december: Sure, an expert economist with lots of relevant data can go beyond the LSD in predicting economnic impacts. However, it seems to me, that Kimstu is simply rejecting the LSD and replacing with her guesses, based on no data and no expertise.
You’re right that I’m not an economist, but I think you must have missed the parts of my last post that acknowledged that the L.S.D. certainly does continue to exert some influence, even if there are offsetting factors that it doesn’t take into account. I wouldn’t describe that as “rejecting the L.S.D.” Moreover, the “guesses” about those offsetting factors are not my own, but those of people who do happen to be professional economists, although I agree that even they appear to be a long way from a solidly verified model of how all the ramifications of minimum-wage laws affect the economy.
And finally, the “data” that called this whole debate into being in the first place, in response to brent’s casual assumption that raising the m-w automatically means “throwing many people out of work”, is the empirical evidence that past m-w hikes have not in fact done so. The L.S.D. predicted that they would do so. Evidently, we need a more sophisticated model to provide a better predictor of actual events in this situation.
*First of all, if the interpretation is “bizarre,” please don’t blame pman2. There’s no ambiguity in the quote. Wouldn’t you agree, Kimstu? *
Not at all. The quote uses the phrase “reduce employment by x percent”. It does not explicitly equate that with “increase overall unemployment levels by x percentage points,” which is how pman2 read it. Obviously, there has to be another way to interpret the phrase, unless you wish to join pman2 in inferring that the professional economists who conducted the referenced studies must have been asserting that a 10% hike in the minimum wage might kick the overall unemployment level up as high as 14%. Does that sound reasonable to you?
*Automatic escalation of the MW is a valid position, but it seems quite risky, in view of Kimstu’s acknowledgment that a raise in the MD could have major untoward economic effects, depending on other economic factors. *
All automatic escalation is kind of risky, for sure, but remember that the “untoward effects” I was concerned about were those resulting from an extremely drastic rise in the m-w, such as the $3+ hike that would be needed to turn it into a real “living wage”. I doubt that such dramatic spikes could possibly result from automatic escalation, unless we had some horrific bout of runaway inflation—in which case, we’d probably have much bigger things to worry about than mandated m-w raises.
You’re talking about maintaining “humane conditions” according to your standards. Go to Honduras, and you’ll see what’s wrong with your statement. The rural Hondurans live in shacks. They are lucky if they have a single pump in the village with clean water. Low-paid factory work would represent a big increase in their prosperity, although it wouldn’t satisfy your required income level.
You have no idea what I would consider acceptable “standards” or a “required income level” in the case of workers in a Third World village; you are simply assuming that they are unrealistically high so that you can dismiss them. A living wage and a reasonable standard of living are always dependent on the social and economic circumstances that the workers currently have. All I’m saying is that neither the workers’ survival nor the employers’ profits ought to depend on keeping wages and conditions so substandard that the workers cannot thrive on them.
The impact of the “living wage” requirement is to keep the work out of the 3rd world, which is just what 1st world labot unions want.
A useless and uninformative insult. I could just as easily say that the point of resisting “living wage” requirements is to maximize profits by starving and maltreating third-world workers, which is just what first-world capitalists want. Both statements would be equally well supported and equally specific and verifiable, and we would be no further along. Can we agree at least that the issue of how to recompense low-wage workers in unskilled jobs, both in the U.S. and overseas, so as to give them a reasonable level of well-being, social mobility, and exercise of their rights, while at the same time not placing unreasonable burdens on their employers, is a very complicated one that is not likely to be addressed by any one-sentence generalization from either side of the issue?
pman2: I haven’t read the study that represented “the high end.” But apparently someone is–that would be whoever came up with the 10% decrease in unemployment [sic]. And since it’s already happened in some welfare states in Europe, it’s hardly out of the question. I suppose it has a lot to do with study parameters, and whether you take into account localized effects. I agree that a broad 14% unemployment rate is unlikely to arise from any minimum wage hike likely to pass congress. But I can see it happening if some idiot wanted to impose NY kinds of wages on Mississippi–a federal minimum wage of 10.50 or something like that.
But the “high-end” study in question said that it was not any such drastic increase, but a mere 10% raise, that was predicted to “reduce employment by 10%”. As I said to december above, unless you are arguing that there is a sane and respected economist who asserted in a published study that a 10% m-w hike could push overall unemployment levels as high as 14%, then your interpretation of the phrase “reduce employment,” as used in this report, must be wrong.
*But again, I reiterate–if we start with unemployment at 4%, and employment decreases by 1%, then we must have a corresponding 25% increase in unemployment. So that 1% decrease has pretty big consequences.
But my argument isn’t a bizarre missapprehension at all. It’s simple arithmetic.*
Well, it’s simple arithmetic applied to your interpretation of what the described effect is supposed to be. If we want to interpret economic predictions correctly, I think we need to apply not only the ability to do simple arithmetic but also some common sense.
*“Thus, once wages are raised by mandate, employers may be better able to attract workers to take and keep these jobs.”
Ummm, geez. If they say so. That’s one of the most bizarre pieces of economic thinking I’ve ever encountered.*
Well, take it up with the Financial Markets Center. It doesn’t seem unrealistic to me that the federally-mandated wage hike at the lowest level might be helpful to some employers by allowing them to make their lowest-paid jobs more attractive to workers, while not putting them to the additional expense of raising wages across the pay scale. I do wonder, however, whether the advantage is not likely to be only temporary, or perhaps cyclical; that is, as the new wage floor becomes accepted as “standard”, the lowest-level jobs lose the appeal that the wage hike gave them, requiring another wage hike, etc. But since I think that the m-w (like most other w’s) ought to be adjusted upwards periodically anyway, I don’t know that that’s actually a problem.
I think we’re quite justified in leaving the OP to stew in its own venom and pursuing the topics we can actually have an informed and intelligent discussion about.