From Alan Manning, in Journal of Economic Perspectives (a journal of the American Economic Association), “The Elusive Employment Effect of the Minimum Wage”:
Conclusion
Much of the literature on the employment of the minimum wage focuses on the question of “what is the employment effect of the minimum wage” using an empirical specification in which the effect is always negative, zero, or positive. This approach has reached the point of diminishing returns. A balanced view of the evidence makes it clear that existing evidence of a negative employment effect is not robust to reasonable variation in specification, even when the wage effect is robust. This might mean that the labor demand elasticity is very small (and this paper has discussed some reasons why that might be the case), but it might mean that the effect of a higher minimum wage on employment (within the existing range of minimum wages) is not negative at all. The claim that the employment effect might not be negative continues to be met with incredulity in some quarters or to be euphemistically described as “unconventional.” But as soon as one acknowledges that efficiency wage effects might be important or that labor markets have frictions—ideas that appear in mainstream introductory-level textbooks and can hardly be described as unconventional—one has to acknowledge that the impact of the minimum wage on employment is theoretically ambiguous.
Of course, there is some level of the minimum wage at which employment
will decline significantly. The empirical literature on the minimum wage should
reorient itself towards investigating the determinants of that point. …
That’s from the first article in a JEP symposium on minimum wages, in the Winter Issue of the JEP.
Two things on the theory. Page 18:
‘Perhaps employers will react to higher minimum wages by being less generous with other aspects of the employment contract—what Brown (1988) called “offsets”—such as meal breaks, fringe benefits, health benefits, or training (for more discussion, see Clemens in this issue). Such offsets would mean that the overall gain to workers from a higher minimum wage is lower than the wage gain. Depending on the value that workers place on the offsets, it is theoretically possible that workers could be made worse-off with a combination of a higher wage and additional offsets, although the fact that minimum wage workers support raises in the minimum wage suggests we are not at that extreme. But although offsets are a theoretical possibility, evidence for such offsets is decidedly weak’
Walter Wessell made a similar theoretical argument but he restricted himself to a competitive market model.
But what if labor markets have monopsony features. Go to pages 20-21. The paper notes the importance of assuming perfect competition for the conventional view but then it notes frictions and other labor market imperfections exist in the real world. Even if that offends the purists!
The road to … pave with good intentions.
https://www.npr.org/sections/coronavirus-live-updates/2021/02/02/963496920/kroger-to-close-2-long-beach-stores-following-city-mandated-pandemic-pay-increas
The government can mandate; businesses can respond.
Leave it to Bruce Hall to short change essential workers so he can buy his Snicker Doodles cheaply. BTW – I bet Kroger closed those stores because shoppers did not want to enter a store that was risking their lives. But of course Single Statistic Bruce “no relationship to Robert” Hall cannot imagine other potential causal effects. Always the heartless idiot you are!
Interesting that you cherry pick and point to a single case observation in Long Beach (with plenty of confounding variables). Why didn’t you point to Seattle? The actual scientific studies in Seattle found no negative effects of their increase in the minimum wage. You are a master of cherry-picking (out of a sea of data) those quirky little outlier observations that (to the untrained eye) “supports” your preset narratives. To a scientifically literate audience that makes you a joke. Perhaps even more funny is that you (unwittingly) made the argument that minimum wage increases should be national, such that businesses cannot relocate to get out from under them.
If you did not lose all your money buying GameStop at over $300 a share (it is now only $92 and likely to fall further), it seems the same crooks (who JohnH thinks for some dumb reason are heroes) have shares in a Special Purpose Acquisition Company (SPAC) to sell. Read both this from Kevin Drum as well as the excellent discussions in his links:
https://jabberwocking.com/spac-mania-is-finally-getting-out-of-control/
This is the worst in Wall Street robbery but since they also snookered temporarily a few hedge fund theirs – idiots like JohnH might think these thieves are making the little guy better off. No, no, no – avoid this fraud like the plague.
What JohnH actually said: “ Crocodile tears for the hedge funds that got burned…”
pgl loves to grossly misrepresent what others say.
And not a single concern about the others that lost to this scam except that is what they get when they swim with the sharks. Oh wait – you never got this issue or any other issue. Never mind!
https://www.investopedia.com/articles/analyst/030102.asp
Can’t complain about a rigged game when both sides are doing the rigging.
Both sides? Like only two people are buying and selling this stock. Now there have been some dumb comments on this issue but we have to had to you Bruce – yours is the dumbest one of all!
“An S&D trader’s main goal is to profit by shorting a stock prior to smearing the stock publicly.”
Now that Bezos is stepping down, I may just short Amazon but only after I get the word out that Amazon’s new CEO will be Bruce Hall!
http://www.minneapolisfed.org/pubs/region/06-12/card.cfm
October 17, 2006
I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.
— David Card
David Card’ work is well respected here except for a couple of rude commentators (Manfred and Princeton Steve – we are looking at you).
pgl,
Actually David Card is the new president of the American Economic Association, succeeding Janet Yellen. So indeed, he is pretty well respected, even if his famous paper on this topic with the late Krueger has been highly controversial and hotly debated. As the paper by Manning shows, it has held up pretty well over time, despite some minor flaws in it.
And yet know it all Manfred appears to be totally unaware of Card’s research.
I agree with the overall sentiment in Manning’s paper, but I don’t understand what he means by this:
as soon as one acknowledges that efficiency wage effects might be important
My understanding is that the efficiency wage is a wage that is slightly above the bottom feeder wage (or minimum wage). The efficiency wage is a premium that smart employers pay in order to minimize shirking because the cost of getting fired equals the difference between the efficiency wage and the minimum wage. A job that pays the efficiency wage is more than just another “throwaway” job. But hey…I’m not a labor economist.
One good thing about the minimum wage that doesn’t get a lot of attention is that it reduces the transaction costs both for employers and job seekers. Everyone knows what the prevailing wage is without having to incur a lot of search & matching costs.
2slug,
Efficiency wage is above marginal product of labor, not above min wage, in short a wage higher than what would presumably be paid in a standard competitive model. You have the argument why they get paid right, that employers wish to hang onto good workers, although it is not so much the cost of firing as the cost of searching for a new employee. In any case, when there are efficiency wages being paid standard competitive supply and demand relations are not operating.
Barkley Rosser I understand that in the textbooks it’s above the value of the marginal product of labor, but the textbook also assumes no minimum wage is in effect. I think the way it works is that in a competitive model without a minimum wage, the worker can always get the same job at will for the same wage, so there is no incentive not to shirk. If there is a minimum wage that is above the marginal product, then the worker might not be able to find a job quite as easily so the worker has at least some incentive for not shirking. But the key thing about the efficiency wage isn’t so much whether it’s compared to the marginal product or the minimum wage, but the positive incentive effect that the wage premium has for the worker.
When I referred to the cost of firing, I didn’t mean the cost to the employer, I meant the cost to the worker of being fired. That’s what I meant by a “throwaway” job.
In any event, I still don’t understand what Manning meant when he said that efficiency wage effects might be important with respect to the minimum wage. I agree that efficiency wages are important, but I don’t see how they affect the minimum wage. In fact, it seems like it’s the other way around. It’s the minimum wage that has important effects with respect to the efficiency wage. If the minimum wage is above the marginal product of labor, and if you raise the minimum wage, then the efficiency wage loses some of its potency.
Here is a paper at nber (may be paywalled?): https://www.nber.org/system/files/working_papers/w3877/w3877.pdf
Effort-extraction creates monopsony-like effects.
Wow a 1991 paper that noted things like monopsony. And Manfred thinks he has read everything and is convinced that the perfect competition model rules. Thanks for this link (which works).
2slug,
Why on earth are you imposing a textbook competitive model in a discussion of frictions in the labor market? Not appropriate. In the real world firms do not all pay the same wages or have the same policies. So some pay efficiency wages and others do not.
Regarding the min wage, well, that may be above the MPL, but the efficiency wage may be above the min wage. There are various possibilities. As it is, this excellent paper by Manning basically throws that out as a minor throwaway line, not all that important, although a possibility.
BTW, I had Ben Zipperer on JMU to speak about two years ago, one of the people heavily relied on in this paper for the state level studies of this.
There are labor market frictions and monopsony like features in labor markets. But shhh – do not tell Manfred lest he lecture us again of not reading his wing of the literature.
Barkley –
Have you ever actually run a business with employees?
“Steven Kopits
February 7, 2021 at 8:34 am
Barkley –
Have you ever actually run a business with employees?”
Stevie pooh has gone from incredibly stupid to full blown racist and now such a really low life retort. Hey Stevie – I bet the only business you ever ran went under even as you paid those immigrants at less than half the minimum wage. Of course not having customers for worthless trash is such a bummer.
Yes, Steve, although I was not all that good at it. I have no idea whether the wages I paid were above or below the MPLs of my employees.
