Jay Reding.com

Night Of The Living Wages

One theme that appears frequently on this site is the notion that policies have consequences and what distinguishes serious thinkers from less serious ones is that the serious thinkers consider the implications of the policies they choose to pursue. The “living wage” is an example of just such a thing — those who tend to champion that policy tend not to consider how such a thing works in the real world. For instance, take this statement from one comment recently posted here:

A person working a full-time job in the richest country in the history of the world should not be allowed to live at or below the poverty level. You can try to sound like you are on the side of workers, but as long as you are against that statement, you’re just spewing more of Bill O’Reilley’s junk.

Now, I’ll ignore the fact that given the choice of listening to Bill O’Reilly prattle on about the “folks” and having a colonoscopy performed by an enraged badger, I’d have to think about it first. What matters is that the commenter wants to make a rather categorical statement about the way in which an economy should work without considering the consequences of that position.

In theory, it all sounds good. Why should anyone who works full time be below the poverty level? (In fact, very few full-time workers are.) After all, we’re the richest country on the planet, right?

This is where the rules of economics delivers a sharp kick to the groin…

There are X number of low-wage jobs out there. We have a natural rate of unemployment that’s historically somewhere in the neighborhood of 5% give or take. Some people just don’t want to work, some people are transitioning between jobs, some people are sick. Full employment isn’t economically possible, and the lessons of the 20th Century have shown that bad results occur when a government tries to make policies that mandate it.

But what of those who do work? Why can’t toilet cleaners at the 7-11 make $13/hour?

There’s no law that says that they can’t, other than the fact that people tend not to want to pay $100 for a Squishee and some Slim-Jims. The going rate for labor has less to do with government policy (a relatively small number of workers get paid at the minimum wage) than it does with how much people are willing to pay for labor. The reason why an increase in the minimum wage won’t have much of an economic effect is because so few workers actually get paid at that rate. Even a typical McJob is likely to pay more because the labor markets are relatively tight. We have a rate of unemployment that’s probably as low as it can sustainably go.

What happens if government comes in and says that 7-11 must pay their toilet cleaners $13/hour?

A few things happen: for one, 7-11 stops offering toilets for their customers. And that’s if we’re lucky.

The actual outcome isn’t some hypothetical — the banlieues of Paris are exactly the sort of consequence that comes out from a labor system that is restricted by high starting wages. The first people to get hurt are those who don’t have a lot of marketable skills – mainly immigrants, minorities, and the less educated. The result: official unemployment of over 19%, and probably higher.

If an employer knows that they have to pay a new worker $13/hour, who will they hire: a single unwed mother who is likely to have to miss work because of day care and sick kids, or some suburban teenager with his own car and good grades? It doesn’t take a genius to figure out which one is going to get a bigger advantage than the one they’ve already got.

At any given moment, any given employer can only spend so much for wages. That figure may vary over time, but a “living wage” means that employer has to make do with the same amount of money, but much higher costs. That means fewer jobs, and that means that employers are going to want to take as few risks as possible with the people that they do hire.

The “living wage” sounds good in principle, but the reality of the situation is that it would be devastating to the least fortunate among us. Even those making the prevailing wage, should they work 40 hours a week, are quite likely to be above the poverty level. Raising the minimum wage raises it for everyone — rich teenagers saving up for their Playstations, Grandpa working as a greeter for Wal-Mart, and the working poor. The problem with that is that we don’t have a societal interest in making sure that Suburban Billy gets his PS3 before the end of the summer or whether Grandpa has enough money for Viagra — we want to subsidize those who truly need the money.

Raising the minimum wage doesn’t do that. Increasing the EITC, helping to improve the educational system, and other forms of targeted relief does. The consequences of those policy changes are far less haphazard than merely raising the minimum wage.

We don’t live a perfect world where every employer can go back to the money tree and dramatically increase their personnel budgets — no matter how much we’d like that to be true. In order to craft good public policy, lawmakers need to be able to understand and avoid the negative consequences of their actions — and the better a plan sounds on paper, the worse those consequences tend to be.

45 responses to “Night Of The Living Wages”

  1. Nicq MacDonald says:

    I’d agree; though I’d add that the age for qualifying for the EITC should probably be dropped to 21; or even 18. As it stands, it does nothing for people under that age- one of the least secure ages, especially for young single parents.

  2. Erica says:

    The “living wage” sounds good in principle, but the reality of the situation is that it would be devastating to the least fortunate among us.

    Only in the Jayreding.com mirrorverse does it make any sense to assert that the worst thing that could happen to the poor would be to get paid more.

  3. Jay Reding says:

    Only in the Jayreding.com mirrorverse does it make any sense to assert that the worst thing that could happen to the poor would be to get paid more.

    And only someone with absolutely no reading comprehension skills could so completely fail to understand an argument.

    If the price of some getting higher wages is others having no job at all, then there’s no net benefit. You’re just protecting some at the expense of others. And who gets screwed? The most vulnerable.

    It’s not a hard argument to understand, provided you’re actually trying to.

  4. Mark says:

    “If the price of some getting higher wages is others having no job at all, then there’s no net benefit.”

    Again, show us the casualty list of all the displaced fast-food workers laid off as a direct result of minimum wage/living wage increases. If this is truly is the epidemic that your breathless hyperbole suggests, surely there must be some right-wing think tank publishing sets of statistics tracking all of the would-be fast food workers priced out of the job. Let’s see it.

  5. Erica says:

    It’s not a hard argument to understand, provided you’re actually trying to.

    You seem to misunderstand. I understand it just fine. It’s just bullshit. Like this:

    If an employer knows that they have to pay a new worker $13/hour, who will they hire: a single unwed mother who is likely to have to miss work because of day care and sick kids, or some suburban teenager with his own car and good grades?

    Why would you hire a teenager who can only work 12 hours a week when the mother says she can work 35? It wouldn’t even be worth the boss’s time to fill out the paperwork to hire the teenager.

    I’m fine with you trying to argue from hypothetical examples; but you need to make sure your hypotheticals are realistic. The idea of a school-going teen who can work 40 hours a week is just nonsense. What, did you forget how time works, or something? Mark already destroyed your argument that slight increases in the minimum wage increase unemployment. And if you’re arguing against $13/hour wages, that’s a strawman – none of the increases on the table are that high.

  6. Erica says:

    My best friend is a sociologist – you’d hate him actually – and he has a saying about economists. “Economists study how people make choices and sociologists study how people don’t have any choices to make.”

  7. Jay Reding says:

    Why would you hire a teenager who can only work 12 hours a week when the mother says she can work 35? It wouldn’t even be worth the boss’s time to fill out the paperwork to hire the teenager.

    Because that teenager doesn’t have to worry about sick kids. Because that teenager is more likely to be able for those 12 hours a week, and when the summer ends, that employer can shed excess capacity. Because that teenager doesn’t need health insurance. Because he doesn’t have to worry about what happens if his car breaks down. It’s a lot easier for an employer to hire some kid than it is to worry about hiring a single mother, especially if it’s in a position where there’s high turnover.

    I’m fine with you trying to argue from hypothetical examples; but you need to make sure your hypotheticals are realistic. The idea of a school-going teen who can work 40 hours a week is just nonsense. What, did you forget how time works, or something? Mark already destroyed your argument that slight increases in the minimum wage increase unemployment. And if you’re arguing against $13/hour wages, that’s a strawman – none of the increases on the table are that high.

