Bruce Murphy
Murphy’s Law

Why the Minimum Wage Should Be Increased

It could do more than anything to reduce the income gap in this state.

By - Dec 5th, 2013 12:02 pm
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Today, there are demonstrations at fast food restaurants across the nation. Organizers expect there will be one-day strikes in 100 cities and protest activities in 100 additional cities, with Milwaukee and Madison on the list of 200. The protests are demanding minimum pay of $15 per hour, which might be hard to accomplish, but the strikes also raise the issue of the minimum wage, which is long overdue for an increase.

The minimum wage in Wisconsin is $7.25, the same as the federal rate. In real, un-inflated dollars, that has declined drastically from 1968, when it stood at $10.60 an hour, or 55 percent of the median full-time wage, as University of Massachusetts-Amherst economics professor Arindrajit Dube has written. By contrast, the current minimum wage of $7.25 equals just 37 percent of the median full-time wage. To restore the value of the minimum wage so it equals 55 percent of the median full-time wage would mean raising it to $10.78.

President Barack Obama has proposed hiking it to $10.10. That may sound high, but it’s normal in Canada, where the minimum wage is $10 or higher in every Canadian province except Alberta ($9.95).

Last month, voters in New Jersey approved a hike in the minimum to $8.25 an hour. California, New York, Connecticut and Rhode Island also raised their minimum wages this year. 

Voters overwhelmingly support such legislation. As Dube writes, “over three-quarters of Americans, including a solid majority of Republicans…support raising the minimum wage to either $9 or $10.10 an hour…voters in red and blue states alike have consistently supported, by wide margins, initiatives to raise the minimum wage…Since 1998, 10 states have put minimum wage increases on the ballot; voters have approved them every time” –  by 71 percent of Florida voters and 68 percent of Nevada voters, both passed in 2004.

This is a no-brainer platform plank for a Democratic opponent to Gov. Scott Walker. Odds are a huge majority would favor increasing the minimum wage in Wisconsin.

Once upon a time, the minimum wage was seen as something mostly affecting teen worker, but not in today’s economy. A recent analysis by the Economic Policy Institute shows more than 88 percent of workers earning the minimum wage are older than age 20.

The median age of fast-food workers is now 29 and is 32 for women, who make up 65 percent of all such workers. And 36 percent of the fast-food workers 21 or older have children to support. Most of these parents are women.  This is an issue that should have huge resonance for women.

The Nation magazine spotlighted the story of Milwaukee worker Mary Coleman, who works at a Popeye’s in Milwaukee for $7.25 an hour. “Coleman, 59, lives with her daughter, who has a heart condition, and her two grandchildren. She also relies on food stamps to make ends meet…’I’m tired of working for $7.25,’ Coleman says. “I can’t take care of my household, I can’t even take care of myself.’”

Industry officials say only a small percentage of fast-food jobs pay the minimum wage and are largely entry-level jobs. But the other workers can’t be earning much more, given that the median hourly wage for fast-food workers nationally is $8.94 an hour. Take Austin, Texas: there about 28,275 fast foot workers are employed in that city, with a median wage of $8.83.

The classic argument is that raising the minimum wage will lead employers to cut employment. Drube’s study concluded that a hypothetical 10 percent increase in the minimum wage would affect employment in the restaurant or retail industries “by much less than 1 percent; the change is in fact statistically indistinguishable from zero.”

“Existing research, he adds, “suggests that if you raise the minimum wage by 10 percent, you can expect the price of a $3 burger to rise by a few cents, which is enough to absorb a sizable part of the wage increase.”

Of course, a ten percent increase would raise the minimum wage only to about $8 (which would certainly help workers). What would be the impact of jumping it to $10?

Wall Street Journal columnist Al Lewis points to Australia, where fast-food workers already make about $15 an hour. “Only some of this higher cost of labor is passed on to consumers. The rest is absorbed by using more technology than people, and demanding more productivity from the fewer people they pay this higher wage.”

