Here’s a time series of the real minimum wage, under the Sanders proposal.
Figure 1: Federal minimum wage deflated by CPI (black), and proposed minimum wage under S.53, divided by CBO projected CPI (teal), all in 2020$. NBER defined recession dates and NBER peak shaded gray. Quarterly CBO CPI projections interpolated by quadratic match. Source: BLS, CBO, NBER, author’s calculations.
Today, CBO released its assessment of the impact of such legislation:
If enacted at the end of March 2021, the Raise the Wage Act of 2021 (S. 53, as introduced on
January 26, 2021) would raise the federal minimum wage, in annual increments, to $15 per hour by June 2025 and then adjust it to increase at the same rate as median hourly wages. In this report, the Congressional Budget Office estimates the bill’s effects on the federal budget.…
Underlying the budgetary estimates are CBO’s projections of how pay would change for people directly or potentially affected by an increase in the minimum wage—that is, people who would otherwise have been paid hourly wages that were less than the proposed new minimum or slightly above it—and how changes in pay would affect the number of people employed.
- From 2021 to 2031, the cumulative pay of affected people would increase, on net, by
$333 billion—an increased labor cost for firms considerably larger than the net effect on the budget deficit during that period.- That net increase would result from higher pay ($509 billion) for people who were employed at higher hourly wages under the bill, offset by lower pay ($175 billion) because of reduced employment under the bill.
In an average week in 2025, the year when the minimum wage would reach $15 per hour, 17 million workers whose wages would otherwise be below $15 per hour would be directly affected, and many of the 10 million workers whose wages would otherwise be slightly above that wage rate would also be affected. At that time, the effects on workers and their families would include the following:
- Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s
average estimate; and- The number of people in poverty would be reduced by 0.9 million.
Arindrajit Dube critiques. So too does EPI.
Recent survey of literature on minimum wage, here.
Addendum, 2/10 noon Pacific:
Goldman Sach (Nicolae/Mericle/Phillips on 2/8) notes that some portions of the country have raised the minimum wage already, so that the impact of Sanders legislation on the effective minimum wage is smaller than depicted in Figure 1.
The nationwide effective minimum wage is already around $11.
Remember, the 1.4 million estimated job losses (if you believe it) is an aggregate number. In the real world, turnover of minimum wage jobs is more than 70% annually. Rather than 1.4 million people not working, you are going to have a much smaller number “sharing” jobs. So the typical minimum wage worker is going to get fewer hours but be paid more than enough in higher wages to compensate.
Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate; and the number of people in poverty would be reduced by 0.9 million.
We can assume therefore that 1.4 million people will fall into poverty by losing their jobs, and by math, 2.3 million people (1.4 + 0.9) will be lifted from poverty. That’s an acceptable trade-off, that for every 3.3 people lifted from poverty 2 will have no work? That is what Menzie is advocating as good public policy? I think it’s awful.
And which 1.4 million people will lose their jobs? Will it be disproportionately, say, well-educated white girls from the suburbs, or poorly educated young black and Latino men with no steady work experience, a criminal record and a history of drug abuse? Those displaced from the job market will be exactly those who need the jobs the most. A $15 / hour minimum wage is likely to prove super-regressive and super-racist, as I see it, because job losses are likely to be concentrated in the most vulnerable segments of society. Statistically, that is disproportionately likely to occur in minority communities, and within that, to young men with problematic resumes.
Yes, I think this is consistent with some of the literature I have read. Both businesses and consumers face budget constraints. Raising the minimum wage does not ease these constraints, and therefore either increased labor costs must be passed through with an implied reduction of labor. Or increased costs cannot be passed through, in which case businesses must either 1) reduce profits, which is only possible if they are in excess of the cost of capital; or 2) substitute higher quality labor or capital assets for lower quality labor; or 3) reduce services in some manner, for example, cleaning the toilets at McDonald’s less frequently or increasing waiting times at the counter.
I would also note that lower worked hours may be, in significant part, an artefact. If I own a restaurant, I can say that I will pay you for six hours, but expect you to stay for eight. I don’t even have to say it. I just fire those who don’t stay the whole shift, and the employees will quickly catch on that they had better work the eight hours if the want to keep their jobs — which they would have been willing to do anyway!
