Raise the Minimum Wage

[dblack]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

Bullshit. How completely ridiculous!

If it's completely ridiculous bullshit you should certainly have no problem providing evidence to the contrary.

Supporters argue that a higher minimum wage is an effective anti-poverty tool. If businesses must pay their low-wage employees more, then those workers should earn more and fewer of them should live in poverty. Common sense says a higher minimum wage should fight poverty.

The facts, however, show otherwise. Many economists have examined the evidence and come to the surprising conclusion that the minimum wage does not reduce poverty. Ohio University economists Richard Vedder and Lowell Gallaway examined the effect that increases in the minimum wage had on the overall poverty rate in the United States and on the poverty rates for groups like minorities and teenagers that might especially benefit from higher minimum wages.[1] They found that the minimum wage had no statistically detectable effect on poverty rates.

[1] See Richard K. Vedder and Lowell E. Gallaway, "Does the Minimum Wage Reduce Poverty?" Employment Policies Institute, June 2001, at www.epionline.org/studies/vedder_06-2001.pdf(December 28, 2006).

Raising the Minimum Wage Will Not Reduce Poverty

You need evidence? Really? Okay, let's say you get a one week pay check that amounts to $240, or you could get a pay check that amounts to $500 for the week. Which pay check do you think will keep you out of poverty?

Definitely not the check they'll be getting from the umemployment line after they lose their job because their employer can't afford to give them a $260 week raise.

And by all means, use these Mythbusters to those who oppose you, a friend or loved one, from getting a much needed raise to improve their well being.
This is a Clip & Save!!

Minimum Wage Mythbusters
Myth: Raising the minimum wage will only benefit teens.

Not true: The typical minimum wage worker is not a high-school student earning weekend pocket money. In fact, 88 percent of those who would benefit from a federal minimum wage increase are age 20 or older, and 55 PERCENT ARE WOMEN!!

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Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: A review of 64 studies on minimum wage increases FOUND NO DISCERNABLE EFFECT ON EMPLOYMENT. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016.

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Myth: Increasing the minimum wage is bad for businesses.

Not true: Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

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Myth: Increasing the minimum wage is bad for the economy.

Not true: Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised.

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Myth: The federal minimum wage goes up automatically as prices increase.

Not true: While some states have enacted rules in recent years triggering automatic increases in their minimum wages to help them keep up with inflation, the federal minimum wage does not operate in the same manner. An increase in the federal minimum wage requires approval by Congress and the president. However, in his call to gradually increase the current federal minimum wage to $10.10 per hour, President Obama has also called for it to adjust automatically with inflation. Eliminating the requirement of formal congressional action would likely reduce the amount of time between increases, and better help low-income families keep up with rising prices.

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Myth: The federal minimum wage is higher today than it was when President Reagan took office.

Not true: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s. That's why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.

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Myth: Small business owners can't afford to pay their workers more, and therefore don't support an increase in the minimum wage.

Not true: A June 2014 survey found that more than 3 out of 5 small business owners support increasing the minimum wage to $10.10. Small business owners believe that a higher minimum wage would benefit business in important ways: 58% say raising the minimum wage would increase consumer purchasing power. 56% say raising the minimum wage would help the economy. In addition, 53% agree that with a higher minimum wage, businesses would benefit from lower employee turnover, increased productivity and customer satisfaction.

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Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would hurt restaurants.

Not true: In California, employers are required to pay servers the full minimum wage of $9 per hour - before tips. Even with a recent increase in the minimum wage, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.

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Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would lead to restaurant job losses.

Not true: Employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour – before tips. Yet, the San Francisco restaurant industry has experienced positive job growth over the past few years according to the Bureau of Labor Statistics.

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Myth: Raising the federal minimum wage won't benefit workers in states where the hourly minimum rate is already higher than the federal minimum.

Not true: Only 23 states and the District of Columbia currently have a minimum wage higher than the federal minimum, meaning a majority of states have an hourly minimum rate at or below the federal minimum. Increasing the federal minimum wage will boost the earnings for some 28 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. Raising the federal minimum wage is an important part of strengthening the economy. A raise for minimum wage earners will put more money in more families' pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.

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Myth: Younger workers don't have to be paid the minimum wage.

Not true: While there are some exceptions, employers are generally required to pay at least the federal minimum wage. Exceptions allowed include a minimum wage of $4.25 per hour for young workers under the age of 20, but only during their first 90 consecutive calendar days of employment with an employer, and as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive the current federal minimum wage or the state minimum wage, whichever is higher. There are programs requiring federal certification that allow for payment of less than the full federal minimum wage, but those programs are not limited to the employment of young workers.

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Myth: Restaurant servers don't need to be paid the minimum wage since they receive tips.

Not true: An employer can pay a tipped employee as little as $2.13 per hour in direct wages, but only if that amount plus tips equal at least the federal minimum wage and the worker retains all tips and customarily and regularly receives more than $30 a month in tips. Often, an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage. When that occurs, the employer must make up the difference. Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, he or she is entitled to the provisions of each law which provides the greater benefits.

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Myth: Only part-time workers are paid the minimum wage.

Not true: About 53 percent of all minimum wage earners are full-time workers, and minimum wage workers contributed almost half (46 percent) of their household's wage and salary income in 2011. Moreover, more than 88 percent of those who would benefit from raising the federal minimum wage from $7.25 to $10.10 are working adults, and 55 percent are working women.

