Celebrating the Minimum Wage Increase

That Melanie (the author) actually believes such absurdities about the great depression, "buying power" and supply and demand is jaw-dropping.

Hidden costs of the minimum wage.
Good intentions, bad results
Great Myths of the Great Depression

If you want wages to have more buying power, end the Fed, return to a gold standard, and prices will drop as wages have more buying power. During the late 1800s, this is exactly how it worked.

Economic science predicts that persons will respond to costs and benefits. This fits the Christian worldview that since the fall, persons will be interested in their own well-being.

When wages are pushed above equilibrium in the labor market, there are very predictable results. One is that people will want to work more since the reward to work is greater. And employers will be less willing to hire workers since the cost of hiring a worker would now be greater.

The combination of these effects is unemployment; more workers want to work than employers want to hire. The size of the effect depends on how big the wage increase is. Other predictable effects of increasing the minimum wage include less jobs available, discrimination, and deterioration in working conditions.

Nobel prize winner Milton Friedman called the minimum wage the most racist policy in the U.S. economy and if you look at the data, it looks like Friedman could be right. Between 1948 and 1955 the unemployment rate for young males was about 6 or 7 percentage points higher than the general rate of unemployment and there was no significant difference between the unemployment rates of blacks and whites. After 1955, when the minimum wage was raised sharply, not only did the difference between the general unemployment rate and that of the young white male rise to 9 or 10 percentage points, but the unemployment rate of black teenagers rose even more sharply reaching a differential of between 15 and 20 percentage points as compared to the general rate of unemployment. Black youth unemployment ultimately rose to 50%. This is predictable because, with a minimum wage above equilibrium, employers will have a line of people waiting for jobs--they have to discriminate in one way or another since they cannot hire all who want a job. Competitive markets reduce discrimination since the number of workers wanting a job will match the jobs offered.

A few years ago, the Joint Economic Committee reviewed 50 years of research on the minimum wage. The results, which generally confirm the unemployment and discrimination results are at http://www.house.gov/jec/cost-gov/regs/minimum/...

A 2010 study (http://www.ncpa.org/sub/dpd/index.php?Article_I...) found that: Increasing the minimum wage was meant to raise the living standards of millions of Americans holding unskilled, entry level positions. But it may have led to the elimination of 550,000 jobs -- opening the possibility that such wage levels should be revised, suggests a new study from Ball State University.

A study of part-time workers monitored by the Bureau of Labor Statistics from 1999 to 2009 found that raising the minimum wage to its current level of $7.25 during the recent recession caused some businesses to scale back on filling vacant positions or eliminate jobs altogether, says Michael J. Hicks, director of Ball State's Center for Business and Economic Research (CBER).

Other findings:

About 67 percent of teenagers and young adult minimum wage workers live in households with incomes at least twice the poverty level (for example $44,000 for a family of four).

Adult workers toiling at minimum wage have limited skill.

About two-thirds of all adult minimum wage workers have a high school degree or less.

One benefit of the minimum wage keeping some of these workers out the labor market is that it forces them to obtain additional education and training in the workforce development network.

I would encourage more than good intentions when considering ways to help the poor. All policies have unintended effects. Careful thinking considers these.

I would also encourage more careful consideration of Scripture that calls for work to be justly rewarded. It seems to me that one interpretation of justice would be that workers be paid equal to the value that they contribute. Competitive markets push in that direction.

Ultimately money wages are meaningless unless valuable products are available to buy. That implies that, overall, value must be produced to be available. "When you eat the labor of your hands, you shall be happy, and it shall be well with you." Ps 128:2

That Melanie (the author) actually believes such absurdities about the great depression, "buying power" and supply and demand is jaw-dropping.

Hidden costs of the minimum wage.
Good intentions, bad results
Great Myths of the Great Depression

If you want wages to have more buying power, end the Fed, return to a gold standard, and prices will drop as wages have more buying power. During the late 1800s, this is exactly how it worked.

The Cato Institute reports on the reporting, praising those who acknowledge the pros and cons to society, as well as criticizing those (NY Times) who ignore the cons to the minimum wage increase.

It's not an easy answer. At most, I'd agree to a state minimum wage laws being more accurate and effective, though even that is debatable.

Yeah, you must be a bigoted capitalist hatemonger who only wants to see eyelidless children suffer from too much sun and starve to death.

God bless unemployment! Hallelujah!

4His Glory we should be advocates for low wage workers ? Are there not factors involved in this issue that can complicate it from both sides ? Any yet still be an advocate for people ?

