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Thread: Minimum Wage Does Not Destroy Jobs

  1. Top | #11
    Veteran Member Treedbear's Avatar
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    Quote Originally Posted by laughing dog View Post
    ...
    Employment fulfills other needs besides income support. Employment may allow the employed to feel part of the community and a sense of self worth, something UBI cannot do.
    Employment provides fulfilment first of all when it provides sufficient means for giving back to the community. Typically by allowing one to provide for a decent family life. As it happens that's especially true for men, given that they don't actually produce children. Making just enough to survive doesn't provide meaningful purpose.

    Finally, advocating for a pie-in-the-sky solution that has no chance of being implemented in the USA in the near future regardless of who is elected President is simply wasting people's time.
    It makes it a policy that's worth discussing. In this thread for instance.

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    Quote Originally Posted by Cheerful Charlie View Post
    Does this mean that next recession, those states that have low minimum wages will not suffer job losses?
    No, the places with a higher minimum wage (relative to their economy!) will have more job losses in a recession.

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    Quote Originally Posted by Loren Pechtel View Post
    Quote Originally Posted by Cheerful Charlie View Post
    Does this mean that next recession, those states that have low minimum wages will not suffer job losses?
    No, the places with a higher minimum wage (relative to their economy!) will have more job losses in a recession.
    Evidence? Stats? Percentages?

    Even if it is true, does it mean that workers have to scrape out a living on slave wages because their may be a recession sometime in the future?

    Everyone else prospers, especially the rich, during the good times....except for low income earners?

    It helps lift economic activity if everyone has a decent income and cash to spare for luxuries.

    Life is not just for the benefit of the rich.

  4. Top | #14
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    Quote Originally Posted by Loren Pechtel View Post
    Quote Originally Posted by Cheerful Charlie View Post
    Does this mean that next recession, those states that have low minimum wages will not suffer job losses?
    No, the places with a higher minimum wage (relative to their economy!) will have more job losses in a recession.
    As always, show your work. Evidence, please?

  5. Top | #15
    Veteran Member Lumpenproletariat's Avatar
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    Minimum Wage overall impact is net economic damage, due to loss of employment and production.

    Quote Originally Posted by Cheerful Charlie View Post
    https://www.axios.com/minimum-wage-j...33eef4bca.html
    Job loss predictions over rising minimum wages haven't come true
    Certain extreme predictions have not come true. But you have no data showing there were no net job losses as a result of MW increase.

    Minimum wage increase results in a net loss of some jobs compared to no MW increase. But the loss is not measurable. And there are many other factors also causing job increase and decrease. So it's impossible to measure the exact number of jobs lost as a result of minimum wage. You have no data to indicate otherwise.


    Eighteen states rang in 2019 with minimum wage increases — some that will ultimately rise as high as $15 an hour — and so far, opponents' dire predictions of job losses have not come true.
    Of course there has been an increase in jobs as a result of Trump's unprecedented budget deficits, which pump money into the economy, and also as a result of the suppression of interest rates. These two factors obviously have offset other factors which cause higher unemployment.

    But if we could isolate the minimum wage per se, by itself, to determine its impact on jobs, that one factor results in some net job loss.


    Axios used Bureau of Labor Statistics data to compare job growth rates in four states with low minimum wages vs. eight states with high minimum wages:
    • Since 2016, when California became the first state to pass the $15 minimum wage law, all 12 states have seen growth in restaurant, bar and hotel jobs.
    • Three of the four states with job growth higher than the U.S. median have passed laws that will raise the state minimum wage to at least $13.50.
    • Three of the five states with the slowest job growth rates did not have a state minimum wage above the federal minimum of $7.25 an hour.
    • An outlier was Massachusetts, which had the slowest job growth in the sector and currently has the highest state minimum wage: $12 an hour.
    None of this changes the fact that minimum wage by itself, as one factor, causes net job loss. When it is increased, the result is a certain amount of job loss compared to what would have happened if there had been no increase. But because of other factors -- e.g., Trump's deficits -- we cannot measure the number of lost jobs. By keeping the increases small enough, the damage done by minimum wage can be obscured.

    But when there is a major MW increase, such as happened in Samoa in 2007-09, we are able to measure the impact of MW to see whether it causes job loss. It's only in such an extreme case that it's possible to determine the MW effect, and that effect is to eliminate some jobs. In this case the damage was great enough to be measured, so that everyone, Left and Right, had to agree that it did more harm than good, eliminating jobs.

    So that MW increase had to be rescinded, or postponed, with even those favoring it having to admit that it did more harm than good. Because in this case the evidence was clear that the MW impact was negative.

    But normally MW increases are small, so that the damage they do cannot be measured, and so MW partisans can claim there is no damage.

    Notice in ALL the MW increases there is a limit to it to spread it out over several years, in order to keep the impact of it down, and to minimize the damage to only a small amount. But even so there is net damage to the economy, even if they are able to keep the MW increase low enough that the damage it does is obscured and cannot be measured.