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Myth: Increasing the minimum wage lacks public support.

Not true: Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013 when President Obama first called on Congress to increase the minimum wage have consistently shown that an overwhelming majority of Americans support an increase.

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Myth: Increasing the minimum wage will result in job losses for newly hired and unskilled workers in what some call a “last-one-hired-equals-first-one-fired” scenario.

Not true: Minimum wage increases have little to no negative effect on employment as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

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Myth: The minimum wage stays the same if Congress doesn't change it.

Not true: Congress sets the minimum wage, but it doesn't keep pace with inflation. Because the cost of living is always rising, the value of a new minimum wage begins to fall from the moment it is set.

Minimum Wage Mythbusters - U.S. Department of Labor

If all this is true, why on earth wouldn't you advocate for increasing the minimum wage to $100/hr so that we can all live in comfort?

 

[DrDoomNGloom]

I think every teenager flipping burgers & dunking fries should be paid the equivalent of a dental assistant. I mean I'm sure learning the spatula was as tough as leaning how to perform dental procedures right?

Stupid libs

This will upset the balance of nature. Everyone will expect their wages be doubled. Why should a burger flipper earn as nearly as much as a mechanic or programmer or a hygienist? It's insane!

The first place you'll see this happen is at the companies who have several workers whose wages will increase. Everyone above them will expect the same thing. Should be interesting to see the dominoes fall.

The theorists never factor that stuff into their "ideas", but they don't have to. They're just theorists.

Isn't that how it has always worked? Let's say in 1979 the minimum wage was $2.00 an hour and a business had 1 clean up janitor that made the $2, and the business had 1 secretary, with starting pay at $2.80 an hour...40% more than the minimum wage worker....and some other workers we don't need to discuss for this example....

in 2009 with the same starting secretary salary..... do you think you can hire her at $2.80 an hour? let's say 30 years later....minimum wage in 2009 was 7.00 an hour, you will pay the secretary 40% more than the minimum wage worker....then the secretary starting salary position would be $9.80 an hours...but if the minimum wage worker was making $10.00, the starting salary for the secretary would be $14.00 an hour....

Minimum wage is kept low, and not going up with the cost of living because they can pay the rest of the workers less and keep more of the profit for themselves and the higher ups....

that minimum wage for the lowest worker is what keeps the middle class behind the 8 ball....and you don't even realize this....???

Damn and if you had kept your mouth shut the rubes would have been none the wiser, right??
Where do you morons get these visions of grandeur??

It is the tit sucking entitled of society, the leeches of society that keep the middle class behind the 8 ball .......... if the entitled would work the middle class would have to shoulder less of a tax burden ...................

 

[DrDoomNGloom]

Policy Analysis No. 701
The Negative Effects of Minimum Wage Laws
By Mark Wilson
June 21, 2012
The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.

There is no “free lunch” when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that’s rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.

This study reviews the economic models used to understand minimum wage laws and examines the empirical evidence. It describes why most of the academic evidence points to negative effects from minimum wages, and discusses why some studies may produce seemingly positive results.

Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today’s sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers.

http://object.cato.org/sites/cato.org/files/pubs/pdf/PA701.pdf

Would you like me to flood this thread with opposing literature?? It's coming, just keep your shit up, it's coming ......

 

[DrDoomNGloom]

The Negative Effects of Minimum Wage Laws
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PDF
Mark Wilson
September 2012

Overview
Background
Who Is Paid the Minimum Wage?
Modeling the Minimum Wage
The Effect of Minimum Wages on Employment
Other Effects of Minimum Wages
Minimum Wages and Poverty
Conclusions

Overview
The federal government through the Department of Labor has imposed a minimum wage since 1938. Nearly all the state governments also impose minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.

There is no "free lunch" when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that's rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.

This study reviews the economic models used to understand minimum wage laws and examines the empirical evidence. It describes why most of the academic evidence points to negative effects from minimum wages, and discusses why some studies may produce seemingly positive results.

Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today's sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers.

Background
The federal minimum wage originated in the Fair Labor Standards Act (FLSA) signed by President Franklin Roosevelt on June 25, 1938. The law established a minimum wage of 25 cents per hour for all employees who produced products shipped in interstate commerce. That wage is equivalent to $4.04 in today's purchasing power.

Originally, the FLSA covered only about 38 percent of the labor force, mostly in the manufacturing, mining, and transportation industries.1 Over the years, Congress has significantly expanded the coverage and increased the minimum wage rate. The air transport industry was added in 1947, followed by retail trade in 1961. The construction industry, public schools, farms, laundries, and nursing homes were added in 1966, and coverage was extended to state and local government employees in 1974. Currently, the FLSA covers about 85 percent of the labor force.2

Since 1938 the federal minimum wage has been raised 22 times. From 1949 to 1968 the real value of the minimum wage (in 2011 dollars) rose rapidly from $3.78 to $10.34. At $7.25 per hour, the minimum wage today in real dollars is 85 percent greater than the original benchmark, and just below its average for the past 60 years of $7.59. Since the 1970s, the federal minimum wage has fluctuated around roughly 40 percent of the average private sector hourly wage.

The FLSA requires employers to comply with state minimum wage laws that may set a state minimum wage rate higher than the federal rate.3 Currently, 45 states and the District of Columbia have their own minimum wages, of which 18 are higher than the current federal minimum of $7.25 per hour.4 Only five states do not have their own minimum wage laws and rely on the FLSA. Moreover, even state minimum wages that are below the federal minimum often have an effect because they can apply to employers or workers who are exempt from the federal statute.