    For three months out of the year they can.

    The statistics show that 70% of minimum wage workers are teenagers. Those are the facts, and if you have a problem with that, then your beef is with reality, not me.

    Furthermore, it’s already been proven that minimum wage increases increase unemployment. Neumark and Wascher showed quite clearly what the effect was when New Jersey raised their minimum wage. Even Paul Krugman (back when he was a serious economist) scorned the idea that raising the minimum wage had no effect on unemployment. Even minor ones produce significant increases in unemployment against the most vulnerable low-skill workers.

    If you want to help the poor, raise the EITC, AFDC, or food stamps. But raising the minimum wage won’t do much, and there’s a significant chance that it will cause more harm than good.

    My best friend is a sociologist – you’d hate him actually – and he has a saying about economists. “Economists study how people make choices and sociologists study how people don’t have any choices to make.”

    Which is why economics is a rational science, and sociology is not…

  8. Erica says:

    From your response, I’d wonder if you’d ever had a service job at all.

    Because that teenager is more likely to be able for those 12 hours a week

    Nonsense. Few workers are less reliable than teens.

    Because that teenager doesn’t need health insurance.

    The employer isn’t offering any, so why does that matter?

    Because he doesn’t have to worry about what happens if his car breaks down.

    Teenager’s cars don’t break down? That’s news to me. Do you have some explanation for this amazing phenomenon?

    For three months out of the year they can.

    So?

    The statistics show that 70% of minimum wage workers are teenagers.

    Already proven irrelevant and misleading. You really need to be keeping up with the arguments.

    Furthermore, it’s already been proven that minimum wage increases increase unemployment.

    Disproven by the fact that, while real wages have fallen 29% since 1979, unemployment rates through the same period remained essentially unchanged.

    Which is why economics is a rational science, and sociology is not…

    Precisely backwards, revealing your complete ignorance of science. In fact, sociology is a science every bit as rigorous as any other scientific field, but economics is hand-waving voodoo with no rigor in the field whatsoever. In science, faulty models are discarded. In economics, faulty models like “supply-side economics” are enshrined. Economists can’t even agree on whether economies are driven by supply or demand, or both, or neither!

    You should really get some idea of what you’re talking about before you declare sociology “not a rational science”. Just because the results of a field utterly destroy your ridiculous political ideology is not grounds to reject it as science, but it’s not surprising to find a conservative who thinks that way. Creationism much?

  9. zzx375 says:

    “…sociologists study how people don’t have any choices to make.”

    Everyone has a choice. There are choices we wouldn’t want to make but they are still there. Some of the early education intervention programs are all about helping kids understand that making inappropriate choices can have serious consequences(jail or poor job future). Those programs, regrettably, often take the place of a parent or parents giving that lesson.

  10. Mark says:

    Jay, show us the statistics of displaced fast-food workers priced out of the job market because of minimum wage/living wage increases. What are you waiting for? Support your thesis with some cold hard facts.

  11. Jay Reding says:

    From your response, I’d wonder if you’d ever had a service job at all.

    And I can certainly tell you’ve never worked in a position where you’ve ever had to hire someone.

    Nonsense. Few workers are less reliable than teens.

    Other than young mothers with kids who are at the mercy of their child’s schedule.

    The employer isn’t offering any, so why does that matter?

    It matters because someone who needs a job with health insurance is more likely to leave the second they find it.

    Teenager’s cars don’t break down? That’s news to me. Do you have some explanation for this amazing phenomenon?

    Teenagers tend to have these things called parents that can give them a lift, something that your average teenage unwed mother tends not to have as a resource.

    So?

    Which means that an employer is going to be more apt to hire someone who can provide three solid months of work and they can later get rid of without feeling too guilty about. Everything about hiring a teenage worker tends to be easier than bringing on someone with the baggage of already having a family.

    Already proven irrelevant and misleading. You really need to be keeping up with the arguments.

    I know you find the truth to be irrelevant, but the statistics don’t spout bullshit. An increase in the minimum wage will benefit more people who are not poor than it will those who are. The EITC and other methods benefit only the poor. The reason why the Democrats are pushing one and not the other is because one is politically expedient and the other is not. The sign of a shitty policymaker is one who values political expediency above getting results.

    Disproven by the fact that, while real wages have fallen 29% since 1979, unemployment rates through the same period remained essentially unchanged.

    Um, no, that doesn’t prove anything. What that might prove is that wage decreases don’t decrease unemployment, but even that isn’t warranted. Furthermore, it’s economically illiterate to say that “real wages” have decreased by 29% over the past 30 years. For one, whose wages? By what measure? And if that were true, we’d see poverty exploding, yet the poverty rate continues to be at historic lows. The reason why 1979 is chosen is because inflation in that year was right through the stratosphere, which distorts the baseline.

    The reality is total labor compensation continues to rise — it’s just that a smaller fraction of that goes to wages, and more of it goes to things like tax-saver programs, health insurance, and other benefits. The argument that wages have fallen nearly 30% since the 1979s is silly on its face – if that were true, the economy would be in shambles rather than on historically high ground.

    Precisely backwards, revealing your complete ignorance of science. In fact, sociology is a science every bit as rigorous as any other scientific field, but economics is hand-waving voodoo with no rigor in the field whatsoever. In science, faulty models are discarded. In economics, faulty models like “supply-side economics” are enshrined. Economists can’t even agree on whether economies are driven by supply or demand, or both, or neither!

    Well, that’s about the dumbest thing I’ve ever heard. At least economics isn’t a completely bullshit science like entomology… why they don’t even know if evolutionary changes are gradual over time or react in spurts to dramatic environmental changes? I mean what the hell is that about?

    That’s about the most ignorant statement I’ve ever heard, and only reflects on your lack of understanding of economics.

    You should really get some idea of what you’re talking about before you declare sociology “not a rational science”. Just because the results of a field utterly destroy your ridiculous political ideology is not grounds to reject it as science, but it’s not surprising to find a conservative who thinks that way. Creationism much?

    It’s not a rational science because it doesn’t quantify its results under a rigorous scientific method. Economics is rational and reproducible. Sociology is much more fluid. It isn’t that sociology is worthless, but it isn’t a hard science. There’s a reason why they don’t award Nobel Prizes for sociology…

  12. Seth says:

    Jay–
    If it weren’t so sad at how smart you really think you are it would be funny. You can’t have a post about how I don’t think about the consequences of my thoughts and about how I am a ‘less serious’ thinker without looking at any evidence whatsoever.

    First, the $13 an hour exists in no place in the United States. Santa Fe has the highest minimum wage, at $9.65 an hour. So your scary hypothetical is more than a third larger than it exists anywhere in America. It’s typical of the conservative rhetorical tactic of creating boogeymen that don’t exist, but it’s simply not true.

    Second, the overwhelming majority of studies that aren’t done by right wing think tanks with a corporate agenda show that when wages increase, increases in productivity generally offset the gain in wages, leaving the employer with a net profit. It may be hard for you in your ivory tower to see that people who can afford health care or aren’t worried about how they will make a rent payment or feed their families work harder and are more productive.

    Third, studies show that increases in the minimum wage have never led to a dramatic loss of jobs lie you claim. In fact, the last time we raised the wage, jobs increased slightly. States that raise the wage experience more growth, not less, than other states around them when they raise the wage. I hate to tell you this, but the crap you were tought in Weekly Standard economics 101 just isn’t true.