That is a black market, and I have spent copious amounts of time decrying the corrupting and other adverse effects of black markets.
But is the damage of a $15 minimum worth, in essence, buying employed min wage workers increased leisure time? Is that worth depriving the most vulnerable in the labor market from freely selling their labor? I don’t think so.
Steven Kopits: Simple question: Have you ever read Card and Krueger, AER, 1994? I am curious; after all Card and Krueger were pretty smart, don’t you think they guessed at some possible adjustments in response to higher minimum wages. FYI AER is the flagship of flagship publications of the American Economic Association. Just sayin’.
He clearly did not read their 1994 paper which examined employment by places like McDonald’s, which of course he insists must be employers with no market power. Yes Princeton Steve is THAT dumb!
I’m very proud to say I got my local public library to put 2 hardcopies of the Card/Krueger book on their shelves. Now, do not ask me if I have read all of that book I requested them to add to their inventory as it’s a personally shameful answer which I’d rather not confess.
That was an insightful paper… 30 years ago.
https://www.npr.org/2018/09/12/646968887/automation-comes-to-mcdonalds
Bruce Hall: The Market for Lemons was written nearly fifty years ago (published 43 years ago). Do we ignore that paper, despite the advent of Carfax?
Menzie,
“The Market for Lemons,” by your former prof, George Akerlof, was published in 1970 in the QJE, 51 years ago, after having been rejected by several other journals for being either “wrong” or “obvious.”
Barkley Rosser: Yes, sorry, looked at wrong entry on Google Scholar. As they say “a fortiori”
Menzie, I was only pointing out that the alternatives for employers have changed in 30 years (the paper was published in 1992).
Consequently, some of the assumptions need major revisiting. I now that pgl likes to make snarky replies on tangential points, so I won’t go there.
Bruce Hall: Well, not sure that the types of fast food joints — and the relative shares of labor costs in production — have changed that substantially. And pretty sure differences-in-differences works the same way it did back then.
“I was only pointing out that the alternatives for employers have changed in 30 years”
Your evidence for this is ??? Oh you do not have any evidence. You do not even know what you mean by “alternatives for employers” do you? Oh maybe they have found new ways of exploiting monopsony power. BTW Bruce Menzie has provided a lot more on this topic besides this 1994 AER publication. And of course you could not be bothered to read that either.
“Raising the minimum wage does not ease these constraints, and therefore either increased labor costs must be passed through with an implied reduction of labor.”
Are you so stupid that even after reading that empirical paper Menzie provided which not only discussed how in a labor market where employers with market power that an increase in the wage floor would RAISE employment but they showed this with rather convincing evidence.
Good God man – you write so much crap based on a narrow model of labor markets which numerous papers show did not fit the real world. And you claim that those of us who recognize the existence of market power have a VERY HIGH bar to bear before we make such claims. But the bar for you apparently is even lower than your single digit IQ.
“If I own a restaurant, I can say that I will pay you for six hours, but expect you to stay for eight. I don’t even have to say it. I just fire those who don’t stay the whole shift, and the employees will quickly catch on that they had better work the eight hours if the want to keep their jobs”
Pardon me as I am not a lawyer but Princeton Steve is advocating what is likely a crime. Requiring people to work for free is akin to slavery and I’m sure any business owner that tried such a disgusting stunt would end up facing huge fines if not imprisonment. Of course we had a President who did such scummy things in his business career – Princeton Steve’s mentor … Donald John Trump.
If Princeton Steve ever starts a real business – do not work for this thief. And if he puts stock on the market, short sell it like crazy as you will do well.
Clearly, you’ve never been a consultant, lawyer or investment banker.
Look at me! Look at me! I have been a consultant and an expert witness for lawyers, if not an actual lawyer! But, sigh, never a banker, sob!
Clearly.
If you want indentured servitude, try any of those professions. And I don’t mean expert witness consultant. I mean a guy pumping out reports for clients.
Yeah, pumping out reports for clients is like pumping gas for a minimum wage. Wow! Now we all get it!