Who Is Paid the Minimum Wage?
Supporters of minimum wages might believe that these laws mainly help to boost the incomes of full-time adult workers in low-income families, some of whom are supporting children. However, the data generally do not support that view. Most workers earning the minimum wage are young workers, part-time workers, or workers from non-poor families.

According to the Bureau of Labor Statistics, 1.8 million paid-hourly employees were paid the federal minimum wage of $7.25 in 2010.5 These 1.8 million employees can be broken down into two broad groups:

• Roughly half (49.0 percent) are teenagers or young adults aged 24 or under. A large majority (62.2 percent) of this group live in families with incomes two or more times the official poverty level.6 Looking just at the families of teenaged minimum wage workers, the average income is almost $70,600, and only 16.8 percent are below the poverty line.7 Note that the federal minimum wage applies to workers of all ages.8
• The other half (51.0 percent) are aged 25 and up.9 More of these workers live in poor families (29.2 percent) or near the poverty level (46.2 percent had family incomes less than 1.5 times the poverty level).10However, even within this half of all minimum wage employees, 24.8 percent voluntarily work part-time, and just 34.3 percent are full-time full-year employees.11

Only 20.8 percent of all minimum wage workers are family heads or spouses working full time, 30.8 percent were children, and 32.2 percent are young Americans enrolled in school.12 The popular belief that minimum wage workers are poor adults (25 years old or older), working full time and trying to raise a family is largely untrue. Just 4.7 percent match that description.13 Indeed, many minimum wage workers live in families with incomes well above the poverty level.

Modeling the Minimum Wage
When economists want to understand the effects of a policy change, they build a model or set of equations to figure out how variables such as wages and prices might be affected. There have been decades of research on the effects of the minimum wage, and economists have used three types of models to explore the issue: competitive, monopsony, and institutional. With each of these models, the cost increase associated with the minimum wage changes the behavior of firms, with resulting impacts on workers, consumers, owners, and others. The three alternative models emphasize different types of adjustments that employers use to adapt to increases in the minimum wage.

Much of the empirical research has focused on estimating how much an increase in the minimum wage will reduce employment in affected industries and affected groups of workers. Other research has examined the effects of minimum wages on the number of hours worked, firm profits, worker training, level of work effort, human resource practices, operational efficiencies, internal wage structures, and other parameters. The important thing to understand is that markets often respond to changes in mandated minimum wages in ways that create negative effects that are unplanned and are not desired by policymakers or the general public.

Basic Competitive Model

The competitive model has been most often used for evaluating the minimum wage. This is the basic textbook model that has been taught in university economics courses for decades. The core components of the model are a negatively sloped labor demand curve and a wage rate that clears the market and is not controlled by individual agents. In competitive markets, the imposition of a minimum wage provides a classic example of a government distortion that creates negative side effects in the marketplace.

The figure shows a hypothetical competitive local labor market. The market demand curve for labor is DD, and the market supply curve is SS. Their intersection determines the competitive wage, Wc, with employment Ec. If the minimum wage is set at Wm, employment is reduced to Em. The reduction in employment is smaller than the excess supply of labor (the distance AC). The excess supply of labor includes both a reduction in employment (fewer hours and job opportunities, or AB) along with a second component consisting of workers who are drawn into the labor market by the prospect of earning the higher minimum wage (BC). Although some of the workers who are drawn into the labor market (typically those with higher skills) may succeed in finding one of the minimum wage jobs, it comes at the expense of lower skilled workers who are shut out of the labor market.

The excess supply of labor in this example is dispersed in several ways: 1) a reduction in hours, fewer job opportunities, and a shift in employment from sectors covered by the wage law to sectors not covered, including the underground economy. The employment effects are typically the most pronounced in labor markets for low-skilled youth.

In the case of a nationwide minimum wage, large numbers of firms will be affected, albeit by different amounts depending on the industry, region of the country, and other factors. In addition to the mandated cost increase possibly causing employment reductions, a portion of the higher wage costs may be passed forward to consumers or backward to other workers or suppliers of business inputs. In some circumstances, firms may reduce work hours, such as with fixed employment costs and worker heterogeneity, but maintain headcount. The employment and hours worked may also be affected by wage-related changes in employee productivity.

Other channels of adjustment in the competitive model besides employment reductions include reduced job training, reductions in worker benefits, the substitution of more skilled labor for less-skilled labor, reduced turnover and more selective hiring, and a greater ease in filling vacancies. If the minimum wage reduces profitability below the normal level, the number of businesses and investment in affected industries may shrink over time until normal returns are restored. In sum, the textbook competitive model assumes that firms respond to minimum wage increases by minimizing other production costs and by making various adjustments to offset the negative effects on their bottom line.

Monopsony Model

Some economists think that some labor markets may better approximate monopsonies rather than being fully competitive, and their models of the minimum wage may produce different results than the competitive models. A classic monopsony is a market with only a few employers in a particular marketplace. These firms have more market power than firms in competitive markets.

Since 1990 the monopsony model of labor markets has increasingly been the focus of empirical minimum wage research. In newer or dynamic versions of the monopsony model, it is labor market frictions related to hiring, turnover, search, and mobility costs on the supply side that drive the model. Although the particulars differ, the core components of monopsony models are an upward sloping labor supply curve facing firms and some employer discretion in wage setting.