    Paris uses a different unemployment measuer than the U.S. does–so 19% unemployment is 1.) not comparable to U.S. employment figures and 2.) does nothing to show that the raise in wages actually led to the unemployment. As you are fond of so haugtily saying, corelation does not prove causation. If you loo at American cities and states that have enacted a wage increase, their economies tend to do better than those around them that did not. This is another surprise for the Ivory Tower Republicans–it turns out that when more people have more disposable income, they tend to buy more things. That might be hard to get through your supply-side noggin, but at least try.

    Minimum wage in this country earns a full time worker a little more than $10,000. It’s unethical, immoral and bad for the economy.

    In my system, the employer pays a decent wage and the consumers pay for that. In yours, the federal government gets invovled, decides who is poor and who is not and then refunds them tax money that is paid by everyone. So even though I never go to Wal-Mart, I am paying wages of Wal-Mart worers. This is neither efficient nor keeping in the spirit of a market economy.

    Last–it does not follow that everyone that disagrees with you is stupid or a less serious thinker. Again, a little common decency would be nice if you are going to police all the mean and nasty things I say to you.

  13. Seth says:

    Also, using your logic, what would be best for workers and the economy would be to lower the minimum wage and raise the EITC. So the best policy initiative would be to have a minimum wage of $2.00 an hour (or less) and then have the government pay people $10,000 or so. That’s a pretty good solution for a serious thinker like Jay Reding.

  14. Will says:

    Two comments:

    1. Even if an increase in the min wage creates more unemployment, that’s not really a problem when we’re running at or beyond maximum employment anyway, which we currently are.

    2. Both econ AND sociology are junk sciences.

    (But under Jay’s logic, Peace is a science too (“There’s a reason why they don’t award Nobel Prizes for sociology…”)).

  15. Erica says:

    Other than young mothers with kids who are at the mercy of their child’s schedule.

    Nonsense. Again your typically-Republican ignorance of the workplace shows. I’ve worked with both teens and mothers, and you know what? Teens who don’t really need the money blow off the job. Mothers know what the stakes are.

    Nobody works harder than the desperate.

    It matters because someone who needs a job with health insurance is more likely to leave the second they find it.

    Nobody’s offering health insurance at the minimum wage. (If you know differently, send me a link – I could use some health insurance.) And, of course, like most voodoo economists, you assume complete worker freedom and mobility. The simple truth is that changing jobs isn’t easy, and people will rarely do it simply because they’ve heard about a better offer somewhere. People working 40-50 hours a week and raising children simply don’t have the time to be looking for another job.

    Teenagers tend to have these things called parents that can give them a lift, something that your average teenage unwed mother tends not to have as a resource.

    Again, your ignorance is showing. Usually the only reason single teenage mothers can make it work at all is because they can rely on parents or other family members for day-care and other services.

    I appreciate you going to all this trouble to invent clever scenarios to justify an employer’s illegal discrimination against mothers. But you need to work a little harder to keep your justifications reality-based. (Of course, in reality, there’s no good reason to discriminate against working mothers.)

    The reality is total labor compensation continues to rise — it’s just that a smaller fraction of that goes to wages, and more of it goes to things like tax-saver programs, health insurance, and other benefits.

    Hilarious. First Jay denies that wages have decreased, and then in the very next paragraph he says that the have decreased; they’ve simply been compensated by more benefits.

    Of course, less people have health coverage now than then, so again those inconvinient truths just knock your argument out of the water.

    The argument that wages have fallen nearly 30% since the 1979s is silly on its face – if that were true, the economy would be in shambles rather than on historically high ground.

    There’s a reason that the only people who believe we have a “historically high” economy are economists and Republicans. (The fact that economists are blind to what everybody else knows is just further proof that the entire field is intellectually bankrupt. If they can’t even detect a crappy economy when they’re right in the midst of it, there’s no rigor in the field whatsoever.)

    At least economics isn’t a completely bullshit science like entomology… why they don’t even know if evolutionary changes are gradual over time or react in spurts to dramatic environmental changes?

    Are you kidding me? We answered that 50 years ago. Darwinian gradualism – constant-rate evolution – is dead. But that just goes to show how you don’t know even the first thing about science.

    It’s not a rational science because it doesn’t quantify its results under a rigorous scientific method.

    100% false. It’s the economists who don’t employ the scientific method. Research in sociology is subject to the strictures of peer review, just like any science; models in economics are subject to no review whatsoever.

    Economics is rational and reproducible.

    Nonsense.

    It isn’t that sociology is worthless, but it isn’t a hard science.

    If you think that the “hard/soft” science dichotomy is a real thing that anybody still takes seriously, then you’ve been hanging around with too many economists. There’s no such thing as a “hard” or “soft” science. That’s a distinction that no longer has any meaning in an age when mathematical models and computational tools are regularly employed in every scientific field.

    There’s a reason why they don’t award Nobel Prizes for sociology…

    Once again, you prove yourself staggeringly ignorant. Two minutes of Google would have showed you that at least 4 Nobel prizes have been given out for work in sociology since 1995, when the Nobel committee determined that the social sciences should be eligable.

    There’s a reason, though, why the Nobel prize in Economics, which you refer to, was instituted not by Nobel, but by a Swedish bank in his memory.

  16. Erica says:

    Both econ AND sociology are junk sciences.

    It really isn’t. Sociology is a legitimate scientific field with the same level of rigor; it employs the same statistical and methodological tools as other fields that study the natural world.

    In sociology, faulty models are discarded. In economics faulty models are enshrined.

  17. Jay Reding says:

    If it weren’t so sad at how smart you really think you are it would be funny. You can’t have a post about how I don’t think about the consequences of my thoughts and about how I am a ‘less serious’ thinker without looking at any evidence whatsoever.

    No, I’ve pointed to plenty of evidence. I can cite the literature, you can’t. (As we’ll soon see.)

    First, the $13 an hour exists in no place in the United States. Santa Fe has the highest minimum wage, at $9.65 an hour. So your scary hypothetical is more than a third larger than it exists anywhere in America. It’s typical of the conservative rhetorical tactic of creating boogeymen that don’t exist, but it’s simply not true.

    Even that has economic effects. Besides, the argument is over a living wage, which many have said is somewhere around $13/hour (Barbara Ehrenreich made that argument as I recall.)

    Second, the overwhelming majority of studies that aren’t done by right wing think tanks with a corporate agenda show that when wages increase, increases in productivity generally offset the gain in wages, leaving the employer with a net profit. It may be hard for you in your ivory tower to see that people who can afford health care or aren’t worried about how they will make a rent payment or feed their families work harder and are more productive.

    Name one. Give me one reproducible study that comes to that conclusion. Wage increases do not increase productivity, what they do is force many employers to fire workers who are less productive. Again, the most vulnerable lose out.

    Third, studies show that increases in the minimum wage have never led to a dramatic loss of jobs lie you claim. In fact, the last time we raised the wage, jobs increased slightly. States that raise the wage experience more growth, not less, than other states around them when they raise the wage. I hate to tell you this, but the crap you were tought in Weekly Standard economics 101 just isn’t true.

    Again, name one credible study that makes that argument. For one, the last minimum wage increase was relatively small. ($4.15 to $5.15) and occurred during a period of massive economic growth that is not correlated to the increase in the minimum wage.

