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Thread: Minimum Wage Vicious Cycle

  1. #31
    Quote Originally Posted by PRB View Post
    at least not immediately.
    I included jobs for several years after the increase went into effect. There was no decline. You can check my links above.



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  3. #32
    Quote Originally Posted by Zippyjuan View Post
    I included jobs for several years after the increase went into effect. There was no decline. You can check my links above.
    When there is a decline, you say that it was from some other factor.

    When there is not a decline, you disregard other factors.

    It's not possible in real-life examples to separate out the effect of the minimum wage from all the other things that affect the economy. But we know for sure, as a mathematical certainty that is proven beyond any shadow of a doubt that raising the minimum wage costs jobs.



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  5. #33
    Quote Originally Posted by erowe1 View Post
    When there is a decline, you say that it was from some other factor.

    When there is not a decline, you disregard other factors.

    It's not possible in real-life examples to separate out the effect of the minimum wage from all the other things that affect the economy. But we know for sure, as a mathematical certainty that is proven beyond any shadow of a doubt that raising the minimum wage costs jobs.
    I'm willing to concede that if the raise is only a nickel or a dime, the effect is hard to notice. But you gotta be kidding if you think a raise for $5 to $15 as liberals are demanding will have no effect on employment.

  6. #34
    Quote Originally Posted by erowe1 View Post
    When there is a decline, you say that it was from some other factor.

    When there is not a decline, you disregard other factors.

    It's not possible in real-life examples to separate out the effect of the minimum wage from all the other things that affect the economy. But we know for sure, as a mathematical certainty that is proven beyond any shadow of a doubt that raising the minimum wage costs jobs.
    Well, if there is mathematical certainty (which I am sure you can share with us)....

    It's not possible in real-life examples to separate out the effect of the minimum wage from all the other things that affect the economy
    Real life is what matters. Yes, there are other things which effect the economy and since raising minimum wage in the past has not led to job losses, then the minimum wage effect must not be very large on the overall economy.

    Sticking with the year chosen earlier of 1995, there were 125 million people employed. http://www.dlt.ri.gov/lmi/laus/us/usadj.htm If two percent were paid the Federal Minimum wage, that means that applied to 2.5 million of them. Many minimum wage jobs are part time but some may be full time. I will figure an even 30 hours a week worked on average for them. Adding one dollar an hour costs $30 a week to an employer. Is that a lot of money? That will depend on his margins. Let's figure 50 weeks a year (two weeks off also to keep numbers simple). $30 a week is $1,500 a year more (before taxes).

    So what is the impact on the overall economy? GDP in 1995 was $7.7 trillion (about half what it is today) and 2.5 million minimum wage workers times $1500 a year is $3.75 billion (which is now a bigger number) comes out to 0.05% of GDP.
    Last edited by Zippyjuan; 04-20-2015 at 01:04 PM.

  7. #35
    Quote Originally Posted by PRB View Post
    I'm willing to concede that if the raise is only a nickel or a dime, the effect is hard to notice. But you gotta be kidding if you think a raise for $5 to $15 as liberals are demanding will have no effect on employment.
    You are right- the larger the increase, the bigger the impact. I have not heard calls for raising the minimum wage by $15 an hour though.

  8. #36
    Quote Originally Posted by Zippyjuan View Post
    Well, if there is mathematical certainty (which I am sure you can share with us)....
    Sure.



    Quote Originally Posted by Zippyjuan View Post
    Real life is what matters. Yes, there are other things which effect the economy and since raising minimum wage in the past has not led to job losses, then the minimum wage effect must not be very large on the overall economy.
    There has never been an instance where raising the minimum wage didn't result in job losses compared to what the employment level would have been if the minimum wage weren't raised.
    Last edited by erowe1; 04-20-2015 at 02:31 PM.

  9. #37
    It depends on elasticity- the slope of the lines for demand for labor and supply of labor. If demand is inelastic, changes in prices (for labor or anything else) do not lead to changes in demand. If elasticity is high, then small changes in price can lead to large changes in demand.

