# Minimum wage = less jobs? **URL:** \ **Category:** Factual Questions\ **Created:** [May 1, 2006, 6:51pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983 "2006-05-01T18:51:21Z")\ **Posts on this page:** 11\ **Page:** 2
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [May 2, 2006, 11:37am UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/21 "2006-05-02T11:37:50Z")
> [@Bill Door](#): > > What kind of a crappy businessman is Bob? The question he should, and would be asking in any business I have ever worked in is not “How much can I pay?”, but rather “How many do I need?” If he needs two workers, he’ll hire two, and if the minimum wage goes up he’ll raise prices to compensate. If he needs only one, he’s not hiring two, no matter how cheap they are. What’s the extra guy going to do, watch? ## Or, Bob decides to alter his business model to use less labor and scale back his business’s [gr?] activities in the more labor-intensive end of the industry. Bob is a consumer just like you and I. If something costs more, he’ll try to use less of it. You seem to be thinking about a two-employee business, and your arguments _do_ work better there. Pretend we’re not talking about Stoner’s LP and Head Shop, LLC. Let’s think of your local Target or Best Buy. Try to cut heads without losing more in sales than you save. We can chart our hourly sales out REAL closely, and save 80 man-hours per week by cutting the number of registers open. Lines will be a little bit longer, but hey, gotta’ keep them prices low. Cut back sweeping and mopping by doing it half as often. Sure, your store will look ugly, but still much prettier than the disgustring Wal-Mart on Arlington Rd in Akron, which manages to stay open and pretty busy. Staying open to midnight? Who the heck actually shops at 11:00 except for college students? They don’t have much money anyway. Go ahead and start closing down at 10:00. Come to think of it, Stoner’s LP and Head Shop, LLC could probably save money opening later or closing earlier. Might make one or both of the Stoner Service Representatives part-time. There’s also the option of Old Man Stoner working another hour or two per day to cut down on paid labor. You could also stop offerring services that don’t make you money. The Tire & Lube Express at Wal-Mart basically breaks even but serves as a convenient way to keep you in the store, shopping, while your oil is getting changed. If it costs more to provide that perk, they may have to rethink having it. I understand that if you’ve worked in small shops, wage pressures don’t seem that decisive in manpower decisions, but they do change the big labor picture. “Hey, how much for the bong?” “Sorry, sir, but I’m going to have to ask you to leave. You have to call those water pipes!” “Fscking fascist!” ---
**Author:** ![Osip](https://avatars.discourse-cdn.com/v4/letter/o/4491bb/32.png) [@Osip](https://boards.straightdope.com/u/Osip)\ **Post date:** [May 2, 2006, 12:35pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/22 "2006-05-02T12:35:21Z")
> [@Kimstu](#): > > Actually, **Osip** , those Walter Williams articles are press releases that are essentially opinion pieces, not “scientifically valid studies” such as the OP asked about. Nor do they contain references to such studies, unfortunately. Huh? Well Walter is a respected Economist at a damn fine university. With the first article linking to US dept of labor statistics. (third paragraph)He just expands and explains those numbers (as he sees it). while not a deep drawn out year long “serious” study. Is worth reading as it does relate to a particular view regarding minimum wages ---
**Author:** ![kanicbird](https://avatars.discourse-cdn.com/v4/letter/k/5f8ce5/32.png) [@kanicbird](https://boards.straightdope.com/u/kanicbird)\ **Post date:** [May 2, 2006, 12:53pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/23 "2006-05-02T12:53:44Z")
Some other arguments are that it inflated prices, so it has the effect of these mim wage people actually being able to buy less, and also union contracts are sometimes tied to the min wage, so a $70/h union worker will get a automatic raise w/ the increase in M.W… Also that the M.W. is a entry level pay level, if you get into a entry level job, it is a starting wage, but you should be able to get raises as time goes on. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [May 2, 2006, 1:27pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/24 "2006-05-02T13:27:33Z")
> [@Osip](#): > > Huh? Well Walter is a respected Economist at a damn fine university. I never said he wasn’t. I just pointed out that those particular articles you linked to are irrelevant to the OP’s particular question about scientifically valid studies concerning the thread topic. > [@Osip](#): > > With the first article linking to US dept of labor statistics. (third paragraph)He just expands and explains those numbers (as he sees it). But those DOL statistics are just some raw numbers about the characteristics of minimum-wage workers. They are not part of any **scientifically valid study attempting to determine definitively whether or not it is true that minimum wage increases cause job losses**. Which is the information that the OP was asking for. (Heck, the linked DOL site doesn’t even mention the subject of raises in the MW.) I’m not dissing the Williams opinion pieces as such (although I don’t happen to agree with their arguments). I’m just noting that they don’t answer the question that the OP asked. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [May 2, 2006, 4:17pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/25 "2006-05-02T16:17:55Z")