Example would be in my state , we have a minimum wage that goes up automatically with the inflation rate . My wife is a Director of a preschool and day care . Since it is a ministry of our church , we reach out to low income families . So say poor families pay a considerable lower rate when the state helps them , but the amount of pay workers and staff receive is he same . Hence some day cares will not take poor because of this . We have even taken special needs children who require staff workers for continued around the clock care , thus limiting the amount of children the day care can take in of other children . The thing is since this a ministry , we do things that day care business would not do ordinarily , and many of the jobs are taken by women at our church who have hearts of mercy and love . But the state does not pay increase amounts when they place children in day cares , but they force the employees wages to go up . Just one instance I believe that issues can get complicated when you are dealing with state regulations , in this case hurting the poor for a noble cause , raising pay for the poor.

I find little to celebrate that people are no longer permitted to work for less than $7.25 per hour. It amounts to telling people who's labor is worth less than $7.25/hour..."tough luck, you are not permitted to participate in our economic system."

But I suppose I'm not a "person of faith."

I was thinking about this whole ordeal, and the author quotes a 2006 poll citing support for a minimum wage increase.

2006. Ya know, back when we we all deluded that the economy was booming, and we didn't know that it was unsustainable. Ya know, when small business could borrow money at interest rates lower than inflation (which means it paid to borrow!). Ya know, when people were spending money they didn't have because they thought their homes would magically rise in value, so they were spending and small businesses could afford to pay a little more if they were forced to.

If we hadn't had such inflationary measures and monetary policies in 2006, the price of wages wouldn't need to go up because the value of the same wages would increase. Inflation hurts the poor. The central banking system and its collusion with the federal government is at the core of this problem.

"The church should approach wage conversations not primarily as economists, however, but as advocates for low wage workers. We can cheer today's wage increase as a step toward affirming that every person is made in the image of God. But $7.25 an hour is still not enough." Huh? Minimum wage is a way of affirming the image of God? How? Because the government shows its "compassion" in this manner? The church's job is advocacy for low wage workers? Sure, on the surface that's fine, but I thought our mission was the gospel, working for and with the poor so that they might see the far greater glory of Christ. When will we naive Christians quit putting our hope and trust in a goverment, president or legislators and do as a church what we were called to do - to share the love of Christ with a sin-burdened world and rescue their souls while we work with and through the church to do what no earthly government will ever do.

Wow; that's a great comment. And I think that your example is a very good one. Thank you for sharing that. I think that what troubles me is the tone or notion of articles such as this one which makes it feel like the government has really done something right because it "helps the poor." What I have observed for years but especially in the last six months is that every action has an equal and opposite reaction. Our intentions may be good but without consideration for the consequences of our actions, good intentions fall flat. I just hate to see the chuch consistently (right and left politically) putting their hopes in a government system rather than the transforming gospel. Thanks for your comment.

Libertarian propaganda claiming that raising the minimum wage will hurt the poor is unsupported by any real evidence.
Libertarian 'think tanks', such as the Cato Institute, provide excuses for indifference to the suffering of the unfortunate poor in America.
The Economic Policy Institute provides a Fact sheet for the 2009 minimum wage increase and estimates that the increase to $7.25 will, over the course of the following 12 months, boost consumer spending by over $5.5 billion.
http://www.epi.org/publications/entry/mwig_fact...

I'm very happy your state has an inflation-adjusted minimum wage. One of my complaints about the federal minimum wage is that it is all too often used for political gain: "Look what we did for you," say the advocates, "And look what THAT GUY voted against!"

That is one way to make a[positive on of a negative , and I see your point . Also I agree inflation is one of the most oppressive economic problems the poor faces . This administration and previous ones have done a powerful hurt to the poor and middle class in the name of justice.
.

I think the answer is that many poor people would lose their jobs and businesses would suffer because they could not hire workers at a reasonable wage to do the work.

That's one option. The other is to raise prices on everyday purchases. Many minimum wage jobs are in the service industry. If the owner decides not to cut jobs, or cut back on hours, due to an increase in the minimum wage, then he either has to take a cut in profits (which means slower growth for the business, and possible future jobs are sacrificed), or he has to raise the costs of the services he offers. So when you and I see rising prices, we buy less things, because our wages aren't going up. So we stop at Dunkin Donuts a few less times per month or week; we buy a small bottle of soda instead of a larger bottle. We buy fewer goods, which means the economy slows down.

There are myriad studies about the Great Depression, and Hoover's and FDR's initiatives to keep wages high. It had a horrible effect on the economy as a whole.

To the author's credit, I don't think she believes that the minimum wage is a "biblical position"; rather, she likely believes it is a way of helping the poor, when in fact it actually hurts the poor. Sure, it helps some people But 75% of people making the minimum wage are dependents. I guess that means more teenagers buying more electronics with their government-mandated "raise."

My daddy worked for the minimum wage during the 1950s to support our mom and 7 kids. None of the increases hurt his employer, but did help to put food on our table.

What do all of you libertarian scrooges do for a living anyway?

