[amotoustict]

I thought Card and Krueger's research already dispelled the myth that raising the minimum wage decreases employment.

[Veveseinlep]

/me patiently waits for Adam Smith

[Penisvergroesserung]

Adam Smith to the rescue!!

[twinaircant]

Hint..... Take a look at any article that features Card Krueger study as a pro raising the minimum wage arguement and then pause...... and laugh mightily.

[Anypeny]

Originally posted by Adam Smith




We've been through this several times before, and it is really getting tiresome.

• Rasing the minimum age will increase the income of low-wage workers.
• There will be a decline in employment among the lowest-skilled workers.
• The Card and Krueger study has been completely discredited.
  April, 2006:
  http://apolyton.net/forums/showthrea...rd#post4362569
  May, 2005:
  http://apolyton.net/forums/showthrea...rd#post3822431
• The last time I checked, no reputable study has ever shown a positive effect on employment
• There are other ways of raising income without the negative employment effects. e.g. negative income tax.

My thoughts regarding further discussion of this topic are best expressed by one of our resident economic experts:


http://apolyton.net/forums/showthrea...hreadid=155611 Can I have links to these peices please, i specifally remeber K-C saying in there rebuttal to Neumark and Wascher that they used BLS data and N-W's own data.

All this begs the question why are conservative economists like Landsburg and Cowen hold a view opposite yours.

http://www.marginalrevolution.com/ma...imum_wage.html

[alfredtaniypnx]

Originally posted by flash9286
Can I have links to these peices please, i specifally remeber K-C saying in there rebuttal to Neumark and Wascher that they used BLS data and N-W's own data. The posts I linked to cited the Murphy and Welch study, not Neumark and Wascher. At any rate, HERE is a digest of the Murphy and Welch study. I can't seem to lay my hands on the original right now.

HERE is the Neumark and Wascher study, though I see no reference to a Card-Kreuger rebuttal.

Originally posted by flash9286
All this begs the question why are conservative economists like Landsburg and Cowen hold a view opposite yours. Opposite?

From Landsburg:
http://www.slate.com/id/2103486/
If you want to transfer income to the working poor, there are fairer and more honest ways to do it. The Earned Income Tax Credit, for example, accomplishes pretty much the same goals as the minimum wage but without concentrating the burden on a tiny minority. For that matter, the EITC also does a better job of helping the people you'd really want to help, as opposed to, say, middle-class teenagers working summer jobs. It's pretty hard to argue that a minimum-wage increase beats an EITC increase by any criterion. I could not agree more completely.

From Cowen:
http://www.marginalrevolution.com/ma...imum_wage.html
So the scenario is now simple. The government boosts the minimum wage. Low-wage workers earn more. Few lose their jobs. Workers sweat more too, one way or another. Few are much better off. Most economists would doubt the Gordon Tullock argument that employers make working conditions worse in response to an increase in wages, but the rest of the statement agrees with what I said.

Speaking of work, I have a chunk to finish before I go home.

PS: The idea that the Card and Kreuger results are reflective of monopsony (one or few buyers) in the unskilled labor market does not seem to make much sense. If you have a large number of unskilled laborers, you almost certainly don't have the upward sloping supply curve of labor needed to make a monopsony profitable.

edits: formatting

[KojlinMakolvin]

Income tax credits are a bureaucratic mess, whilst the minimum wage is self-enforcing.

[drislerfottor]

ES-202 is an area census. IIRC Murphy and Welch went back and got the actual time cards from the establishments Card and Kreuger surveyed. That's a direct test of Card and Kreuger's survey result.

Also, ES-202 reports number of persons employed but not hours worked. If adjustments take place on the intensive margin (i.e., number of people employed stays the same, but hours of work falls), as seems likely if there are explicit or implicit hiring costs, then ES-202 data would not pick up the adjustment.

[MAKEMONEY]

All depends on the elasticity of low wage labour.

[DoctorTOneery]

Smith, you didn't address the article at all. The claim made was that there was a negative effect but that the negative was much, much smaller then previously thought.

It seems that you didn't respond to that at all. Nor even did you talk about the proposal to raise the minimum wage while also lowering taxes on businesses to help off set the increased costs. Could you please respond to those points? They were the main thesis of the OP article.

[KellyMP]

Originally posted by Kuciwalker
Your solution is damaging to exactly the degree it is effective. No it depends on the elasticity of low wage labour. Eg the effect would be very different depending on if the demand graph was D1 or D2.