    There has never been an instance where raising the minimum wage didn't result in job losses compared to what the employment level would have been if the minimum wage weren't raised.
    which is impossible to measure. Remember also that while higher labor costs may mean fewer jobs offered by some employers, the higher wages people get also leads to more spending on goods meaning higher demand and need for more labor to produce those additional goods. Or if an employer is able to pass along the higher labor costs to his customers, he may not decrease his workforce (in total hours or total numbers of workers). There is no absolute "this will lead to fewer jobs".

    A ten percent hike in the minimum wage does not lead to an automatic ten percent decline in minimum wage jobs. As you said earlier, once you move to the real economy and out of the classroom, there are many other factors also at work.
    Last edited by Zippyjuan; 04-20-2015 at 02:52 PM.

  10. #38
    Quote Originally Posted by Zippyjuan View Post
    You are right- the larger the increase, the bigger the impact. I have not heard calls for raising the minimum wage by $15 an hour though.
    Not "by" but "to". http://fightfor15.org/april15/

  11. #39
    Quote Originally Posted by PRB View Post
    Ah.

    But you gotta be kidding if you think a raise for $5 to $15 as liberals are demanding will have no effect on employment.
    Thought you meant increases of $5 an hour up to a $15 an hour increase. Sorry. (Fed minimum wage is only $7.25 currently so I assumed an increase of those amounts since raising it $5 would not get it to $15).
    Last edited by Zippyjuan; 04-20-2015 at 03:35 PM.

  12. #40
    We can get rid of the minimum wage once the Border is sealed and the rent seeking 14th amendment corporate person is abolished. Good idea also to eliminate rent seeking law/regulation in the professions- especially medicine and law.



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  14. #41
    Quote Originally Posted by paleocon1 View Post
    We can get rid of the minimum wage once the Border is sealed and the rent seeking 14th amendment corporate person is abolished. Good idea also to eliminate rent seeking law/regulation in the professions- especially medicine and law.
    in other words, we can have less government after we have more government?

  15. #42
    Quote Originally Posted by PRB View Post
    in other words, we can have less government after we have more government?
    More like your words rather than other words, at least with the border (I don't know what he means elsewhere). The border guards are not actually on the border. They are at internal roadblocks up to 100 miles inside the border. I have documented on this forum how roadblocks are ineffective. I documented how Richard Stana of the DHS said the goal is to secure 30% of illegal activity at the border, leaving 70% unsecured.

    So, your more government is actually people getting their head out of their ass and doing some real work. That would amount to less government.

    I don't even care about this issue, but anyway, you're a fake libertarian on this site just trying to troll. Your love of big government is also well documented. If any new members want more detail, then just let me know. PRB's posting speaks for itself, but there are other gems he's posted.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  16. #43
    Quote Originally Posted by NorthCarolinaLiberty View Post
    More like your words rather than other words, at least with the border (I don't know what he means elsewhere). The border guards are not actually on the border. They are at internal roadblocks up to 100 miles inside the border. I have documented on this forum how roadblocks are ineffective. I documented how Richard Stana of the DHS said the goal is to secure 30% of illegal activity at the border, leaving 70% unsecured.

    So, your more government is actually people getting their head out of their ass and doing some real work. That would amount to less government.

    I don't even care about this issue, but anyway, you're a fake libertarian on this site just trying to troll. Your love of big government is also well documented. If any new members want more detail, then just let me know. PRB's posting speaks for itself, but there are other gems he's posted.
    On what basis do you conclude i am a fake libertarian? Just because I won't tell you about muh gunz?

  17. #44
    If anybody is interested in PRB's misdeeds, then just let me know. He and I have discussed this at length, so I am only addressing other members here. Thanks.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  18. #45
    Quote Originally Posted by NorthCarolinaLiberty View Post
    If anybody is interested in PRB's misdeeds, then just let me know. He and I have discussed this at length, so I am only addressing other members here. Thanks.
    In other words, you won't answer my questions, because you can't. You can only fool people (most likely in private) where I can't respond and hope that people will buy your lies.

