[Mulderator]

I think its now clear the damage the increase in the minimum wage that went into effect last summer has caused on the economy. Its no accident the economy has started tanking right after that time. First and article from Mises (economic think tank) on the effects:

http://www.mises.org/story/2130

Once again politicians and pundits are calling for increases in the legal minimum wage. Their reasons are familiar. Market wages are supposedly immoral. People need to earn a "living wage." If the minimum wage went up at least to $7, or better still to near $10 an hour, millions would be lifted out of poverty.[1]

The economic case against minimum wage laws is simple. Employers pay a wage no higher than the value of an additional hour's work. Raising minimum wages forces employers to dismiss low productivity workers. This policy has the largest affect on those with the least education, job experience, and maturity. Consequently, we should expect minimum wage laws to affect teenagers and those with less education. Eliminating minimum wage laws would reduce unemployment and improve the efficiency of markets for low productivity labor.

There are a few economists who have been leading the charge for higher minimum wages. Some of these economists have obvious ideological leanings. Economists connected with the Left -orientated Economic Policy Institute and the Clinton Administration have concocted a rational for minimum wage increases. According to these economists higher wages make employees more content with their jobs, and this leads to higher worker productivity. Thus workers will be worth paying a minimum wage once their employers are forced to pay these wages. Of course, if this were true — if employers could get higher productivity out of less educated and experienced workers by paying higher wages — they would be willing to do this without minimum wage legislation. But the economists who make this case claim to have empirical evidence that proves them right. Economists David Card and Alan Krueger have published studies of the fast food industry indicated that small increases in the minimum wage would cause only minor job losses, and might even increase employment slightly in some instances. These studies by Card and Krueger show only that a small increase in minimum wage rates might not cause much of an increase in unemployment. Such studies ignore the fact that the current level of minimum wages are already causing significant unemployment for some workers.

The economic case for minimum wage increases has gained some ground with public and even professional opinion. Even some free market leaning economists, like Steven Landsburg, have conceded that minimum wages increases do not affect employment significantly.[2] Landsburg notes that critics of minimum wage laws emphasize that they have a disproportionate effect on teens and blacks. But he dismisses these critics because "minimum wages have at most a tiny impact on employment … The minimum wage kills very few jobs, and the jobs it kills were lousy jobs anyway. It is almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers."

Real statistics indicate that the critics of minimum wage laws were right all along.While it is true that minimum wages do not drive the national unemployment rate up to astronomical levels, it does adversely affect teenagers and ethnic minorities. According to the Bureau of Labor Statistics the unemployment rate for everyone over the age of 16 was 5.6% in 2005. Yet unemployment was 17.3% for those aged 16-19 years. For those aged 16-17 unemployment was 19.7%. In the 18-19 age group unemployment was 15.8%. Minimum wage laws do affect ethnic minorities more so than others.[3] The unemployment rate for white teens in the 16-17 age group was 17.3% in 2005. The same figures for Hispanic and black teens were 25% and 40.9% respectively. Of course, these figures decrease for older minorities. Blacks aged 18-19 and 20-24 had 25.7% and 19.9% unemployment in 2005. For Hispanics unemployment was slightly lower — 17.8% at age 18-19 and 9.6% at age 20-24.

. . .

A second problem with the case against minimum wages is that they affect older workers too. As already noted, workers in the 20-24 age group appear to be affected by minimum wage laws. Unemployment rates in the 25-34 age group are higher than for the 35-44 age group. The unemployment rate for blacks and Hispanics aged 25-34 were 11.1% and 5.8% in 2005. Unemployment for whites and Asians in this age group were 4.4% and 3.5%. In the 35-44 age group the unemployment rates for these four ethnicities were 7.2%., 5.1%, 4.4%, and 2.7%. A comparison of black to Asian unemployment is revealing. In the United States, Asians tend to attain higher levels of education than blacks. Thus minimum wage laws are relatively unimportant to Asian Americans. Consequently, Asians are able to attain unemployment as low as the 2-3% range. For Asians aged 16+ the unemployment rate was only 3.3% in 2005. For Asians in the 20-24 age group unemployment was 5.1%. These figures are only a fraction of the unemployment rates experienced by blacks in 2005. There is no reason why white, Hispanic, and black Americans cannot also reach the 2-3% range of unemployment.