For the record, I hate microeconomics. > [@Kimstu](#): > > However, the trouble with simple basic principles, such as the economic law of supply and demand, is that they’re often **too** simple to adequately explain real-life situation that have complicating features. > > For example, the fact that the acceleration due to gravity is a constant independent of mass is a simple basic principle of physics. It implies that objects of different mass should fall in the same time. However, this simple basic principle doesn’t adequately explain how objects fall in our everyday experience, where they are affected by air resistance. > > Similarly, the simple basic principle of supply and demand predicts that if the price of labor goes up, the demand for labor will go down. However, in the real world, labor markets are very complicated things, differing in many respects from the ideal perfect competitive market. Things happen in real-life markets that simple basic economic principles, by themselves, don’t adequately explain. Yes, they do not adequately explain this – **to you!** If my micro professor were here, he would slap you for this type of thinking. This is like trying to explain why .99999 + .99999 = 2. The basic principals of economics explain relatively all transaction in the real world, generally. Of course there are going to be exceptions! However, as this has been the economic thought since – I don’t know – the discovery of economics, there is little to try and prove against it. > [@kimstu](#): > > By the way, is anybody else interested in trying to answer the question that the OP actually asked, about the existence of scientifically valid studies on this issue? Basically, there has been one scientifc study which has shown the opposite to be true, the Card Kruger Study (1994) (I know, I know, I cited that wrong, but I can’t find my [del]blue[/del] Maroon book right now ;)). The authors also made two foundational studies before hand: Card, Industrial and Labor Relations Review, vol. 46 (1992); and, Katz and Krueger, Id. The 1994 study has been hotly debated by pratically all economists, the strongest arguments was that the study was not very scientific (methodologies were brought into question). David Neumark and Willam Wascher are often touted as a counter study (though, objectively, I don’t think they were out to disprove anything), which had results in line with general economic thinking on this subject. Anyway, this [site from the US Joint Economic Committee](http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm) shows nicely summarizes the main points of 50 years of economic research that argues against the minimum wage. Pay more attention to the bibliography section below since it has the actual journal names and more elaborate summaries than the government bullet points. This is as scientific as you can get (i.e. journal peer reviewed studies). The effects of raising the minimum wage, generally, is that it leads to less employment. Why is it done? To help the poor, to give them a job and some money now. However, it is a bad trade off, as the site suggests, because employers will cut costs such as reducing job training to maintain profit and keep prices low. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [May 2, 2006, 4:33pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/26 "2006-05-02T16:33:29Z")
> [@mazinger](#): > > The basic principals of economics explain relatively all transaction in the real world, generally. Sure, if you use **enough** basic principles and combine them correctly. Similarly, the basic principles of physics, properly combined, explain lots of real-world physical phenomena, including how objects of different mass fall when affected by air resistance. But you can’t just wave around any **one** basic principle and expect it to accurately predict the behavior of complicated systems all by itself. > [@mazinger](#): > > If my micro professor were here, he would slap you for this type of thinking. Dear me! I hope you’re encouraging him to get counseling for his violent tendencies, and I hope he hasn’t been hitting you too much. My sympathies. > [@mazinger](#): > > the Card Kruger Study (1994) (I know, I know, I cited that wrong, but I can’t find my blue Maroon book right now It’s Card and Krueger; you’ll see it mentioned in the excerpt I cited above from an EPI briefing paper, and the full citation is given in the References section of that link. ---
**Author:** ![vetbridge](https://avatars.discourse-cdn.com/v4/letter/v/b5e925/32.png) [@vetbridge](https://boards.straightdope.com/u/vetbridge)\ **Post date:** [May 2, 2006, 7:16pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/27 "2006-05-02T19:16:41Z")
> [@Bill Door](#): > > What kind of a crappy businessman is Bob? The question he should, and would be asking in any business I have ever worked in is not “How much can I pay?”, but rather “How many do I need?” If he needs two workers, he’ll hire two, and if the minimum wage goes up he’ll raise prices to compensate. If he needs only one, he’s not hiring two, no matter how cheap they are. What’s the extra guy going to do, watch? In some fields (like veterinary medicine) there are extra guys who are paid to watch. In my practice, if MW is increased, I let someone go. The one I let go would be happy to work for $2.00 an hour, but the government says they cannot. Typically they are planning on applying to veterinary school and they need to have something to list on their application. Years ago I would allow that person to “volunteer”. They would come in and spend 8 hours cleaning, filing, and observing. Liablity became more of an issue over time and I began to only have “employees” in place of “volunteers” (per advice of counsel). So, in my field at least, a rise in MW leads to less employees. ---