Competitive and monopsony models offer different predictions about the employment effects of minimum wage changes. For minimum wage increases that push below-competitive wages toward competitive levels, monopsony models predict employment and/or hours will rise rather than fall. However, minimum wage increases above competitive levels will decrease employment, just as in the competitive model. The rise in employment in the first case will also expand industry output until the minimum wage equals the competitive wage and product prices should fall. In a classic monopsony, profits fall and the firms may exit in the long run. In new monopsony models, savings from decreased turnover may offset the profit effect. Unlike the competitive model, expenditures on general training may increase because the monopsony employer can capture some of the return.

While the results of monopsony models are interesting, most economists don't think the results are generally applicable because few low-wage employers are large enough to face an upward-sloping labor supply curve that typically characterizes an entire labor market.14

Institutional Model

Institutional (or behavioral) models of labor markets were often used for evaluating the minimum wage up until the 1950s, but this approach has gradually faded from use. The institutional model draws on the concepts in behavioral economics and emphasizes (1) the rejection of a well-defined downward sloping labor demand curve, (2) the fact that labor markets are imperfectly competitive, institutionally segmented, socially embedded, and prone to excess supply, and (3) the fact that technological and psycho-social factors in firms and internal labor markets are determinants of cost and productivity.

A key proposition of economists who favor institutional labor market models is that moderate minimum wage increases may, in the short-run, have either no employment effect or a small positive effect. The expected response of employers to a minimum wage increase is not to lay off workers but to search for ways to absorb the cost impact by expanding sales, improving service, and general economic expansion. It is also believed that costs from the minimum wage are partially offset by reducing organizational slack and improved productivity. That is achieved through tighter human resource practices (such as better scheduling), increased performance standards, increased work effort, and enhanced customer service. Costs that cannot be absorbed are passed on customers through higher prices. The institutional model also predicts that a higher minimum wage leads to a "ripple effect" in the internal wage structure as firms raise the pay of above-minimum wage employees to maintain morale while still allowing for some internal wage compression among employees with higher seniority.

The Effect of Minimum Wages on Employment
Despite the use of different models to understand the effects of minimum wages, all economists agree that businesses will make changes to adapt to the higher labor costs after a minimum wage increase. Empirical research seeks to determine what changes to variables such as employment and prices firms will make, and how large those changes will be. The higher costs will be passed on to someone in the long run; the only question is who. The important thing for policymakers to remember is that a decision to increase the minimum wage is not cost-free; someone has to pay for it.

The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment. The higher the minimum wage relative to competitive-market wage levels, the greater the employment loss that occurs. While minimum wages ostensibly aim to improve the economic well-being of the working poor, the disemployment effects of a minimum wages have been found to fall disproportionately on the least skilled and on the most disadvantaged individuals, including the disabled, youth, lower-skilled workers, immigrants, and ethnic minorities.15

In his best-selling economics textbook, Harvard University's Greg Mankiw concludes:



The minimum wage has its greatest impact on the market for teenage labor. The equilibrium wages of teenagers are low because teenagers are among the least skilled and least experienced members of the labor force. In addition, teenagers are often willing to accept a lower wage in exchange for on-the-job training. . . . As a result, the minimum wage is more often binding for teenagers than for other members of the labor force.16
Research by Marvin Kosters and Finis Welch shows that the minimum wage hurts low-wage workers particularly during cyclical downturns.17 And based on his studies, Nobel laureate economist Milton Friedman observed: "The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken."18

In a generally competitive labor market, employers bid for the most productive workers and the resulting wage distribution reflects the productivity of those workers. If the government imposes a minimum wage on the labor market, those workers whose productivity falls below the minimum wage will find few, if any, employment opportunities. The basic theory of competitive labor markets predicts that a minimum wage imposed above the market wage rate will reduce employment.19

Evidence of employment loss has been found since the earliest implementation of the minimum wage. The U.S. Department of Labor's own assessment of the first 25-cent minimum wage in 1938 found that it resulted in job losses for 30,000 to 50,000 workers, or 10 to 13 percent of the 300,000 covered workers who previously earned below the new wage floor.20 It is important to note that the limited industries and occupations covered by the 1938 FLSA accounted for only about 20 percent of the 30 million private sector, nonfarm, nonsupervisory, production workers employed in 1938. And of the roughly 6 million workers potentially covered by the law, only about 5 percent earned an hourly rate below the new minimum.21

Following passage of the federal minimum wage in 1938, economists began to accumulate statistical evidence on the effects. Much of the research has indicated that increases in the minimum wage have adverse effects on the employment opportunities of low-skilled workers.22 And across the country, the greatest adverse impact will generally occur in the poorer and lower-wage regions. In those regions, more workers and businesses are affected by the mandated wage, and businesses have to take more dramatic steps to adjust to the higher costs.