    The job loss doesn’t have to be dramatic. It just has to be targeted at those who are the most vulnerable. Again, think like an employer. The amount an employer can spend is limited. If the price of labor increases, an employer will shed excess capacity and be less likely to hire in the future. That employer isn’t going to hire someone who is more of a risk to them — they’ll hire a skilled worker rather than an unskilled one, a worker who has as few outside obligations as possible rather than one who is tied down with children.

    Paris uses a different unemployment measuer than the U.S. does–so 19% unemployment is 1.) not comparable to U.S. employment figures and 2.) does nothing to show that the raise in wages actually led to the unemployment.

    Eurostat and the BLS have used the same methodology for some time now.

    And yes, studies have shown that the connection between French labor laws and high unemployment. The OECD found that France’s productivity is some of the lowest in the developed world, which disproves your earlier point. Again, why is it that the countries with the highest amount of labor laws have correspondingly high unemployment. If that’s coincidence, it’s one hell of a big coincidence. And why is that when countries have made their labor markets more fluid, unemployment has gone down? (See Ireland.)

    As you are fond of so haugtily saying, corelation does not prove causation. If you loo at American cities and states that have enacted a wage increase, their economies tend to do better than those around them that did not. This is another surprise for the Ivory Tower Republicans–it turns out that when more people have more disposable income, they tend to buy more things. That might be hard to get through your supply-side noggin, but at least try.

    Again, you’re missing the point. A few would get more disposable income. Others lose their jobs.

    It’s basic economics. The amount of money an employer can spend on wages at a given point is fixed. By arbitrarily increasing wages, you reduce the number of workers that employer can hire. And an employer will shed excess capacity by firing the least skilled of their workers — which tends to be the most vulnerable among us.

    If you care about the poor, it’s crucial that you support policies that help those who most need it. Increasing the minimum wage causes poor people to lose their jobs. It’s not sound policy.

    Minimum wage in this country earns a full time worker a little more than $10,000. It’s unethical, immoral and bad for the economy.

    The poverty line for a single person is just under $10,000. Only a small percentage of workers A) work full-time and B) only get the minimum wage. Raising the minimum wage isn’t the only way to help those people, in fact, it’s probably the worst way of doing so, as it’s more likely to cause them to be unemployed.

    In my system, the employer pays a decent wage and the consumers pay for that. In yours, the federal government gets invovled, decides who is poor and who is not and then refunds them tax money that is paid by everyone. So even though I never go to Wal-Mart, I am paying wages of Wal-Mart worers. This is neither efficient nor keeping in the spirit of a market economy.

    Well, if we wanted to have economic efficiency, we’d get rid of the minimum wage altogether and let market valuations determine wages. However, I don’t think that’s what you want. The EITC subsidizes A) only those who need it and B) only those who are making an effort to work. It’s one of the most effective anti-poverty measures we have. Are you seriously advocating it be eliminated, or do you want to admit that your argument is a red herring?

    Last–it does not follow that everyone that disagrees with you is stupid or a less serious thinker. Again, a little common decency would be nice if you are going to police all the mean and nasty things I say to you.

    No, but it does apply when people make arguments without considering what the actual consequences of those arguments are.

    Also, using your logic, what would be best for workers and the economy would be to lower the minimum wage and raise the EITC. So the best policy initiative would be to have a minimum wage of $2.00 an hour (or less) and then have the government pay people $10,000 or so. That’s a pretty good solution for a serious thinker like Jay Reding.

    Except that isn’t how the EITC works. Your argument is a complete straw man.

    Ideally, I wouldn’t mind seeing a minimum wage floor indexed to inflation, although that might have some negative economic consequences as well.

    The EITC only effects those who are actually members of the working poor. It works as policy, and if the goal is eliminating poverty rather than political posturing, that’s the way to go rather than mucking about with the minimum wage.

  18. Jay Reding says:

    In sociology, faulty models are discarded. In economics faulty models are enshrined.

    Given that supply-side economics have worked everywhere they’ve been tried and were created in large part as a response to failure of Keynesianism, that argument is just dumb. Just because an economic model (backed by dozens of people who have won the Nobel Prize) doesn’t fit with your ignorant political views doesn’t mean it’s wrong, it means that you are.

  19. Jay Reding says:

    Of course, now we have Erica arguing that all economics is bullshit because economic evidence doesn’t fit with her worldview. It really doesn’t get any more ridiculous than that.

    The idea that a single mother burdened with child care is an easier hire for an employer than a teenager that can be let go with little risk is so patently absurd on its face as to be laughable.

    Again:

    – Most of the people who make the minimum wage are teenagers. The BLS data confirms that. Only ~30% of a minimum wage increase goes to those who actually need it.
    – Serious economists debate what the effects of a minimum wage increase would be. There is little disagreement that the EITC is more effective in helping the poor.
    – Targeting anti-poverty measures are better than non-targeted ones. If we’re going to help the poor, it makes no sense to subsidize others who don’t need the money as well.
    – Even the Democrats proposed increase won’t be anywhere near to a “living wage”
    – The costs of labor are fixed at any given point in time.
    – Increasing wages by fiat doesn’t increase that amount.
    – Therefore jobs will be lost.
    – And there’s no correlation between productivity and wages, so the effects if an increase will not be positive or neutral
    – The jobs will be lost will be predominantly with unskilled workers.
    – Who more often than not tend to be minorities and other underprivileged workers.
    – Therefore an increase in the minimum wage will disproportionately hurt those who need the benefits the most.

    If you want to argue against the well-tested position of nearly every credible economist, fine. It just means you’re being ideological rather than rational, which proves the point I made initially.

  20. jack says:

    I keep seeing the word ‘ignorant’ bandied about–and am shocked by the ignorance of the people bandying it.

    Erica, mothers–any mother, rich, poor, single, wed, you name it–is statistically more likely to take off work for her children. This increases her ‘unreliability’ in the eyes of her employer. Some employers don’t care, some do. But it’s a simple fact.

    Desperation isn’t a factor when the kids’ got a fever–and THAT little truism goes for single fathers as well as mothers.

    Having worked numerous dead end low wage jobs, I can say, from experience, that, in general, you’re not getting 40 hours–or anywhere close to full-time work. Too risky. Cross that ‘full-time’ barrier too often and companies have to start paying benefits–and THAT really costs money.

    You’re also not working for ‘minimum wage’ in a lot of cases. You’re working for a ‘starting wage’. Prove your worth and that wage goes up. Be a dismal employee and you should get fired–never mind a raise.

    That ‘starting wage’ thing is important. People who get stuck moving from job to job, staying at minimum aren’t good workers. Again, I speak from experience, I wasn’t a good worker–eventually, I wised up.

    Seth, every think-tank has an agenda. And the ones you enshrine, if you look close enough, have their fair share of ‘corporate sponsors’. Corporations are the source of most think-tank funding. If you don’t realise that, perhaps Jays’ idea that you’re a ‘less serious thinker’ isn’t far from the mark.

    The loss in jobs that you and Mark harp upon consists more of people not getting hired than people getting fired. It consists of companies delaying expansions and improvements. It’s not a simple case of numbers of unemployed. But leftist-think tanks and their corporate masters frame it that way to distract from the complexity of the issue as well as having a handy number to dangle.