    I ask you time and time again to provide evidence, the best you can do is accuse me of lying because I didn't tell you about muh gunz. I asked you to prove I am a liberal, Democrat, Jew, paid shill, fake libertarian, and the best evidence you can cook up are

    1. I didn't tell you about muh gunz
    2. I said in a conversation that I belittle people (not always, not everybody)
    3. I admit that sometimes I troll

    I didn't ask you about my "misdeeds" I asked you what basis you have for calling me a fake libertarian and other names you are so fond of.

  19. #46
    Quote Originally Posted by PRB View Post
    You can only fool people (most likely in private) where I can't respond and hope that people will buy your lies.

    If anyone is interested, then please feel welcome to post right on this forum. Thank you.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  20. #47
    Quote Originally Posted by NorthCarolinaLiberty View Post
    If anyone is interested, then please feel welcome to post right on this forum. Thank you.
    Ok, let me volunteer (since I do have an affinity for voluntaryism )

    Libertarianism, like any label out there isn't always easy to pin down since there are even socialists like Chomsky who call themselves Libertarian(-socialist) but nonetheless, since I've seen PRB sneak in liberal agenda into the discussion on more than one occasion (although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well), I'm curious to know what other generally "anti-freedom" ideas he espouses.

    Honestly, I don't know if he's an anti-liberty troll or not but I think if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll.
    There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
    - Milton Friedman

  21. #48
    Quote Originally Posted by Paul Or Nothing II View Post
    Ok, let me volunteer (since I do have an affinity for voluntaryism )

    Libertarianism, like any label out there isn't always easy to pin down since there are even socialists like Chomsky who call themselves Libertarian(-socialist) but nonetheless, since I've seen PRB sneak in liberal agenda into the discussion on more than one occasion
    DO quote which occasion. Please, thanks.

    (although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well), I'm curious to know what other generally "anti-freedom" ideas he espouses.

    Honestly, I don't know if he's an anti-liberty troll or not but I think if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll.
    What's a good example, you're not a liar or child molester like NorthCarolinaLiberty, so I expect you to know the answer.



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  23. #49
    Quote Originally Posted by PRB View Post
    DO quote which occasion. Please, thanks.

    What's a good example, you're not a liar or child molester like NorthCarolinaLiberty, so I expect you to know the answer.
    I didn't even call you a troll & you're getting all wound up......Nonetheless, I'm not inclined towards petty fights.
    There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
    - Milton Friedman

  24. #50
    Quote Originally Posted by Paul Or Nothing II View Post
    (although I'll also concede that I've seen him defend "libertarian" positions a couple of times as well)...,

    I've never seen him defend a liberty position. Never.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  25. #51
    Quote Originally Posted by Paul Or Nothing II View Post
    I didn't even call you a troll & you're getting all wound up......Nonetheless, I'm not inclined towards petty fights.
    I apologize, I read that to say you were accusing me of "if a person has defended a view on one occasion & opposed the same view on another occasion, within a fairly short space of time, then I think it's highly likely that such an individual isn't genuine & could very likely be a troll."

  26. #52
    Quote Originally Posted by NorthCarolinaLiberty View Post
    I've never seen him defend a liberty position. Never.
    That must explain why you keep calling me a "pretender" or "faker" since I never appeared to defend a liberty position???

  27. #53
    Quote Originally Posted by Xerographica View Post
    The Nobel Prize liberal economist Paul Krugman recently argued that we need more government because people tend to make poor education/career decisions. Shortly after reading Krugman's case for bigger government, I read an article in the LA Times about how some people in the Philippines were lured to America with the false promise of high wages.

    Somewhat inspired by this very popular blog entry... A Week of Shorter Rod Drehers... I patched together some relevant snippets from Paul Krugman...

    Krugman: The world economy is a system -- a complex web of feedback relationships -- not a simple chain of one-way effects
    Krugman: Wages, prices, trade, and investment flows are outcomes, not givens
    Krugman: Wages are a market price--determined by supply and demand
    Krugman: Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever
    Krugman: Raise minimum wages by a substantial amount
    Krugman: The price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects
    Krugman: Your decision to stay in school or go out and work will shape your lifetime career
    Krugman: Now, the fact is that people make decisions like these badly
    Krugman: Bad choices in education are the norm where choice is free
    Krugman: He and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day

    If you'd like the context, just click the links. As you can see... Krugman used to be an opponent of minimum wages... but now he's a proponent.