I am a consultant. But we differ as I provide clients with useful and honest advice unlike the intellectual garbage you have perfected.
I am a consultant. But we differ as I provide clients with honest and useful advice unlike that intellectual garbage you excel at giving.
At the end of the day, I’m for the $15 minimum wage. I think it does more good than damage, and I strongly suspect, by the year 2030 and we’re looking back on all of this, for labor it does much less damage than quantitative measures are suggesting at this moment.
The CBO scores the $15 minimum wage as increasing the federal deficit by $54 billion over 10 years. They came to this conclusion from a very complicated set of assumptions such as Medicare costing more because of higher wage healthcare workers and nutritional programs costing less due to less poverty.
This is an average of $5.4 billion increase in the annual deficit. I would congratulate any economist in 2031 who has the skill to tease out a $5.4 billion deficit increase in a $7 trillion budget. In other words, the cost of the minimum wage increase to the federal government is essentially zero.
They also conclude almost no change to GDP. The only real change they see is a small shift in income from capital to labor.
Scored as it is by the CBO there should be no problem passing the wage increase in accordance with the Byrd Rule through a 51-vote reconciliation bill
“The only real change they see is a small shift in income from capital to labor.”
Ah yes – monopsony power is reduced so the labor share rises as profits from exploiting monopsony power erode.
But shhh – let’s tell Princeton Stevie that the real world is not perfectly competitive lest this arrogant know nothing goes off on more pompeous tirades.
Well, it would seem as with any government mandated economic policy, there will be winners and losers. The question is whether the winners and losers will simply be limited to those who get more pay and those who don’t get jobs… or if there are broader implications. Will businesses that fall under this mandate be able to continue or will they simply fail? $15/hr. is no problem for a large corporation that rarely employs a large number of people below that rate. But smaller businesses that have already been undermined by government-led shutdowns will be squeezed even more:
The minimum wage of $15 would apply to anyone working minimum-wage jobs, tipped wage workers, youth wage workers or 14(c) wage workers. This means that anyone working a minimum-wage job, including those who are tipped, teenaged workers, and workers with disabilities, would see an increase in their minimum pay. https://www.newsweek.com/who-does-federal-minimum-wage-apply-senate-bill-15-hour-1564864
Of course, this mandated cost increase to business will never show up in the cost of goods sold or in overall inflation, uh-huh. It’s just going to magically be absorbed and vanish, uh-hu. However, on the slight off chance that the costs do not magically disappear, what are the offsets and the market reactions? Oh, and will workers’ compensation insurance go down or will it go up because there are more workers unemployed? I’m guessing that the businesses already stressed by the additional wage costs and possible margin reductions will be faced with paying more WCI to cover the displaced workers that they can’t afford to hire or who lose their jobs because these business can’t afford to keep them on. Is this a virtuous cycle or a vicious cycle?
Silly me. I always thought that the marketplace paid for skills and scarcity and that’s why Silicon Valley pays $125,000 per year for average coders. Now I understand that they were told to do that by the government. And those poor Big Tech firms can’t even cover the costs of those employees and have trouble making any profit from keeping those workers employed. Good thing the government is running HR for the nation. Now it seems the government is mandating higher pay for the abundance of lack of skills.
But as Old Uncle Joe would say, “Hey, come on man. Give me a break! This is for equity or equality or equanimousability or more votes, man! Just pay the money and give me the damn credit! What’s 15 bucks to you anyway?”
Bruce Hall You might want to try reading the CBO report before going off at the mouth…or keyboard. CBO addresses all of your questions. CBO estimates the impact on prices. CBO estimates the impact on unemployment insurance. CBO estimates how much the higher wage bill will reduce returns to capital. CBO also estimates both the changes in revenue and cost for Medicaid, Medicare, SSI, etc. And as you noted, the new minimum wage would apply to tipped workers. That’s a good thing. It would dramatically limit a business owner’s ability to engage in wage theft, which is a huge problem in the restaurant industry.
