128 Comments

I don't understand why nobody ever even tries to just say "every county's minimum wage will be set each January 1st to 50% or 60% of that county's most-recent median-wage, based on whatever numbers from BEA or the Census seem most reliable."

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Because that would be too smart!

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Or I like, if county unemployment is below target, minimum wage goes up x% next year. If it's below target, it goes down x%; just explicitly create feedback from the local unemployment rate.

More monopsony breaks either of these approaches though. To prevent that, you could cluster similar counties and randomly assign them different conditions to see what works best. Really would turn the country into some kind of policy ML experiment.

Minimum wages in each county set by a giant inscrutable AI is both my fantasy and probably the least populist policy imaginable.

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You are assuming that that only unemployment and minimum wage are related. What if some years they are completely independent of each other.... I bet fewer people that you meet in a day make as little as you think. I have worked in the service sector for 30 years. I have had people give me passionate speeches about how the minimum wage increase would be good for me. Which really felt good when I was able to tell him I did not make minimum wage, but increasing the wage was going to reduce my hours in the short term, I was already made aware of it. So, local prices rose, my hours reduced, purchasing power parity reduced, we did not hire for a year and within 15 months we were literally in the same place as before.....

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Well if the min. wage is set at 60% of the current median, then that would immediately change the nation's median wage as now 40% of wages at the bottom will get boosted up to the min. wage.

I suppose you could try something like the Federal reserve does with interest rates and inflation. Declare a certain percentage of workers should be targetted to work at the min. wage. If the actual % is low, the wage gets increased. If high, decreased. That would mean during a period of inflation, the min. wage would be increased since inflation would life many workers above the min. and decreased in deflation.

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Please go take a statistics class.

The median wage is the wage such that half of people make more, and half of people make less.

Say the wage distribution among a group of eleven people is:

60k, 60k, 60k, 60k, 60k, 60k, 60k, 60k, 60k, 60k, 60k.

The median is, as you might guess, 60k! In this case, 60% of the median (36k) is less than ANYONE makes.

Now suppose it's

10k, 20k, 30k, 40k, 50k, 60k, 70k, 80k, 90k, 100k, 110k.

The median is, again, 60k. In this case, because it's a flat distribution, 36k falls between the 3rd and 4th person, so it works out that the people above that cutoff are around 60% of the group -- but the point is that this entirely depends on the shape of the distribution.

In real life, the distribution is neither flat like the one with all 60k, nor a straight line like the second; it's not even a bell curve. It's super skewed off to the right with a long tail.

In terms of the _annual_ individual income distribution, I think the math does work out that right around 40% of people earn less than 60% of the median personal income. (Median income is $36k, and 60% of that is around $20k, which lines up with the 40th percentile.)

https://en.wikipedia.org/wiki/Personal_income_in_the_United_States#Income_distribution

But you can't stop there, because a huge chunk of people don't work at all, or don't work full time. So these figures aren't terribly helpful in figuring out how this relates to _hourly_ wages.

Here's some good hourly wage distribution stats:

https://www.epi.org/chart/state-of-american-wage-table-1-hourly-wages-of-all-workers-by-wage-percentile-2000-2019-2019-dollars/

They have the 50th percentile (median) at $19.33/hr. 60% of that would be $11.60/hr, which is somewhere between the 10th and 20th percentile, and a large chunk of the people below it are already at least close to it. $15 hits around the 30th percentile, but even if the "fight for $15" is successful, everyone that's proposed it has written their law as a phase-in over a few years -- by the time it gets phased in, inflation will have brought it much closer to that "60% of median" line.

I still am personally not onboard for a national $15 rate, I worry that it will be too high in some areas that are _already_ economically in trouble. I'd prefer to just explicitly index min-wage to local (county level) median wage, which probably means around $15 or even a bit more in places like San Francisco, and less in, like, Peoria.

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Thanks for that. I have taken multiple stats classes but sometimes its best to work these examples out first. I had jumped to the conclusion that setting the min. at 60% of the median would mean 40% get a raise. Obviously that's not the case.

I just did an even simplier example in Excel. Ten people with wage rates going 1, 2,3,4,5...10. Median is 5.5 and 60% is 3.3. Replace the bottom 3 people's wages with the new 'min wage' of 3.3 and again the median for everyone remains 5.5

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I love how often I'm seeing comments here where people react positively to being corrected by others! It gives me hope that there's spaces on the internet for productive conversations among (mostly) strangers.