February 4, 2021
Coronavirus
US
Cases ( 27,273,890)
Deaths ( 466,988)
India
Cases ( 10,803,533)
Deaths ( 154,862)
UK
Cases ( 3,892,459)
Deaths ( 110,250)
France
Cases ( 3,274,608)
Deaths ( 77,952)
Germany
Cases ( 2,265,536)
Deaths ( 60,885)
Mexico
Cases ( 1,886,245)
Deaths ( 161,240)
Canada
Cases ( 793,734)
Deaths ( 20,513)
China
Cases ( 89,649)
Deaths ( 4,636)
February 4, 2021
Coronavirus (Deaths per million)
UK ( 1,619)
US ( 1,406)
Mexico ( 1,243)
France ( 1,193)
Germany ( 725)
Canada ( 541)
India ( 112)
China ( 3)
Notice the ratios of deaths to coronavirus cases are 8.5%, 2.8% and 2.4% for Mexico, the United Kingdom and France respectively.
https://news.cgtn.com/news/2021-02-05/Chinese-mainland-reports-20-new-COVID-19-cases-XCPnozOYec/index.html
February 5, 2021
Chinese mainland reports 20 new COVID-19 cases
The Chinese mainland recorded 20 new COVID-19 cases on Thursday – 6 local transmissions and 14 from overseas, the National Health Commission said on Friday.
No new deaths related to COVID-19 were registered on Thursday and 127 patients were discharged from hospitals.
A total of 28 new asymptomatic cases were recorded, while 755 asymptomatic patients remain under medical observation.
The total number of confirmed COVID-19 cases on the Chinese mainland has reached 89,669, and the death toll stands at 4,636.
Chinese mainland new locally transmitted cases
https://news.cgtn.com/news/2021-02-05/Chinese-mainland-reports-20-new-COVID-19-cases-XCPnozOYec/img/42304f7c56624d6f92e5e9238338057f/42304f7c56624d6f92e5e9238338057f.jpeg
Chinese mainland new imported cases
https://news.cgtn.com/news/2021-02-05/Chinese-mainland-reports-20-new-COVID-19-cases-XCPnozOYec/img/8091702a466c4c75bf143399f2521d9d/8091702a466c4c75bf143399f2521d9d.jpeg
Chinese mainland new asymptomatic cases
https://news.cgtn.com/news/2021-02-05/Chinese-mainland-reports-20-new-COVID-19-cases-XCPnozOYec/img/6040408738b54a22adaef16b031cb898/6040408738b54a22adaef16b031cb898.jpeg
I keep trying to self filter myself from commenting on this blog to the amount I do. But it seems some things I find so humorous, I just can’t control myself. It appears that Rudy Giuliani is nearly as hypersensitive as our friends CoRev, Ed Hanson, and Manfred. Rudy’s feelings have now been deeply wounded. Let’s pray for Rudy “The Tuna Snowflake” Giuliani’s quick recovery from emotional pain and suffering:
https://www.mediamatters.org/rudy-giuliani/rudy-giuliani-lashes-out-his-employer-wabc-adding-legal-disclaimer-his-radio-show
You know it’s getting to the point where a person can’t commit libel against other people/corporations on mass media anymore without people who employ you wanting some backstop protection against massive lawsuits. I also hear it’s poor taste to use the N word now. We just don’t live in the “golden age” of American culture like “Princeton”Kopits gets wistful for.
“ANNOUNCER: The views, assumptions, and opinions expressed by former U.S. attorney, former attorney to the president of the United States, and New York City Mayor Rudy Giuliani, his guests, and callers on his program are strictly their own and do not necessarily represent the opinions, beliefs, or policies of WABC radio, its owner, Red Apple Group, and other WABC hosts or our advertisers.”
This is standard boilerplate. Rudy should not be held to the same disclaimers as anyone else? Of course when he questions whether people have to be warned about him – he does have a point. Bu now everyone should know that he is a Carnival Barker.
BTW – Red Apple is one of the only 3 grocery chains in Manhattan. And its owner owns one of the other chains. In effect, a duopoly which is one reason why Manhattan really crappy produced is so overpriced.
Elasticity is -0.8 in Denmark. And the amendment failed in the Senate, anyway.
https://marginalrevolution.com/marginalrevolution/2021/02/danish-minimum-wage-data-it-aint-monopsony.html
Steven Kopits: Yes, and I definitely want to apply Danish results (for a labor market with drastically different institutional characteristics) to the US labor market!
At the end of the day, all you’re arguing is that unskilled labor with other issues — for example, young black men with a criminal record and a history of drug abuse — should not be allowed to sell their labor at all if its value is less than $15 / hour to an employer. I flatly disagree with that as a matter of policy, not to mention human rights.
Steven Kopits: Yes, and I should be allowed to buy untested drugs, buy adulterated food, and let people declare themselves doctors so they can practice the true art of bloodletting, all so we can get cheaper medicines, cheaper food, and cheaper medical treatment. Bravo!
“should not be allowed to sell their labor at all if its value is less than $15 / hour to an employer.”
I suggested earlier that Stevie did not know what monopsony meant. This little quip of his confirms what I suspected.
Ergo, the labor of poorly educated young black men is ‘adulterated food’, eh?
Steven Kopits: The point is government restrictions are sometimes used to coordinate private individual behavior, to the benefit of all. But if you want to be willfully stupid, that is your prerogative, which you have thus far exercised to its fullest.
pgl –
You show me one market anywhere in the US where there is one employer of minimum wage labor. That’s monopsony. One buyer. Find me one community anywhere in the US that meets the criterium.
You have stated that young black men — statistically by far the most exposed group — should be prevented from working if employers deem their labor to be worth less than $15 / hour.
That is the simple read on your statement.
Steven Kopits: No. My read is that nobody (which includes young white women, young Asian-American men, etc.) should be prevented from working. But we can do better than putting the minimum wage at zero.
This is Steve’s rebuttal to market frictions and possible employer market power?
“You show me one market anywhere in the US where there is one employer of minimum wage labor. That’s monopsony.”
Yes he is that stupid. But I guess he has never been to New Haven. I was at Yale in 1980 wrapping up my dissertation and dating someone who worked for Yale as a law school secretary. She was trying to organize a union and was getting ticked off at people in NYC writing rightwing opeds noting how competitive the secretary market was in Manhattan. But if you lived in New Haven, Yale was the market. A monopsony.
Yes my girl fried was only a secretary but her grasp of economics was far superior to our Princeton Policy village idiot.
Black men with a criminal record? Wow – I never realized you were a member of the Proud Boys.
BTW – I noticed how you are just ducking questions from Menzie on others on your rants that the economy does not need help as a return to full employment is around the corner. I just checked the employment to population ratio for 25-54 was only 76.4% as compared to 80.5% before the pandemic. But to you I presume that the fall off here – which is large – is just a bunch of black criminals.
Steven Kopits Two questions:
(1) If not a minimum wage of $15/hr, what do you think it should be?
(2) Is your heartburn with the specific $15/hr figure, or are you just making a principled (???) stand against any minimum wage?
Based on his rants – the floor should be around zero. He actually thinks the world has one giant homogenous labor market with no frictions or monopsony power.
Slugs –
As a general matter, I oppose minimum wages. I do not believe that I can do better than the market, and when we try, the distortions are usually worse than the problem they are trying to solve. (The whole illegal immigration issue is about just this topic.)
There is little doubt that a binding minimum wage will hurt those at the bottom of the skill and comportment ladder (young black men with poor education, criminal records, and a history of drug abuse) the most, and help those at the margins of entering the market from above (eg, white suburban girls). For me, that is just bad public policy. As I have said, I would much rather subsidize the employment of disadvantaged groups — at an explicit cost to taxpayers — than use a backdoor policy which, at the end of the day, can be anticipated to hurt those at the bottom of the ladder the most.
Now, do I oppose the minimum wage as a political matter? It seems to keep people happy, even if it is bad policy. The question is where the binding minimum wage is set in relation to the effective minimum wage, in the US today about $10-11 / hour. (Hard to judge with the pandemic though. Here in Cape Cod, min wage is now $17 / hour as a practical matter).
Could I live with, say $11, rising to $13 over, 7-10 years? Probably, as a political matter. In terms of economic theory, there should be no minimum wage, but one which does not materially distort markets is probably acceptable in terms of political realities.
“Slugs –
As a general matter, I oppose minimum wages. I do not believe that I can do better than the market, and when we try, the distortions are usually worse than the problem they are trying to solve.”
Ah yes all markets are perfectively competitive and there are no externalities in Princeton Steve’s world. We have a new winner in the Stupidest Man Alive contest!
I think others who have responded to Mr. Kopits are missing an important point. Kopits asserts a negative relationship between a minimum wage and employment even though the point of the Manning article is that there is no good evidence of a negative relationship. Kopits either didn’t read, didn’t understand what he read, or wants to substitute a tired old talking point for Manning’s argument.
macroduck: I have never seen Steven Kopits opt for academic research when he can pick an odd piece here or there to validate his priors.