Lewis suggests companies are cutting their own throats by keeping wages so low: “Last week, I asked readers why they don’t shop much anymore, and, voilà, my email box overloaded with missives from folks who said they can no longer afford it. (Read through scores of these tales on my blog, tellittoal.com.)… Retailers and restaurateurs know the story well. They’ve been warning that the consumer is weak.”

Corporate boardrooms have fallen into the habit of rewarding executives for slashing employment and wages. Perhaps the classic example of this mentality has been a Walmart store’s decision to ask employees to donate to a food drive for its own needy employees, which brought the company tons of negative publicity.

But you can also help a company’s bottom line by driving sales and revenue. Workers who earn a decent wage will have more to spend, and those at the bottom end are most likely to convert any new money made into consumer purchases. They might also feel better about — and be more loyal to — their employers.

Business writer Rick Newman has suggested that raising the minimum wage will actually help companies by reducing employee turnover and improving their performance. And all businesses would be in the same boat, since all would have to pay the minimum wage. On balance, he argues, “It might do more good than harm.”

The simple act of raising the minimum wage would have a huge impact on the growing income gap in America. “The evidence suggests that around half of the increase in inequality in the bottom half of the wage distribution since 1979 was a result of falling real minimum wages,” Drube writes.

The average fast food wage of $8.94 an hour equals $18,595 annually. That’s barely above the federal poverty line for a family of three, which is $17,916. Restoring the real dollar value of the minimum wage would have a huge impact on these families, and would help move this state and this country back towards a less brutal time, when it was patriotic to care about those who have less.

Short Take

State Sen. Kathleen Vinehout (D-Alma) has hired a campaign staffer, thus moving closer to challenging former Commerce Secretary Mary Burke for the Democratic nomination for governor. She told the Eau Claire Leader-Telegram: “Every day I seem to be getting closer and closer to making the decision to run for governor.”

Some Democratic leaders clearly prefer to anoint Burke and fear a primary could be divisive. Burke’s most important advantage is presumed to be her personal wealth, but it’s still not clear how much she is willing to spend. There may well be an opening here for Vinehout. The average Democratic voter, I suspect, would not favor a coronation of one candidate by party insiders.

Either way, it appears Walker will face a woman opponent, who will be in a perfect position to argue for an increase in the minimum wage, and to argue that Walker opposes a measure which most voters favor because it buttresses his conservative credentials as a Republican candidate for president.

Categories: Murphy's Law

75 thoughts on “Murphy’s Law: Why the Minimum Wage Should Be Increased”

  1. Wisconsin Conservative Digest says:

    Yes, I wish I could type, but I studied medicine for 50 years, not typing. Today, in Journal, it was revealed only 2% of the people work at minimum wage and usually not very long, so economic impact will not be to that group but to those at 10-15 dollars per hour that would be increased setting off a change in productivity needs that would be earthshaking to that group of people.
    I worked in inner city for ten years in pharmacy, inner city people say “axe”, not aks.
    Read the Forbes article that has completely destroyed the Global Warming theory. Facts are funny things, they do not go away while fairy tales perpetrated by the Left will.

  2. Tim says:

    Andy, not sure if you remember, but there’s been this thing called a recession going on for awhile, that’s going to affect a lot more teenagers than the minimum wage.

    Now, on a more relevant note, you say it won’t help REAL people get out of poverty. REAL people don’t make minimum wage, which has been discredited by the way. However, even if 100% of the people making minimum wage are teens, it would still benefit the economy and those teen workers.

    Raise those wages for teenagers, what are they going to spend it on? It doesn’t matter, because most of them will spend it, creating more demand and opportunity for business. Out will come the ‘now hiring’ signs, for teens and adults.

    Not that any of your are actually concerned about teenagers’ job prospects, the hardworking poor or increasing job opportunities for the lower and middle classes. The reasons change, but at the end of the day we can count on you to support tax cuts for the rich and benefit cuts for everyone else. You have no credibility, especially since we’ve tried your ideas and they’re only good for making rich people richer.

    Raise the minimum wage!