Silly me. I always thought that the marketplace paid for skills and scarcity
Apparently you haven’t been following along. We don’t live in a world of perfect competition. As the CBO also notes, a higher minimum wage would correct for monopsony conditions in some geographical areas. Do you even know what monopsony means and why a higher minimum wage can increase employment?
2slugbaits: My experience is that Bruce hall does not read the original document.
No, there is not perfect competition within markets and for labor, but a blanket condition imposed by the government that raises the cost of entry labor in all markets is not exactly conducive to and optimal business environment nor an optimal employment environment.
The CBO does gross estimates based on gross estimates which are fine for gross estimating. But the markets for products and labor are quite a bit messier. The so-called “monopsony conditions” which is your main concern would tend to be in less populated areas where living costs would also be lower than a densely populated urban area. https://www.insure.com/cost-of-living-by-state.html Of course, you know that or should know that. One size does not fit all.
So, if… if the government must double the price of entry level labor, perhaps that should be tempered by a relative cost of living adjustment by state preferably by county. Mississippi (regardless of your distaste for it) does not have a comparable cost structure to New York or California. Applying a national rule to double entry level pay in just a few years to all states equally will be disastrous for some and moot for others.
Should people earn a “living wage”? That’s ideal. Should the minimum wage (not necessarily the same as a “living wage”) be the same in Ishpeming as New York City. I think a blind and deaf economist could discern reasons for that not being the case. As long as we have people with no discernible skills for the labor market in which they reside, they must be thought of as “entry level interns” who are getting paid while they learn. Yeah, that’s not going to be a popular idea, but I think it better defines reality than “employees”. Is anyone old enough to remember the “apprenticeship” network?
Of course, Old Uncle Joe is planning on paying off student debt, so rather than taking an entry level job that goes nowhere, why not finish high school and then get Old Uncle Joe to pay for your “apprenticeship”? Too much to ask that someone has skills worth paying for? Get that Social Justice degree before going to work for McDonalds or maybe get a job working for the government as a social worker. Of course, four years in college may not be enough for a “living wage”. https://www.humanrightscareers.com/magazine/careers-in-social-justice-and-human-rights/
Okay, people make stupid decisions when they are young and then have a tough time working their way out. That’s why the old saying is true, especially for economics and employment: “Stupidity has its own rewards.” But how much of your stupidity is my obligation as an employer?
A little anecdote:
My wife grew up in a family of eight children; her best friend grew up in a family of nine children. Her best friend got pregnant at 19 and the sperm donor abandoned her. She kept the baby and got an entry level job at an insurance firm. Then she got a secretarial job at a large insurance corporation. It was tough. But she was tougher. She met a nice guy a few years later who married her even with the child in the picture. They both had to work so she kept taking on more responsibility in her insurance jobs. Not great pay, but a lot better than when she started. Fast forward thirty-some years. She is an executive vice president and named insurance woman of the year by the industry.
Oh, but accepting responsibility for your own mistakes, working your butt off for low wages while you learn to be something more, and then persevering rather than whining? That’s too much to ask. Just pay me more than I’m bring in and give me the free stuff.
Bruce Hall Sorry, but the ramblings of an angry, bitter old man don’t quite measure up to a sustained argument. You sound drunk. Still not over the fact that Trump lost?
Look, I know you don’t realize this, but your examples of people with college degrees working at low end jobs is in large part a consequence of monopsony powers. And appeals to personal responsibility are fine, but they are not a substitute for intelligent social policy. I suspect that you’re more interested in feeling smug about yourself than in actually understanding economic issues. And if you think that government is the only thing that gets in the way of competitive markets, then you really need to relearn Micro 101.
Now go yell at those kids to get off your lawn.
2slug,
LOL! No I let the kids play on the lawn and clear snow off the lake so they can skate.
Your argument that “monopsony powers” prevent college graduates from obtaining good wages is gratuitous at best and willingly naive at worst. Just who are those “college graduates” who can’t get good paying jobs? What were their majors? Why haven’t they relocated? Who is forcing them to work at low end jobs? It couldn’t be that they chose a major with no viable career path, could it? It couldn’t be that they chose a major with a surplus of candidates for a very small job market, could it?