    Conservative politics and economic theory, meet reality. Dire conservative predictions of massive job loss and rising unemployment due to higher minimum wages have not come true.
    What has come true is small damage, net job loss, net harm to the economy, compared to what would have happened otherwise. But by restricting the MW increase they prevent the dire predictions from coming true.

    It's only when the MW increase is large and sudden that the damage can be recognized. So, the policy is to keep it restricted to small increments spread out over several years, so that the damage caused by MW cannot be identified and measured.

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    Elder Contributor DBT's Avatar
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    The California unemployment rate fell to 4.0 percent in September 2019, setting a new record low in a data series going back to the 1970s.

    ''California payroll jobs totaled 17,538,500 in September 2019, up 21,300 from August 2019 and up 320,000 from September of last year.

    California’s Labor Market, by the Numbers...


    The state’s unemployment rate fell to 4.0 percent1 in September, setting a new record low in a data series going back to the 1970s.

    California’s record low unemployment rate in September coincided with a 0.2 percent drop in the national unemployment rate to 3.5 percent for the month, a 50-year low.

    September’s 21,300 nonfarm payroll gain extended California’s current job expansion to an all-time record of 115 months. Gains were concentrated in the professional and business services industry, particularly for firms providing employment services, along with increases in the manufacturing and education and health services industry sectors.

    California added an average 29,120 jobs2 per month over the entire 115-month-long expansion — far more than the 8,000-9,000 jobs needed monthly to match labor force growth.''

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    MW impact: benefit to a small screaming minority -- overall net harm to the nation/society = 330 million citizens..

    Quote Originally Posted by Cheerful Charlie View Post
    The problem is that the claim high minimum wages destroys employment has become an ideology that has been quite stubborn in face of economic experts who have claimed repeatedly that this is not true.
    No, the "economic experts" differ about it, but the repeated claims of MW proponents is that the actual results of MW increase have not been measurably harmful. They usually leave open the possibility that there is net harm, but say it's too small to be of any consequence, or it's not possible to determine who is adversely affected, and so it's OK to allow this little bit of harm in return for the verifiable wage increases to some workers, so that at least we know these particular workers have been made better off. While whatever harm is done cannot be identified.


    Once a bad idea becomes part of a political ideology it gets hard to correct such errors.
    The only error is to exaggerate the extent of the damage that MW increase will cause. Usually the damage is too small to be measured, but there is net damage overall. Data can easily be thrown around by both sides of the debate, but neither side can prove there is net benefit or harm. Each side can give some data -- to prove some jobs losses did or did not happen, whichever they are arguing.

    In these claims respectively both sides are right, not contradicting each other, but just giving separate data.


    The thing to notice now though is that minimum wages have been raised on the state and local level and have falsified these conservative claims.
    Only the exaggerated claims of impending doom. The claim that there is a net negative overall impact is not falsified by any results.


    This is no longer theoretical, we have strong empirical evidence that this right winged ideological-economic theory is false.
    But only theories which make the exaggerated predictions. There is no empirical evidence to undermine the general principle that higher MW per se leads to net job loss. All the empirical evidence shows is that this loss is too small to be determined because it is offset by other factors. So the total job loss is very minor, compared to other factors -- compared to job increases due to other factors.


    The states and cities that raised minimum wages became working experiments that have delegated conservative job killing claims caused by higher minimum wages to the economic equivalent of flat Earthism.
    Again, you're just obsessing on the exaggerated predictions when the MW increase was moderate so that the negative impact of it was too small to measure.

    But the example of Samoa in 2007-09 proves that the job-killing claim is correct. I.e., when the MW increase is great enough, or sudden enough, or impacts on much of the economy, its effect can be measured and produces net damage rather than benefit.


    As time goes on, this will become more and more clear to all but conservative ideologues.
    What's becoming more clear is that the damage done can be minimized by keeping the MW increase moderate and restricted. Which is why these increases are now always phased in gradually. Even now the 15% increases have not yet taken effect in most places where it has been enacted.


    When those states that have not raised their minimum wages contemplate doing so, and the usual ideologues start trying to kill such actions by resorting to these economic theories, the proponents can now demonstrate with strong evidence that these right wingers are wrong. proven wrong by direct evidence, not some theory of liberal economists.
    Again you're just obsessing on the exaggerated predictions.

    The traditional free-market theory is upheld in some cases where there is evidence -- the case of Samoa being the extreme example -- but the experience has been that MW can be increased with little or no measurable damage. This is what the liberal economists have demonstrated with their data. They have not demonstrated that there is no net harm caused by the MW, but only that there are no dire consequences and no measurable NET damage.


    In those conservative states that fail to get with the program, this may be a problem as workers flee these backward states to neighboring states that are more enlightened and therefore offer better living standards.
    Nothing like that will ever happen. There are too many other factors dictating where people choose to relocate.

    And this is a cart-before-the-horse dilemma, because the states with a higher living standard automatically also enact higher MW levels. So it's impossible to determine which caused which.