  3. Kyle says:

    WCD, that’s a pretty weak defense for your typo. I’d have left it off. But, since you made it, the Merriam-Webster dictionary’s entry for “axe” is: ax noun \ˈaks\.

    Also, I find it interesting that you publish a digest, but never got around to learning to type or proofread your work. If you were hoping to inspire people to check out your publication, you might want to present a better image. Being the worst fairy tale writer on a lefty website’s comment section doesn’t inspire me to read your other work.

  4. Andy says:

    Tim, “real dollars” not real people. The value of minimum wage right now, today, is higher or as high as it’s been in the last 30 years. Why does this not resonate?

    But you are right, teenagers don’t make up “most” of the minimum wage earners, they make up about a third. 16-24 year olds make up “most.” I stand corrected. Point being, young people make up most minimum wage earners.

    Next, reading my comment about teenage job loss, after the recession hit and all other unemployment stabilized, teenagers unemployment went way up after the minimum wage hike. So this accounts for the recession in that analysis.

    And no, I don’t care about how much teenagers make. Generally, they are not supporting themselves or their families, they are working a job to get experience, maybe pay for a car or extra cash for entertainment… maybe even a few saving up for school so they don’t need as many student loans. Teenagers overall don’t represent the poor, we don’t need to subsidize them with hand outs. (as evidence that the median household income of a minimum wage earner is over $60,000)

    Once again (I feel like I’m a broken record) the money you give these teenagers is coming from somewhere. Will they spend more of their earnings vs saving compared to someone with a higher income? Probably.. but not by enough to make a dent in the economy. Not enough to justify all the ill effects we could cause by raising the minimum wage too high or too fast.

    The minimum wage is at a 30 year high mark, leave it as it is.

  5. Tim says:

    Andy, like so many right-wing apologists before you, you don’t know what talking about and/or flat out lying. The minimum wage has lost value accounting for inflation, more importantly, it’s level is more relevant than ever in a service dominated economy.

    It’s obvious you don’t care about teens, I’m glad you can admit you were concern trolling earlier. The fact is though, a raise in the minimum wage will be good for them and others in the economy.

    Their increased wages will go right back in the economy, these teens will be customers with more money to spend and they will spend it. I don’t care you have a hangup with this, but economically it’s a winner.

    Once again, raise the minimum wage… not just for families and young adults, but those teens too!

  6. Kyle says:

    Tim, it’s amazing how much truth you can state and how many lies you can dispell without a single number or fact to back up anything you say. You sir, have a bright future in politics.

    I don’t, so let’s have some more fun with numbers! In 2013, only 32.25% of teens were employed during June and July (the highest months of teen employment). From 2007 to 2009, the minimum wage increased 40%, and caused a 2.8 point reduction in teen employment (Gorry, 2013). Another 40% increase gets us really close to the $10.10 that some politicians have tossed around. A similar drop in teen employment rates would mean 1 in every 11 teenagers would be let go. So those people lose all their buying power. The rest would have more money to spend, but since they are most likely to spend it at places that utilize minimum wage employees (food and retail), the prices they pay will be higher. How much is hard to say, as it varies by business, but no one managed to contradict the 25% price increase I used earlier, so let’s stick with that.

    Now, there going to be some math, so if that scares you, take a moment before you continue. If 11 teens have $7.25 to spend at normal prices of $1 (maybe they really like McDoubles and don’t have to pay tax), they can buy 79.75 McDoubles. If 10 teens have $10.10 to spend on $1.25 McDoubles, they can buy 80.8 McDoubles. Yes, you have increased spending power! But at what cost? If you weren’t making minimum wage, you are now demonstrably worse off.

    I’m not trying to take a side on the broader issue of balancing society and making work provide for most people, but I think you’re avoiding the numbers and sticking with rhetoric because the numbers for minimum wage don’t say what you want them to. Figure out the problem you’re trying to solve, and then come up with a better solution than this.