Economic science predicts that persons will respond to costs and benefits. This fits the Christian worldview that since the fall, persons will be interested in their own well-being.

When wages are pushed above equilibrium in the labor market, there are very predictable results. One is that people will want to work more since the reward to work is greater. And employers will be less willing to hire workers since the cost of hiring a worker would now be greater.

The combination of these effects is unemployment; more workers want to work than employers want to hire. The size of the effect depends on how big the wage increase is. Other predictable effects of increasing the minimum wage include less jobs available, discrimination, and deterioration in working conditions.

Nobel prize winner Milton Friedman called the minimum wage the most racist policy in the U.S. economy and if you look at the data, it looks like Friedman could be right. Between 1948 and 1955 the unemployment rate for young males was about 6 or 7 percentage points higher than the general rate of unemployment and there was no significant difference between the unemployment rates of blacks and whites. After 1955, when the minimum wage was raised sharply, not only did the difference between the general unemployment rate and that of the young white male rise to 9 or 10 percentage points, but the unemployment rate of black teenagers rose even more sharply reaching a differential of between 15 and 20 percentage points as compared to the general rate of unemployment. Black youth unemployment ultimately rose to 50%. This is predictable because, with a minimum wage above equilibrium, employers will have a line of people waiting for jobs--they have to discriminate in one way or another since they cannot hire all who want a job. Competitive markets reduce discrimination since the number of workers wanting a job will match the jobs offered.

A few years ago, the Joint Economic Committee reviewed 50 years of research on the minimum wage. The results, which generally confirm the unemployment and discrimination results are at http://www.house.gov/jec/cost-gov/regs/minimum/...

A 2010 study (http://www.ncpa.org/sub/dpd/index.php?Article_I...) found that: Increasing the minimum wage was meant to raise the living standards of millions of Americans holding unskilled, entry level positions. But it may have led to the elimination of 550,000 jobs -- opening the possibility that such wage levels should be revised, suggests a new study from Ball State University.

A study of part-time workers monitored by the Bureau of Labor Statistics from 1999 to 2009 found that raising the minimum wage to its current level of $7.25 during the recent recession caused some businesses to scale back on filling vacant positions or eliminate jobs altogether, says Michael J. Hicks, director of Ball State's Center for Business and Economic Research (CBER).

Other findings:

About 67 percent of teenagers and young adult minimum wage workers live in households with incomes at least twice the poverty level (for example $44,000 for a family of four).

Adult workers toiling at minimum wage have limited skill.

About two-thirds of all adult minimum wage workers have a high school degree or less.

One benefit of the minimum wage keeping some of these workers out the labor market is that it forces them to obtain additional education and training in the workforce development network.

I would encourage more than good intentions when considering ways to help the poor. All policies have unintended effects. Careful thinking considers these.

I would also encourage more careful consideration of Scripture that calls for work to be justly rewarded. It seems to me that one interpretation of justice would be that workers be paid equal to the value that they contribute. Competitive markets push in that direction.

Ultimately money wages are meaningless unless valuable products are available to buy. That implies that, overall, value must be produced to be available. "When you eat the labor of your hands, you shall be happy, and it shall be well with you." Ps 128:2

I'm very happy your state has an inflation-adjusted minimum wage. One of my complaints about the federal minimum wage is that it is all too often used for political gain: "Look what we did for you," say the advocates, "And look what THAT GUY voted against!"

That is one way to make a[positive on of a negative , and I see your point . Also I agree inflation is one of the most oppressive economic problems the poor faces . This administration and previous ones have done a powerful hurt to the poor and middle class in the name of justice.
.

I think the answer is that many poor people would lose their jobs and businesses would suffer because they could not hire workers at a reasonable wage to do the work.

That's one option. The other is to raise prices on everyday purchases. Many minimum wage jobs are in the service industry. If the owner decides not to cut jobs, or cut back on hours, due to an increase in the minimum wage, then he either has to take a cut in profits (which means slower growth for the business, and possible future jobs are sacrificed), or he has to raise the costs of the services he offers. So when you and I see rising prices, we buy less things, because our wages aren't going up. So we stop at Dunkin Donuts a few less times per month or week; we buy a small bottle of soda instead of a larger bottle. We buy fewer goods, which means the economy slows down.

There are myriad studies about the Great Depression, and Hoover's and FDR's initiatives to keep wages high. It had a horrible effect on the economy as a whole.

To the author's credit, I don't think she believes that the minimum wage is a "biblical position"; rather, she likely believes it is a way of helping the poor, when in fact it actually hurts the poor. Sure, it helps some people But 75% of people making the minimum wage are dependents. I guess that means more teenagers buying more electronics with their government-mandated "raise."

My daddy worked for the minimum wage during the 1950s to support our mom and 7 kids. None of the increases hurt his employer, but did help to put food on our table.