Minimum wage up again

[Gob]

The minimum wage is to rise by 3 per cent to £6.50, ($10.83 US,) adding an extra £370-a-year to the pay packets of millions of workers.

The inflation-busting rise is the first for five years and follows George Osborne’s call for workers to be rewarded as the economic recovery gains momentum. And the Low Pay Commission said it was just the start of a ‘new phase’ which would take the rate to new record highs.

Ministers claim the £6.31 hourly rate for adult workers has been outstripped by the rising cost of living and is now worth the same in real terms as in 2004. Since 2010 the main rate for over 21s has risen by just 38p, amid fears that sharper rises would have meant firms laid staff off.

Mr Osborne last month suggested it could eventually reach £7-an-hour, which is what it would be if it had risen in real terms since the financial crash.


Read more: http://www.dailymail.co.uk/news/article ... z2uT7KR1V5
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[dgs49]

(a) Is there actually a "Low Pay Commission"? Hot-damn! How could I get appointed to that little sinecure? Surely, a university degree is required!

(b) "...the 6.31 hourly rate for adult workers..." Is there a different rate for non-adult workers? Does part-time versus full-time matter?

(c) Why would anyone fear that "sharper rises would have meant firms laid staff off"? In the U.S. we know that this is an economic fallacy, promoted by Republicans.

(d) What is preventing the Low Pay Commission from raising it further? Mr. Osborne obviously thinks the Low Pay Earners are getting short shrift.

[Scooter]

[rubato]

Evidence poster here before shows that raising the minimum wage has zero effect on job loss.

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The City of Santa Cruz living wage ordinance was adopted on October 24, 2000 (ordinance number 2000-25). The ordinance requires that persons doing work on City of Santa Cruz contracts, for services specified in the ordinance, are to be paid a living wage while working on the City of Santa Cruz contract. The ordinance does not apply to employees who are members of a collective bargaining unit, or labor union, are 17 years old or younger, or to persons in positions that are designated for “trainees” or are otherwise part of an employer’s training program. The ordinance also states that employees have the right to participate in a union, and bargain collectively without reprisal.

The ordinance requires that employees working for your firm on this contract be notified that the living wage ordinance applies to them. As part of compliance for this contract, you are required to notify affected employees.

Effective from July 1, 2013, through June 30, 2014, the current rate for minimum compensation to employees is:

1. If benefits are provided, a wage of no less than $14.79 per hour.
2. If benefits are not provided, a wage of no less than $16.13 per hour.

Benefits are defined as follows:

1. A combined twelve days compensated sick and/or vacation leave annually for full-time employees, and prorated leave for employees working less than full time
2. A combined ten days uncompensated sick and/or vacation leave annually for full-time employees, and prorated leave for employees working less than full time.
3. Payment of at least $1.29 per hour towards a health insurance policy for the employee.

Also be advised that the City may request any or all certified payrolls associated with this contract, however, any such request will be made to your firm in writing and provide fourteen calendar days to respond. The City may conduct on-site audits to verify compliance. These audits may include, but are not limited to, employee interviews. View the Living Wage Compliance Statement.

Good for us!


yrs,
rubato

[MajGenl.Meade]

The ordinance requires that persons doing work on City of Santa Cruz contracts, for services specified in the ordinance, are to be paid a living wage while working on the City of Santa Cruz contract. The ordinance does not apply to employees who are members of a collective bargaining unit, or labor union, are 17 years old or younger, or to persons in positions that are designated for “trainees” or are otherwise part of an employer’s training program.

(a) this post offers no evidence that 'raising the minimum wage has zero effect on job loss'. Jus' sayin'.
(ii) the ordinance applies only to City contracts and raises no "minimum wage" other than temporarily. Presumably at the end of the contract, the employees can go back to working for $0.45/hour and as much gravel as they can eat
(3) "The ordinance does not apply to..." must have been written by the same fun-folks who wrote Lincoln's Emancipation Proclamation i.e. it only applies where it doesn't count

[rubato]

"...
(a) this post offers no evidence that 'raising the minimum wage has zero effect on job loss'. Jus' sayin'.

I did not claim that it does. Posts with that information have been posted numerous times. More than enough. And anyone who cared about the truth can look it up.





yrs,
rubato

[MajGenl.Meade]

Oh right then. I thought perhaps posting a quote from 2000 meant something.

[rubato]

It does, but a meta-analyses of data on job losses vs minimum wage which compiles data from many studies matter a great deal more and that has been posted before.

Do the google. I get tired of posting the same information many times and having it disappear and leave a perfect blank slate.