Manfred has the same problem as little Stevie.
What amazes me is all these economics guys saying, “Well, I studied economics and I know the base case and the central importance of price signals, but really, all that is worthless because the basic rules don’t apply.” Why does one need to study economics, if the basic models are all bullshit?
And, yes, a binding minimum wage is super-regressive. It will most adversely affect those at the bottom of the wage ladder, that is, those with the worst skills, the worst work ethic, with the worst education, and worst the track records, most notably related to crime and drug use. And if I look at that statistically, it will affect young black men disproportionately. And it enables racism by employers. Hey, if I have a more highly qualified candidate willing to work for the money on offer, why does an employer have to hire a guy with a criminal record? In the real world, they don’t.
To wit:
Nearly 50 percent of black men and 40 percent of white men are arrested at least once on non-traffic-related crimes by the time they turn 23, according to a new study.
One of the authors of the study published this month in the journal “Crime & Delinquency” said the statistics could be useful in shaping policy so that people aren’t haunted by arrests when they apply for jobs, schools or public housing.
The Rev. Dr. Robert Waterman, a pastor at Antioch Baptist Church in Brooklyn, said the high arrests rates for young black men create a troubling cycle, where criminal records lead to difficulties gaining lawful employment, which then results in criminal behavior and more arrests. “It really takes a toll on them and their futures,” he said. “Even the process of getting carried down to the police station – it becomes a custom or pattern that becomes part of their lives.”
https://www.nydailynews.com/news/national/black-men-arrested-age-23-study-article-1.1586000
If you are an egalitarian, a materially binding minimum wage is about as bad as social policy gets, other than criminalizing drugs, breaking up families, and preventing people from going to the school of their choice.
Steven Kopits: Well, let’s say somebody studies carefully the labor market as a central part of their agenda, don’t you think we should pay heed to his/her assessment? It’s not just a random economist off the street, after all.
Steven,
Sorry, but you are simply out and out wrong when you declare, as you did here, that “a binding minimum wage is super regresive.” It is not impossible for it to be regressive, and the income distribution effects are complicated and it is quite possible that raising the fed min wage to $15 per hour might in fact damage the employment and income prospects of some African American males who are former drug addicts.
But the overwhelming evidence is that increasing the minimum wage is in general highly progressive overall. Google it, please, and look at the studies. One has it that a 10% increase in the min wage in the US will reduce the adult non-elderly poverty rate by 5%. That is not trivial and probably close to correct.
It is not just the people currently earning min wage who get their wages going up, assuming they do not lose their jobs which some might. It is that this ripples further upwards to lead to increase the wages of others who were making not too far above min wage as well, in short, a lot of low income people get their incomes boosted.
Is this that hard to understand? I would think that somebody smart enough to run an apparently successful consulting operation would be smart enough to figure this out. Really.
Barkley Rosser: This is futile to admonish Steven Kopits to read the literature, when in his mind he has observed reality, and the extant literature is prima facie mistaken, especially if he can find a conclusion validated by one or two papers.
Are you saying that I should believe people who state that lower productivity people should be barred from working? Absolutely not.
“Steven Kopits
February 7, 2021 at 11:23 am
Are you saying that I should believe people who state that lower productivity people should be barred from working? Absolutely not.”
Of course NO ONE is barring anyone from working. We are saying there is market power but I guess Steven William Buckley” Kopits has deduced from his Ivory Tower that this cannot exist in the real world. I like this racist pretend know it all to Buckley because at his core Buckley was nothing more than an arrogant racist with big words to cover up how pathetic his arguments were too.
“Lower productivity people”? Oh yea black men who are drug addicts and criminals. Yes Stevie is that utterly disgusting.
Well, I try to keep things as positive as I can when commenting here on the blog. But sometimes I have to be the bearer of sad sad news. And I’m not sure if “Princeton”Kopits will ever recover from this heavy hit to the gut. Murrow Award winner, FOX News broadcaster, protector of low wage undocumented workers everywhere, Lou Dobbs…….. has been “cancelled”—-no, really, cancelled, from FOX News airwaves:
https://www.nytimes.com/2021/02/05/business/lou-dobbs-fox.html?action=click&module=Top%20Stories&pgtype=Homepage
Dobbs did what he could to defend cheap labor for employers (say for example, on a ranch) who hate undocumented workers but love their desperation to be abused by their employers:
https://www.thenation.com/article/archive/lou-dobbs-american-hypocrite/
But in the end every white boss paying a non-living wage has to make sacrifices. and if Lou Dobbs has to pay a non-living wage in a “principled” stance on wages, then damn it, Lou Dobbs and “Princeton”Kopits will defend you to their death. If you abusively use them for labor, Reagan and Milton Friedman are ready to put you up for sainthood. For human rights sake.
When Dobbs had his gig on CNN he had this right wing blow hard to closing commentary always ending by screaming “LOU”. Dobbs later took over for this role when he migrated to Faux News. Now you are good at this kind of research so I was wondering if you knew the name of this other clown.
@ pgl
You got me on this one. I just remember Stuart Varney used to do some commentary and fill-in on Lou Dobbs old CNN “Moneyline” show. That’s all who I can remember Dobbs palling around with back in those days. That and the fact Dobbs wasn’t too particularly annoying as he would later become. I see him as similar to our Peter Navarro, a guy who really wasn’t that bad “back in the day” but somewhere along the train ride figured out he was going to make more coin by selling his soul to the devil.
Well, first, the minimum wage is not zero. It’s $7.25 (still that?) at the Fed level, higher in some states.
But if you’re saying $15 is too high, and $7.25 is too low, how do you establish the minimum wage? What is the right answer in your opinion? I was taught in economics that the market price is a pretty important thing, but clearly you think you’re smarter than the market. OK, so give us the benefit of your insight into the right minimum wage for a country of the size and diversity of the United States.
Steven Kopits: Gee, at least you didn’t write “magic of the marketplace”…. Let me just remind you, a “free” market is not necessarily a competitive market, in the sense that textbooks define them, and the first and second welfare theorems apply to.
You took a course in economics? School? Oh yea Walla Walla Junior College. Got it!
pgl –
Career Builder is showing 650 administrative job openings in New Haven region. That’s just the New Haven area and just jobs defined narrowly as administrative.
There is no monopsony in New Haven for unskilled or semi-skilled work. (There might be a cartel, conceivably, for say, economics professors.)
And you were educated at Yale? They didn’t teach much in the way of research skills, did they?
https://www.careerbuilder.com/jobs?emp=&keywords=Administrative&location=new+haven
Steven Kopits: Wow. Did not know there is complete homogeneity of labor market participants in the New Haven region.
I bet you have never been to New Haven. Too bad – best pizza on the planet. As far as your little Google rant, our host had addressed your latest incredible stupidity. Of course you forgot to tell us whether any of these listings paid $20 an hour plus generous fringe benefits.
So you believe that there is a monopsony on minimum wage labor in New Haven, Menzie? You really believe that? One single employer for a whole class of employees, like, say cashiers or administrative assistants?
Steven Kopits: I believe there is monopsony power exerted in the New Haven labor market for certain categories — just like I believe Amazon has some monopoly power, even though there *are* online competitors. Is that too complicated for you too understand?
I actually went to your link and this was a common theme:
“Sign-on Bonus! Full or part-time survey taker positions available from home with the potential to earn $$$$ weekly. Apply today, start tomorrow.”
Work at home on what is basically piece meal work with no benefits. Potential to earn whatever a week. Well yea if someone is on-line at home working 120 a week maybe, just maybe one can get $600 for the week. I’ll let Stevie and his magic Excel file tell us that an effective hourly wage = $5 is a great job.
Piece meal work – Lord, Stevie pooh is beyond stupid.
I guess in Steve’s world we all live in one gigantic homogenous labor market that is perfectly competitive!
The minimum wage market is highly competitive. Here in Cape Cod, you can go to any retail store and they will have ‘help wanted’ signs. (Effective minimum wage here is now $17.) Same as New Jersey last I was there. In Princeton, just between the big boxes and Quakerbridge Mall, all within walking distance, I would guess there are 200 employers employing minimum-wage class help. That’s all within walking distance of each other. And most of the stores will have ‘help wanted’ signs.
Steven Kopits: You are *NOT* using the term “competitive” in the sense that economists use it. Now you’ve forced me to write up a post on competitive markets, market failure, market imperfections. Hopefully, I will not need to repeat a post on what a confidence interval is, and why they are useful.
Your stupidity is about to be called out in a new blog post here. Can’t wait to see how you will further dig yourself in a deep hole of your incredible stupidity laced with arrogance that makes me chuckle!
BTW – you do know that the trick of exploiting market power on the buyer side is to have less employment than what would exists in a competitive market. In effect, employment is set by the supply of labor curve and not the competitive demand for labor curve. So your “evidence” is not exactly what you think it is. But of course an arrogant moron like you is incapable of figuring out why. But I have good news for you – hire a lawyer and sue your former school for wasting your time and money taking whatever pathetic economics class you attended.