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Because what you and a great many other people simply cannot seem to understand is that many jobs are not even worth the current minimum wage. The only thing stopping them from simply being automated out of existence right now is employer complacency and ignorance of the options available and that may even be a thing of the past now as businesses seek to mitigate COVID-19 revenue shortfalls if lack of capital for the short term expense doesn't get in the way. Regardless. hike the Min wage to $15/hr and you will see automation, and corresponding innovation in the automation industry occur at a pace faster than you ever dreamed of.

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So how do you explain the fact that there _wasn't_ mass unemployment back when the real value of the minwage was _more_ than what $15 is in inflation-adjusted dollars today? Has the productivity of the average worker gotten lower? I guess one could propose that _because_ of the erosion of the real value of minwage, employers have started hiring unskilled labor to do stuff that o/w might make sense to do with fewer workers and more capital. But in that case what you're saying is that raising the minwage will lead to a booming economy -- everyone will want to invest in productivity-raising capital, which will complement unskilled labor to make productivity shoot up... Which fits with the part of the research that shows that minwage hikes might _increase_ employment. If you encourage investment in capital, and that makes it so the productivity of unskilled labor is higher, it follows that it will become attractive to find ways to deploy that labor. So there might be some short-term displacement, and certain workers who are inherently constrained, like teenagers, might have a harder time finding work generally, but you'd expect the larger trend to lead to a tight labor market and rising low-end wages, like what happened in the 1990s. We had four hikes in that decade, in 1990-91 and again 1996-97. We went from $3.80 at the beginning of that period, to $5.15 by the end, a hike of 45%. And yet in the late '90s we had record low unemployment, low-end wages rising so fast that income inequality actually fell for a couple years (basically the only time in modern history), and we even ran a budget surplus.

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" Has the productivity of the average worker gotten lower? "

I'm sorry, Is that a serious question? Gen Y and Z spends as much time on facebook and instagram at work as they do working.

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"So how do you explain the fact that there _wasn't_ mass unemployment back when the real value of the minwage was _more_ than what $15 is in inflation-adjusted dollars today? "

Pretty easy: Vastly limited automation options, with said limitations no longer existing.

"Has the productivity of the average worker gotten lower? "

"We went from $3.80 at the beginning of that period, to $5.15 by the end, a hike of 45%. And yet in the late '90s we had record low unemployment, low-end wages rising so fast that income inequality actually fell for a couple years (basically the only time in modern history), and we even ran a budget surplus."

They are now talking about a 106% increase asap not a 45%, and two, you mean back when a 20 MB hard disk was state of the art and we did everything with our computers at a DOS command line? Again, employers had no choice but to pay the wage or get in a time machine and go into the future to get automation options that did not exist then. The automation industry is salivating at the thought of a $15 min wage and the joke is very quickly going to be at the expense of the people who think they are still going to have a job where they get it and the know-it-alls who pushed it.

Personally I'm looking forward to it. I expect my fast food ordering experience is going to get a big improvement without the person who can't qualify for any more than minimum wage being solely responsible for it's accuracy.

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Political power to be wielded by the right and nobody on the left had the forethought to set it to a formula model that really only developed once the right's dominance of American politics began in the 1990s. You also have to remember most of the time we raised the minimum wage every few years, sometimes twice a decade. It's only been stagnant due to Republican interference in the model.

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Go ahead and raise it and watch the jobs simply be automated out of existence as you pay the remainder of the cost for most of the goods and services you buy. Anybody who thinks that doubling the min wage is not going to cost jobs is living in a dream world and has no idea the extent to which menial low skill tasks can be automated. The pandemic will only accelerate the automation process. Many businesses will not come back and those that replace them will come heavily automated right out of the gate. I've automated my maid out of existence. She really didn't do that much other than sweep and now I have a machine that does that, all day while I'm not even home, and I don't have to worry about it getting sick and coughing all over everything or what it might be up to when I'm not supervising it.......

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Yes, thanks again uninformed opinion writer on an article literally laying out proven economic theories turned into outcomes.

Fucking being wrong just doesn't hit white men at all sometimes

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You people and the economists live in a complete fantasy if you think you can increase labor costs 100% and not lose jobs. A FANTASY. You DRASTICALLY fail to factor the cost of automation. Why only you know. If you don't like white men, there's always the plethora of non white majority first world nations to immigrate to......oh right, there actually aren't any [snicker]. The utopia of Somalia awaits your arrival. [double snicker]

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You have zero research, evidence, or even a degree to back your assertion.

I'm sorry you're a dumb white guy who thinks being white is enough to excuse your stupidity.