As an example, with the original 1938 imposition of the minimum wage, the lower-income U.S. territory of Puerto Rico was severely affected. An estimated 120,000 workers in Puerto Rico lost their jobs within the first year of implementation of the new 25-cent minimum wage, and the island's unemployment rate soared to nearly 50 percent.23

Similar damaging effects were observed on American Samoa from minimum wage increases imposed between 2007 and 2009. Indeed, the effects were so pronounced on the island's economy that President Obama signed into law a bill postponing the minimum wage increases scheduled for 2010 and 2011.24 Concern over the scheduled 2012 increase of $0.50, compelled Governor Togiola Tulafono to testify before Congress: "We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control... Our job market is being torched. Our businesses are being depressed. Our hope for growth has been driven away."25

In 1977 ongoing debate about the minimum wage prompted Congress to create a Minimum Wage Study Commission to "help it resolve the many controversial issues that have surrounded the federal minimum wage and overtime requirement since their origin in the Fair Labor Standards Act of 1938."26 The commission published its report in May 1981, calling it "the most exhaustive inquiry ever undertaken into the issues surrounding the Act since its inception."27 The landmark report included a wide variety of studies by a virtual ‘‘who's who'' of labor economists working in the United States at the time.28

A review of the economic literature amassed by the Commission by Charles Brown, Curtis Gilroy, and Andrew Kohen found that the "time-series studies typically find that a 10 percent increase in the minimum wage reduces teenage employment by one to three percent."29 This range subsequently came to be thought of as the consensus view of economists on the employment effects of the minimum wage.

It is important to note that different academic studies on the minimum wage may examine different regions, industries, or types of workers. In each case, different effects may predominate. A federal minimum wage increase will impose a different impact on the fast-food restaurant industry than the defense contractor industry, and a different effect on lower-cost Alabama than higher-cost Manhattan. This is why scholarly reviews of many academic studies are important.

In 2006 David Neumark and William Wascher published a comprehensive review of more than 100 minimum wage studies published since the 1990s.30 They found a wider range of estimates of the effects of the minimum wage on employment than the 1982 review by Brown, Gilroy, and Kohen. The 2006 review found that "although the wide range of estimates is striking, the oft-stated assertion that the new minimum wage research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. Indeed . . . the preponderance of the evidence points to disemployment effects."31

Nearly two-thirds of the studies reviewed by Neumark and Wascher found a relatively consistent indication of negative employment effects of minimum wages, while only eight gave a relatively consistent indication of positive employment effects. Moreover, 85 percent of the most credible studies point to negative employment effects, and the studies that focused on the least-skilled groups most likely to be adversely affected by minimum wages, the evidence for disemployment effects were especially strong.

In contrast, there are very few, if any, studies that provide convincing evidence of positive employment effects of minimum wages. These few studies often use a monopsony model to explain these positive effects. But as noted, most economists think such positive effects are special cases and not generally applicable because few low-wage employers are big enough to face an upward-sloping labor supply curve as the monopsony model assumes.32

Other Effects of Minimum Wages
Aside from changes in employment, empirical studies have documented other methods by which businesses and markets adjust to minimum wage increases. The congressional Joint Economic Committee published a major review of 50 years of academic research on the minimum wage in 1995.33 The study found a wide range of direct and indirect effects of increased minimum wages that may occur. These include

• Increasing the likelihood and duration of unemployment for low-wage workers, particularly during economic downturns;
• Encouraging employers to cut worker training;
• Increasing job turnover;
• Discouraging part-time work and reducing school attendance;
• Driving workers into uncovered jobs, thus reducing wages in those sectors;
• Encouraging employers to cut back on fringe benefits;
• Encouraging employers to install labor-saving devices;
• Increasing inflationary pressure;
• Increasing teenage crime rates as a result of higher unemployment; and
• Encouraging employers to hire illegal aliens.34

Another channel of adjustment to minimum wage changes is labor-labor substitution within businesses.35Research finds that some employers will replace their lowest-skilled workers with somewhat higher-skilled workers in response to increases in the minimum wage. As a result, minimum wage increases may harm the least skilled workers more than is suggested by the net disemployment effects estimated in many studies because more-skilled workers are replacing some less-skilled workers. Nobel laureate economist Gary Becker has noted that this effect helps generate political support from labor unions for higher minimum wages:

A rise in the minimum wage increases the demand for workers with greater skills because it reduces competition from low-skilled workers. This is an important reason why unions have always been strong supporters of high minimum wages because these reduce the competition faced by union members from the largely non-union workers who receive low wages.36

A 2011 study by Barry Hirsch and coauthors found yet further methods of business adjustment.37 Some firms partially offset increases in the minimum wage by awarding smaller than normal pay increases to their workers who earn more than the minimum wage. Some firms try to increase worker productivity by requiring better attendance, insisting that job duties are completed faster, imposing additional tasks on workers, minimizing hours worked with better scheduling, and terminating poor performers more quickly.

A final method for businesses to respond to minimum wage increases is to try to push forward the additional costs to consumers. If a minimum wage increase is imposed economywide, it may be partly passed on in prices. However, in a global economy, this is less likely for internationally traded goods because domestic producers facing higher labor costs will be undercut by imports. So price effects may be more prevalent in goods and services less subject to competition from imports.

