Sunday, February 9, 2014

NYT Calls for Higher Minimum Wage

In an editorial out today, The New York Times calls for a higher minimum wage, without discussing the supply and demand dynamics which by logic show that a higher minimum wage will mean that some will lose their jobs. They just tell us that there is "research" that shows the logic isn't correct. In other words, for NYT research can show that 2+2 does not have to equal four.

 NYT simply takes the number now earning less than the proposed new minimum wage of $10.10 (to be fully enacted by 2016) and declares that all employers will pay workers this wage, even if workers are not productive enough to generate marginal revenue product higher than $10.10 per hour. In addition, NYT ignores the likelihood that it will become beneficial for some firms to switch to machine automation rather than paying workers the higher wage.

Here's NYT, they call it "The Case for a Higher Minimum Wage," although they don't make such a case, they just assume an environment that couldn't possibly develop:
The political posturing over raising the minimum wage sometimes obscures the huge and growing number of low-wage workers it would affect. An estimated 27.8 million people would earn more money under the Democratic proposal to lift the hourly minimum from $7.25 today to $10.10 by 2016[...]

This is not a new debate. The minimum wage is a battlefield in a larger political fight between Democrats and Republicans — dating back to the New Deal legislation that instituted the first minimum wage in 1938 — over government’s role in the economy, over raw versus regulated capitalism, over corporate power versus public needs.
NYT further fails to address the fact that there are now many unemployed because of the current minimum wage. Maybe NYT thinks an unemployment rate for youth of over 20% is normal.



  1. "The old saying is that “figures will not lie,” but a new saying is “liars will figure.” It is our duty, as practical statisticians, to prevent the liar from figuring; in other words, to prevent him from perverting the truth, in the interest of some theory he wishes to establish."- Carol Wright, in 1889 while addressing the Convention of Commissioners of Bureaus of Statistics of Labor.

  2. In 2006, 28% of the workers earning minimum wage were between the age of 16-19. In 2012, the percentage was 27%. The minimum wage in 2006 was $5.15 and in 2012 it was $7.25. Hard to see how raising the minimum wage has hurt that group more than any other.

    However, that age group was hit especially hard by the 2007 recession. The spread between the 16-19 group an workers over 25 who have a college degree literally tracked the overall unemployment rate until the 2007 recession. During the recession, the spread rose faster than the overall unemployment. However, since May 2013, they are converging. The spread between over 25 with college degree and 16-19 fell from 20% to 17% (17% decrease) while the unemployment rate fell from 7.5% to 6.6% (13% decrease).

    Left Axis (blue line): (Unemployment Rate - 16 to 19 years minus Unemployment Rate) - (Bachelor's Degree and Higher, 25 years and over)

    Right Axis (red line): Unemployment Rate (U-3)

    Data for minimum wage workers do not support the claim that raising the minimum wage damaged 16-19 any more than anyone else: They became a smaller percentage of those collecting the minimum wage before the minimum wage was raised in 2007 (when Democrats took control of Congress and raised the minimum wage).

    Number working at minimum wage 16-19
    2002: 226,000 @ $5.15 (41% of total minimum wage workers)

    2006: 484,000 @ $5.15 (28% of total minimum wage workers)

    2012: 436,000 @ $7.25 (27% of total minimum wage workers)

    total at minimum wage
    2002: 570,000
    2006: 1,692,000
    2012: 1,566,000




  3. No matter what history has told us about minimum wage, raising minimum wage today could be different. There are a variety of economic climates in every state. Economists are divided and guessing. We all can guess.
    Extreme jumps in the minimum wage will definitely cause more reactions from businesses than small bumps.
    Lots of small businesses which employ near the minimum wage are not sitting on bundles of cash. They will try to survive as expected. Raising prices, cutting staff, increased automation or going out of business. Business models are already in play and they are based on the current minimum wage laws. Business models will need to change. Common sense tells you that some of that will happen depending on the size of increase in the minimum wage.

  4. These idiot libtards are INSISTENT on creating more unemployment aren't they? Morons.