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Economists agree: Raising the minimum wage reduces poverty

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Re: Economists agree: Raising the minimum wage reduces poverty

#41

Post by jedmeyers »

jruthers wrote: post #16

Perhaps, rather than theorize about improving the American minimum wage, look to other countries that have higher minimum wage and evaluate their level of poverty (or lack thereof). Look at Australia and Norway, for example. Granted, the lack of poverty in those countries is not solely caused by a humane minimum wage - but it's a huge factor, and a positive indicator. I lived in the US for 7 years and could never fat…

The point is that no country behaves as a whole and therefore doesn't tolerate anything. You wouldn't find even two people who agree on all the issues, so how can you expect 310+ million people to agree on one of them? Also it looks like the supply of min wage workers far outweighs the demand for them.

Re: Economists agree: Raising the minimum wage reduces poverty

#42

Post by jordanb »

cjo wrote: post #36
jbellis wrote: post #22

It's pretty easy to find research coming to a different conclusion than the Card/Kreuger paper that most pro-minimum-wage-increase people cite: http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-w... http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-k... http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-w... But the best reasoning I've seen on the subject is Bryan Caplan's: "Suppose you have…

Even if minimum wage does cause some unemployment that's not the beginning or the end of the story. It's a market distortion created to counteract two other market distortions - namely already existing unemployment and market concentration on the employers' side, both of which depress wages. So even proving beyond a doubt that minimum wage causes an increase in unemployment isn't enough to abolish the institution if…

Yep, and notice that the article was talking about a reduction in aggregate poverty rather than total employment. If a few people lose their jobs but a significantly larger number of people get higher wages, poverty in aggregate goes down.

But as the article points points out, there is excellent and robust empirical evidence that the current minimum wage (and even earlier minimum wages in America, which were much higher) are too low to significantly affect total employment. Wikipedia has an excellent writeup of the scholarship on this topic:

http://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies

Re: Economists agree: Raising the minimum wage reduces poverty

#43

Post by bqpro1 »

Of course I am not an economist at all, but still I see here some paradox. Minimal wedges are paid for the jobs that require low qualifications or in fact no qualifications. So for example if we raise 4$ per hour to 5$ for such jobs, we may reduce the value of 1 dollar. If 1 hour of such job was worth 4$ and now is worth 5$, then now 1$ has less value than it used to have. As a consequence the whole economy may experience inflation. I do not believe in simple solutions to complicated problems. Printing more money do not reduce poverty and rising minimal wedges is for me a little bit like printing money.

Re: Economists agree: Raising the minimum wage reduces poverty

#44

Post by stefan_kendall »

ddebernardy wrote: post #25
derefr wrote: post #21

Earlier quoted context omitted.

> by raising the minimum wage, you lift minimum wage earners from a state where they barely survive to make ends meet to one where they consume the stuff that society at large is producing Do you have a citation on this? A raise of the minimum wage actually having an effect at the margins, in either direction, is unusual, because places don't tend to raise the minimum wage until it wouldn't have an effect anyway. Rai…

Not handy, but use your common sense if you will: if you're surviving on $8/hour or whatever it currently is in the US, and your wage increases by a dollar per hour, then all things being equal you're going to be spending that extra buck on a range of things that had been delayed for a while: shoes for the kids, new tires for the car, and what not. This is consumption, and it's going to get recycled over and over aga…

It's like you didn't even think through your example at all. If minimum wage is suddenly $50/hr, businesses begin to collapse.

The Fed, seeing this collapse, would massively inflate the dollar. Anyone with savings would have their savings destroyed, and the churn would make everyone poorer than before, quite specifically the same people you were trying to help.

Re: Economists agree: Raising the minimum wage reduces poverty

#45

Post by rfnslyr »

jedmeyers wrote: post #37
krakensden wrote: post #18

Earlier quoted context omitted.

Just because things don't work asymptotically doesn't mean they don't work.

But why would a $15/hour minimum wage work and $100/hour won't? Where between 15 and 100 do you draw the line and why?