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Oh BTW the CBO says as many as 3.7 million jobs lost, but hey I know.......WHITE GUYS. LMAO

https://www.foxbusiness.com/economy/heres-how-many-jobs-bidens-proposed-15-minimum-wage-could-kill-according-to-the-cbo

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Oh look baseless assumptions and a variation on argument from authority logical fallacy from a fool who, based on the fact he thinks you can simply double labor budgets and have no effect on the number of employees a business can continue to field, has never written a payroll check in his life. :) Don't worry cupcake, after you immigrate to the utopia of Somalia to get away from the evil white men you won't have to worry about this stuff as you dig through a garbage dump for your food. :)

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Not being a jerk, but have you ever submitted a business plan, or a budget proposal for a private business for a future project? How are people expected to allocate capital/labor mix with any sort of prediction? This will just effectively act as another 'tax' on low skilled labor in my opinion. People will look for any way to get fixed costs so they can make some comparison between future projects. If labor is a variable cost, and attempting to fix costs for future projects is desirable for businesses, what kind of effect do you expect this to have on the demand for labor? Theory predicts it will fall, and eventually reach the same equilibrium point it was at before. Now a few more people priced out of the labor market... I do not know, I could be wrong, but I think most of these policies, while with the best intentions, end up costing the people who are the least able to avoid paying the costs.

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This guy didn't read the article and keeps joining that 26% who are in effect unable to read the empirical data we keep collecting because...something something freedom?

I'm not sure what argument you think you made here because the article largely debunks its premise and I don't gather why you reiterated it?

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I'm against this proposal because of the basic law of supply & demand - along with something, something freedom.

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You should be against it as a consumer because YOU WILL PAY MORE FOR GOODS AND SERVICES. GUARANTEED. Any minimum wage hike that cannot be recouped by reduced labor expenditures will be made up in higher cost of goods and services. Don't tell me you will make up for it in savings in taxes that go for social programs either. Politicians are not going to stop buying votes with handouts because the minimum wage goes up. That's simply not happening.

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The basic law of supply and demand doesn't apply to surplus labor economies. You should absolutely not reply anymore until you understand that concept.

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Of course it applies, hence the whining for a higher minimum wage because the wages that result from supply and demand are deemed to low, mostly by those who lack the skills to make any more than minimum wage and in many cases aren't even worth that, those too ignorant to know that they will pay much of the higher wage cost as consumers, and, of course, those politicians who want to buy votes from both of the aforementioned groups.

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So, again, NOT READING THE ARTICLE keeps making you look like an idiot and an asshole. Just why keep writing? What privileged white guy nonsense are you living in?

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"Not to be a jerk", but did you read the original post? :-P

You're essentially assuming the model of the labor market that Noah is critiquing, suggesting that labor costs will be a binding constraint on small businesses. That surely _is_ the case for some, but that's exactly why I'm suggesting a localized rate, because I'm concerned that a nationally-set rate would be damaging to small businesses in exurban towns.

And to your rudely-phrased question, yes, as a matter of fact, I was the #2 at a small business where I owned a sizable percentage of the equity, and for six years I was the guy dealing with our online accounting payroll system, and literally signing paychecks when we issued the odd paper check (to new hires who weren't coded in yet).

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Hello, Thank you for interpreting the "not to be a jerk" part in a favorable light. I was attempting to understand your experience to better understand your perspective, and most ways I word it tend to sound accusatory in nature in mediums like this. Backfired! Did not intend to come off rude, thanks for taking it well.

For your second paragraph, I absolutely do think this is the case at many businesses that employ minimum wage labor. What happens when small businesses are developing plans multiple years into the future? Most of the small business I managed were located in small towns. We relied on networks of local, regional, and national supply lines to help us lock in a cost. This was necessary to predict revenues and costs as we decided where best to use capital. I am not sure how that would work, trying to predict for changes in wages that might effect our costs for inputs every year based on conditions that might change year to year, and whatever resulting disruptions as those business choose how to proceed with their variable costs.....

It is possible I am wrong though, and it has different effects and opposing forces will always be reacting to each other. This might dampen effects.... so might conclusions might be wrong.

I do not know though, I might not be clear on all your arguments so I might be going off on a tangent you were not intending....