“minimum-wage class help” means what old arrogant clown? I guess if you work for Best Buy that means you are a stupid black criminal drug addict who is lucky the man paid you anything about $5 an hour.
Yes Stevie – you arrogance and hatred for other people even exceeds your incredible stupidity!
Go ahead, enlighten me about the definition of a competitive market for labor.
I understand you think there is a monopsony on labor in New Haven at the minimum wage level. Is that correct? Show me evidence to that effect.
I know monopsonies. For example, I consulted for Alkaloida, a manufacturer of morphine-based products from Hungary’s poppies in Tiszavasvar. (Not often i visited a client who kept their inventory in a safe.) It was a true one horse town, and it exerted power not only as a monopsony employer, but as a political matter locally. You could not do much in that town without the approval of the CEO of the plant.
But even there, you could leave and move to Budapest, one hundred miles away. So was there monopsony locally? I would say so. But did employees have no other option? Certainly not.
And further, you can have monopsony in certain specialized fields (although this can be mirrored by a kind of monopoly the other way). For example, if you were an intelligence officer, your choices of employer were quite limited. But even here, monopsony is hard to maintain, because the government is recruiting out of a competitive pool, eg, graduates of better US colleges and universities. And those people can see the pay grades ten years out. So the CIA has to compete with consultancies and investment banks, for example, and that will put a floor on entry salaries. This in turn puts a floor on salaries up the ladder. The CIA can’t say that you start at $60,000 and your wage after ten years will be $40,000.
But if we are talking about unskilled labor, you are way in the weeds. Below are the stores at Quakerbridge Mall in Princeton. Explain how monopsony works here for unskilled labor.
30 Burger
A Dollar
Aeropostale
Aldo
American Eagle Outfitters
Ann Taylor
Apple
Arthur Murray Dance Studio
AT&T
Auntie Anne’s and Cinnabon Cafe
Auntie Anne’s Pretzels
BAM Men’s Clothing
Bath & Body Works
Belgium Jewelers
Brighton Collectibles
BRIO
Cellairis
Champs Sports
Charleys Philly Steaks
Claire’s
Clarks
Co-Cool Smoothies and Bubble Tea
Coach
Cohen’s Fashion Optical
Daniel’s Ramen
Danillo’s Pizzeria
Dining Pavillion
Dunkin’ Donuts
East Meets West
Easter Bunny Photo Experience
ecoATM
Elegant Jewelers
Express
Express Men
EZ Fix
Finish Line
Foot Locker
Forever 21
GameStop
Garage
GNC
Go! Calendars, Games & Toys
Godiva Chocolatier
Green House Spa
Gymboree
H&M
Haagen-Dazs
Hallmark
Helzberg Diamonds
Hot Topic
Hyperspace Gaming
Infinity Nails & Spa
J. Jill
jcpenney
JCPenney Portraits
JCPenney Salon
Journeys
Justice
Kay Jewelers
Lane Bryant
LensCrafters
Lids
LOFT
Lord & Taylor
Lucky Brand Jeans
Lush Fresh Handmade Cosmetics
Macy’s
Macy’s Salon
Master Wok
Michael Kors
MoDA New York
Motherhood Maternity
Nathan’s Famous
New York Thread
Next T-Shirt
Old Navy
Old York Cellars
PacSun
Pandora
Payless ShoeSource
Pearle Vision Center
Piercing Pagoda
Play Area
Popeye’s Chicken
Regis Salons
Repair & Fix
Rubee
Sarku Japan
Sephora
Seventh Sense Botanical Therapy
SHOE DEPT. ENCORE
Sleep Number
Spencer Gifts
Sprint
Starbucks Coffee
Subway
Sur La Table
T-Mobile
T.D. Alterations
Team Spirit
The Body Shop
The Cheesecake Factory
The Children’s Place
The Walking Company
Things Remembered
Time After Time
Torrid
Twinkle
Vans
Vera Bradley
Verizon Wireless
Victoria’s Secret
White House Black Market
Windsor
Zona Fresca
Zumiez
I’m all ears. But I have to wonder why you even teach economics. You don’t seem to believe in it at all.
“But I have to wonder why you even teach economics. You don’t seem to believe in it at all.”
This is at the of another one of your insane rants. Let’s see – you mention one town with lots of retail shops and that you have talked to someone in Hungary. Whatever – did you find dirt on Hunter Biden? Rudy would pay big time for that and you would get another appearance on Fox and Friends. Go for it.
To you economics means markets are perfect. Yea we teach that at the beginning of class but then we go beyond your little cherished Ivory Tower simpleton models. But I guess the math got too hard for you to get and besides talking about the real world would mean your buddies at Fox and Friends would stop calling you.
But do blather on with more of your blatant racism as there is still another 90 minutes before kick off and you are cracking all of us up!
Tyler Cowen equates Mississippi to Denmark? Of course this focus on teenage employment in Denmark which very well may differ from the low skill labor market here. But I guess when one lives in a Princeton Ivory Tower, one would not get this.
BTW Stevie – Tyler Cowen has a long habit of cherry picking things that pretend all markets are perfectly competitive. But at least he can spell monopsony? Can you? Do you have even the slightest clue what this means?
WOW! You had to go all the way to Denmark to cherry-pick one single example that “supports” your preset narrative. So I guess you are now understanding the need for socialized medicine, free higher education, government running everything and being >50% of GDP, and strong unions with government enforced (and sometimes written) contracts. Let’s cancel “freedom” and predatory capitalism so we can get to “Elasticity is -0.8”. I am with you Bro, where and when do we begin?
BLS released the Jan. 2021 employment report:
https://www.bls.gov/news.release/empsit.a.htm
The Establishment Survey indicates employment grew by a mere 49 thousand. That the Household Survey indicates an unemployment rate of only 6.3% must be taken with a grain of salt for at least 3 reasons. One is that the labor force participation rate fell. Add into the measurement effects from this virus noted in the report as well as the “population control” issues noted here.
I’ll be interested in the analysis from those who closely follow these things such as Dean Baker.
Not good:
Nonfarm business sector labor productivity decreased 4.8 percent in the fourth quarter of 2020, the
U.S. Bureau of Labor Statistics reported today, as output increased 5.3 percent and hours worked
increased 10.7 percent. (All quarterly percent changes in this release are seasonally adjusted annual
rates, and show what the percent change would be if the quarterly rate continued for four quarters.)
The fourth-quarter 2020 decline in productivity is the largest quarterly decline in the measure since a
decline of 5.1 percent in the second quarter of 1981. From the fourth quarter of 2019 to the fourth
quarter of 2020, nonfarm business productivity increased 2.5 percent, reflecting a 2.7-percent decline in
output and a 5.0-percent decline in hours worked. (See table A1.)
Unit labor costs in the nonfarm business sector increased at an annual rate of 6.8 percent in the fourth
quarter of 2020, the combined effect of a 1.7-percent increase in hourly compensation and a 4.8-percent
decline in productivity. Nonfarm business unit labor costs increased 5.2 percent over the last four
quarters. (See table A1.)
https://www.bls.gov/news.release/prod2.nr0.htm
Dean Baker just emailed his latest, which I’m sure will be online soon. A couple of excerpts:
‘The establishment survey showed an increase of just 49,000 jobs, with the private sector only accounting for 6,000 of these jobs. There were sharp downward revisions to job growth for both November and December, so the level of private sector jobs reported for January was 198,000 below the November level.
The January employment level left the economy with 2,981,000 fewer jobs than when President Trump took office. This makes him the first president to leave office with a loss of jobs since Herbert Hoover.’
Some of his details shows that lots of those new government jobs were school teachers returning to work. He also notes that private sector construction employment rose but many other sectors had net job losses.
So Biden’s press secretary (who is off to a solid start) just turned her podium over the Jared Bernstein to discuss employment situation. It is good to see an honest and competent economist in the White House again.
an honest and competent economist
Which I always thought was hilarious since his formal academic training wasn’t in economics! But he’s still a better economist that a lot of academic economists.
Anybody with a music degree (performance, no less) can co-author with Lawrence Michel is pretty OK.
I must confess I was surprised to Bernstein’s lack of degrees focused specifically on Economics. I’ll stay away from my positive biases related to Irish last names for today, and say that President Obama was kind of renowned for encircling himself with “eggheads” (or technocrats if you prefer). So I don’t think it’s a dumb assumption. And I’ve never heard the man pull a “Stephen Moore” or pull a “”Lawrence Kudlow” in his public orations or writings.