  7. Andy says:

    Kyle, don’t scare the poor lad with numbers… He has a certain line of beliefs that he’d like to follow no matter what evidence says. Just let him do that, ok? So what if you demonstrated that, without even taking into account that this money going to teens is coming from someone else who also spends money, the teen’s total population spending has barely increased. It just… you know… feels good!

    OK just kidding, I’ve got numbers of my own in a sec.

  8. Andy says:

    Tim, you and I may disagree on whether we should subsidize teenagers burger and mall purchases, but one thing you can not call me is a liar or say I don’t know what I’m talking about when it comes to the minimum wage in real dollars over the last 30 years.

    For you statisticians out there, here’s the breakdown for the last 30 years, 1984-2013 using real value of 1996 dollars. Currently it’s at $4.87. The null hypothesis is Ho ≤ 4.87, alt hypothesis is Ha › 4.87

    Sample size 30

    Sample mean 4.684333333
    sample std dev 0.316180692
    √n 5.477225575

    Hypothesized Value 4.87

    std error 0.05772643
    test stat -3.216319786
    Degrees of Freedom 29

    p-value two tail 0.00318283

    For the non statisticians, basically what this is saying that in real dollars adjusted for inflation, we can say with 99.691317% confidence that the current minimum wage in real -inflation adjusted- dollars is equal to or greater than it has been in the last 30 years.

    Well that was just fun… who knew this stuff would come in handy again??

  9. Andy says:

    Sorry, I’m told I need to cite my numbers.

    Adjusted for inflation using the CPI-U (Consumer Price Index for All Urban Consumers).
    Source: U.S. Department of Labor. Web: http://www.dol.gov/esa/whd/flsa/

  10. jake says:

    I am proud to subsidize Walmart, Mcdonalds, etc… that have figured out that the top people deserve the millions they make and my tax dollars pay there lifestyle.

    There is nothing more disgusting than giving tax dollars to poor people, takers they are called.

    What is more American than being a horder of wealth a blaming the poor while you fix the tax system to funnel more money to your coffers.

  11. Andy says:

    Jake,

    You make such a compelling and well thought out argument. I’ll declare it now, you win the internetz!

    After all, I’m sure there’s never any negative consequences to consider when talking about economic decisions…

  12. Tim says:

    Wow, you guys have been busy… although that’s not that same as being productive.

    So Kyle, you added some numbers to a post… I suppose it would be too much to ask that these be relevant numbers. How do you tie the increase in minimum wage to an increase in unemployment for teens? You casually assume a singular correlation, very sloppy.

    2nd, what else have you supported that reduces the teen unemployment rate? It seems you’re concern trolling here, your goal seems to avoid raising the minimum wage. The reasons will change but the aim stays the same.

    Andy, you’ve been busy too… why 30 years? Why not since inception? Cherry pick all you want but it seems you’re just leaving me with the pit.

    Now, please do another analysis… have housing costs been below or above inflation? How about health care costs? Higher education? Child care?

    I’m sure everything has been fine for you in your bubble, although you’re getting worried you might have to pay more for your morning latte. Boo fricking hoo.

  13. Kyle says:

    Tim, my casual assumption came from the European Economic Review. I don’t have the rights to reproduce the work of that paper here. It’s available through most university libraries, or for $36 on it’s own (with varying subscription rates if you prefer that route). You’re looking for the September 2013 issue, and the author’s name is Gorry. That paper does a good job of isolating the impact of minimum wage on teen unemployment. I’m sorry you think this work is sloppy. If you have any proof of that, I encourage you to publish it. If you have alternate credible sources, I’d be happy to take a look at those.

    Regarding my thoughts on teen unemployment rate, while I think there is some value to having a part time job, I prefer to focus efforts on education and training for jobs with the potential to become family-supporting careers. I think the two-year technical colleges are under-utilized and under-supported, and that more young people need to take the time to explore apprenticeships and (paid) internships. I would much rather take the time (and I do) to tutor someone in a STEM subject than fight to make cashier a middle-class career. Admittedly, those individual efforts aren’t going to solve a systemic problem, but nothing about the minimum wage is going to fix teen employment rates either.