    But that unwed mother, the one that got passed over in favor of Jays’ spoiled teenager? Well she didn’t get passed over. And the teenager didn’t get the job. There was no job to get. But the minimum wage workers got a raise, and now the employer, who was about to hire someone, has to make do with a short staff. Your fries might get cold.

    But you’ll have numerical proof that raising the minimum wage doesn’t get employees fired.

    Oh, Erica, ‘peer review’ is not a rigorous scientific method. Peer review is a tool employed in many fields.

    There are indeed hard and soft sciences. Hard sciences have defined areas of study. Soft sciences do not.

    Additionally, given the sheer number of sociologists who favor a leftist, ‘socialist’ approach, one wonders if it is less a science than a means to an end. After all, no rational person could study primates and decide that an insectoid social system would work–much less benefit– the primates in question.

  21. Erica says:

    Given that supply-side economics have worked everywhere they’ve been tried and were created in large part as a response to failure of Keynesianism, that argument is just dumb.

    “Everywhere they’ve been tried”? Care to substantiate that?

    Just because an economic model (backed by dozens of people who have won the Nobel Prize)

    Again with the Nobel prize? Did you even read what I just said? The “Nobel Prize in Economics” is an award given out by a bank with the Nobel name stapled to it. They’ve only been doing it since 1969. It’s no more a reflection of the legitimacy of the field of economics than the Spike TV Video Game Awards. It’s insider gladhanding; they had to admit the rest of the social sciences in 1995 to make the award more respectable. In other words – they had to stop giving prizes to economists in order for the award to be significant.

    That ought to tell you something. It’s amazing that you could have gone to the institution that hosts the Nobel Conference and completely failed to learn anything about Alfred Nobel and his prizes (and the prizes that bear his name but aren’t his.)

    The idea that a single mother burdened with child care is an easier hire for an employer than a teenager that can be let go with little risk is so patently absurd on its face as to be laughable.

    Funny, then, that you can’t seem to explain why in your post. But I guess having all support for an argument knocked away is no reason for Jay Reding to stop repeating it. Is that what you learn in law school? It’s a wonder lawyers get paid what they do.

    And there’s no correlation between productivity and wages

    We’ll keep that in mind when the subject of CEO salaries comes up, don’t worry.

    credible economist

    Sounds like an oxymoron to me… nonetheless, every single point in your little list has already been refuted. How many times do we have to do it?

  22. Erica says:

    The most telling example of how supply-side economists fail to operate from a reality-based position is found in the above: The costs of labor are fixed at any given point in time.

    Employers don’t hire workers because they have N number of dollars to spend on labor burning a hole in their pocket. Employers hire workers because they need to have work done. The amount of work that needs to be done doesn’t decrease simply because labor becomes more expensive. Re: tax cuts for the rich, the amount of work that needs to be done doesn’t increase simply because employers have a little more money to potentially spend on labor.

    The costs of labor are not fixed; they’re variable. Any employer can tell you that the cost of labor fluctuates over time – week to week, month to month. Economists may say otherwise because they’re completely divorced from the reality of the people who work and hire. I mean, how many of your “dozens” of fake-Nobel-prize-winning economists are the heads of Fortune 500 companies? Have owned and operated their own business? Have swept floors for a living?

  23. Seth says:

    “The Effect of the Minimum Wage on the Fast Food Industry,” Lawrence Katz and Alan Krueger, which shows that employment increased in the places that had to raise wages the most to comply with federal minimum wage increases and that price changes were unrelated to mandated wage changes.

    You could check out: David Card and Alan Krueger. 1995. Myth and Measurement: The New Economics of the Minimum Wage. This generally debunks most of your right-wing talking points about hurting business and making jobs disappear.

    Or “State Minimum Wages and Employment in Small Businesses,” Fiscal Policy Institute, April 20, 2004. It showed that states that have raised the wage have higher economic growth than those that don’t.

    Or Jerold Waltman, Allan McBride, and Nicole Camhout, “Minimum Wage Increases and the Business Failure Rate,” Journal of Economic Issues, Vol. XXXII, No.1, March 1998. It shows business failures are not related to minimum wage increases, particularly among smaller businesses that would arguably be the hardest hit. Notably: “there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” (p. 221).

    All of which are articles by actual independent economists backing me up (and kinda makes you look silly for the bit about me not thinking through the consequenses of my thoughts.)

    That’s actually four more works than you have cited, so please give one that show the opposite that wasn’t done by the Heritage Foundation. It’s funny that you say you can cite the literature and I can’t, because you haven’t cited any of it yet. I’m sure you meant that in the figurative sense or something like that and I’m missing your point or I don’t know the definition of ‘cited,’ so help me out and actually post something that doesn’t have ties to a right-wing think tank.

    Think about it: The employer at McDonald’s is already running a cheap operation. If he doesn’t need a worker to cover a shift, he already knows that and doesn’t hire the worker. That is, people working minimum wage jobs are doing menial jobs that an employer would cut if he or she could do so while maintaining the level of service they need to get people to come back. The minimum wage person being there is not dependent upon the economics of the situation so much as the necessity of having a person be in a place and fulfilling a task function, no matter what the rate of pay.

    France measures the number of people employed versus the entire population to get its index. We use the number of people employed versus those actively looking for work. There’s a difference. France also has a much lower poverty rate, which approached 0 for children legally in the country.

    You are truly not all that smart if you think low-end wages are set by economic efficiency and the value to the employer. The power structures are too asymmetrical.

    I thin we agree that the minimum wage floor should be adjusted (I think at least yearly) for inflation. Of course, that goes against everything you’ve been saying so far.

    The EITC makes me pay for goods I don’t consume. It makes me pay the wages for employers who won’t, and rewards behavior of bad-faith employers. It depresses the minimum wage and acts as a barrier to upward mobility (if people know they will receive more money, then there is no incentive for them to go to a $7 an hour job, so they stay in the low-end wage pool indefinitely, which is exactly what Sam Walton wants). And it’s a huge expansion of the Federal Government’s role in the labor market. You haven’t addressed any of these critiques so much as repeated your talking points.

    I don’t think you have the ability to see this issue at all, unless it fits with your right-wing blinders.

  24. Mark says:

    Jay, I continue to wait and wait and wait for you to present the statistical data and/or list of names that offer documented proof of minimum-wage workers displaced as a result of the 1997 minimum wage increase or any previous MW increase. Why do you fail to present this evidence to back up your hysterical ravings on this issue?

  25. Will says:

    Erica wrote:
    “Sociology is a legitimate scientific field with the same level of rigor; it employs the same statistical and methodological tools as other fields that study the natural world.”

    You’ve identified precisely why I lable sociology (and econ) a “junk science” — they study *something other than* the natural world. It’s not the method itself, it’s the subject.

    The natural world is, at least arguably, fixed and static. (Leave quantum mechanics out of this.) Or, at least the changes that do take place in the natural world take place over enormous spans of time.

    Human behavior, and human economies, are just the opposite: fluid and mobile. Malleable, even, by other humans and other economies. The subject is fleeting, prone to abrupt and illogical change. Consequently, I find both econ and sociology to be beyond the realm of real science.

    (I shouldn’t say “real” science either, because, frankly, I’m skeptical of ALL science. I’m skeptical about the entire scientific method. I’m skeptical about the existence of Objective Truth. And I’m especially skeptical about the possibility that human beings can discover Objective Truth. But that’s a conversation for another day, and most likely not on a blog.)