    From my perspective, a minimum wage is a problem because it doesn't accurately communicate the demand for unskilled labor in any given area. This increases the chances that people will make really bad career/education decisions. Here's how I've illustrated this...



    And here's another attempt...



    My drawing skills aren't that great... but hopefully you should get the idea that, in this drawing, the US has more than enough people pushing brooms (unskilled labor). In economics... "more than enough" means that there's a surplus. Usually when there's a surplus of something the price will accurately communicate this information to the entire world. A low price says "hey, we have more than enough!". This important information helps people make informed decisions. When this important information changes, people's decisions will change accordingly. So in order for the US to have ended up with such a massive surplus of unskilled labor... something must have gone wrong with the price system. And that something is the minimum wage. A minimum wage says, "hey, we don't have enough unskilled labor!".

    A minimum wage creates a vicious cycle. When wages falsely signal that the US has a shortage of unskilled labor... this increases the chances that people will make big mistakes. Students are more likely to make the big mistake of dropping out of school and unskilled immigrants are more likely to make the big mistake of risking their lives to move here. The logical consequence of so many people making big mistakes is an increase in poverty... which is then used to justify an increase in the minimum wage.



    So what would happen if we eliminated minimum wages? I'm guessing that wages for unskilled labor will decrease. And I'm sure that proponents of a minimum wage would guess the same thing. Right? Because if we eliminated the minimum wage... and wages didn't decrease... then there wouldn't be a need for a minimum wage.

    If proponents of a minimum wage want to guess that eliminating the minimum wage would result in a huge decrease in wages... then, assuming that they are correct, this huge decrease would reveal that there is indeed a huge surplus of unskilled labor in the US. This would conclusively confirm the problem with lying to people about the demand for unskilled labor (aka "a minimum wage").

    Would chaos ensue if we learned that there actually was a huge surplus of unskilled labor in the US? Well... no. Take China for example. They used to have a huge surplus of cheap labor... but now they don't...


    Wages in China really didn't skyrocket because of a minimum wage... they skyrocketed because of the massive demand for cheap labor...


    In case you didn't actually dig through all those Krugman articles that I shared earlier, I'll point out that he vociferously argued against the idea that the massive increase in the global supply of cheap labor had anything to do with wages stagnating in the US. Eventually he acknowledged that perhaps there were some issues with his "implicit assumptions".

    Let's review! Here are two possibilities of eliminating the minimum wage here in the US...

    1. Wages don't plummet. Then there's really no point in having a minimum wage.
    2. Wages do plummet. Then the US "will soon be overwhelmed by the inflow of capital from the United States, Europe, Japan, and now China".

    We really don't help anybody by giving people bad directions. If you truly want to help poor people... then start a business. Give poor people a better option (builderism). Especially if you have a strong theory that some existing business is making a stupid mistake. Put your strong theory to the test by starting a business that doesn't make the same stupid mistake. Maybe you want to argue that starting a business is too difficult? Well there you go. You've successfully identified a huge problem. It's a huge problem when it's too difficult to give poor people better options. Please figure out how to make it easier for somebody as intelligent as yourself to start a business. And if you can't figure it out... then please have some respect for anybody who does manage to successfully start and run a business that employs/serves any amount of people.

    So anyway, back to the thread and the people who are here to legitimately discuss it. Plus rep to the OP. I like the simplicity of the circular drawing and other diagrams.

    If there are any other legit or non-lying people who'd like to discuss, then I'd like to hear. I even welcome opposing viewpoints, as long as they're genuine.
    Quote Originally Posted by TheCount View Post
    ...I believe that when the government is capable of doing a thing, it will.
    Quote Originally Posted by Influenza View Post
    which one of yall fuckers wrote the "ron paul" racist news letters
    Quote Originally Posted by Dforkus View Post
    Zippy's posts are a great contribution.