Supporters of minimum wage laws do not realize that prior to minimum wage laws the national unemployment rate did fall well below 5%. According to the US Census, national unemployment rates were 3.3% in 1927, 1.8% in 1926, 3.2% in 1925, 2.4% in 1923, 1.4% in 1919 and 1918, 2.8% in 1907, 1.7% in 1906, and 3.7% in 1902. Even today, some states have unemployment rates as low as 3%. Virginia now has an unemployment rate of 3.1%. Wyoming has an unemployment rate of 2.9%. Hawaii has an unemployment rate of 2.6%. National unemployment rates seldom drop below 5% because some categories of workers are stuck with double digit unemployment. [b]Given these figures, it is quite arguable that minimum wage laws keep the national unemployment rate 3 percentage points higher than would otherwise be the case.

The economic case for a living wage is unfounded. Current minimum wage rates do create high levels of unemployment among low productivity workers. Higher "living wages" would only make these problems worse. The alleged moral case for a living wage ignores the fact that minimum wage increases adversely affect the very people whom advocates of living wages intend to help. If politicians wish to pursue sound policies, they should consider repealing minimum wage laws, especially where teens are concerned. Unfortunately, most politicians care more about political expediencies than sound economic policy. This being the case, minimum wages will increase unless public opinion changes significantly.

Translation: Unless the idiots who simplisticly believe a higher minimum wage helps the poor, the poor will continue to be the people that are being hurt by these politicaly driven, economically unsupported laws.

I did a analysis myself by comparing the state unemployment rates with the minimum wage (see below). Not surpisingly, the states with the lowest unemployment have the lowest minimum wage and visa-versa (generally speaking). There are some exceptions--for example, the southern states with high concentrations of low skilled workers will always have high unemployment rates. Hawaii will always have low unemployment rates because of its uniqueness. But the data is absolutely clear--for example, 14 of the states in the bottom 24 of the unemployment rate have the lowest minimum wage. Conversely, 17 of the states in the highest 25 in unemployment rates also in the top half of the rates of minimum wage.

Its no accident that California which is a liberal state and has the highest minimum wage laws and the most onerous employment laws always has one of the highest unemployment rates.

http://en.wikipedia.org/wiki/List_of..._minimum_wages
http://money.cnn.com/pf/features/lis...ent/index.html

The "Wage Rank) is from lowest to highest minimum wage--obviously there area lot of ties for places since many states go by the federal minimum wage. I also replaced wages that were lower (due to exceptions to the wage rates) with the federal minimum.

[Mulderator]

Now it was explained to the Moore-Ons that if you raise minimum wage all it does is drive up the prices and you are right back where you started (except that most of the poor who live on government subsidy now are worst off then they were until there is an increase in the government benefits--which come much later).

Not surprisingly--check the Consumer Price Index (see below) for Food and Beverages which doubled from the prior few years and is already at 5.1 for the first 3 months of 2008. We all know that the raise in minimum wage is going to effect the food and beverage industry the most significantly because that's where there is a high concentration of the MW jobs. Again, this is not rocket science--you don't need an Economics degree to understand that raising the minimum wage is going to adversely effect those that it supposedly was enacted to help. It is the epitome of how politicians play to emotions and ignorance.

From the Bureua of Labor and Statistics:

http://www.bls.gov/CPI/#overview

[lotuseclat79]

Hi Muldie,

Dreaming again Muldie? - WAKE UP! You are talking to yourself again!

-- Tom

[Wino]

Yeah!! Our current economic down turn is all the fault of the increase in minimum wage.

MUOUUHAHAHAWAHAHAH!

[Mulderator]

Originally Posted by Wino

Yeah!! Our current economic down turn is all the fault of the increase in minimum wage.

MUOUUHAHAHAWAHAHAH!

Not entirely--no--but it is certainly a factor.