  26. Dave says:

    The best aurguement against raising minimum wage. If raising the minimum a dollar is ok? Why is it wrong to raise it 10 dollars or more?

    When you answer the second question you see your answer to the first is wrong.

    Besides there are no poor in america, just people of less luxury then the majority.

    Dave

  27. Jay Reding says:

    “The Effect of the Minimum Wage on the Fast Food Industry,” Lawrence Katz and Alan Krueger, which shows that employment increased in the places that had to raise wages the most to comply with federal minimum wage increases and that price changes were unrelated to mandated wage changes.

    You could check out: David Card and Alan Krueger. 1995. Myth and Measurement: The New Economics of the Minimum Wage. This generally debunks most of your right-wing talking points about hurting business and making jobs disappear.

    The Card and Kruger study was the one I referenced earlier (although not by name). Even Paul Krugman found the methodology there suspect in the days when he was a serious economist rather than a hack columnist. The Card and Krueger study has a major methodological flaw: the data upon which their conclusions were based was wildly inconsistent. The Neumark and Wascher study I mentioned early is the one that debunks their conclusions. If that weren’t enough, a researched for the Federal Reserve also took a look at the results of Card and Krueger study and found that it indicated that some fast food franchises (which were Card and Krueger’s sample) hired massive amounts of workers while others fired many — which is inconsistent with the payroll data for the same time and place.

    In other words, Krueger and Card (and those that rely on them as a basis) didn’t have good data, and their conclusions were entirely wrong. When Neumark and Wascher took the payroll data for the same sample assembled by the Economic Policy Institute they found that fast-food franchises in New Jersey decreased unemployment by 4.8%.

    The Card/Krueger study has been very well debunked over the years, and very few serious economists consider it a valid study because of its methodological flaws and the way that it contradicts the more accurate payroll data assembled by the EPI and the Federal Reserve.

    Or “State Minimum Wages and Employment in Small Businesses,” Fiscal Policy Institute, April 20, 2004. It showed that states that have raised the wage have higher economic growth than those that don’t.

    The problem with that study is our old friends, correlation and causation. States with higher rates of economic growth can afford higher wages. The study never made the causal link between wages and economic growth, and most economists reject that such a positive correlation exists – it’s the opposite, higher economic growth yields higher wages, not the other way around. In this universe, cause precedes effect. I know it’s annoying, but there’s just nothing to be done.

    Or Jerold Waltman, Allan McBride, and Nicole Camhout, “Minimum Wage Increases and the Business Failure Rate,” Journal of Economic Issues, Vol. XXXII, No.1, March 1998. It shows business failures are not related to minimum wage increases, particularly among smaller businesses that would arguably be the hardest hit. Notably: “there seems to be no discernible correlation between minimum wage increases and a rise in business failures, either in the year the increase occurred or in the following year. If anything, the evidence leans the other way” (p. 221).

    The issue isn’t business failures. The issue is increasing unemployment. Increases in the minimum wage aren’t usually enough to put businesses under, but they do effect unemployment.

    All of which are articles by actual independent economists backing me up (and kinda makes you look silly for the bit about me not thinking through the consequenses of my thoughts.)

    Pulling things from a Google search and understanding the arguments being made are not the same thing.

    Think about it: The employer at McDonald’s is already running a cheap operation. If he doesn’t need a worker to cover a shift, he already knows that and doesn’t hire the worker. That is, people working minimum wage jobs are doing menial jobs that an employer would cut if he or she could do so while maintaining the level of service they need to get people to come back. The minimum wage person being there is not dependent upon the economics of the situation so much as the necessity of having a person be in a place and fulfilling a task function, no matter what the rate of pay.

    Except that isn’t true. The biggest expense for any business is payroll, and when you have millions of workers, the aggregate effect of an increase in the minimum wage is massive.

    France measures the number of people employed versus the entire population to get its index. We use the number of people employed versus those actively looking for work. There’s a difference. France also has a much lower poverty rate, which approached 0 for children legally in the country.

    No, that’s not true. There are a few relatively minor differences in how active job seekers are tabulated, but the BLS and EUROSTAT have used the same basic methodology since the early 1990s when Eurostat was formed. Furthermore, the argument that France has a 0% child poverty rate is also completely and utterly false. France has a rate of child poverty significantly higher than the EU average. Their rate of child poverty is around 8-8.5% (having gone up since 2004).

    You are truly not all that smart if you think low-end wages are set by economic efficiency and the value to the employer. The power structures are too asymmetrical.

    That statement is complete nonsense. Indeed, wages are set by the value of labor, that’s basic economics. One of the reasons why employers are trying to hire so many illegal immigrants is because the going rate of labor for American workers is so high – and if the laws were enforced, it would probably do more to equalize the job market on the low end than any increase in the minimum wage.

    I thin we agree that the minimum wage floor should be adjusted (I think at least yearly) for inflation. Of course, that goes against everything you’ve been saying so far.

    To be honest, I haven’t done enough research to fully commit to that position. It’s possible that indexing won’t have any negative side effects, but I haven’t read the literature to know enough. Even if that were the case, there should probably be some kind of cap on the increase in case we have a replay of the stagflation of the 1970s. (And with Democrats in control of Congress, that’s now a real fear.)

    Your arguments on the EITC are completely and utterly ridiculous. If you seriously want to stand up and advocate eliminating the EITC on the grounds you mentioned, feel free, but it’s about the dumbest idea anyone could have. The EITC is the most effective anti-poverty program in America with strong bipartisan support. Your argument is, quite frankly, just dumb.

    The EITC makes me pay for goods I don’t consume.

    No, it doesn’t. The EITC is like any other tax credit and only applies to earned income. What you’re subsidizing is people being employed. I thought liberals were supposed to want to help the poor?

    It makes me pay the wages for employers who won’t, and rewards behavior of bad-faith employers.

    No, it doesn’t. Again, the EITC is prefaced on the proven idea that getting people to work full time is a valuable investment that will produce overall economic growth. The evidence has shown that to be true.

    It depresses the minimum wage and acts as a barrier to upward mobility (if people know they will receive more money, then there is no incentive for them to go to a $7 an hour job, so they stay in the low-end wage pool indefinitely, which is exactly what Sam Walton wants).

    Again, the evidence says elsewise, No studies have found this to be true.

    And it’s a huge expansion of the Federal Government’s role in the labor market. You haven’t addressed any of these critiques so much as repeated your talking points.

    And minimum wage laws aren’t? That’s a phenomenally stupid argument to make when you then turn around and argue for what amounts to government wage controls. You can’t argue that the EITC is wrong because the Federal government gives a tax credit and then say that the government should regulate wages. It’s not even a remotely consistent position.

    I don’t think you have the ability to see this issue at all, unless it fits with your right-wing blinders.

    Give me a break, I could write volumes about what you don’t understand about basic economic principles.

  28. Mark says:

    Isn’t it crazy how Jay CONTINUES to fail acting upon my request of offering real-world documentation of workers displaced by minimum-wage hikes even though he’s been ranting and raving about it for days now. It’s almost as if that entire premise is a mythology created by pointy-headed Cato Institute hacks while smoking cigars on “Prescott’s yacht” without ANY statistical evidence validating its accuracy.