Some of those degrees say, “I just spent four years and thousands of dollars studying a subject that has no market value and no transferable skills.” I know a young woman whose father was a VP at Chrysler. She had every advantage. She attended the University of Michigan and obtained a Bachelor’s degree in anthropology for which her parents paid. Why? Who knows. Of course, there are no jobs for people with that level of education in that field. So she ended up working as an office manager in some small business in northern Michigan.
Her choices are not someone else’s obligations.
“She attended the University of Michigan and obtained a Bachelor’s degree in anthropology for which her parents paid. Why? Who knows. Of course, there are no jobs for people with that level of education in that field.”
you are actually arguing with the concept of a liberal arts education. the major itself is not important. the important thing is developing an ability to think and solve problems. i am not necessarily a proponent of such approach, but i certainly understand the logic behind it. bruce, you simply showed ignorance of the value of a liberal arts education. you do not even understand what it is.
Wow so many trivial sentences from someone who clearly does not get the basic labor economics in the presence of monopsony power.
I have to apologize to Princeton Steve for calling him the dumbest troll ever. No Bruce – you still own that crown.
Wow, pgl. I continue to be amazed that you can be so snarky and say absolutely nothing of value. Today you have become the “monopsony parrot”. Awwk, monopsony! Monopsony! Or maybe just a dog with a bone he won’t let go.
I remember when “economies of scale” was seen as a good thing. Higher output, lower marginal costs, better bargains for consumers. But now the perceived evil of being economically dominant in an area or sector is a tragedy. Why, these evil companies are making a profit and their employees are starving to death. Nonsense. Ask those starving people what would happen to them if that terrible monopsonic company closed up shop. Yeah, ask those coal miners. Ask those welders and heavy equipment operators that Biden just put out of work (how many other pipeline projects were available to them?).
Oh, but wages in “this” area are so low. People have to work for so little. They don’t have any choices. Well, maybe when the government gives them their “Vaccinated” interstate passport they can seek employment elsewhere. It just couldn’t be that they don’t have any marketable skills so are left with table scraps. But, but, social justice, equity…. Always someone else’s obligation. Too bad Obama defunded all of those vocational schools. I guess it’s get a federal government student debt amnesty for college or else.
https://study.com/articles/Decreased_Funding_for_Vocational_Schools_Raising_Quality_or_Limiting_Opportunity.html
Hey, anyone know where I can find a good plumber?
“Ask those starving people what would happen to them if that terrible monopsonic company closed up shop. Yeah, ask those coal miners. ”
you mean those coal miners with black lung disease? those coal miners?
“Ask those welders and heavy equipment operators that Biden just put out of work (how many other pipeline projects were available to them?).”
you mean those construction workers that are now building foundations for the thousands of wind turbines under construction? or the welders that are welding the turbine towers? those workers?
bruce hall, you have a very warped view of the world you live in.
We are going to take a bunch of babble from someone who could not even bother to tell us what the CBO really said as evidence of the impact of the minimum wage? Congratulations Bruce – you have managed to outdo the Village Idiot Princeton Steve in sheer stupidity.
Those least prepared for employment are those most likely to be taken advantage of in seeking employment. Certainly, a classic case is a coal mine operator who employs unskilled manual laborers. Of course, unskilled laborers can and do unionize. And then the well-intentioned government forces the closing of the mines. Another classic example is the aggregator of agricultural products who can set the price for crops grown in the area or milk produced or farm animals. Of course, farmers can and do form their own cooperatives. And then the well-intentioned intelligentsia say don’t eat beef or dairy, just soy.
You seem to be caught up in a world of 1930s economics where the evil empires destroy the noble workers who have no alternatives. Sure, there are labor markets with surpluses and those with deficits. Of course, it often takes an artificial surplus of low-skilled labor with no real career options like those found in Texas, New Mexico, Arizona, and California to give some employers this overwhelming advantage. Those markets are often skewed by well-intentioned governments who say, “no work, no problem; don’t take those jobs you don’t like even if you are not qualified for anything else… we got you covered.” That’s just an incentive for both businesses and well-intentioned enlightened ones to keep flooding the market with even more low-skilled labor from less than legal sources with no real career options.
