominent outliers – to a reduction in employment opportunities for the low-skilled and directly affected workers’. (p. 286)

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