Trade union membership in Denmark is about 70%, where trade union membership in Mississippi is about 7%.
http://www.bls.gov/webapps/legacy/cpslutab5.htm
January 15, 2021
United States Union Membership Rates, 2020
United States ( 10.8)
Hawaii ( 23.7)
New York ( 22.0)
Rhode Island ( 17.8)
Alaska ( 17.7)
Washington ( 17.4)
Connecticut ( 17.1)
California ( 16.2)
Oregon ( 16.2)
New Jersey ( 16.1)
Minnesota ( 15.8)
Michigan ( 15.2)
Maine ( 14.7)
Illinois ( 14.3)
Pennsylvania ( 13.5)
Nevada ( 13.4)
Ohio ( 13.2)
Maryland ( 13.1)
Massachusetts ( 12.0)
Montana ( 12.0)
Vermont ( 11.8)
West Virginia ( 10.7)
New Hampshire ( 9.8)
Delaware ( 9.7)
Nebraska ( 9.6)
Missouri ( 9.4)
Kansas ( 8.9)
Wisconsin ( 8.7)
District of Columbia ( 8.6)
Indiana ( 8.3)
Alabama ( 8.0)
Wyoming ( 7.6)
Kentucky ( 7.5)
Colorado ( 7.4)
Mississippi ( 7.1)
New Mexico ( 7.1)
Iowa ( 6.6)
Florida ( 6.4)
North Dakota ( 6.2)
Oklahoma ( 6.0)
Louisiana ( 5.9)
Idaho ( 5.6)
Arizona ( 5.3)
Texas ( 4.9)
Arkansas ( 4.7)
Georgia ( 4.6)
Tennessee ( 4.4)
Virginia ( 4.4)
South Dakota ( 4.3)
Utah ( 3.7)
South Carolina ( 2.9)
North Carolina ( 2.3)
http://www.bls.gov/webapps/legacy/cpslutab3.htm
January 15, 2021
United States Union Membership Rates, 2000-2020
Private wage and salary workers
2000 ( 9.0)
2001 ( 8.9) Bush
2002 ( 8.6)
2003 ( 8.2)
2004 ( 7.9)
2005 ( 7.8)
2006 ( 7.4)
2007 ( 7.5)
2008 ( 7.6)
2009 ( 7.2) Obama
2010 ( 6.9)
2011 ( 6.9)
2012 ( 6.6)
2013 ( 6.7)
2014 ( 6.6)
2015 ( 6.7)
2016 ( 6.4)
2017 ( 6.5) Trump
2018 ( 6.4)
2019 ( 6.2)
2020 ( 6.3)
Steven Kopits: “all you’re arguing is that unskilled labor with other issues — for example, young black men with a criminal record and a history of drug abuse — should not be allowed to sell their labor at all if its value is less than $15 / hour”
Ah, yes. Kopits’ justification for keeping millions of people poor is his heartfelt concern for black men with criminal records. Do you even listen to yourself talk and how ridiculous you sound?
I give up. I literally have no idea how Kopits” brain even works. It follows unfathomable twist and turns that are incomprehensible to normal human beings. Like when he argued that hurricane deaths were merely slightly premature.
So what’s your model, Joseph? The real minimum wage, last I checked, is about $10 / hour. About 20 million people work at that level. (Also, only 700,000 people worked at the minimum wage, overwhelmingly young and part-time). But $10 / hour, that affects 20 million people.
Now if people without serious issues are being employed at $10 hour, do you think that people with serious issues — like a criminal record or a history of drug abuse — are going to be more desirable at $15? And if they are not worth $15, do you then maintain they should be barred from working, as Menzie does, that they should be prevented from negotiating an agreed wage with an employer? I use young black men because, as a statistical matter, they have the highest unemployment rate. In Q4 2020, it was 21.3% for those aged 16-19, and 18.1% for black men aged 20-24.
For white girls in the same ages groups, this was 11.7% and 7.7%, respectively.
And you think the way to improve the absolute employment levels and comparative advantage of young black men is to raise their cost to employers by 50%? I think that’s insane.
https://www.bls.gov/web/empsit/cpsee_e16.htm
Steven Kopits: Extending the logic, why not allow people to enter into indentured servitude? If individuals are free to enter into such agreements, wouldn’t it be Pareto optimal to allow such types of contracts. My inquiring mind would like to know your answer.
Something tells me Steve’s great grand parents had a plantation in Old Dixie with lots of slaves.
I’ll say this, Kopits might remind one of an old South slave owner, in the sense that when he condescends and demeans a group pf people with blanket statements, he somehow imagines he’s “doing them a favor” or bequeathing them with something. This is ironically what Republicans are always accusing Democrats of doing by advocating “social” programs (an inaccurate term in my view). That by giving minorities the educational tools to lift themselves up to any socio-economic level of their desire that Democrats are “coddling” them, when in fact they are only just now offering Blacks and the poor a level playing field to operate from in their burgeoning years—-the basic tools of life, such as nutrition and easy access to knowledge (otherwise known as public education).
Why are most Jews and Asians in the Democrat party??~~it’s not even close. Both of these minority groups fair better economically (in a broad/general sense) than Blacks do. So why do Asians and Jews overwhelmingly tilt to the Democrat Party?? Because they know the only way you climb up the ladder is with access to those tools. the donald trumps of the world don’t want the Menzie Chinns of the world competing against their children, they prefer the Menzie Chinns of the world sit at home with no school lunch and know school laptops. Because the donald trumps of this world know that if the Menzie Chinns of the world have a school laptop and a school lunch with nutritious food, they will put a slam dunk on the eric trumps and ivanka trumps of this world. And it’s not even going to be close.
*excuse me, that should read “no school laptops” in my above comment.
Indentured servitude has occurred historically in the context of a loan for transportation to a new geographic market, say, from Europe to the American colonies. Today, we would call this human trafficking, and of course, it is still happens in the US for illegal immigrants. The issue is neither the loan nor a fixed period to work off the loan, but rather the enforcement of the contract on the destination end. For example, women are often trafficked on the pretense of acting, administrative or family care jobs, only to find themselves impressed into service as prostitutes. The problem is contractual enforcement, which in turn results from the black market in migrant labor, of which I have written. This is similar to the problem of, say, guest worker maids in Saudi Arabia. The key problem is thus neither the loan nor a fixed period of work per se, but rather the inability to enforce the worker’s contractual rights at the destination due to a lack of de facto or de jure legal standing. Hence the need for market-based visas in the US, to return to that evergreen topic.
The terms that people will accept are a function of their prevailing income and wealth. For example, the President has announced a task force to reunite children separated from their parents at the border. The problem, it seems, is that the parents cannot be located. Now, I ask you, if you lost your children with DHS, how hard do you think it would be to locate that child? The more likely reason is that parents abandoned their children in the US with the expectation that the latter will be properly fed and educated, learn English and at some point become US citizens. I can only imagine this as heartbreaking for both the parents and children. But it is a measure of poverty. That’s what they are willing to do given their economic circumstances. That is the historical context of indentured servitude: very poor people making very difficult choices.
The most important reason this practice does not exist today is that we are much wealthier. In 1700, the cost of an Atlantic crossing was 5-7 years of servitude for unskilled labor. Today, a crossing is about two weeks’ at minimum wages for most people. What has allowed this improvement is not some minimum wage law, but rather sound property rights combined with well-functioning markets, and yes, decent governance. This has allowed wealth, and by extension, assets to accumulate. This, combined with competitive free markets, have led to the productivity gains which underpin US wage levels today. If you want to cross the Atlantic, your period of servitude — even at the lowest income levels — is two weeks. “I owe, I owe, it’s off to work I go,” as one of my friends like to say.
Laws, of course, are important. But underpinning these is an economic context, without which, the laws may be of limited use and applicability. As income increases, we march up the utility curve, and practices which were acceptable at some historical point become no longer good enough. This same process is at work in China, by the way, the principal reason we would expect democracy to arise there sometime this decade.
https://www.usatoday.com/story/news/politics/2021/02/02/immigration-biden-task-force-reunite-families-separated-border/4341970001/
“the President has announced a task force to reunite children separated from their parents at the border. The problem, it seems, is that the parents cannot be located. Now, I ask you, if you lost your children with DHS, how hard do you think it would be to locate that child? The more likely reason is that parents abandoned their children in the US with the expectation that the latter will be properly fed and educated, learn English and at some point become US citizens. I can only imagine this as heartbreaking for both the parents and children.”
What a disgusting lie. And we thought Stephen Miller was an evil person. You are beyond the pale. BTW – when does the KKK start having your regular weekly meetings?
I think if “Princeton”Kopits was so “worried” about the Black community and other minority communities, he might discuss ideas such as the ones outlined inside the link below:
https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3Idy7vY59bOtN2lxVQM%3D
Some lady who I am a HUGE fan of highlighted this Citi analysis in her first Press Briefing of the new administration. Bonus points for those who can guess who that would be.
I am not an egalitarian; therefore, I am not principally concerned about equality. Should I worry that Asians make 20% than whites? Life’s too short.
I am rather interested in progress, and broad-based progress for society overall. In my opinion, the most important issue for the inner city black community is safety and security. If an area is deemed to be dangerous, people will move out and there will be a lack of jobs. The key to safety, in turn, is the criminalization of drugs. As I have stated, perhaps half the violent crime rate in inner cities can be traced to the war on drugs. Thus, the war on drugs is the key reason for a lack of jobs in inner city black communities, best I can tell.