    I’ll leave you with a quote from the great liberal economist, Paul Krugman (1998): “What the living [minimum] wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price–determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away.”

  14. dohnal(Wis. Conservtive Digest says:

    The moral plan would be to develop programs that get people out of poverty instead of trying to keep them in poverty with food stamps, unemployment, minimum wage and on. If the trillions we have spent have not done that then maybe it is time to change polices and politicos.
    It amazes me that the Lefties on this blog never admit what a rotten job the leaders of Milwaukee have done the last 50 years: MPS, one of worst systems in country, Wisconsin Center poorly conceived, poorly run. Milwaukee theater, virtually worthless. MMSD an overspending disaster. Milwaukee County board, a joke. Crime in Milwaukee has elevated us to the top ten in nation, poverty in the worst ten. 57% unemployment of our youth, that cannot read, so force their wages up instead of teaching them, trainng them for skills that will get them above poverty. One thing I give credit, illegit births are down to the kids. One victory, but it is a start.
    Make Clarke police chief and toss Flynn and Barrett to the wind. We might get out of top ten.
    Don’t you realize that Milwaukee is considered the rectum of the state by everyone else?

  15. wisconsin Conservative Digest says:

    “Liberals Have theories, Conservatives solve problems.” Worst solution every: Reynolds and Barbee destroyed the school system with busing.

  16. Wisconsin Conservative Digest says:

    I wonder how many of you left wing geniuses that have caused all of these problems ever spend any time with inner city people as I have for the last 60 years? when I came to Milwaukee in 1964 I thought that the inner city problems could be solved and thought for sure that they could be solved by ow, but allof your poverty programs have made things worse even though a few families have escaped on sheer force of drive, no help form the Left.

  17. Andy says:

    Tim, you think 30 years is cherry picking? Is it cherry picking when you compare it to solely 1968, the single highest year on record and the only year where the wage would be higher than if we raised it to $10.10 /hr?

    Every blog, opinion piece, and in general most minimum wage hike supporters seem to site that one year. Yet that one year, besides being the highest on record, is only 2/3rds the real dollar value of what many people want to bump the wage up to. It just boggles my mind.

    Please, I invite you to do some research and analysis of your own. Please give us some hard numbers. Please tell us how many people are trying to support a family on minimum wage at least… and show us why hurting so many low income wage earners is worth helping those few.

    And Dohnal, no one likes your commentary… even people on the same ideological side as you. You don’t stick to actual facts, you don’t stay on topic, you talk in gross generalizations that add nothing to the conversation. Get your act together and try to have meaningful discussions.

  18. Tim says:

    So Kyle, your gold standard of proof is an unlinked and generally unavailable article… Yeah, I’m sure the guy’s research is top-notch as well. Besides, you don’t care either way on the outcomes of teens… Your goal here is to discredit a minimum wage increase. It’s like a mortician arguing against a new treatment for cancer, saying it’s too expensive.

    Krugman’s quote is insightful in that you can never eliminate markets, they naturally form in many situations. As you know the markets themselves and the societal goods produced from them, are not maximized by leaving markets to their own devices… Anyone that’s played a game of monopoly knows eventually 1 person owns it all, hence common interventions to civilize markets like banning insider trading or granting patents. I assume you couldn’t care less about improving the function of markets though, this has become a game of throwing everything against raising the minimum wage and hope something sticks… Desperate strategy that’s not working.

    As for me, chew on this post and the underlying papers linked if you care. Basically it says raising the minimum wage doesn’t harm low wage workers, obviously heresy to some, actual observed behaviors to the real world.

    http://economix.blogs.nytimes.com/2013/12/13/raising-the-minimum-wage-old-shibboleths-new-evidence/?_r=0

    Andy boy, that link above mentions 1968 just for you… Your words don’t fit in my mouth, try again. By the way, do you want to see the minimum wage eliminated? Honest question, will that improve the economy? Walk me through that.

    As I mentioned, increasing purchasing power of consumers… Leads to increased demand … Leads to more hires. It seems to be beyond you though, where am I losing you?