How about good old Chicago or New York? Lots of choices there. Yet somehow there seem to be so many thousands who remain unqualified or uninterested in employment opportunities in these very non-monopsic locations. It must be because the government didn’t set the wages for them. Or maybe it’s simply the fact that there are so many unqualified and uninterested people who muddle along and are content to blame everyone else for their failings. It couldn’t be that they made really bad choices, eh? There are only so many available openings for dishwashers, janitors, and landscaper helpers.
Their bad decisions are not other people’s obligations. But maybe they need their own state. How about Washington, DC? That could be a grand experiment for the federal government. You have to be unqualified to qualify for residency and government-mandated wage rates.
bruce, please don’t let me put words in your mouth. but by your logic, the large number of poor black people in mississippi are in that position because they are lazy and made poor choices. same thing for the poor black people in new york city.
” It couldn’t be that they made really bad choices, eh? ”
of course you are correct. if they had only been smarter, they would not have chosen to be a black baby born to crop sharers. they would not have chosen to have skin color that much of america discriminated against. what would they be thinking? the smart ones are born to white upper middle class parents living in the suburb with good schools and an inheritance from the grandparents. if only these poor folks made better decisions…bruce, your ignorance is astounding.
“And those poor Big Tech firms can’t even cover the costs of those employees and have trouble making any profit from keeping those workers employed.”
WTF? Google, Amazon, Apple, Microsoft, Facebook, and Oracle are all bleeding losses? Damn – this is the dumbest thing you have ever written and given you write really dumb things each and every minute, this was a real accomplishment!
“WTF? Google, Amazon, Apple, Microsoft, Facebook, and Oracle are all bleeding losses?”
God, pgl, you are so literal. You can’t recognize sarcasm when it hits you in the nose. Of course, they make great profits and pay great salaries because the people they hire are well prepared for the work that needs to be done and create products that are profitable. And… all without the government HR department mandates.
Bruce Hall: Please remind me, where was DARPANet – the precursor to the internet – developed?
Menzie, LOL! Good non-sequitur.
The Chinese invented fireworks so I guess that means everything that stemmed from that … weapons to spacecraft … was the result of some dynasty? It’s great to have a very basic framework, but that doesn’t mean that everything that follows is now directly attributable to a precursor or that the precursor would not have occurred from another source (convergent evolution). And if no one builds on what has been done previously, what was done becomes a dead end.
Now, how does that relate to the discussion of government mandated minimum wages? Are you saying that if the government hadn’t mandated economics, you would not have become a professor? No, that would be absurd. Are you saying unless the government dictates terms of employment, an individual cannot acquire a living wage? I don’t believe you would say that either. Perhaps you are arguing that “society demands” (that vague all-knowing “them”) a minimum wage and that it should be set at $15 per hour. Would that be for both Ishpeming and New York City? That doesn’t seem equitable. Why not $20 per hour? Some politicians say there should be a guaranteed income with no strings attached. No work; no big deal. I think that’s called Universal Basic Income. What could possibly be wrong with that? Businesses wouldn’t have to hire anyone… well, they couldn’t hire anyone for less than what was given away because no one would work for such a business… like a grocery store or a warehouse or a filling station or restaurant or theater or nursing home or … and if the businesses paid to exceed some arbitrary “got it for free” wage level (couldn’t simply match it because no one would accept that deal), then would the increased prices for the products be something the customers would be willing or able to pay?
Or have we simply found the perfect formula for inflation?
You know the old saying: in for a penny; in for a pound. Then would the only people who would work be the people who want to pay taxes to finance the Universal Basic Income? I think Finland gave that a “no questions asked” try and decided that maybe some questions were in order. Norway has a welfare system (but strangely so does the U.S.) for people who cannot work (but not so much for the people who will not work). Switzerland thought about it, but the 3/4 of the population that would have had to pay for it said, “Not on our dime.”
So, are you in for a penny, but not a pound?
actually bruce, i think it is safe to say that $7.25 per hour is too low for a minimum wage. that is not in dispute. the question becomes, what should that value be? somebody proposed $15 per hour. you seem to disagree. so what number would you propose for a minimum wage?