Second, black citizens should be allowed to choose their own schools, rather than being oppressed by the state-owned monopoly of public schools foisted upon them by the Democratic establishment. I think Menzie would agree that choice is good, and money should follow the student, not the school, in the inner city. That’s really huge.
Third, family formation and maintenance is essential. Want to find someone from the inner city in trouble with the law? Good chance they came from a single household.
Since 1970, out-of-wedlock birth rates have soared. In 1965, 24 percent of black infants and 3.1 percent of white infants were born to single mothers. By 1990 the rates had risen to 64 percent for black infants, 18 percent for whites. Every year about one million more children are born into fatherless families. If we have learned any policy lesson well over the past 25 years, it is that for children living in single-parent homes, the odds of living in poverty are great. The policy implications of the increase in out-of-wedlock births are staggering.
This was written by George Akerloff and Janet Yellen in 1996. The out-of-wedlock birth rate for blacks in 2008, the last year for which I see data, was 70.2%.
https://www.brookings.edu/research/an-analysis-of-out-of-wedlock-births-in-the-united-states/
If we made additional, material progress on those three fronts, we would be headed in a good direction.
Steven Kopits: Well, first, it’s Akerlof, not Akerloff (and Gramm, not Graham).
Do you think perhaps that systemic biases in the justice system overall might not be a big part of the issue of out-of-wedlock birth rate? Or are you saying it’s 100% minimum wage? Seems to be what you are implying.
Akerloff I corrected but apparently didn’t take. I thought it was another Graham. My bad.
@ “Princeton”Kopits
You’re very falsely assuming that money that goes to “private” schools (most often subsidized with public tax dollars siphoned away from public schools is being spent on students, when the facts speak otherwise:
https://www.readfrontier.org/stories/technology-testing-sites-and-salaries-documents-provide-some-insight-into-epic-charters-expenses/
https://www.readfrontier.org/stories/epic-charter-school-penalized-530k-for-excessive-administrative-costs/
https://www.readfrontier.org/stories/in-investigation-of-epic-state-auditor-finds-a-system-ripe-for-potential-abuse/
https://www.readfrontier.org/stories/senator-says-he-was-asked-to-delete-epic-emails/
https://www.readfrontier.org/stories/at-least-one-in-four-epic-students-transfer-out/
https://oklahomawatch.org/2020/10/12/state-board-orders-epic-charter-schools-to-repay-11-million/
https://tulsaworld.com/community/sandsprings/news/statewide-virtual-charter-school-board-member-is-relative-of-epic-co-founder/article_67c7da38-14df-11eb-830a-ef0d01341aaa.html
https://oklahomawatch.org/2020/08/03/in-oklahoma-epics-operator-refuses-to-release-spending-records-in-california-records-are-public/
In short, often times “administrative costs” and “administrative salaries” of “private” schools are exorbitantly high and robbing the state taxpayer blind. Example A: Lying/exaggerating enrollment numbers, classroom sizes, and delaying documentation of student transfers OUT of the district. “Oh, little Tommy left class 6 months ago?? ‘Damn’ we forgot to tell the taxpayer.” Money following PHANTOM students. I’m sure to people such as yourself and Bride of Satan Betsy Devos is of ZERO concern.
God help the state taxpayers who legislators get any “consultancy” advice from “Princeton”Kopits on the “cost effectiveness” (or lack thereof) of “private” (taxpayer subsidized) schools. It will be, and HAS BEEN a never-ending blackhole for taxpayer FRAUD
@ “Princeton”Kopits
You’re very falsely assuming that money that goes to “private” schools (most often subsidized with public tax dollars siphoned away from public schools is being spent on students, when the facts speak otherwise:
https://www.readfrontier.org/stories/technology-testing-sites-and-salaries-documents-provide-some-insight-into-epic-charters-expenses/
https://www.readfrontier.org/stories/epic-charter-school-penalized-530k-for-excessive-administrative-costs/
https://www.readfrontier.org/stories/in-investigation-of-epic-state-auditor-finds-a-system-ripe-for-potential-abuse/
https://www.readfrontier.org/stories/senator-says-he-was-asked-to-delete-epic-emails/
https://www.readfrontier.org/stories/at-least-one-in-four-epic-students-transfer-out/
https://oklahomawatch.org/2020/10/12/state-board-orders-epic-charter-schools-to-repay-11-million/
https://tulsaworld.com/community/sandsprings/news/statewide-virtual-charter-school-board-member-is-relative-of-epic-co-founder/article_67c7da38-14df-11eb-830a-ef0d01341aaa.html
https://oklahomawatch.org/2020/08/03/in-oklahoma-epics-operator-refuses-to-release-spending-records-in-california-records-are-public/
In short, often times “administrative costs” and “administrative salaries” of “private” schools are exorbitantly high and robbing the state taxpayer blind. Example A: Lying/exaggerating enrollment numbers, classroom sizes, and delaying documentation of student transfers OUT of the district. “Oh, little Tommy left class 6 months ago?? ‘Damn’ we forgot to tell the taxpayer.” Money following PHANTOM students. I’m sure to people such as yourself and Bride of Satan Betsy Devos is of ZERO concern.
God help the state taxpayers who legislators get any “consultancy” advice from “Princeton”Kopits on the “cost effectiveness” (or lack thereof) of “private” (taxpayer subsidized) schools. It will be, and HAS BEEN a never-ending blackhole for taxpayer FRAUD
I assume the following is what “Princeton”Kopits means by “money following students” at private schools.
Story written by Nuria Martinez-Keel
https://oklahoman.com/article/5681911/what-exactly-are-ghost-students-theres-more-than-one-definition-in-oklahoma
“The phrase ‘ghost students’ first made headlines in July 2019 after it appeared in a search warrant filed by the Oklahoma State Bureau of Investigation.
While asking a judge for permission to seize a teacher’s computer, the OSBI alleged Epic had been illegally inflating its enrollment with dozens of students who received little to no instruction from the virtual charter school. Epic denies any illegality in its student counts.
It was these children, whom Epic reportedly enrolled but didn’t teach, that the OSBI called “ghost students.”
Investigators said these students were enrolled in Epic while also attending private schools or while being home schooled. Their families reportedly had no intention for their children to be full-time students at Epic.
The OSBI alleged Epic’s co-founders, Ben Harris and David Chaney, persuaded parents to enroll their children anyway in exchange for money for extracurricular activities.
“Ben Harris and David Chaney enticed ghost students to enroll in Epic by offering each student an annual learning fund ranging from $800 to $1,000,” court documents from the OSBI state. “The parents of many of the homeschool students admitted they enrolled their children in Epic to receive the $800 learning fund without any intent to receive instruction from Epic.”
With state education funds distributed per pupil, the OSBI alleged Epic raked in taxpayer dollars from these extra enrollees. But investigators said Epic didn’t educate them like full-time students, if at all. Some students were enrolled in Epic without their families ever knowing, according to court records.
…….. The OSBI investigation is still ongoing, and no one has been charged with any crime.”
Jobs are neither created nor do they disappear because of the level of wages. If there is a demand, then employers will have to hire. As long as the competitor next door is subject to the same minimum wage, then it doesn’t matter what that minimum wage is. Everybody have to set the price of their products/services to cover their labor (and other) costs. The ONLY thing that has any real impact on the number of jobs is the amount of work that has to be done by people. It will always be hard to employ some people, let’s call them the “less employable”. However, there is always a point of “labor shortage” where employers will hire even them. That point is determined by the lack of more qualified candidates, not the minimum wage. I think you need to get out of your Ivy Tower and talk to people why run a business or is employed by private businesses. When your (macro) models contradict observations in the real world – question your models not reality.
“I literally have no idea how Kopits” brain even works.”
Simple – he wakes up every morning trying to figure out how to get Fox and Friends to invite him back to their show. He actually thinks that is some noble accomplishment!
https://fred.stlouisfed.org/graph/?g=ANcU
January 15, 2018
United States and Denmark Employment-Population Ratios, * 2007-2018
* Employment age 25-54
[ The US ratio in Q3 2020 was 74.8 as compared to 81.6 for the ratio in Denmark. ]
2slugs and Barkley,
In regards to ‘efficiency wages’, if employers in general have the flexibility to set EWs, why cannot governments impose minimum wage increases that exceed productivity for at least some affected workers? Employer decisions are involved to the extent that they choose to keep the ‘overpaid employee’ as opposed to dismissing that employee.
I would have guessed/assumed that efficiency wages — where they can be found — exhibit a wide distribution depending on the individual characteristics of the worker. A priori, there is nothing that prevents an employer from paying a young worker with grade 10, who was born with FASD and consumed solvents during the formative years, an efficiency wage.