In 2004 a comprehensive review more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent and overall prices by up to 0.4 percent.38 A 2007 study from the Federal Reserve Bank of Chicago found that restaurant prices unambiguously increase in response to minimum wage increases.39 And a 2011 study of quick-service restaurants found that two-thirds of the minimum wage cost increases were offset by higher menu prices, and that higher prices rather than cuts in employment and hours was the most important channel of adjustment for this type of firm.40

These results help to reconcile the few minimum wage studies that do not find negative employment effects with the large majority of studies that do. Economic theory suggests that firms can respond to minimum wage increases by reducing employment, raising prices, or both. In the studies that find small or no employment effects, it may be that the businesses studied were able to pass on the added costs solely in higher prices. Indeed, the Federal Reserve study concluded that the results are consistent with the small disemployment effects found in some studies. Note finally that empirical studies finding that minimum wage increases affect prices in some cases is consistent with the competitive model of labor markets, but not with the monopsony model.41

Minimum Wages and Poverty
Proposals to increase the minimum wage can be politically popular because they are viewed as being a way of helping the poor. However, evidence from a large number of academic studies suggests that minimum wage increases don't reduce poverty levels. Some of the reasons include

• Many poor Americans (63.5%) do not work, and thus aren't earning wages.42
• Even among the working poor, the relationship between earning a low hourly wage rate and living in poverty is weak and has become weaker over time. That is because most workers who gain from a minimum wage increase live in nonpoor families and most of the working poor already have wages above the required minimums.43
• While an increase in the minimum wage will lift some families out of poverty, other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty.44
• If a minimum wage is partly or fully passed through to consumers in the form of higher prices, it will hurt the poor because they disproportionately suffer from price inflation.45

Relatively few poor households would benefit from a minimum wage increase even if there were no negative employment or other affects. In the recent federal minimum wage increase from $5.15 to $7.25, only 15.8 percent of the workers who were expected to gain from it lived in poor households.46 In the current proposal to raise it to $9.50, only 11.3 percent of the workers who would gain live in poor households.47 And of those who would gain, 63 percent are second or third earners living in households with incomes twice the poverty line.

Since 1995, eight studies have examined the income and poverty effects of minimum wage increases, and all but one have found that past minimum wage hikes had no effect on poverty.48 One recent academic study found that both state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates.49These studies generally find that some low-skilled workers living in poor families who remain employed do see their incomes rise. However, other low-skilled workers lose their jobs or have their work hours substantially reduced, which causes income losses and increased poverty. On net, some studies find that the families of low-skilled workers and less-educated single mothers are no better off and may be made worse off by minimum wage hikes.50 The upshot is that there is no free lunch to this sort of top-down mandated attempt at reducing poverty.

Conclusions
In the American economy, low wages are usually paid to entry-level workers, but those workers usually do not earn these wages for extended periods of time. Indeed, research indicates that nearly two-thirds of minimum wage workers move above that wage within one year.51 For full-time minimum wage workers, research has found that the median first-year raise is about 14 percent.52

While they are often low-paid, entry-level jobs are vitally important for young and low-skill workers because they allow people to establish a track record, to learn skills, and to advance over time to a better-paying job. Thus, in trying to fix a perceived problem with minimum wage laws, policymakers cause collateral damage by reducing the number of entry-level jobs. As Milton Friedman noted, "The minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills."53

Seventy years of empirical research generally finds that the higher the minimum wage increase is relative to the competitive wage level, the greater the loss in employment opportunities. A decision to increase the minimum wage is not cost-free; someone has to pay for it, and the research shows that low-skill youth pay for it by losing their jobs, while consumers may also pay for it with higher prices. Moreover, evidence from a large number of academic studies shows that, even if there were no negative employment or other affects, minimum wage increases don't reduce poverty levels. Only 11.3 percent of the workers who would gain from a recent proposal to increase the minimum wage to $9.50 an hour even live in poor households.54

Some current proposals on Capitol Hill and at the state level to raise minimum wages could not come at a worse time. The current unemployment rate for teenagers is 24.9 percent, and this group's employment rate is near its record low of 25.4 percent. For minority youth the situation is even worse. The unemployment rate for minority teenagers is 38.2 percent, and the employment rate is just 15.5 percent.

In these tough economic conditions, employers are simply not going to hire workers whose labor produces less than the cost of hiring them. Employers will not pay $8.25 an hour to hire a worker whose hourly efforts bring in $7.25. A higher minimum wage will price even more low-skilled individuals out of a job. Although a small share of workers will get a raise, others will lose opportunities for employment. Minimum wages generally don't distribute income to workers from employers, but to a small group of lucky workers from the unlucky workers who lose jobs.

Rather than pursuing policies such as minimum wage increases that create winners and losers, policymakers should focus on policies that generate faster economic growth to benefit all workers. While minimum wages may be a well-meaning attempt to help workers, economic research clearly shows that somebody must pay the price for any increase, and it is usually the least skilled and least fortunate among us.​

The Negative Effects of Minimum Wage Laws Downsizing the Federal Government

This is just the start, if you rebutt, Please list all sources ......................
Hypewrtext links to source material will suffice ...........

 

[The Rabbi]

It's simple Econ 101: raise the price, you sell less of it. WHy do people think that somehow laws of economics dont apply to their issue?

 

[RKMBrown]

Why raise it to 10 or 15 when we can raise it to 20 or 30 and really make a difference in people lives.

It's because, despite their claims to the contrary, they intuitively recognize that dictating wages with government harms the economy, and they don't want to harm it "too much".

I see, so it would benefit the economy if we had the liberty to hire certain people at say, less than the current minimum wage. I assume it would also benefit those people who are out of work who get to earn said income. Odd that the democrats are so against what is good for this country.

 

[dblack]

Why raise it to 10 or 15 when we can raise it to 20 or 30 and really make a difference in people lives.

It's because, despite their claims to the contrary, they intuitively recognize that dictating wages with government harms the economy, and they don't want to harm it "too much".

I see, so it would benefit the economy if we had the liberty to hire certain people at say, less than the current minimum wage. I assume it would also benefit those people who are out of work who get to earn said income. Odd that the democrats are so against what is good for this country.