Here is a well known fact that you may not get. A huge part of the compensation paid to the kids who do the actual R&D was in the form of employee stock options. Now if one get the right to buy Microsoft or Cisco stock at prices ala the beginning of 2001 – those stock options became worthless except for perhaps being used as toilet paper. Sort of like your usual comment.
How about if they got those stock options in 2004 instead of 2001? I can cherry-pick, too. How many people at Facebook became wealthy because they took a chance and got in early? How about Tik Tok (like my daughter-in-law)?
Are you proposing a government-mandated guarantee of stock options? Silly you.
CBO has a note on the distributional effects of a $15/hr minimum wage, but their analysis missed the most obvious distributional impact; viz., the effect across different age groups. We have good reason to believe that most of the unemployment impact will fall on teen employment rather than adult employment. For example, historical data over the last three recessions has a clear “last hired, first fired” pattern. It seems reasonable that a hike in the minimum wage should follow the same overall pattern that we see in recessions:
https://fredblog.stlouisfed.org/2020/10/last-hired-first-fired-employment-losses-across-age-groups/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog&_gl=1*14k5ijq*_ga*MTU1MjgxNTI3LjE1ODg2NzUyNjI.*_ga_5K9L4B5XET*MTYxMjg4Mjk1OC4yLjEuMTYxMjg4MzAyMS4w
As a matter of public policy this should make any potential unemployment effects a lot easier to swallow. Lower teen employment is not all bad.
As a matter of public policy this should make any potential unemployment effects a lot easier to swallow. Lower teen employment is not all bad.
That might be true if those teenagers are living with families and actively engaged in their education and they were not working because their families needed some financial assistance. Of course, to compensate, some employers may simply eliminate the jobs those teenagers were doing or add those responsibilities to someone else; e.g., no more busboys; waitresses now take orders, serve meals, and clean up afterward. That doubling up of jobs might be part of the CBO thought process. Get twice as much; work twice as much. The people who lose their jobs? Not-so-important teenagers.
a better policy is to raise the minimum wage to something livable, reduce the number of teens working so they can focus on their education, and recover those funds for the family through increased child tax credits for the family. teenagers should spend the majority of their time focusing on their future through education. not flipping burgers. this is a much better approach than wasting teenagers efforts on shop cleanup for minimum wage while flunking out of school.
CBO also models the impact of a $12 minimum wage and the employment effects are very modest. Note that the 1968 minimum wage equated to $12 today in real terms. And as I recall the unemployment rate was a mere 3.5%.
Right. Raising the minimum wage to $12/hr over the next couple of years should be doable without any significant unemployment risks. If we lived in a rational world then we’d want to continue raising the minimum wage along a policy path until unemployment hit some trigger threshold, at which point we would pause any further increases. Too bad we don’t live in a rational world.
Hillary Clinton ran on a $12 an hour minimum wage in 2016. Yea the Sanders crowd attacked her as a sell out but it seems to me that this would have been a good thing to pass in 2017.
There’s no doubt, Hillary Clinton had the type judgement any New Yorker would admire:
https://www.washingtonpost.com/news/the-fix/wp/2016/09/02/12-things-i-learned-from-the-fbi-report-on-hillary-clintons-private-email-server/
pgl I do have to admit though, it shocked me to find out regional accents are erotically stimulating to you.
https://www.youtube.com/watch?v=pB4aMVq7T7A
Steven Kopits: “We can assume therefore that 1.4 million people will fall into poverty by losing their jobs, and by math, 2.3 million people (1.4 + 0.9) will be lifted from poverty. That’s an acceptable trade-off, that for every 3.3 people lifted from poverty 2 will have no work?”
Uh,oh. Danger alert. Kopits trying to do math again.
Steven, the CBO number on poverty is a net number. 0.9 million reduction in poverty which includes the reduction in jobs.
But, as I pointed out, the reduction in jobs does not mean that 1.4 million have no work. Let me give you a simple math problem. Would you rather work 40 hours a week at $7.50 per hour or 20 hours a week at $15 per hours. Think about it for a while. I’ll wait because I know you have difficulty with numbers.