I have decided that if someone is too lazy to look it up then they don't care what the facts are, they don't want your opinions based on them, and it is a waste of time trying to provide them. So I have no idea why I do this.

http://www.cepr.net/documents/publicati ... 013-02.pdf

Conclusion
Economists have conducted hundreds of studies of the employment impact of the minimum wage.
Summarizing those studies is a daunting task, but two recent meta
-
studies analyzing the research
conducted since the early 1990s concludes that the m
inimum wage has little or no discernible effect
on the employment prospects of low
-
wage workers.
The most likely reason for this outcome is that the cost shock of the minimum wage is small relative
to most firms' overall costs and only modest relative to t
he wages paid to low
-
wage workers. In the
traditional discussion of the minimum wage, economists have focused on how these costs affect
employment outcomes, but employers have many other channels of adjustment. Employers can
reduce hours, non
-
wage benefits
, or training. Employers can also shift the composition toward CEPR


23
higher skilled workers, cut pay to more highly paid workers, take action to increase worker
productivity (from reorganizing production to increasing training), increase prices to consumers, or
simply accept a smaller profit margin. Workers may also respond to the higher wage by working
harder on the job. But, probably the most important channel of adjustment is through reductions in
labor turnover, which yield significant cost savings to employe
rs.

yrs,
rubato

[Long Run]

The CBO report just concluded that raising the national minimum wage to $10 would cost about 500,000 jobs. On the other hand, the increase would benefit a couple of million who could find or keep their jobs. Citing a limited period where the economy was doing great and there was a modest bump in the minimum wage does not defeat a basic economic principle that raising the cost of an item will reduce the demand for that item. In contrast, what is being proposed now is a substantial 37% increase in the minimum wage during a difficult economic time period when we have the lowest employment rate in decades. Which is why the CBO report concludes that this would exacerbate the historically low employment rate. fwiw, Obama's appointee at the Fed agrees such a huge increase will cost jobs.

As for the minimum wage bump in the original post, the two key items are: a modest 3% increase; and

‘We do believe however that the economic recovery should this year allow an increase in the real value of national minimum wage, the first increase for at least five years.

[dgs49]

Those who follow such things understand that Paul Krugman, Nobel-winning economist and NYT pundit is the economic guru to not only Our Beloved President, but also to the whole Progressive movement in this country. I mean, how can you dispute the wisdom of, for example, trillions of dollars in "stimulus" spending of borrowed and printed money when a Nobel-fucking-prize-winning economist not only SUPPORTS it, but CLAIMS IT IS NOT ENOUGH! Claims that the Prez has been too timid!

I have always wondered how and why Dr. Krugman persistently spouts such economic nonsense, and I frequently seek out articles by other economists who dig up the real data to show Krugman as a fraud and manipulator of data. But today I happened upon an article in HuffPo on line by a guy named Benjamin Powell that actually explains it in language that anyone can understand (posted 12/12/2013). It is an article about the minimum wage, and Powell explains that there are actually TWO PAUL KRUGMAN's: One who is a competent economist, and one who is a pundit - a flack for democrat politicians. And his positions on the Minimum Wage are pretty much 180 degrees opposed to each other, depending on whether he is speaking as an economist or as a pundit. He explains it much better than I can, so here goes:

Paul Krugman's recent call to raise the minimum wage is consistent with much of his liberal political writing over the past decade. But raising the minimum wage is not consistent with Krugman's writing as an economist. Those who care about the poor should pay more attention to Krugman the economist than to Krugman the liberal pundit.

Krugman uses the Christmas shopping season, and the fact that 60 percent of minimum wage workers are in sales or food services, to talk about the decline in the real wages of people working in retail. His solution to their problems: "We can raise the minimum wage."

But before we embrace the policy prescription of Krugman the pundit, let's ask the opinion of Krugman the economist. In his 1998 review of a book on living wages he wrote: "So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment."

Krugman the economist should know. He co-authors an Econ 101 textbook. The 2008 edition clearly states, "when the minimum wage is above the equilibrium wage rate, some people who are willing to work--that is, sell labor--cannot find buyers--that is, employers--willing to give them jobs."

Most people's employment prospects aren't harmed by a minimum wage because their productivity is far above the legal mandate. Young people with fewer skills are the most affected. Roughly a quarter of all minimum-wage earners are teenagers, and more than half are under 25 years old. It's no accident that these age groups have the highest unemployment rates. Teen unemployment is 22.2 percent while 12.5 percent of 20 to 24 year olds are unemployed, compared to the U.S. national average of 7.3 percent.

People who deny that the minimum wage causes unemployment often point to the empirical work of economists David Card and Alan Kruger, whose study and subsequent 1997 book didn't find an unemployment effect of the minimum wage. What did Krugman the economist think of their work? Here's what he wrote:

"What is remarkable...is how this [Card and Kruger's] rather iffy result has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda.... Clearly these advocates very much want to believe that the price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects.
So fifteen years later, why does Krugman the pundit not believe Krugman the economist? New evidence has surfaced but the bulk of it agrees with Krugman the economist, not the pundit. Economists David Neumark and William Wascher surveyed the vast literature studying the effects of minimum-wage laws in their recent book, Minimum Wages. They find that the bulk of the evidence accumulated over the last 20 years indicates that minimum-wage laws reduce employment for the least-skilled workers and lowers their earnings."