[Mulderator]

BTW--I would prefer this not get partisan in terms of politics and hope some of the more reasonable people on the left would consider this issue seriously because it continues to damage the economy and hurt the poor, unfortunately. However, it is a VERY popular issue with the politicians because people generally don't understand it. Everyone of course wants poor people to climb out of poverty (and it seems very obvious if you don't understand economics that just raising the MW will do that)--whether you are a bleeding heart of, a die hard capitalist, or a redneck from Texas (****cough****Wino****cough! ) we are much better off without poverty--we are much better off with people working. No one can dispute that.

[lotuseclat79]

Originally Posted by Mulderator

Not entirely--no--but it is certainly a factor.

Hi Muldie,

Oh, maybe about 0.000000000001% of a factor! Certainly!

-- Tom

[Bastiat]

Originally Posted by lotuseclat79

Hi Muldie,

Oh, maybe about 0.000000000001% of a factor! Certainly!

-- Tom

Hmmmmm.......Muldie (as you like to call him) posts facts and statistics; your "educated" retort is quoted above. Quick go find an article at informationclearinghouse.com or some Soros back blogger.

[Mulderator]

Originally Posted by Bastiat

Hmmmmm.......Muldie (as you like to call him) posts facts and statistics; your "educated" retort is quoted above. Quick go find an article at informationclearinghouse.com or some Soros back blogger.

That's the ignorance I often refer to--liberals have their minds made up--like I said its "knee-jerk" and seemingly obvious--higher wages means higher pay, more money for the worker less profit for the employer. The economic reality of course could not be further from the truth. The employer won't be effected--it/he/she will simply pass on the additional cost. The poor will of course be the big loser.

[Mulderator]

Originally Posted by lotuseclat79

Hi Muldie,

Oh, maybe about 0.000000000001% of a factor! Certainly!

-- Tom

Ignorance--complete ignorance. You don't have to be an economist to figure out that a double digit increase in the CPI of the food and beverage industry (a huge industry) would have an effect on the economy. Again, this confirms my anecdotal experience in seeing how expensive lunch has become--what used to be a $5.00 lunch only two years ago is now $7.00 to $7.50. I know I've seen a lot of people brown bagging it again--hell I'm even thinking about it. Lunch adds up after awhile.

The other place its very noticeable is the supermarket--the price of food has increased significantly in the last year alone--again--I can't be the only one noticing this. I know my wife switched supermarkets because of it. How in the world is the poor being helped by this? Maybe you in your infinite ignorance might venture a guess.

[buck52]

Originally Posted by Mulderator

That's the ignorance I often refer to--liberals have their minds made up--like I said its "knee-jerk" and seemingly obvious--higher wages means higher pay, more money for the worker less profit for the employer. The economic reality of course could not be further from the truth. The employer won't be effected--it/he/she will simply pass on the additional cost. The poor/working stiff will of course be the big loser.

as is always the case...

[Mulderator]

Originally Posted by buck52

as is always the case...

You added "working stiff"--it depends on the skills of the working stiff as to whether he/she is effected. If you are a lower skilled laborer, it could effect the working stiff significantly in loss of job. At best it won't effect him/her at all because what happens is tends to ripple effect wages--that is those that were being paid a dollar over the minimum wage will continue to be paid a dollar over the MW. Cost of living goes up and it tends to wash. The poor of course get no cost of living increase or at least not on a regular basis so they are hurt significantly during the initial few years of MW increases because they are on fixed incomes and when the cost of goods goes up (especially food) as it has since the MW increase was instituted, they suffer.

MW effect is much like the effect a union has on the free market--it helps a very small percentage of people while harming a much a larger sector of the economy but both make liberals feel good about themselves.

[Gabriel]

Like any of you guys are even close to poor

[buck52]

Originally Posted by Gabriel

Like any of you guys are even close to poor

please don't make me respond to that... I would be permenantly banned... that was a stupid statement...

I am a hard working stiff who is regarded as very good at what I do... but if you think for a minute that I have buckets of money you are sadly mistaken... I work my fingers to the bone to pay the bills and keep the few toys/pleasures I have...

Your post has me fuming so I'm logging of before I get in trouble...

[Gabriel]

Originally Posted by buck52

please don't make me respond to that... I would be permenantly banned... that was a stupid statement...

Well, then a stupid answer from you would be a perfect compliment