Not really. Problems are how politicians justify their power. The more problems they can create (while pretending to 'cure' them), the more power than can grab.

 

[RKMBrown]

Why raise it to 10 or 15 when we can raise it to 20 or 30 and really make a difference in people lives.

It's because, despite their claims to the contrary, they intuitively recognize that dictating wages with government harms the economy, and they don't want to harm it "too much".

I see, so it would benefit the economy if we had the liberty to hire certain people at say, less than the current minimum wage. I assume it would also benefit those people who are out of work who get to earn said income. Odd that the democrats are so against what is good for this country.

Not really. Problems are how politicians justify their power. The more problems they can create (while pretending to 'cure' them), the more power than can grab.

Sounds like a protection racket.

 

[Care4all]

I think every teenager flipping burgers & dunking fries should be paid the equivalent of a dental assistant. I mean I'm sure learning the spatula was as tough as leaning how to perform dental procedures right?

Stupid libs

This will upset the balance of nature. Everyone will expect their wages be doubled. Why should a burger flipper earn as nearly as much as a mechanic or programmer or a hygienist? It's insane!

The first place you'll see this happen is at the companies who have several workers whose wages will increase. Everyone above them will expect the same thing. Should be interesting to see the dominoes fall.

The theorists never factor that stuff into their "ideas", but they don't have to. They're just theorists.

Isn't that how it has always worked? Let's say in 1979 the minimum wage was $2.00 an hour and a business had 1 clean up janitor that made the $2, and the business had 1 secretary, with starting pay at $2.80 an hour...40% more than the minimum wage worker....and some other workers we don't need to discuss for this example....

in 2009 with the same starting secretary salary..... do you think you can hire her at $2.80 an hour? let's say 30 years later....minimum wage in 2009 was 7.00 an hour, you will pay the secretary 40% more than the minimum wage worker....then the secretary starting salary position would be $9.80 an hours...but if the minimum wage worker was making $10.00, the starting salary for the secretary would be $14.00 an hour....

Minimum wage is kept low, and not going up with the cost of living because they can pay the rest of the workers less and keep more of the profit for themselves and the higher ups....

that minimum wage for the lowest worker is what keeps the middle class behind the 8 ball....and you don't even realize this....???

Damn and if you had kept your mouth shut the rubes would have been none the wiser, right??
Where do you morons get these visions of grandeur??

It is the tit sucking entitled of society, the leeches of society that keep the middle class behind the 8 ball .......... if the entitled would work the middle class would have to shoulder less of a tax burden ...................

But how so Dr Doom n Gloom? Can you show some sort of dotted line that I could follow on exactly how the leeches of society are putting the middle class behind the 8 ball on their wages being stagnant, while it has not affected the wealthy one itty bitty iota in wage stagnation, when they pay a lot of taxes too?

We are ALL, including corporations, paying the lowest effective federal income tax rates in the past 40 years....

Yep.... and many of those so called leeches, are the MIDDLE CLASS, taking advantage or earned income credits, and child tax credits, and child deductions, while those earning the same income, but without children are paying much much much more in taxes, and the double standard deductions for seniors, like my parents, who are wealthy and don't need the senior double deduction....while people struggling are paying higher taxes for the same amount of income earned just because they are younger....or those with children qualifying for food stamps...many are in the middle class, there are lot's of injustices out there when it comes to our tax code and so called leeching too....not just the poorest getting a welfare check....

However, I still do not see what this has to do with the tea in China...when it comes to stagnant wages and minimum wage?

 

[kiwiman127]

I read your article. It's one man's opinion with no source cited for his "data". He also makes an absurd statement.



Does he not understand that median means average? That means 50% of the population made less than $14.90 an hour. He is inferring that we can just raise the wages of 50% of the population with no detrimental affect on the economy.

This man has no credibility.

He's a highly respected economist! But because you disagree with him, he has no credibility. If you do a Google search you will find several reference pieces that also confirm that historically, when the Minimum wage increased there was a ripple effect to the working middle class.

Secondly, keeping wages flat (including the minimum wage hurts the economy. I challenge you to find one economist who isn't connected to any ideology who disagrees that flat wage growth hurts the economy. Find just one.

 

[PredFan]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

But it sure does jack the prices up on food, huh?

Gasoline prices raise the price of food more than any other thing out there, year after year after year...once every 10 years minimum wage hike does jack to the price of food compared to fuel prices....

You'd have a point if they didn't want to double the MW. Since they are, you can't be dense enough to not understand that the money to pay them has to come from the price of the product.

 

[Plasmaball]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

i went from 10 to 20 bucks and hour and it sure helped me be less poor

 

[RKMBrown]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

i went from 10 to 20 bucks and hour and it sure helped me be less poor

I went from $2.25/hr to $160/hr, but it didn't make me any richer. I guess it depends on what how you measure richness in life. I'll take the job that pays somewhere in between, that I enjoy, and does not require the job become my life.

 

[Plasmaball]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

Actually raising the minimum wage helps the working Middle Class by raising the floor of wages.

No, it doesn't. It hurts the middle class. The only people who get a wage bump when the minimum wage is raised are the people who were making less than the new minimum wage. The rest of us don't get the same increase, but we do pay the higher costs of goods and services as a result of the increase.

So the minimum wage hasnt been increased and yet things are still inflating anyways. this argument doesnt hold water at all.