Barkley wrote: “Regarding the min wage, well, that may be above the MPL, but the efficiency wage may be above the min wage. ” Fair enough, but to be clear, the minimum wage could also be an efficiency wage depending on the sector, the employer and the worker.
Erik Poole why cannot governments impose minimum wage increases that exceed productivity for at least some affected workers?
In most cases the minimum wage does exceed the value of the marginal product of labor. If the minimum wage is less than that, then the minimum wage is nonbinding and not an issue.
I would have guessed/assumed that efficiency wages — where they can be found — exhibit a wide distribution depending on the individual characteristics of the worker.
I think there’s a lot to that. This whole idea of employers knowing the value of the marginal product of labor is a creature of the 19th century factory system. In a modern economy that’s dominated by a services sector with heterogeneity across worker skills creates an epistemological (you like that big word?) problem for employers. Employers won’t know the value of the worker until that worker starts the job. In today’s world the real value of a minimum wage is that it sets a baseline wage that is based on average product rather than marginal product and can be known with no information costs to either the employer or the employee.
the minimum wage could also be an efficiency wage depending on the sector, the employer and the worker.
My understanding is that the efficiency wage depends upon a wedge between the EW and labor’s marginal product; however, in general the minimum wage is greater than the marginal product so the effective wedge is between the EW and the minimum wage. We’ve gone well beyond my initial question, which simply asked what Manning meant when he said that efficiency wage effects might be important with respect to the minimum wage. Barkley attributes that to a throwaway line. That could be the case.
“In most cases the minimum wage does exceed the value of the marginal product of labor. If the minimum wage is less than that, then the minimum wage is nonbinding and not an issue.”
In a perfectly competitive market, yes? Employers would pay less than MPL if they could. In an imperfect market, perhaps they pay less than the MPL.
Yes – I would think 2slug would get this. Maybe not Manfred and Princeton Steve but those two are just arrogant idiots.
Erik and 2slug,
Indeed a throwaway line in the fine Manning paper, but that not meaning it is a nothing or zero, but still a relatively minor factor in this debate over min wages, another of the various complications and frictions out there in the labor market that lead to it not being well described by the competitive textbook story that led to economists for so long strongly to assert that of course raising the min wage would reduce employment. The famous paper by Card and Krueger made it clear that this simple story simply did not hold in general, although even if we can push the min wage up quite a bit without negatively impacting employment now in most of the US, few would argue that this is unlimited. After all, a tenfold increase in the min wage almost certainly would have such negative consequences, probably very substantial. But then, nobody is proposing anything so obviously ridiculous.
BTW, the idea of efficiency wages is very old. It was initially introduced by Alfred Marshall well over a century ago, although he called them “efficiency earnings.” Part of what motivated his discussion of this matter was a recognition that workers vary greatly in productivity and even more specific peculiarities related to that, as well as the information issue that it takes time for managers to learn what the skills of specific workers are, which is the basis of managers not wanting to face the costs of learning the skills of a new employee. So managers are willing to try to hang on to familiar workers one knows well. It was also a truism from Marshall on to much more recent observers that these wages above competitive market levels could reduce employment. That this might be the case does not mean that raising min wages must lead to lower employment. This is indeed a very complicated issue.
BTW, there is a further link between the discussion of efficiency wages and min wages. In the state studies done by Dube and Zipperer they found that a major factor involved when raising the min wage actually increases employment is that it can reduce turnover significantly. What is involved in that appears to be something like this efficiency wage effect of employers hanging on to workers much longer. In effect the increase in employment comes from a reduction of frequent layoffs, not something most observers discuss in this debate at all, but something that seems to be pretty important out there in the real world and the data.
“After holding steady at $7.25 for more than a decade, the federal minimum wage would rise to $15 per hour under the proposal, which would also end the tipped minimum wage and sub-minimum wage for people with disabilities. Many states and localities have already raised their own wage floors. It is not clear how quickly the higher wage would phase in.
Research from the Congressional Budget Office in 2019 suggested that raising the wage to $15 nationally could increase pay for tens of millions of workers, though potentially at some cost to jobs — perhaps 1.3 million people who would otherwise work would not be, in part because employers would reduce payroll.”
Somebody pays.
https://www.nytimes.com/2021/01/14/business/economy/biden-stimulus-plan.html
https://finance.yahoo.com/news/top-democratic-economist-warns-biden-235747689.html
Cherry picking a line out of a secondary source again? Hey Bruce – we have asked you to provide credible original sources many times but I guess you are too stupid or too dishonest to do so. For everyone else – here is a link to the actual CBO publication:
https://www.cbo.gov/publication/55410
Read it for yourself as we know the lying dumbass Bruce Hall will not.
Bruce Hall I’m not committed to a $15/hr minimum wage. As I’ve said before, it’s ultimately an empirical issue. It’s pretty clear that $7.25/hr is too low and might even discourage potential workers from entering the labor force. Even unemployed time has some value. Should the minimum wage be $10/hr? Or $12/hr? Or $15/hr? I dunno. I’m pretty sure that going to $10/hr would have virtually no effect on employment. I’m less sure about a $15/hr minimum wage. But that’s why we have professional labor economists to figure out those kinds of questions.
Somebody pays.
That’s true. And not all somebody’s are the same. Given that there are significant negative externalities associated with teenage employment I am a lot less concerned about fewer teenagers working than I am adult workers. If raising the minimum wage hurts teenagers a little but helps adults a lot, then the choice is really a no brainer.
” Should the minimum wage be $10/hr? Or $12/hr? Or $15/hr? I dunno. I’m pretty sure that going to $10/hr would have virtually no effect on employment.”
I provided the CBO link. They address this But Bruce Hall cannot be bothered to note what they said.
How would all that work be done if those 1.3 million people didn’t do it?
If that work could be done without these employees, why would anybody hire them to do it at any salary level?
When your models cannot explain reality – question the models not reality.
“Steven Kopits
February 6, 2021 at 8:13 am
pgl –
You show me one market anywhere in the US where there is one employer of minimum wage labor. That’s monopsony. One buyer. Find me one community anywhere in the US that meets the criterium.”
I have already done so in the form of secretaries working in New Haven where Yale is the market. But let me note my explanation why groceries in Manhattan generally suck in quality and are yet highly priced. There may be 3 grocery chains on this island but 2 of the 3 are owned by the same person. But no according to our Arrogant Moron from Princeton (not the university for sure) there is no monopoly there. Lord – Stevie is a loud mouth fool.
Except there are 650 jobs listed in that category for New Haven today.
650 listings of unspecified fluff means nothing. I guess you do not realize that anyone with an ounce of brains who decides to go onto LinkedIn and the various other places can get 100s of listings literally an hour. If you think this means anything, it is no wonder that you get zero listings as the entire world have figured out you are the most incompetent person ever.
According to the BLS, 90% of minimum wage workers are 20 or older, half are over 25 years old and a third are over 40 years old. 55% are full time. 44% have at least some college.
Minimum wage is not a teenage or entry level or part-time or education issue.
joseph I think you misunderstood my point. Suppose you’re an employer and you have one 16 year old worker and nine workers over age 25 and all earn the minimum wage. To the extent that a minimum wage increase might force you to lay off one of those ten workers, which one is most likely to go? I think the answer is obvious. A 16 year old losing a job due to a minimum wage hike is a much smaller ethical problem than a 25 year old with a family losing a job. That’s what I meant when I said “…not all somebody’s are the same.” To the extent that an overly aggressive minimum wage hike might increase unemployment I would not be terribly concerned if that unemployment was concentrated among 16 and 17 year olds. Making one 16 year old worse off in order to make nine 25 year olds better off is a deal I’d take any day.
But Princeton Steve would have you believe that 95% of them are black criminals on drugs. I bet he will present his latest research on Fox and Friends.
“Suppose you’re an employer and you have one 16 year old worker and nine workers over age 25 and all earn the minimum wage. To the extent that a minimum wage increase might force you to lay off one of those ten workers, which one is most likely to go?”
Suppose, suppose, suppose. If, if, if.
You can spend all day with your hypothetical lay offs but empirical evidence provides little evidence for them. Without quantification, your hypothetical is meaningless.
Studies have gone back and forth but in every case the effects of a minimum wage increase are small. For example Clemens and Wither showed that a 40% increase in the federal minimum wage resulted in a 6% reduction in jobs.
6% less hours working for 40% more money. I’ll take that deal! That’s fabulous!
And before you lament about the 6% consider that minimum wage jobs have an annual turnover above 70%. Average job duration is less than 6 months. So, in aggregate, there really aren’t 6% of unfortunates without jobs. It really is closer to everyone working 6% fewer hours and making 40% more per hour.
joseph Calm down and cool your anger. If you’d pay attention you would have noticed that I was making an argument FOR a higher minimum wage.
I suspect Joseph was reacting to all that crap from Princeton Steve and Bruce Hall. I dunno as the sheer volume of rightwing stupidity from these two clowns has gotten out of hand.