**Author:** ![saoirse](https://avatars.discourse-cdn.com/v4/letter/s/5daacb/32.png) [@saoirse](https://boards.straightdope.com/u/saoirse)\ **Post date:** [May 2, 2006, 8:57pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/28 "2006-05-02T20:57:39Z")
Well I am dissing Walter Williams; I’ve been reading him for years. He generally presents arguments that are dishonest or turn out to be based on bad information. I don’t know who he is “respected” by. A friend of mine used to like him, but he was a right-winger already, and discovered that Williams didn’t have much to offer in terms of arguments supporting his position. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [May 2, 2006, 9:33pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/29 "2006-05-02T21:33:14Z")
> [@treis](#): > > Thats not true, there are other options than what you list. Probably. I thought those were the most relevant points though. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [May 2, 2006, 9:35pm UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/30 "2006-05-02T21:35:33Z")
> [@ShortBus](#): > > I want to know if there exists any rigously scrutinized, scientifically valid studies that either prove or disprove this assertion. That’s your problem right there. You don’t prove something like this in economics like you prove what the boiling point of water is. You simply can’t do rigoroulsy controlled scientific experiments in economics. But even in a field where agreement is rare, most US economists will tell you that minimum wage laws reduce employment. How much they do so, is a much tougher question. [From the wikipeida article on MW:](http://en.wikipedia.org/wiki/Minimum_wage) > [@](#): > > The costs and benefits arising from minimum wages are subject to considerable disagreement among economists, though the consensus among economics textbooks is that minimum wage laws should be avoided whenever possible as the costs exceed the benefits. A survey in the Winter 2005 issue of the Journal of Economic Perspectives reports that exactly two-thirds of academic economists at top universities agree with the statement, “a minimum wage increases unemployment among young and unskilled.” A society like the US is going to have a “natural” minimum wage that would exist even without a legal minimum wage. While some people might be willing to work for $.05/hour, that number would be so small as to be negligble (especially if we consider only adults). As long as the legal minimum wage is not too far from the natural minimum wage, you aren’t likely to be able to measure much of an effect. Also, it’s almost impossible to measure jobs that were never created in the first place because of the existance of any legislation whether it’s the minimum wage or something else. ---
**Author:** ![Osip](https://avatars.discourse-cdn.com/v4/letter/o/4491bb/32.png) [@Osip](https://boards.straightdope.com/u/Osip)\ **Post date:** [May 3, 2006, 12:24am UTC](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983/31 "2006-05-03T00:24:05Z")
**Shortbus** you do not list location. you might see if you are in a location with a JSTOR affiliation school or library. check here: [http://www.jstor.org/about/participants\_na.html](http://www.jstor.org/about/participants_na.html) If so… go and seek: Article: **employment and the 1990-1991 Minimum-Wage Hike.** Donald Deere, Kevin M Murphy, Finis Welch _American Economic Review_ Vol. 85, No. 2, Papers and Proceedings of the Hundredth and Seventh Annual Meeting of the American Economic Association Washington DC, January 6-8, 1995 (May 1995) pp.232-237 Oh what the hell You can go download all kinds of studies related to wage and unemployment over here: [http://ideas.repec.org/p/nbr/nberwo/5092.html](http://ideas.repec.org/p/nbr/nberwo/5092.html) check the botton for lots of downloading goodness and studies. Most of which can be read thru a JSTOR affiliate as well. There be your serious studies on Minimum wage equal less jobs. They a bit dry? (yes they are) So, what does all them Economic people think? > [@](#): > > Two important surveys of academic economists were reported in two issues of the American Economic Review, May 1979 and May 1992. In one survey, 90 percent, and in the other 80 percent, of economists agreed that increasing the minimum wage causes unemployment among youth and low-skilled workers. ``` So look up those studies and check out the Surveys to see how the Academics view the information from those studies. ``` **Kimstu** For the record, that last quote was from the Williams article. I Brought up Williams for the OP because, Williams does state his opinions, yet is nice enough to tell you where to go digging for his sources. Which led me to those studies, which lead me to oodles of serious research. I normally prefer to (mostly in cases like this) to point a direction and let the curious mind go forth and research. Otherwise it feels like I am doing someone elses homework for them. [Previous page](https://boards.straightdope.com/t/minimum-wage-less-jobs/354983.md?page=1)