One thought I would be interested to hear your opinion on:

Do you think a policy like this (variable min wage tied to some localized wage situation) would lead to low wage jobs concentrating in one region or area, possibly stunting growth for those people in that area? I don't know. Many low paying jobs (2/3) are probably not able to relocate. People won't drive 20 miles to a McDonald's let alone get on a plane..... (would be interesting to know if affluence influences how far people will travel to consume low cost goods. Like will this just subsidize the middle class to keep low income people segregated if as income rises so does propensity to travel further distances..... cars are safer & more comfortable...never driven one but oh man they do look fun and I would definitely drive more in the short run, others might not or adjust down over time... higher EV rate might diminish people's perceptions of the environmental impact leading to more driving.... shifting regulation to EV vehicles might prevent lower income people from being able to travel greater distance to work, concentrate closer to these jobs......just speculation on what might be affected)..... But other sectors might, similar to what we see now with global manufacturing relocating to match capital and cheap labor.

Even if there is an effect, I am not sure what the outcomes would be because it might be hard to determine which effects will be stronger. Could be a way to solidify labor costs though for large businesses, flood a single market as a hub for large multinationals to distribute goods regionally while choosing locations that their gravity will effect the most.

Interesting to think about sorry if this is a wild divergence, (I live in a legal weed state.....ha)

cheers!

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As the saying goes, "A plan is useless, but planning is necessary."

In a world where min-wage was tied to median wage, I would not expect min-wage to rise tremendously fast, because wages just haven't. Also, arguably the regime I'm describing would provde _more_ predictability, because right now, what happens is that the min-wage languishes for years at a flat level, and then suddenly the politics of the issue allow it to make a big spurt of catch-up growth. If you're trying to project budgets for the next 2-3 years, just assume that wages will go up about 5% per year (which is a _very_ pessimistic assumption, from the perspective of wages being a cost -- they probably will rise slower than that).

Regarding your thing about jobs concentrating -- it is _already_ the case that wages (including min-wage) vary across very nearby locations (e.g. at the boundary of Kansas City, KS, and Kansas City, MO, and between counties and cities in some cases). That's exactly how we first started getting the experimental literature Noah is talking about in the original post, where people would look at a case where people really _do_ have the option to just drive five minutes into a jurisdiction with a different min-wage. They seem to find that the impact of a min-wage hike in the district that already was higher wage has minimal effect, as long as the min-wage remains relatively low (below maybe 60% of the median for the two areas jointly).

Also, to the extent that demand for labor increases in a low-wage county, shouldn't running a tight labor market there tend to raise wages? This is arguably a _good_ thing. Take a look at the spike in wages even for service workers during the North Dakota shale boom... (Not that I think the shale boom is a good thing itself, but again, it's a natural experiment.) In theory if we started charging a border carbon adjustment, and o/w making imports from China / SE Asia look less attractive because of regulations related to environmental and labor conditions, if you started onshoring work like textile assembly again, it would be _great_ for small cities that are somewhat isolated from bigger metro areas to attract those industries.

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My second paragraph, meant to say how to predict labor markets using those techniques all over the country..... and the reactions to those changes over large distances..... again, legal weed state.......

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Thanks for this. I'm very interested in whether or not min wage laws are good. I'm glad that you went into regional differences because a national min generally seemed like a bad idea to me and I would wonder if it could be tied to regional wage levels. But even with the monopsony scenario, is the assumption that if an employer has market power then they WILL be artificially keeping wages low and can afford more? I'm not trying to say that I think employers are good and will always want to pay fair wages but it seems like the argument perhaps assumes that employers will be unfair.

Also, how would you compare min wage laws to letting the market wages go but then using more gov't assistance like EITC, UBI, or something else.

Thanks again!

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Minimum wages are just politically easier to pass than big tax-funded welfare payments.

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If there's actually Monopsony though the min wage has the extra benefit of increasing output more towards the optimum level.

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Sure because the American population is overwhelmingly made up of non-business owners and has been dumbed down to the point that a large percentage of it can't manage to grasp that in order to be profitable in the first place, every business must pass on 100% of it's operating costs to consumers. Minimum wage cost to businesses that cannot be offset by workforce reductions will be passed on to consumers. Those who support a higher minimum wage support they themselves paying more for most goods and services that they purchase. Almost all of those goods and services have inflated costs as a result of minimum wage underlying their price at some point. Even professional services where at first glance this might not seem to apply have underlying clerical and other low skilled labor costs pushing up the price.

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Could you provide a cite about smaller towns have more concentrated employment?

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I think the argument is not so much that employers will be unfair, but rather than employers will take the economically rational choice of employing people at the wage that leads to the most profits.