[oB8LI2kP]

Flip, an excellent article. It really did go into both sides.

Studies on the impact of minimum wage changes are subject to criticism on both empirical and
methodological grounds, and should be treated with caution. Despite this caveat, the evidence from
decades of research does suggest that minimum wages have an adverse impact on employment. It then goes on to say that the amount of decreased employment growth is relatively small. For a 10% increase in the minimum wage they would expect a 1%-3% decrease in new job growth. That is without any offsetting tax releaf for businesses.

[bellson]

Originally posted by Maniac
No it depends on the elasticity of low wage labour. Eg the effect would be very different depending on if the demand graph was D1 or D2. I'm familiar with elasticity, thank you. You're still causing economic damage to these businesses which are the primary employers of low-wage labor, and to the consumers who pay higher prices (these consumers comprise most of the population).

And, unlike the EITC, a lot of the benefit can be mistargeted (e.g. to middle-class teenagers, who are the only people around here making minimum wage in the first place).

[doxinwasido]

Originally posted by Flip McWho
Aye, in NZ we have a youth rate which is like a dollar or so less than the adult rate (age 18 being the difference), though both increase when the govt. adjusts the minimum wage. I have no great problem with that either, as I've said before.

[Enfotanab]

IIRC, there were very few Americans actually making minimum wage (as opposed to making less than minimum wage) and many of those were part time workers. So I don't forsee that much effect one way or another. But what do I know?

[Gulauur]

One of the negative consequences of a policy increasing systematically, every year, the minimum wage, in excess of the inflation rate, which is done here since the sixties, is that workers previously paid above the minimum become minimum salary workers. Right now, around 12% of the work force are paid the minimum wage. These people have no longer any motivation since they can hardly expect an individual salary rise. And this has created a population that expect their income progress not from their work but from politicals who get elected because they promise to grant generous increases of the minimum wage.

[soineeLom]

From Landsberg , whoever he is:

Ordinarily, when we decide to transfer income to some group or another—whether it be the working poor, the unemployed, the victims of a flood, or the stockholders of American Airlines—we pay for the transfer out of general tax revenue. That has two advantages: It spreads the burden across all taxpayers, and it makes politicians accountable for their actions. It's easy to look up exactly how much the government gave American, and it's easy to look up exactly which senators voted for it. Those 'advantages' are pitiful. Spreading the burden across all taxpayers is not as fair as it sounds - the super rich and large corporations can often escape paying their fair share. And of course, it's perfectly easy to see who voted for the minimum wage.

[freeprescriptionplanrrx]

Originally posted by DAVOUT


You only forget that some existing restaurants will be closed because the rise in minimum wages makes them not profitable enough, and new restaurants will not be opened for the same reason. The demand to be referred to is not the demand of lunches but the demand of workers by restaurants owners. Or the restaurant-owner will simply ignore the law all-together and employ personnel illegally. I'm surprised that a Belgian like Maniac doesn't think of that.

[cinggooft]

Originally posted by Adam Smith
ES-202 is an area census. IIRC Murphy and Welch went back and got the actual time cards from the establishments Card and Kreuger surveyed. That's a direct test of Card and Kreuger's survey result.

Also, ES-202 reports number of persons employed but not hours worked. If adjustments take place on the intensive margin (i.e., number of people employed stays the same, but hours of work falls), as seems likely if there are explicit or implicit hiring costs, then ES-202 data would not pick up the adjustment. I thought M-W used CPS.

[MrsGoo]

Perhaps he's talking about French minimum wage?

Anyway, that issue illustrates an interesting problem (that my company could face) with raising the min wage up to 7.25 or so. That on top of the "big box" wage here in chicago that would require Target/HomeDepot/etc. to pay $10/hr to their employees; doesn't affect us directly, but what both laws would do would be to decrease the incentive for more skilled people to work for my company: higher pay.
We pay somewhat over the illinois minimum wage, as an initial rate, and then have some flexibility over that based on experience. A significant increase in the minimum wage would likely cause us to have to pay minimum wage, rather than somewhat above that wage, for our initial hires, and in addition could limit our ability to pay more to those with experience [as we'd have to worry about payroll]. That really sucks for us, because while we wouldn't be forced to raise our wages by a new min wage, we would be put in a quandry - either raise them anyway, to stay competitive vs other retailers, but hurt our payroll even more... or lose our competitive edge in getting new employees.