Yes, indeed, pgl. It was a response to this from Kopits:
“Also, only 700,000 people worked at the minimum wage, overwhelmingly young and part-time.”
So I pointed out that that typical excuses that minimum wage only affects the young or the entry level or the part time or the uneducated are bogus.
According to the BLS, 90% of minimum wage workers are 20 or older, half are over 25 years old and a third are over 40 years old. 55% are full time. 44% have at least some college.
But 2slugbaits felt he had to jump in there for some reason with a hypothetical about job losses for teenagers.
Steven Kopits As a general matter, I oppose minimum wages. I do not believe that I can do better than the market,
To the extent that employers enjoy monopsony power in the labor market, this claim is incorrect. Monopsony is a market failure just as monopoly is a market failure. In both cases the issue isn’t just the fact that companies with monopsony power underpay workers or that companies with monopoly powers overcharge customers. The problem is that monopsonies underuse labor and monopolies undersupply output. That’s the definition of a market failure. You can easily prove this to yourself with a little freshman math. So when you eliminate a minimum wage and businesses enjoy monopsony powers, you are in fact denying employment to people who would like to work. Contrary to intuition and the garbage you might hear on Fox Business, in the presence of monopsonies an increase in the minimum wage will tend to increase employment, not reduce employment. That’s one reason why the empirical literature on the minimum wage yields so many contradictory and ambiguous results. In a purely competitive market in which businesses do not enjoy monopsony powers an increase in the minimum wage could very well decrease employment; however, in an uncompetitive market in which businesses do enjoy monopsony powers an increase in the minimum wage could very well increase employment. In the real world we always find markets that are somewhere in-between.
And while we’re on the subject of monopsony, it’s not just a minimum wage problem and it’s not just a problem for those at the lower end of the income scale. For example, monopsony is a big problem among teachers and nurses. Typically there is only one major buyer of their services. In the case of teachers it’s a local schoolboard or state run department of education. In the case of nurses it’s typically a large regional hospital with few competitors. Contrary to intuition, churning out more teachers and nurses from college only makes the monopsony problem worse. The solution in those cases is to have a strong union that pushes up wages. That ends up actually increasing the number of teachers and nurses and ends up correcting a market failure. The lesson is, as always, beware of “econ 101-ism”.
Employers do not have effing monopsony power in the minimum wage category. And you know that.
Have you ever attended a Chamber of Commerce meeting?
Probably not as he prefers to hang with the Fox and Friend gang.
Seriously dude? You deduced that from where – traveling in Hungary? BTW moron – the 1980 secretary strike which succeeded in raising wages was not about the minimum wage at that time. But to a dumba$$ like you – we all live in one giant homogenous labor market.
Steven,
Well, so far nobody has bothered to drag in what are totally accepted truisms in both the academic industrial organization literature as well as the policymakers at the Antitrust Division of the DOJ, where indeed I know that a couple of decades ago they even had an amusing rhyme for it, which I only partly remember and will not attempt to repeat as it would simply prove once and for all how badly the taxpayers of Virginia are being ripped off by still having me on a state payroll there.
Anyway, the bottom line of this truism is that with four firms in an industry behavior is usually close enough to competitive outcomes as not to warrant any legal activity to block mergers that reduce the number of firms in an industry from five to four (unless one of them is overwhelmingly dominant making it more like a de facto monopoly). If the proposed merger would move an industry from four to three firms, then it is a matter of close consideration that depends on details of the industry, with it possibly to be allowed or possibly to be blocked. But if a proposed merger is to move it from a triopoly to a duopoly, then it is to be blocked due to there being too much of an increase in monopoly power, even though a duopoly is more competitive than a monopoly.
Now it is true that DOJ (and FTC) basically do not enforce at all on the other side of monopsony. But this does not mean that there is no such thing as monopsony. More important, and a point that Steven here seems to be ignoring, it is not the case that if one goes from monopoly or monopsony to one firm more one is suddenly in an essentially perfectly competitive solution is simply not the case. This means his examples of how in this or that community there might be two hospitals or whatever do not mean no monopsony, and invoking how somebody can up and move elsewhere to get a job, well, that is high cost, not just a trivial matter. Monopsony power continues to exist to some extent even with more than one employer in an industry in a location and so is more widespread than Steven lets on.
New post up with an excellent paper which of course Princeton Steve will refuse to read.
“monopsony is a big problem among teachers and nurses. Typically there is only one major buyer of their services.”
Since Princeton Steve does not even know where New Haven even is while I did live there back in the day, consider a nurse looking for a job. Only hospital is called Yale New Haven, which of course is associated with the only real university in town.
But there is one good thing about my former town – a very competitive pizza market with the best two pizza places on the planet – Pepe’s and Sally’s. My NYC friends only think they have the best pizza as most of them have not been to New Haven either.
Never been to New Haven, but one of my nephews is a Yale Law graduate. Sadly, he’s part of the evil empire and writes the occasional op-ed for The Federalist Society. I still like him.
Actually, my mother had a heart attack in New Haven. I know the hospital there quite well.
The hospital. Yep – there is only one. But NO – there could not be monopsony power because you can take the train to NYC. Lord – you are the dumbest troll ever.
Oh, forgot to mention that 6%/40% is from Clemens and Wither on the last major minimum wage hike.
Glad you joined in the discussions of monopsony power – and well said. But trust me – Princeton Stevie is not following this at all. Just look at his incredibly idiotic comments. He claims to have taken an economic class but he does not even get the basics in the slightest. But our host has promised a new post on market structure and market failures.
I was wondering if there are any models or papers that maybe account for the workers that have multiple jobs and how an increase of the minimum wage would effect that side of the workforce. My initial assumption is that with a higher minimum wage the workers who work multiple jobs will quit those, allowing there to be more jobs available that could offset the (proposed) loss of jobs due to an increase.
I love this blog. As a well educated lawyer and a less well educated economist I sometimes miss the nuances in the cross-talk. On this blog I read about monopsony in the labor market and saw a map depicting the distribution of monopsony power. What I think I saw is that such power is not evenly distributed across the nation. I read arguments for and against minimum wages. I do not understand the effort of well educated people making such arguments. Minimum wage laws, like other are federal labor standards are here to stay. So, the policy debate distills to whether the federal minimum wage law should be raised from $7.25 to $15.00? Some contributors argue that for the broad national economy the cost-benefit analysis is positive. Others seem to argue that focusing on the broad national market ignores demographic and geographic sub-market problems. Other than sardonic quips and slurs, I did not see any actual answers to the issue. Is this differences in labor markets a real issue? The vast majority of states have higher minimum wages than the federal rate. Has anyone studied the effect of New York raising its minimum wage compared to Pennsylvania which has not? Does it matter to the policy discussion that the metropolis monopsony index is lower than that for less densely populated areas? Does the analysis differ where a highly populated state like California already has a $14 minimum, but Pennsylvania’s would more than double? If this is not the venue for asking dumb questions, can you recommend some resources?
Again, typical Menzie, a partisan hack.
What Menzie does not tell you in the blog entry is several things: a) the paper he mentions is part of a symposium – another paper of that same symposium has the title “How Do Firms Respond to Minimum Wage Increases? Understanding the Relevance of Non-employment Margins”, by Jeffrey Clemens; if Menzie had some academic honesty, he would at least mention it; b) there are authors who disagree with Manning – Manning’s word is not the final thing; there is David Neumark and also Jonathan Meer, who come to different conclusions; an honest prof of economics would at least mention this; c) the CBO came out with a study that raising the minimum wage would, yes, raise 900K people out of poverty, but leave 1.4 million unemployed over the next four years. This is the CBO that Menzie so much loves. So basically raising the minimum wage is like a lottery; a lottery of “who gets to lose his or her job” in order to help a few.
Menzie, is this the type of stuff taught in “schools of public policy”? At least it is a lottery, and not an executive order by the president leaving 50 thousand people without a job in a blink of an eye (yes, 50K, 10K in the US and 40K in Canada). Apparently, in “schools of public policy” supported by taxpayer money, and populated by tenured profs who are cushy in their offices, there is no empathy for them.
And then people complain that I am rude. Apparently, it is not rude to play lottery “who gets to lose his job” and it is not rude to support a president that with a stroke of a pen destroyed the livelihood of 50K people. Life in taxpayer funded tenure-land is really great.
Oh well.
Manfred: Gee, what’s the last line of the post? Oh, it’s “That’s from the first article in a JEP symposium on minimum wages, in the Winter Issue of the JEP.”
When will you stop lying?
Uh, Manfred, in that CBO study the total of those who gained was not just the 900,000 getting out of poverty but well over 20 million who would have their incomes rise, although most of them are already out of poverty. The number gaining is far greater than the number losing, unlike what you presented here.
Menzie is quite reasonably to ask “When will you stop lying?” Indeed, when will you?
@Barkley Rosser,
What you are describing is an oligopsony.
Hard to pronounce.
Easier than “onomotopedia” or “antidisestablishmentarianism,” :-).