Everything we don’t know about them:
It wouldn’t be all that surprising if a small hike in the minimum wage had little effect on unemployment. But that doesn’t mean that you can extrapolate that result to very high minimums, like the Sea-Tac law, which hiked the local minimum wage by more than 50 percent from a level that was already well above the national average. To illustrate the problem, imagine raising the minimum wage by a penny. It’s extremely doubtful that anyone would fire workers in order to save 40 cents a week. But you’d be foolish to conclude that it would therefore be safe to raise the minimum wage to $100 an hour. The size of the increase matters.
Quantity has a quality all its own.
Legislating economic truth has a history of such success. Minimum wage is such a good idea we should make everyone billionaires.
The next time rev. so and so declares a new min. we should double down. Perhaps the media could be enlighten by a bit more absurdity by the other party. Confuse the idiots.
Ken is absolutely right..
The one glaring problem with this write-up by Megan is that she only focuses on unemployment. She is completely missing the other economic issues that come up with raising minimum wage.
Here is what is known and not in dispute. When the government artificially inflates the minimum wage, the cost of every business that employs minimum wage workers go up. There are several ways that these owners can deal with that. First, they can try to get by with fewer workers (laying off employees – this is what she looks at) OR they could cut hours so they keep all employees, but these folks work fewer hours, making essentially the same as they did before. They could also keep these employees and raise prices to keep up with the new costs. Third, they could just absorb the loss (which economically doesn’t make any sense).
So sure, there may be places that decide to not lay off employees and either cut hours or raise prices. Either way, the overall effect of raising the wage is negated (and made worse for those who were not given the same type of raise).
It seems pretty obvious in what direction things will move. Some people’s wages will go up, other factors (employment, hours, number of businesses…) will go down. Doesn’t seem too clear how much they will go down. I guess it’s good that these workers will have more money, but all the other factors are clearly very bad indeed.
Given that that is so, I don’t understand why someone would be sure that raising minimum wage is a good idea. How can they be sure that the good outweighs the bad?
Hey Mike
I believe there are 2 answers to your question.
1. They are very simplistic thinkers – more money to workers = better for everyone. Simple first-order analysis without any further thought.
2. (This is much more in line with progressive thought) – It doesn’t necessarily matter it the good outweighs the bad, the overall effect of government control over private business is the real issue and (for them), that is enough.
Raise the minimum wage by a penny and you’ll need to find a penny (for every worker) from somewhere else to keep the business afloat. Typically it comes out of things that are hardest to measure – like remaining competitive. Any increase in costs are essentially a tax on the future viability of the company.
But, Trent… the minimum wage is being pushed by the side that thought we could solve the debt ceiling problem by minting a couple of trillion dollar coins, driving them over to the treasury, and depositing them. So surely it’s far too much to expect such minds to grasp the concept that money has to come from somewhere?
Of course if the administration and Dem Congress cared the least little bit about black unemployment and teen unemployment they would not raise the minimum wage.
But they don’t care about that.
There are companies which are struggling to remain profitable today that would become unprofitable if wages rose by one penny, and would sack people, cut hours–while expecting employees to do the same amount of work in those hours– or shut down. Probably not many, but some.
So, no, it’s not ‘extremely doubtful’ that anyone would sack employees if the wage went up one penny, as there will always be companies which go from profitable to unprofitable with any enforced wage increase.
In my experience, the left won’t even argue about minimum wage causing job losses any more. They now just say ‘well, if the company can’t afford to pay minimum wage, they shouldn’t exist’.
In my experience, the left won’t even argue about minimum wage causing job losses any more. They now just say ‘well, if the company can’t afford to pay minimum wage, they shouldn’t exist’.
That’s been my experience as well. A recent talking point is the claim that companies which pay near minimum wage are unfairly subsidized by poverty programs like food stamps and health insurance subsidies. Somehow it’s better to tax these companies for their unfair subsidies than to employ poor people (which seems like the kind of behavior bleeding hearts would want to subsidize!).
“The true minimum wage is zero—the amount an unemployed person receives from his nonexistent employer,” Milton Friedman explained in his Newsweek column 43 years ago.
The state with the highest minimum wage also suffers from high unemployment relative to other states. Washington State’s minimum wage of $9.47 an hour exceeds the minimum wage set for the states in Washington by $2.22. The Evergreen State currently ranks 33rd in its unemployment rate. Certainly other factors determine the health of a job market to a greater degree than the minimum wage, and the unemployment rates stands as just one metric of a healthy job market. But one can’t help to think of Milton Friedman when realizing that some teen mom in Spokane endures the true minimum wage—$0 an hour for a nonexistent job because no employer deems paying her $9.47 an hour a good deal.
http://spectator.org/articles/61360/real-minimum-wage-still-0