  19. Kyle says:

    Tim, you don’t like an actual research journal because they require a subscription, but you provide a link to a blog? Not just any blog, but a blog that cites numerous other blogs to support its position. That must means that there’s no value to academic research, if it’s less reputable than a blog. Clearly we should stop wasting our time and money on such endeavors.

    Also, my goal has never been to discredit a minimum wage increase. I just want to define the increase we’re talking about. Are we talking about the $9 minimum in the 7th paragraph of the blog you cited? Or the $10.10 that seems to be the focus later in this blog post? Maybe we’re talking about the $12.45 living wage being discussed in Milwaukee County. But the protesters want $15 for working at McDonalds. Your blog actually starts out by saying it should be $25 (based on peak value in 1968 and productivity increases since then). And I’m pretty sure someone in this thread meantioned $50. So what is it? You tell me Tim, which number do you like today? If your argument is “increasing purchasing power of consumers… Leads to increased demand … Leads to more hires” then pick a high number and defend it. Explain where the money is coming from, and why that won’t have any ill effects.

    Personally, I think it could use some modification. I don’t like the idea of tying it directly to inflation. I’d prefer to tie it to the poverty line. The poverty line for a family of 2 is $15,510, so let’s make a full year’s worth of work worth that much, as a minimum. Of course, you have to define full. The typical 2000 hour work year would make that $7.76 (I’m going to round up every number, since rounding down might miss the line by a few pennies). I could pick lots of intermediate values, and someone would say I cherry-picked, so the loosest definition of full time I can find is PPACA (Obamacare). The 30 hour full time work week would mean a minimum wage of $9.95 to get to $15,510. I don’t personally think 30 hours is full time, but I’ll leave it to someone else to define that. After that, if you want it substantially higher, then redefine poverty and the minimum standards. Don’t make up a living wage as whatever you want.

    Just in case my advocating for a slightly higher minimum wage didn’t convince you, no I don’t support eliminating the minimum wage, and no this isn’t Monopoly. We have a minimum wage, which regulates the labor market. We also have labor laws, which do that too. And the ever-popular court of public opinion that likes to villify those it deems unworthy. All I’m asking is that you think before you start pushing buttons and turning dials you don’t fully understand.

  20. Dohnal(Wis. Conservtive Digest says:

    Andy your arguments richly deserves the ridicule thye get. Milwaukee is a disaster brought about by the Left. Now a “living wage” to cover up the disaster that Obama has been to the middle class the last 6 years. Higher food prices, higher gas, higher everything but no jobs, or parttime jobs lower wages, higher inflation. Now Obamcare is going to put them in the ditch more.
    I know that it is hardto argue with facts so you losers do not. Now the city wants to build a new Arena when 10th graders cannot read and Milwaukee is tenth most violent city.
    What a bunch lo losers you guys are. I love to hear the Left whine. Walker had to come in and fix the mess that the Left, under Doyle/Burke made in 8 years, and the Left whines. Doyle/Burke did not do one thing to help education despite all the useless rhetoric.
    Barrett is useless. Flynn blames the violence on semi auto guns with which only three shootings happened last year. what problem has he solved. They hate Clarke cause he points this out so theey get some idiot to run against him. Barrett has spent all ten years running for something else insetad of solving Milwaukee problems. Now he wants to be fed. judge.
    What a sorry lot. Look at what has happened to Waukesha under great leadership compared to Milwaukee.
    Merry Christmas Losers.

  21. Andy says:

    Wow Bob… name calling! That’s even better than bringing up MPS, MMSD, gun violence, and Barrett wanting to be a judge during a discussion about minimum wages… which obviously are totally related. I’m going to go out on a limb here… and assume you were probably on the debate team back in your day.

    Tim, sorry I used my few spare moments today to respond to Dohnal instead of you. I’ll be back!