    And Dave, your pedestrian attempt at a “gotcha” question can be shot down by deferring to simple guidelines of modesty, acceptability, and what our economy can absorb. A minimum wage of $7.25 an hour is modest in its scope and worthy of a basement level earning capacity for workers in the richest country in the world, would be deemed by most acceptable and inexcessive compensation for people who work at our lowest-level jobs, and almost certain to be absorbed by an economy the size of America’s in a time of economic growth.

    Now that we have that issue resolved, let’s turn the tables. The question that liberals, moderates and sane conservatives should be posing to the furthest reaches of free-market discipleship who oppose a minimum wage rate is “If not now, after nine years of minimum-wage stagnancy, when?” Of course, you and I both know that in their heart of hearts, opponents of a minimum wage increase’s real opposition is to the minimum wage in general, but fat chance many will ever admit that in public. By forcing minimum wage critics to twist in the wind either defending a minimum wage of $5.15 per hour for the rest of eternity or publicly calling for the abolition of a minimum wage in America, it’ll cement in the public minds the largely accurate assumption that economic conservatives’ utopian vision of America involves huddled masses of starving peasants competing to be the lucky few who get on the bus as “day laborers” at daybreak, transported to McDonald’s to chop lettuce until the places closes at midnight, and rewarded for his labors with a five-spot or whatever the manager happens to have in his wallet at the end of the day.

    By all means, bring this debate on. Tell us early, often, and as loudly as possible that the minimum wage should remain $5.15 an hour, serving up all your cheesy and unsubstantiated talking points of mass layoffs and/or blistering inflation. If you think you can beat us with that argument in the court of public opinion, try us. We’ll be more than happy to accommodate if this is a battle you choose to take.

  29. Erica says:

    The natural world is, at least arguably, fixed and static.

    Not to harp on an off-topic remark, but that’s a very inaccurate characterization of the natural world. There’s nothing fixed or static about it. Stasis is merely an inaccurate impression derived from sciences that actually don’t study the natural world, like physics and chemistry. These disciplines actually only study mathematical models based on simplifications of the natural world.

    And I’m especially skeptical about the possibility that human beings can discover Objective Truth.

    Science doesn’t really claim to do that, but that is a subject for another blog. We’re way over Jay’s reading level, here.

  30. Jay Reding says:

    Wait, did you just say that physics and chemistry don’t study the natural world?

    Broiled Buddha on a biscuit, what crack are you smoking?

    Science doesn’t really claim to do that, but that is a subject for another blog. We’re way over Jay’s reading level, here.

    This from someone who wants to argue that science is only science if it matches her pedestrian little worldview. I’d tell you to read Oakeshott, but I’m afraid of the inevitable lawsuit that would arise when your head exploded.

  31. Erica says:

    Wait, did you just say that physics and chemistry don’t study the natural world?

    Like I said, I don’t want to get into it with the guy who thinks Darwinianism vs. punk-eeq is still a raging biological debate, DDT doesn’t thin eggshells, and that a cloud of burning plutonium over the Sea of Japan is a completely harmless scenario. It’s a subtle point that you will not be able to appreciate, being as you are completely ignorant about the sciences. Maybe when you stop getting your facts about biology from creationists, we can have this discussion.

    This from someone who wants to argue that science is only science if it matches her pedestrian little worldview.

    This from someone who thinks science is science only if they give out a Nobel prize for it (and then didn’t bother to look up what they give prizes out for, these days.)

    I’d tell you to read Oakeshott, but I’m afraid of the inevitable lawsuit that would arise when your head exploded.

    Yeah, yeah. I know you have your little list of names you like to trot out so that it looks like you’re well-read. You should try reading books instead of simply name-dropping authors. Your commentary might result in being a little less “attitude” and a little more intelligence.

  32. Mark says:

    Still waiting for that source, Jay.

  33. Jay Reding says:

    Like I said, I don’t want to get into it with the guy who thinks Darwinianism vs. punk-eeq is still a raging biological debate, DDT doesn’t thin eggshells, and that a cloud of burning plutonium over the Sea of Japan is a completely harmless scenario. It’s a subtle point that you will not be able to appreciate, being as you are completely ignorant about the sciences. Maybe when you stop getting your facts about biology from creationists, we can have this discussion.

    And maybe when you learn anything about economics, you can have a discussion about that subject that goes beyond the schoolyard level.

    Yeah, yeah. I know you have your little list of names you like to trot out so that it looks like you’re well-read. You should try reading books instead of simply name-dropping authors. Your commentary might result in being a little less “attitude” and a little more intelligence.

    Please, your ignorance is only matched by your arrogance.

  34. Jay Reding says:

    Mark: Have you not been paying attention at all? Neumark and Wascher already showed the correlation and thoroughly debunked the Card and Krueger study. Vedder and Galloway also did a study which confirms that minimum wage increases do not decrease poverty.

    Very little has been done to research the specific effects of the 1997 increase because it was a relatively small increase during a period of nearly unprecedented economic growth. There’s too much statistical noise to get a good sample for that period.

    Again, the point still stands. The minimum wage is not the best way to reduce poverty, while raising the EITC is a far better way of going about things.

  35. Seth says:

    Neumark was a political appointee for the Reagan and then Bush II Administrations. Wascher was a Reagan political appointee as well. So, like I said, it would be nice if you had something on which you could base an argument that didn’t come from a right-wing hack. I’m not sure you’ve ever read anything that wasn’t from a right-wing hack, though, so it seems highly doubtful that you would start now. You did dig your own grave, however. In saying that states with high economic growth can afford higher wages and in previous assertions that America is going through a robust period of growth, you are saying America absolutely can afford higher wages. I’m glad we can put this one to bed now.

    The article you presented, this one right here says in plain English that the unemployment measures in France are obtained differently and then balanced to be more comparable to the United States.

    France has a poverty rate about half that of the United States. And a much lower child poverty rate. In the U.S., we’re looking at nearly 25% of kids. No Western European country has more than 20%, and in those dreaded communist economies in Scandinavia, they’re under 5%.

    First you say you ‘wouldn’t mind seeing’ a wage indexed for inflation. Then you’re not sure. While you’re now at least admitting you have no idea what you’re talking about and that’s a good start, maybe you should talk about something else then.

    If you’re going to start introducing work from the EPI as definitive, I’ve got a few more studies for you. All showing that raising the minimum wage is good for economies.

    Every tax credit that goes to a person is money that doesn’t go somewhere else. Meaning that the $3000 a person might get refunded is money that has to come from somewhere else. That somewhere else is the rest of the tax payers. I can see we’re going to disagree here: I think we should get people into the work force by paying them (gosh, what a novel concept), and you think we should get people into the work force by artificially increasing their wages and letting corporations off the hook.

    The EITC does not subsidize people being employed whatsoever. It subsidizes people being underpaid. Since I actually do want to help the poor, I want to discourage people being underpaid. Which is why organized labor is a far more effective anti-poverty tool than the EITC.

    At no point have I said I’m against the EITC. I’m all for a very progressive taxation scheme. But given two policy initiatives, one being to actually pay workers and the other being for the Federal Government to refund taxes, I’d prefer actually paying them. It’s far more productive and efficient in the long run.

    You clearly don’t understand the economics here. For example, the fact that people are hiring illegal immigrants does not indicate American labor costs too much. It indicates that given a choice between paying people $5 an hour or paying people $2 an hour, an employer will pay $2. Minimum wage is set in part by the price of labor, but a far more important factor in low-wage labor markets is the power of the employer relative to the power of the employee. Which is why wages are higher in Western Europe than they are here.