When the wage is higher than mine :P

Re: Economists agree: Raising the minimum wage reduces poverty

#46

Post by jruthers »

ddebernardy wrote: post #20
jruthers wrote: post #16

Perhaps, rather than theorize about improving the American minimum wage, look to other countries that have higher minimum wage and evaluate their level of poverty (or lack thereof). Look at Australia and Norway, for example. Granted, the lack of poverty in those countries is not solely caused by a humane minimum wage - but it's a huge factor, and a positive indicator. I lived in the US for 7 years and could never fat…

> but it's a huge factor [ credible citation needed]

m not sure if you'll classify it as "credible" but the wikipedia article on HPI shows a clear ranking of countries that roughly correlates to the minimum wage (higher the wage, lower the poverty ranking). Which.. Doesn't seem like rocket science.

http://en.wikipedia.org/wiki/Human_Poverty_Index http://en.wikipedia.org/wiki/List_of_minimum_wages_by_countr...

Re: Economists agree: Raising the minimum wage reduces poverty

#47

Post by jedmeyers »

Can someone please give me his thoughts on this hypothetical situation?

Let's say a farmer buys some extra land and instead of hiring 50 people to work on it he buys a fancy tractor.

- Would it be right for those 50 people to demand from the tractor factory to stop making tractors because they are out of work?

- Would it be right for them to demand from the government the wages they would have received if the tractors were not made in the first place?

- Would it be right for everyone to pay a higher price for food because farmer had to hire 50 people instead of a tractor?

Re: Economists agree: Raising the minimum wage reduces poverty

#48

Post by harryh »

jruthers wrote: post #46
ddebernardy wrote: post #20

Earlier quoted context omitted.

> but it's a huge factor [ credible citation needed]

m not sure if you'll classify it as "credible" but the wikipedia article on HPI shows a clear ranking of countries that roughly correlates to the minimum wage (higher the wage, lower the poverty ranking). Which.. Doesn't seem like rocket science. http://en.wikipedia.org/wiki/Human_Poverty_Index http://en.wikipedia.org/wiki/List_of_minimum_wages_by_countr...

Well, maybe.

Or perhaps countries with less poverty are able to support higher minimum wages?

http://xkcd.com/552/

Re: Economists agree: Raising the minimum wage reduces poverty

#49

Post by jswinghammer »

cjo wrote: post #40
jswinghammer wrote: post #29

Earlier quoted context omitted.

Yes they can. This is because we can discuss what higher prices do-invariably they cause market actors to seek substitutes. If you push a $15 minimum wage it stands to reason that there would be demand for any machinery that would allow for cost savings. It would be good for the sectors of the economy that would supply these cost savings technologies. Ultimately marginal workers would get hurt even further once these…

Sounds like it's a choice between a short period of minimum wage pay and then getting replaced by "cost saving technologies", or a slightly longer period of subsistence wages and then still getting replaced. It's easy to argue that since the cost of technology goes down with time that any replacement of workers due to a minimum wage hike will happen anyways when the tech gets cheap enough. Here's a question. Both mar…

Ideally I would abolish fractional reserve lending and the inflation that goes along with it. That inflation of the money supply has a medium and long term effect of raising prices. In a free market prices would drop thus your bad wage gets better even if you can't ever find a better job.

Re: Economists agree: Raising the minimum wage reduces poverty

#50

Post by mcbaby »

Skimming over Arin Dube's paper, I can't help but wonder why he doesn't address any of the lurking variables. His time frame, 1990 to 2012, represents a period of vast technological change throughout the US and the rest of the world. I admit I did not read the entire paper, but it seems Mike Konczal and a lot of us are using "causality" and "correlation" interchangeably, which doesn't seem appropriate. This is not an empirical science... lengthy extrapolations don't tend to hold their ground in real-world economics. There are so many other factors and variables working that it seems silly to make these extrapolations. Again, I did not read Dube's entire paper-—he's obviously put much more thought and time into that paper than I have this comment. With that said, that is just my .02
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