Fewer jobs does not necessarily mean people are worse off or have no job at all. Minimum wage jobs are high turnover, over 70% per year. What that means is you may have a million people sharing part time jobs but actually making similar or larger amounts of money annually. There simply is no 1.4 million without work.
The bottom line from CBO is that there is a net reduction in poverty and that is a win even if some people work fewer hours per year. Is that too mathy for you to understand?
If the law is observed, then 1.4 m people will not have work per the CBO. Now, you may state that the law will not be observed, and I may agree at least in part. But the Hippocratic oath of economics is “thou shall not create a black market”.
Yes, Steven, it is possible that 1.4 million people will lose their jobs, although clearly this is a hotly disputed estimate. But this will also lead to supposedly an increase in income for on the order of 27 million people, with nearly a million of those moving out of poverty. Policies do involve tradeoffs.
It may even be the case that some of those with their incomes rising and moving out of poverty will be African American males who are former drug addicted convicts, while some of those losing their jobs will be white racists.
And what do you suppose the proportions will be?
Like Menzie, you believe those who are not worth $15 in the market should be prohibited from selling their labor. And either you do not believe it will be disproportionately minorities with weak resumes, or you do not care. That’s an acceptable trade-off for you, not for me.
Steven Kopits: How’s your feeling on (1) child labor, (2) prostitution, (3) unlicensed medical practice, (4) unlicensed dental practice, etc. These are all restrictions on freedom.
Steven,
I would like to see this done in a way to minimize those job losses, with a gradual roll-in and greater flexibility for lower income states like Mississippi, and like 2slugbaits I am not particularly wedded to some particular increase, such as $15. And I do remind that the CBO number of possible job losses is probably an upper bound, with some estimates having there being no job losses or very few. This is indeed a complicated matter.
You are equating, say, a 19 year old black man with a criminal record looking to, say, work in an Amazon warehouse as the equivalent of child prostitution? You are genuinely arguing that people not worth $15 / hour should be prohibited from working in the US because that is detrimental to society, that they are the equivalent of adulterated food or child prostitutes and should be shunned by all ‘good Americans’?
I hardly know what to say to that.
Steven Kopits: Now you are being just willingly disingenuous. My point is: We make restrictions on human behavior to protect people all the time. We restrict child *labor* I think for good reason, to stop exploitation (I don’t know why *you* brought up child prostitution – I can only guess).
If you persist in misrepresenting what I write, then I will exercise my role of gatekeeper.
Barkley –
What does that mean, to minimize losses? Who mean you don’t believe in $15 / hour, or you don’t believe in a minimum wage? You seem to be waffling. What happened to all that confidence about trade-offs?
“Like Menzie, you believe those who are not worth $15 in the market should be prohibited from selling their labor.”
i do not think that is what has been pointed out at all. but if the wages paid to a full time employee are not enough to pull them out of poverty, then there is a cost to the government as that individual must be subsidized with food stamps and medicaid. this is a cost. the government should have some say in this matter.
That is not what the entire report said. If you read even the summary – you would know that. Stop rehashing the lies from Bruce Hall.
BTW a consultant who cannot do first grade arithmetic. Your clients should sue you for charging them for your utter incompetence.
Steven Kopits: “If the law is observed, then 1.4 m people will not have work per the CBO.”
The CBO does not say that. It’s been pointed out to you several times that the CBO does not say that, yet you persist.
A loss of 1.4 million jobs does not mean that 1.4 million people will not have work. Do you see the difference?
The loss of 1.4 million jobs means that some people will work fewer hours. It does not mean 1.4 million people will have no work. Given the high turnover in minimum wage jobs, over 70% per year, it is likely that most of those people will have at least some opportunity to work — and at higher wages.
Maybe a third time will get through your dense skull, but the CBO did not say what you claim it said.
Maybe that is why lawyers hire Stevie pooh. They often need “experts” who will flat out lie from them.
Just because 1.4 million people are no longer breathing doesn’t mean they are dead. Do you see the difference?
It all depends on your definition of “a job” and “work”. Now, I missed the part where the CBO said “equivalent full-time jobs”.