  22. Wisconsin Conservative Digest says:

    Thank God for Scott Walker, just got my property tx bill and instead of a big Doyle/Burke, Leftist 5% increase every year I got a cut. Then I read about the disaster that Medicaid is around the country for the state’s budgets i can only thank him agin for not jumping into that tar pit. The rest of you will too.

  23. Tim says:

    Kyle, frankly I’m confused by your position. You’re against tying the minimum wage to inflation, but it’s ok to tie it to the poverty line, which is indexed to inflation via the CPI. Explain that to me, I don’t understand where the meaningful difference is.

    So, at the end of the day, raising the minimum wage is an attack on inequality. Just the same as raising income taxes on the wealthiest.

    If you haven’t fully looked over the link I provided, let me summarize. The share of wages earned has decreased even as the economic pie has gotten bigger. Productivity gains have made every worker produce more, yet those benefits are accruing to the owners of the capital. Obviously, no reasonable person would say an investor isn’t due a fair return on their investment, just as a worker isn’t due a fair wage for their effort.

    It’s time to move policies to benefit hardworking people that work for a living, a minimum wage increase is just the tip of the iceberg. A slippery slope to full employment, if you will.

  24. Kyle says:

    Tim, I support tying it to the poverty line because it is defined. Inflation isn’t really. Just as I argue against generic minimum wage arguments and for a defined position. The poverty line also has a breakdown by state, whereas inflation tends not to. I don’t think this position is inconsistent with anything else I’ve said.

    Now that an internet comment has summarized a blog that sites blogs, everything is crystal clear. My problem, yet again, is that you define nothing. Economic pie. Every worker produce more. You act like every business everywhere is exploting the proletariat for record profits. That may be an accurate trend when taken as a whole, but it’s not how the real world works. If it were, every household in the US would be making $50k, and there wouldn’t be an issue. But not every household makes $50k, and not every business is raking in record profits. This method of redistributing wealth will destroy a lot of businesses that aren’t wildly profitable, and the jobs they provide too. Meanwhile, you’ll barely dent the successful businesses that you want to punish, because they’ll find ways to compensate.

    What I’ve been trying to get through to you is that a minimum wage increase is not a slippery slope to full employment. Full employment happens when everyone who wants to work can. Increasing the minimum will not achieve this. You may believe the blog that says increasing the minimum wage won’t increase unemployment, despite a wealth of research to the contrary (putting you in the same category as those who deny climate change like Dohnal), but you don’t have anything anywhere that makes a case that increasing the minimum wage will create a job for everyone. I would love to reach full employment, but all the evidence indicates this approach is a slippery slope away from full employment.

  25. Andy says:

    Tim,

    The worker productivity rate cited by that blog you linked, and repeated by anyone who is pushing for a minimum wage increase, includes all industries including information and communications technology and manufacturing. Both sectors that benefited greatly in terms of productivity since the advent and common adoption of the computer and automation. Neither of these industries have many (basically 0%) minimum wage workers. Meanwhile, all “other” sectors (aka retail, fast food, etc) saw productivity growth at a pace slower than the rise of the minimum wage. (*update of Oliner and Sichel (2002), obtained from Daniel Sichel on February 15, 2010. Line 18 from NIPA Tables 1.1.5 and 5.3.5.)

    So when you talk about the increased productivity in workers, you can’t just broadly apply it to minimum wage workers. You cannot say they haven’t gotten their fair raises and enjoy the increased profits that they are producing because in many cases, they haven’t had that increased productivity that’s being incorrectly cited.

    As far as your slippery slope argument… I’d like you to hash out that “slippery slope towards full employment” of yours. If you follow the slope to $1/hr and $50/hr… which is more likely to be at full employment? Obviously we don’t want to pay people $1/hr… but as far as full employment, I’m sure everyone who wants to work at that point would be able to… meanwhile at $50/hr I’m going to go on a limb and say our unemployment will drastically rise.

    So I bring it back to you. Wouldn’t it be better to create more of those higher paying IT and manufacturing jobs then it is to try and dictate wages at the bottom level?

    We still have yet to hear you tell us what minimum wage you support. Ideally, where would you like it to be and why?

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