Maybe Krugman the economist can give us some insight into Krugman the pundit's newfound faith in the minimum wage. In 1998 he asked why liberals supported a minimum wage. His answer:

"What the living [minimum] wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price--determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away."

When Krugman the moral pundit asks: "Doesn't that [minimum wage] violate the law of supply and demand? Won't the market gods smite us with their invisible hand?", he need only turn to Krugman the economist for his answer: Yes. Economics put limits on our utopian fantasies.

Unfortunately, Krugman the pundit writes from a fantasyland that should embarrass Krugman the economist.

[Scooter]

Krugman the economist should know. He co-authors an Econ 101 textbook. The 2008 edition clearly states, "when the minimum wage is above the equilibrium wage rate, some people who are willing to work--that is, sell labor--cannot find buyers--that is, employers--willing to give them jobs."

Except that, as anyone who has taken Econ 101 would know, any such statement in an Econ 101 textbook always comes with the implied caveat of ceterus paribus - all other things being equal. The moment one raises the minimum wage, all other things do not remain equal. The increased income of minimum wage earners will lead to increased consumption on their part, and that additional consumption has a multiplier effect on other incomes in economy.

The fantasyland is inhabited by those who believe that what they read in an Econ 101 textbook is enough to predict the effects in a real world economy, and one needs to be a special kind of moron to fall for this sort of lazy rhetoric.

Economists David Neumark and William Wascher surveyed the vast literature studying the effects of minimum-wage laws in their recent book, Minimum Wages. They find that the bulk of the evidence accumulated over the last 20 years indicates that minimum-wage laws reduce employment for the least-skilled workers and lowers their earnings.

Oh sure, let's take a selective dataset that encompasses two recessions, ignore all of the elements that don't agree with our predetermined conception, and then reach the conclusion we wanted before we did any analysis. Ah yes, that's some unassailable science there, great job Dave.

[rubato]

The CBO report just concluded that raising the national minimum wage to $10 would cost about 500,000 jobs. On the other hand, the increase would benefit a couple of million who could find or keep their jobs. Citing a limited period where the economy was doing great and there was a modest bump in the minimum wage does not defeat a basic economic principle that raising the cost of an item will reduce the demand for that item. In contrast, what is being proposed now is a substantial 37% increase in the minimum wage during a difficult economic time period when we have the lowest employment rate in decades. Which is why the CBO report concludes that this would exacerbate the historically low employment rate. fwiw, Obama's appointee at the Fed agrees such a huge increase will cost jobs.

As for the minimum wage bump in the original post, the two key items are: a modest 3% increase; and

‘We do believe however that the economic recovery should this year allow an increase in the real value of national minimum wage, the first increase for at least five years.

Maybe you should copy from the source? The CBO report actually says that 16.5 million will get raises. Or to put it another way 165 people will get raises while only 5 will lose their jobs. Rather a de-minimus job loss, close to zero.


http://www.washingtonpost.com/blogs/won ... ge-report/

Wonkbook: What you need to know about the CBO’s minimum-wage report

Wonkbook's Number of the Day: 500,000 and 16.5 million. The first number is the killer of the CBO report. The second is its grace. The former is an estimate of the number of Americans who will lose their jobs if the minimum wage is raised to $10.10, while the latter is the number who will see their income rise.

1. Top story: What you need to know about the CBO's minimum-wage report

CBO: Obama’s minimum wage plan would cost jobs but reduce poverty. "[T]he CBO found that raising the minimum wage to $10.10 an hour (and then indexing it to inflation) would reduce employment by between a very small amount and 1 million workers, with the agency's best guess being about 500,000 workers...At the same time, the report finds that about 16.5 million low-wage Americans would see an increase in their earnings as a result of the hike in the minimum wage. A much smaller number of higher-wage earners would also see a jump in income, the CBO said...Finally, the CBO report offers a useful historical analogy for the proposed increase. Over the past 30 years, an average of roughly 5.3 percent of workers earned between the old and new minimum wages when Congress legislated a change. This time, under the $10.10 option, 10.1 percent of workers do. That's a testament to not only how far the minimum wage has fallen in real terms but also to how significant the increase would be relative to the size of the workforce." Zachary A. Goldfarb in The Washington Post.

In the unlikely event that someone wants to see what the report says for themselves:

http://www.cbo.gov/publication/44995?ut ... campaign=0


yrs,
rubato

[rubato]

Charts and graphs! From the CBO report:

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

$31 Billion going to the bottom deciles in income will be mostly spent and thus contribute very directly to GDP. It will also reduce entitlement payments and EITC costs as increasing income reduces eligability.


yrs,
rubato

[Lord Jim]

In the unlikely event that someone wants to see what the report says for themselves

And yet he wonders why so few care to respond to him...

It must cause the lad actual physical pain to click the "submit" button without including at least one snide insult...

[rubato]

The only way to prove I was wrong is to click on the link, read the CBO report, and be able to recount accurately what it says.

Too much for you?


Yet again.



yrs,
rubato