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Thread: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by SouthernDemocrat View Post
    Well here is one of the problems with studies on the minimum wage though. Back in the Clinton years the minimum wage was raised 3 times if I am not mistaken, yet median household income went up every single year, and the poverty rate went down every single year eventually dropping to its lowest rate on record. The same is true with the 60s. You just can't find a consistent correlation between minimum wage increases and any harmful impacts to the economy or job creation. I would imagine that is because we have never really raised the minimum wage by that much, and just about every time we have done so, it was never raised over what overall prevailing low skilled job wages were anyway.
    Which is why you need to study not the general populace, but rather our low-skill, low-experience, low-education, lowest-income populace.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post
    Which is why you need to study not the general populace, but rather our low-skill, low-experience, low-education, lowest-income populace.
    Right and that low-skill, low-experience, low-education, low-income populace saw their household income go up for the first time in decades back in the 90s and they saw their poverty rate drop to record low levels back in the 90s, despite "enduring" three minimum wage increases.

    If raising the minimum wage always resulted in less jobs for low skilled workers, then we would expect to see the following correlations following a minimum wage increase:

    1. A reduction in median income.

    2. An increase in the poverty rate.

    Yet you can't find any consistency of correlation at all following minimum wage increases despite the fact we have had dozens of them over the course of over 70 years.

    Moreover, I will say this. Even if the minimum wage resulted in less jobs for teenagers as a trade off for more money for the adult working poor, I would say that is a pretty decent trade off.
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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by poweRob View Post
    lol... sure.
    It is true. A study was done that found problems with it and directly contradicted it. But that's fine.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by SouthernDemocrat View Post
    Right and that low-skill, low-experience, low-education, low-income populace saw their household income go up for the first time in decades back in the 90s and they saw their poverty rate drop to record low levels back in the 90s, despite "enduring" three minimum wage increases.
    Well, yeah, the poverty rate dropped. We passed welfare reform. However, what happened on the lowest end was that you saw the income of some go up (as MW is increased) but the income of some dropped to zero, and were no longer scored. As the CBO pointed out, that would lead you to conclude that you'd raised wages if you only scored those earning wages, while net income among the group can decrease or grow in a sharply mitigated fashion.

    It's also worth noting that the MW only increased twice in the mid-90s (the time of economic growth to which you are referring). In in 1996 it changed from $4.25 to $4.75 and then the year after that to $5.15.

    ]If raising the minimum wage always resulted in less jobs for low skilled workers, then we would expect to see the following correlations following a minimum wage increase:
    That is a strawman - no one is arguing it: what we are saying is that it reduces demand for low-wage labor relative to the baseline. You are correct when labor is more highly in demand, the effect will be mitigated (if not entirely). But we're not exactly always going to be in good times, are we? Do we want to set a policy in the good times that only screws a few poor people now, in return for screwing over more poor people exactly when things get harder?

    1. A reduction in median income.
    On the contrary. You would expect an increase.

    Example: you have 100 people making a perfect slope of $1 to $100 dollars an hour. The average is $50. Then you raise the minimum wage to $4. The worker making $3 bumps up, but the workers making $1 and $2 drop out of the work force. Now your average is $51.51. But in order to get that, you completely screwed the two people who are least able to adjust.

    2. An increase in the poverty rate.
    Sure so long as absolutely nothing else (like, say, a major reform to welfare, or a tech-driven economic boom) is going on.

    Again, what you will get is an increase relative to what you would otherwise have seen.

    Yet you can't find any consistency of correlation at all following minimum wage increases despite the fact we have had dozens of them over the course of over 70 years.
    Did you miss all those studies I posted for you earlier? When you look only at the lowest income, you find strong disemployment effects. It's when you look at entire sectors or the broad workforce that you can lose them in the larger mash.

    Moreover, I will say this. Even if the minimum wage resulted in less jobs for teenagers as a trade off for more money for the adult working poor, I would say that is a pretty decent trade off.
    competition at that level is much about social capital. Sadly, a middle class teenager with two parents who is en route to college has more of it than a 21 year old lower class high school drop out who was raised by a grandmother and who gets high on occasion.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    I'll admit, I really don't understand the determination to come to the conclusion that there is such a thing as a free lunch. This must be how liberals feel when debating conservatives who insist that no matter how much you cut taxes, you will always get equal or greater revenue.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by buck View Post
    More evidence for those that don't believe basic econ applies to labor to ignore.