 

[RKMBrown]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

Actually raising the minimum wage helps the working Middle Class by raising the floor of wages.

No, it doesn't. It hurts the middle class. The only people who get a wage bump when the minimum wage is raised are the people who were making less than the new minimum wage. The rest of us don't get the same increase, but we do pay the higher costs of goods and services as a result of the increase.

So the minimum wage hasnt been increased and yet things are still inflating anyways. this argument doesnt hold water at all.

Welfare programs effectively raise the minimum wage... so the argument does hold water.

 

[Plasmaball]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

i went from 10 to 20 bucks and hour and it sure helped me be less poor

I went from $2.25/hr to $160/hr, but it didn't make me any richer. I guess it depends on what how you measure richness in life. I'll take the job that pays somewhere in between, that I enjoy, and does not require the job become my life.

You are talking two different things then. i can pay my bills,spoil my kids and wife a little. save up for some other things now, where before i was drowning. What people fail to grasp is the fact that if you raise wages, people will pay their bills, Crime will go down, more money will be pushed back into the economy. Mortgages will be paid which means better communities and property values. You won't have boarded up houses dragging areas down.

But hey a ceo giving himself a 250k bonus off the sweat of his workers is totally cool...Makes total sense

 

[RKMBrown]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

i went from 10 to 20 bucks and hour and it sure helped me be less poor

I went from $2.25/hr to $160/hr, but it didn't make me any richer. I guess it depends on what how you measure richness in life. I'll take the job that pays somewhere in between, that I enjoy, and does not require the job become my life.

You are talking two different things then. i can pay my bills,spoil my kids and wife a little. save up for some other things now, where before i was drowning. What people fail to grasp is the fact that if you raise wages, people will pay their bills, Crime will go down, more money will be pushed back into the economy. Mortgages will be paid which means better communities and property values. You won't have boarded up houses dragging areas down.

But hey a ceo giving himself a 250k bonus off the sweat of his workers is totally cool...Makes total sense

Yeah our worshiping of Corporations at the expense of our job market has been a bit odd. To bad our government refuses to do it's job in managing this oligopoly corporate executives have over the owners of said corporations, the stockholders. Very odd that CEOs and their entire executive chain give themselves awards based on how much all the other CEOs and corporate executives are getting, not based on other more tangible metrics like how well the company is doing. Even more concerning when a CEO lays off tens of thousands of employees and while distributing hundreds of millions in stock awards. Nutz.

 

[dblack]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

Actually raising the minimum wage helps the working Middle Class by raising the floor of wages.

No, it doesn't. It hurts the middle class. The only people who get a wage bump when the minimum wage is raised are the people who were making less than the new minimum wage. The rest of us don't get the same increase, but we do pay the higher costs of goods and services as a result of the increase.

So the minimum wage hasnt been increased and yet things are still inflating anyways. this argument doesnt hold water at all.

Wow! That's some logic!

 

[dblack]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

Bullshit. How completely ridiculous!

If it's completely ridiculous bullshit you should certainly have no problem providing evidence to the contrary.

Supporters argue that a higher minimum wage is an effective anti-poverty tool. If businesses must pay their low-wage employees more, then those workers should earn more and fewer of them should live in poverty. Common sense says a higher minimum wage should fight poverty.

The facts, however, show otherwise. Many economists have examined the evidence and come to the surprising conclusion that the minimum wage does not reduce poverty. Ohio University economists Richard Vedder and Lowell Gallaway examined the effect that increases in the minimum wage had on the overall poverty rate in the United States and on the poverty rates for groups like minorities and teenagers that might especially benefit from higher minimum wages.[1] They found that the minimum wage had no statistically detectable effect on poverty rates.

[1] See Richard K. Vedder and Lowell E. Gallaway, "Does the Minimum Wage Reduce Poverty?" Employment Policies Institute, June 2001, at www.epionline.org/studies/vedder_06-2001.pdf(December 28, 2006).

Raising the Minimum Wage Will Not Reduce Poverty

You need evidence? Really? Okay, let's say you get a one week pay check that amounts to $240, or you could get a pay check that amounts to $500 for the week. Which pay check do you think will keep you out of poverty?

Definitely not the check they'll be getting from the umemployment line after they lose their job because their employer can't afford to give them a $260 week raise.

And by all means, use these Mythbusters to those who oppose you, a friend or loved one, from getting a much needed raise to improve their well being.
This is a Clip & Save!!

Minimum Wage Mythbusters
Myth: Raising the minimum wage will only benefit teens.

Not true: The typical minimum wage worker is not a high-school student earning weekend pocket money. In fact, 88 percent of those who would benefit from a federal minimum wage increase are age 20 or older, and 55 PERCENT ARE WOMEN!!

--------------------------------------------------------------------------------

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: A review of 64 studies on minimum wage increases FOUND NO DISCERNABLE EFFECT ON EMPLOYMENT. Additionally, more than 600 economists, seven of them Nobel Prize winners in economic ...

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Minimum Wage Mythbusters - U.S. Department of Labor

If all this is true, why on earth wouldn't you advocate for increasing the minimum wage to $100/hr so that we can all live in comfort?

 

[Dont Taz Me Bro]

Raising the minimum wage historically has done absolutely nothing to help the poor or raise people out of poverty.

i went from 10 to 20 bucks and hour and it sure helped me be less poor

Did the rest of the employment increase with you?