    This rather than merely offering big tax advantages and perks to businesses who move to their states will eventually be necessary.
    Corporate welfare is just one more interference in the market which does overall net damage. Interfering in order to pander to any class -- rich or poor, proletarian or capitalist -- ends up making everyone worse off than they would be if the state just left the market alone -- individual players -- to make the decisions.

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    Veteran Member Lumpenproletariat's Avatar
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    More free-market jobs, produced by supply-and-demand -- YES. But

    Trump's artificial "jobs! jobs! jobs! jobs!" -- NO!



    Quote Originally Posted by DBT View Post
    The California unemployment rate fell to 4.0 percent in September 2019, setting a new record low in a data series going back to the 1970s.

    ''California payroll jobs totaled 17,538,500 in September 2019, up 21,300 from August 2019 and up 320,000 from September of last year.

    California’s Labor Market, by the Numbers...


    The state’s unemployment rate fell to 4.0 percent1 in September, setting a new record low in a data series going back to the 1970s.

    California’s record low unemployment rate in September coincided with a 0.2 percent drop in the national unemployment rate to 3.5 percent for the month, a 50-year low.

    September’s 21,300 nonfarm payroll gain extended California’s current job expansion to an all-time record of 115 months. Gains were concentrated in the professional and business services industry, particularly for firms providing employment services, along with increases in the manufacturing and education and health services industry sectors.

    California added an average 29,120 jobs2 per month over the entire 115-month-long expansion — far more than the 8,000-9,000 jobs needed monthly to match labor force growth.''
    Thanks to President Trump's unprecedented high budget deficits. And the gradual recovery since the Crash. And the artificially-suppressed interest rates. Probably also some of the increased suppression of trade, or trade war, and suppression of immigrant labor and work visas. We might ask why the jobs numbers are not even better than this, in view of the extreme factors causing (artificial?) job-creation.

    Most of this will have long-term detrimental impact. But if you don't think so, then surely you'll vote to re-elect him so he can increase the annual deficit to 2 trillion, or even 3 trillion.

    Sky's the limit, as long as it means more "jobs! jobs! jobs! jobs! jobs! jobs!"

  9. Top | #19
    Veteran Member Lumpenproletariat's Avatar
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    Quote Originally Posted by laughing dog View Post
    Quote Originally Posted by Loren Pechtel View Post
    Standard crap. Minimum wage hikes are usually implemented in growing economies and do little harm at that point.
    First, most critics do not make that caveat.
    Some do, and no critics deny it. It easily explains why the MW increase appears to do no damage. It's not that there's little or no damage, but that the damage done is obscured by the growing economy going on which produces good jobs numbers, regardless of the less noticeable damage from the higher labor cost.

    Also, during good times when the employment is increasing the employers increase wages anyway, to attract more applicants, as part of the normal supply-and-demand conditions. So the MW increase is less important, as many of the wages would have increased anyway, without it.


    Nor, does the application of standard demand and supply analysis.
    Yes, supply-and-demand explains why the MW increases are done during better times, and why therefore the damage done by the increase is less measurable. As the economy expands, employers need to increase their wage, because the SUPPLY of labor is lower and the DEMAND for it is higher. And the conditions are more optimistic so they can afford to invest more, so that a higher labor cost is less of a negative factor than it would be during a recession period.


    Quote Originally Posted by Loren Pechtel View Post
    Next recession, though, they increase the job losses.
    And why should anyone think your response is not also standard crap?
    If wage levels are higher when the recession hits, the new job losses will be higher (if the wage cannot be reduced). The higher MW makes it impossible for some employers to reduce wages back to a level where workers could be retained.

  10. Top | #20
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    Making the world worse off, one little bit at a time.

    Quote Originally Posted by Ford View Post
    When I entered the workforce, the minimum wage was $3.35 an hour.

    Raising it beyond that level - to hear tell - would devastate the economy. There would be riots in the streets.
    It's always easy to poke fun at the exaggerated claims. A more correct prediction would have been that the overall net harm would be greater than the net benefit from the increase.


    The nation could simply not support a minimum of tree fiddy.
    Fiddle-faddle!


    I managed to work my way up the food chain (I was in a restaurant kitchen, after all) and wound up making the princely sum of 6 bucks an hour. When I went for a new gig, and asked for a comparable wage, my new boss said "well you'd damned well better be able to justify that amount of money."

    The idea that someday the minimum would be seven? Jesus, you might as well have nuked the Earth and started over again. It was seen as that bad. Stores being looted by roaming bands of communists. Business owners dragged out into the streets and flayed alive.
    If the only argument for MW is that it won't lead to the END OF THE WORLD, that's not a strong case. Even Bolshevism and Nazism didn't lead to the end of the world. Both Russia and Germany still exist, don't they? So maybe Stalin and Hitler weren't all that bad. Right?


    A higher minimum wage isn't the end of civilization. It doesn't destroy the economy. The damage it causes isn't like a catastrophic disease...more like a temporary skin irritation that's easily treated by a topical cream.
    So everyone agrees -- MW causes a net small damage. Makes the world only a little worse off, not a lot worse.

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