    Minimum Wage Hikes Reduced Employment of Low-Skilled Workers | CNS News
    I know of no one who claims there is no downside to raising minimum wage. The argument is that the costs associated by raising the minimum wage are outweighed by the benefits. Short term there is likely to be some small reduction in employment and a small increase in inflation. Historically those have both been small enough that they cannot be identified from the normal fluctuations in the measure of both(the "noise" when graphing them). On the other hand, for millions it means a higher standard of living, it raises demand for products since people at the low economic end spend a larger percentage of their pay, it reduces the number of people on welfare.
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    Quote Originally Posted by Fiddytree View Post
    Uh oh Megyn...your vagina witchcraft is about ready to be exposed.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post
    I'll admit, I really don't understand the determination to come to the conclusion that there is such a thing as a free lunch. This must be how liberals feel when debating conservatives who insist that no matter how much you cut taxes, you will always get equal or greater revenue.
    Who is claiming a free lunch?
    We became a great nation not because we are a nation of cynics. We became a great nation because we are a nation of believers - Lindsey Graham

    Quote Originally Posted by Fiddytree View Post
    Uh oh Megyn...your vagina witchcraft is about ready to be exposed.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by Redress View Post
    Who is claiming a free lunch?
    The idea that you can simply increase minimum wages without effecting demand for low-wage labor is a free lunch argument. We can give poor people a raise with no trade offs. Hooray!

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by DA60 View Post
    The CBO seemed to just fine.

    https://www.cbo.gov/publication/44995


    And the effects are common sense.

    Too many people think (not saying you are one of them) that when you drastically raise the minimum wage that it only effects the burger-flipper types. Not true. IT ripples through much of the entire economy.

    But it is economic common sense. If you raise the minimum wage from say $7.25/hr. to $9.00/hr., then you have to raise a WHOLE bunch of people's wages that have nothing to do with the minimum wage.


    Take a large factory. IF you raise Jake's pay from $7.25/hr. to $9/hr. - suddenly, Lauren - who was making $9/hr. is getting paid the same as the far more inexperienced and less capable Jake. So, now the company has to raise Lauren's pay to about $10.50 an hour just to keep the gap going. But now Steve - who was making $10.50 - is getting paid the same as his subordinate (Lauren). So you have to raise his pay to $12/hr..
    And so on up the pay chain, so that almost everyone in the company has to get a pay raise or have a worker's revolt from everyone except the minimum wage people.
    And that is what you would have all across America. You cannot just force minimum wage up by roughly 25% (without any increase in productivity, btw) and have no ripple effects.
    So, this means virtually everything manufacturered or serviced in America will go up in price as the extra pay raises work their way through the country.

    But remember, there is ZERO increase in productivity...so these products/services are no better...just more expensive. But since foreign countries that import those goods into America had no such increase in pay, then that instantly makes American-made products even less competitive with imports then they already were. That hurts sales. And that causes layoffs at those American manufacturers. And probably causes increased hiring at foreign manufacturers that import to America.
    Sure, the minimum wage people have more pay - but they are not idiots. They are going to buy the product that gives them the most for their dollars. And since American goods are now more expensive - but no better - since the big pay raise, then this new found pay will increasingly go offshore.

    On top of all that, those on fixed incomes - like the poor and seniors - are going to be hurt by all this since the cost of American goods and services will go up (you cannot just raise production costs substantially with no increase in prices). So the government will have to step in and give them more handouts to makeup for the dwindling amount they can now buy. And this hurts taxpayers as they have to finance this added welfare.


    Nothing is free in life. You cannot magically force people to pay employees more money - with no added increase in productivity - and magically get a better life for everyone. Life just does not work like that.

    It could maybe work (to a point - for a while) if the whole world had the same minimum wage. But it does not and all a huge increase in the U.S. minimum wage will do primarily (imo) is a) make U.S. goods and services more expensive and b) force more U.S. consumer dollars off shore to less expensive imported goods manufacturers.
    The CBO report is interesting and about the best report on the topic. I have used this report many times here. You get major credit for linking to the actual report, most link to an article trying to tell what they think the report says.

    The data:

    Raising the minimum wage to 9 an hour would most likely(2 in 3 chance) result in a small increase in jobs to a loss of about 200k workers when fully implemented. 7.6 million people would see a pay raise directly(the effect ripples, so more would actually see an increase).

    An increase of minimum wage to 10.10 an hour would result in(same 2 in 3 probability) "a very slight decrease" to a loss of about 1mil jobs when fully implemented. 16.5 million people would see an increase in pay directly.

    The report does not discuss it, but there would probably be a small increase short term of inflation. The report does mention that short term the federal deficit would be very slightly reduced, and that long term there would be a very slight increase to the deficit. AT 9 an hour, 300k people would move above the poverty line. At 10.10, 900k would.
    We became a great nation not because we are a nation of cynics. We became a great nation because we are a nation of believers - Lindsey Graham

    Quote Originally Posted by Fiddytree View Post
    Uh oh Megyn...your vagina witchcraft is about ready to be exposed.

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    Re: Minimum Wage Hikes Reduced Employment of Low-Skilled Workers

    Quote Originally Posted by cpwill View Post
    The idea that you can simply increase minimum wages without effecting demand for low-wage labor is a free lunch argument. We can give poor people a raise with no trade offs. Hooray!
    Who says that?
    We became a great nation not because we are a nation of cynics. We became a great nation because we are a nation of believers - Lindsey Graham

    Quote Originally Posted by Fiddytree View Post
    Uh oh Megyn...your vagina witchcraft is about ready to be exposed.

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