    Disrupt, Deny, Deflate. Read the RPF trolls' playbook here (post #3): http://www.ronpaulforums.com/showthr...eptive-members

  28. #54
    Quote Originally Posted by Zippyjuan View Post
    Did you make your career decision based on what the minimum wage was? Did you decide not to go to school so you could have a minimum wage job? Do you know of others who have?

    (note that about two percent of all workers receive the Federal Minimum wage)
    This is actually been a proven fact. I can point you to several well known academic studies that demonstrate this. Granted the effect is on the margins for a just binding minimum wage (small increase) rather than a strictly binding in which these effects become more pronounced.

    Still the results have been statistically significant.

    Slutter McGee

  29. #55
    Quote Originally Posted by Zippyjuan View Post
    If just two percent of all jobs pay the Federal Minimum Wage, changing that minimum (unless it was raised significantly) will not have much impact on the total number of jobs available.
    You are right. Change in Employment = Change in Hiring Rate - Change in Separation Rate. With increases in the MW the separation rate drops along with the hiring rate, so on the aggregate there is usually only a small decrease in employment...some studies say not at all. But there are still negative effects. Job creation rate does drop, Businesses substitute away from teenage labor, but not to adult labor...rather to teenage labor with a lower marginal utility of a dollar and a higher marginal product. In other words they substitute away from poor kids to middle class kids who are better educated.

    It also hurts small businesses with lower turnover far more. High turnover business can decrease the marginal expense of hiring new workers as turnover slows and actually increase employment.

    I realize that all these effects are on the margins. On the aggregate you are right about a small increase. But you still can't ignore that they are real effects.

    Slutter McGee

  30. #56
    Quote Originally Posted by PRB View Post
    What if we paid everybody more, $7 guy gets $15, $15 guy gets $23. How would that NOT affect employment?
    I agree with what you said before about increases in MW affecting others above MW. But this situation might actually not affect employment. Across the board increase in wages is going to affect prices the same way. You are talking about a situation where Keynesian theory would probably hold true.

    Sorry, to keep posting one after another. I am late to this, and just going down the thread responding to what I see. Far easier than trying to combine a bunch of posts.

    Slutter McGee



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  32. #57
    Quote Originally Posted by angelatc View Post
    You are perhaps ignoring the unemployed in the equation?

    Price ceilings create shortages, and price floors create surpluses. A minimum wage creates a surplus of unskilled labor.
    .
    Pretty much what everyone thought until the mid 90's. Even after factoring in the fact that Employment is relatively inelastic. Most estimates are around .125 but I have seen them go as high as .3. So you are looking at a 1 to 3% decrease in employment for every 10% increase if that holds true. The classical model doesn't really show this when modeled.

    Basically you are completely correct for large increase in the MW, but it simply doesn't hold true for small increases.

    Slutter McGee

  33. #58
    Quote Originally Posted by erowe1 View Post
    Sure.





    There has never been an instance where raising the minimum wage didn't result in job losses compared to what the employment level would have been if the minimum wage weren't raised.
    Sorry Erowe, I hate to agree with Zippy, but he is right on this. That classical model hasn't held true when actual research is shown....but only for small increases. There are still negative effects though.

    Slutter McGee

  34. #59
    Quote Originally Posted by Slutter McGee View Post
    I agree with what you said before about increases in MW affecting others above MW. But this situation might actually not affect employment.
    Everybody being paid more won't affect employment??

    Across the board increase in wages is going to affect prices the same way. You are talking about a situation where Keynesian theory would probably hold true.
    Keynesian or not, across the board increases WILL affect prices AND employment, I don't know what you're disagreeing about.

  35. #60
    Quote Originally Posted by PRB View Post
    Everybody being paid more won't affect employment??



    Keynesian or not, across the board increases WILL affect prices AND employment, I don't know what you're disagreeing about.
    Prices sure, but you are talking about a 1 time increase in the money supply dolled out to EVERYONE equally. Not going to really effect employment. Inflation and wages adjust in the long run.

    Of course there is going to be negative effects, but in your scenario Prices are not going to be sticky. You are not looking at a huge decrease in employment. Now just increasing the Minimum Wage way up...sure. absolutely you are right. But not with accross the board increases in wages.

    Slutter McGee

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