    Your economic principles exist in a vacuum. A vacuum created by extremists. Let us know when you’re ready to enter the real world.

  36. Seth says:

    Also, you might actually read another article you linked to, this one. That would be the one that says raising the minimum wage has “minor negative effects at worst” on employment levels. It’s also the one that talks about how Neumark and Wascher are right-wing hacks. You should at least make me use my own evidence to make you look silly.

  37. Will says:

    Sorry for continuing with the off-topic conversation, but this is for Erica:

    You wrote:
    “[T]hat’s a very inaccurate characterization of the natural world. There’s nothing fixed or static about it.”

    Ok, you’re right of course. I wasn’t very clear with what I was trying to say, which is: *compared to the subjects studied in econ and sociology*, the natural world is relatively fixed and static. Econ and sociology go back, what, 10,000 years at most? And they both really only goes back a couple of hundred years, especially econ. Contrast that with all the natural sciences, which go back up to 18 billion years.

    That’s all I’m trying to say. I find the natural sciences to be more credible than the social sciences because the subjects studied in the social sciences (i.e., human beings and human behavior) are so short-lived, fleeting, changeable, malleable, and influenceable.

    You wrote:
    “Stasis is merely an inaccurate impression derived from sciences that actually don’t study the natural world, like physics and chemistry. These disciplines actually only study mathematical models based on simplifications of the natural world.”

    I see the point you’re trying to make, but I don’t follow it to your conclusion that physics and chemistry don’t study the natural world, merely because they focus on mathematical models. I guess you’re contrasting those sciences with biology?

    Don’t forget that we have particle accelerators and pretty amazing telescopes, in the same way that we have microscopes.

    Or maybe I’m misunderstanding you.

    You wrote:
    “Science doesn’t really claim to [discover Objective Truth].”

    Really? What does it do, then?

    I’d be inclined to believe that it *creates* objective truth more than it discovers it. Science and art really are the same thing, the way I see it.

  38. Mark says:

    Jay:

    “Mark: Have you not been paying attention at all? Neumark and Wascher already showed the correlation and thoroughly debunked the Card and Krueger study. Vedder and Galloway also did a study which confirms that minimum wage increases do not decrease poverty.”

    I’m not requesting a link to another academic study by pointy-headed Cato Institute ideologues regarding minimum wage and poverty, I’m requesting HARD DATA verifying your core thesis that minimum wage increases erase jobs and displace low-wage workers. No academic studies, only hard numbers validating the premise that low-wage workers have been displaced from employment by previous minimum-wage increases.

  39. Jay Reding says:

    Seth:

    Also, you might actually read another article you linked to, this one. That would be the one that says raising the minimum wage has “minor negative effects at worst” on employment levels.

    It also says that raising the EITC is better than raising the minimum wage for dealing with poverty, which supports my point.

    It’s also the one that talks about how Neumark and Wascher are right-wing hacks. You should at least make me use my own evidence to make you look silly.

    No, it says absolutely nothing of the kind.

    Mark:

    I’m not requesting a link to another academic study by pointy-headed Cato Institute ideologues

    Neumark is a professor of economics at UC-Irvine and Wascher was an economist for the Federal Reserve. You can read their data through JSTOR, IIRC, which you can get at any decent college or public library.

    No academic studies, only hard numbers validating the premise that low-wage workers have been displaced from employment by previous minimum-wage increases

    You don’t seem to understand what an academic study is based upon, do you?

  40. Mark says:

    “You don’t seem to understand what an academic study is based upon, do you?”

    I should have said academic thesis instead of study. My bad. I’ll put it to you this way to hopefully avoid any further semantic loopholes you can employ to defer my request. Any study that doesn’t show hard numbers of low-wage workers displaced by previous minimum wage hikes (the crux of your thesis in this and any number of identical threads in the past month) is not worth my time. I want to see actual EVIDENCE, not simply theoretical anecdotes dreamed up by ideologues, of minimum wage increases directly resulting in the unemployment of low-wage workers.

    Can I possibly make myself any more clear?

  41. Seth says:

    Typical Republican. Thinks we can solve something as huge as poverty with a couple tax credits here and there.

    The Economist article makes it pretty clear those guys found what they wanted to find with their research. Which is probably why you speak so highly of them.

  42. Seth says:

    It takes quite a bit of doing to try to be taken seriously when you say a guy that’s been a Reagan and Bush II political appointee doesn’t have political biases in his economic theories. I would expect nothing less from you, though.

  43. Jay Reding says:

    Mark: Newmark, David and Wascher, William.“Using the EITC help poor families: New evidence and a comparison with the minimum wage” National Tax Journal. Washington: June 2001. Vol.54, Iss.2; 37pgs.

    See also Daniel Shaviro, “The Minimum Wage, the Earned Income Tax Credit, and Optimal Subsidy Policy”, 64 U. of Chicago L. Rev., 405 (1997).

    You’ll have to go to a library to read those, since they’re only available through specialized databases like JSTOR

    See also: http://woodrow.mpls.frb.fed.us/pubs/region/03-06/wirtz.cfm

    Seth:

    Typical Republican. Thinks we can solve something as huge as poverty with a couple tax credits here and there.

    Typical Democrat. I never said that the EITC would solve poverty, just that it would help. Reaching for such silly strawmen is such a sign of desperation…

    The Economist article makes it pretty clear those guys found what they wanted to find with their research. Which is probably why you speak so highly of them.

    If you’d bother (or learn to) read the article, they also support the contention that the EITC is the more effective option, which is my point. I know that being intellectually honest doesn’t sit right with you, but it’s worth a try.

    It takes quite a bit of doing to try to be taken seriously when you say a guy that’s been a Reagan and Bush II political appointee doesn’t have political biases in his economic theories. I would expect nothing less from you, though.

    Of course, only Democrats are credible, right? Furthermore, Newmark isn’t a political appointee to anywhere – he’s an economics professor. (Then at UC Irvine, now at NCSU.)

    Typical liberal – can’t fight on substance, so just start throwing around silly ad hominems around. How typical.

  44. zzx375 says:

    LBJ’s ‘Great Society’ program was intended to end poverty but it did not. How much $$$ does the federal government need to spend to eliminate poverty? That seems like a legitimate question to toss out.

  45. Seth says:

    Jay–
    The reason EITC may be marginally better at reducing poverty is because we’re talking about raising the wage from extremely sub-standard to very sub-standard. It goes to reason that if we paid people above the poverty rate, poverty would become extremely rare. The article in the economist says nothing about a living wage whatsoever, but thanks for telling me I should learn to read.

    The article is a synthesis of some prevailing opinions. It is not an argument. It has no study, no data. I won’t bother you with the details. It also does not take into account the costs of implementing the EITC (the money going to people from the EITC is money that isn’t going someplace else–the article does not address that, nor do any of your right wing buddies), nor does it deal with the fundamental unfairness of subsidizing low wages.

    Neumark was an economist on the Board of Governors for the Federal Reserve fron 1987-1989. So, like I said, a political appointee during the Reagan Administration. The people that still think supply-side economics actually work. His work as a whole shows his research finds what he expects to find. A degree does not make one impartial.

    Are you capable of getting anything right? Even something small? At least maybe you could stop thinking you are God’s gift to academia if you are going to be wrong all the time.