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If you scour BLS data to find the workers within 10% of MW, it's not about small one-company towns in Kansas so much as about "the entire South," even in urban and suburban areas. It's important to recognize that unemployment pressure there is disproportionately borne by one group. So if you're trying to fix the racial wealth gap, this is playing with fire.

I mean, I find it totally plausible that national MW increases might not increase unemployment in the black community. Maybe even more likely than not. Even if I give up to 80% odds of that though, I find that pretty cavalier policymaking.

Perfect is the enemy of the good, though, so I do not want to toss MW entirely. But it must be asked, why not a tiered policy tied to local conditions? Why not add specific measures to protect historically marginalized groups, such as wage subsidies for transitional employment opportunities? Why is this all or nothing? Why can't we include any technocratic safeguards? I know it's a pipe dream that legislatures would pass perfectly written measures, but even on wonkish blogs, can't we at least fantasize about a little technocracy, as a treat?

I'm increasingly frustrated that our policy debates tend to be just "X good! X bad!" The smart vanguard of policy discussions could instead be saying, "Ok, X has some benefits we want, but I'm willing to acknowledge some tail risks, even though I think they're a bit higher/lower than the general consensus. Here are the greatest risks with X, ordered by my best guess of likelihood * impact, and here are some mitigations we can add to the policy that will let us reap the benefits while making it safer for everyone."

Just, "eh, Federal might be fine?"

What's the actual harm of trying to do better? Honest question, maybe there's an answer. Maybe I'm being naive and there are specific reasons why any possible mitigation would be a poison pill, fine, let me know, I can take it. But otherwise I don't know why this is the line. I don't know why this is where we just shrug and give up trying to make a more robust policy that has all the exact same benefits but fewer risks.

(Sorry if this is on the rant-y side; thank you either way for the continuing reviews of research. I find them very powerful and useful distillations of current best knowledge on policy. Just wish you'd let your technocracy flag fly a little higher. Sure, maybe Biden's policy is fine whatever, but what would YOUR best policy be?)

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Something to think about!

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I find explanations incorporating search theory more convincing than the monopsony power theory: When minimum wage is raised, some low productivity jobs will be lost. Hence, laid off workers will spend more resources in finding a higher productivity job, and will also have to accept inconveniences (like a longer traveling time) for it.

This is for example what could have been observed when germany introduced the minimum wage a few years back. And it raises the question, whether the overall result of having a minimum wage is really socially optimal or not.

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Nice work. The potential impact of price setting effects of employers and the interaction with the minimum wage leading to possible employment gains is something that has been deserving of more attention for years. It's implied by but almost never discussed in most intro micro models.

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Not an economist here but can`t one argue that a market with wages at or close to the minimum wage is inherently not competetive?

Given that many people have to have a job to make ends meet they don't have any bargaining power and not taking a job might not be an option, even if they barely or not at all are able to live off of it. Should one or many employers realise that, they could decide to only offer people minimum wage and chances are they still might get enough people to not have their economic output suffer from vacant positions.

Isn't the fact that there are people working fulltime and still needing social security somewhat proof of this?

TY in advance.

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What about the racial impact of minimum wage laws? Its odd that it isn't discussed much, given that the left is obsessed with racial impact in many other policy realms. My biggest beef with the minimum wage is what it does to minorities in inner cities. UC Irvines David Neumark is especially poignant on this and how it disproportionally harms the most marginal in society - especially Blacks from inner cities. Everyone intuitively understands why say the teenage unemployment is so high given minimum wage laws, but the Black urban youth is suffering from the same impact of the minimum wage. I'd be for a minimum wage if it was somehow pegged to the Black/White unemployment gap, for example. But when it comes to issues that greatly benefit unions (public schools, public services, and the minimum wage) the left suddenly doesn't care about racial impacts.

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Why is the worker not allowed to set a price for their own labor?

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The BLS states the median hourly wage in the US is $19.14/hr. That means a $11.48/hr minimum wage is the 60% sweet spot. Or $12.63/hr if you want that two-thirds upper range. $15 is 78% of the median hourly wage in the US.

https://www.bls.gov/oes/current/oes_nat.htm

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I am a small business owner. I employ 30-35 employees. If minimum wage was $15, my payroll last week would have been $8000.00 more. My rates to parents will raise $50-$70 per week per child. This will be the same in all businesses. So, employees making $15-$20 now will be brought down into poverty level because they will not get an $8 an hour raise. How does that feel for employees who have worked hard to get where they are, and now all the lazy, always late, never show up to work employees are making the same as them. Now, who wins, it is the government. I also figured how much more payroll taxes my business would pay on just the increase in minimum wage. My increase in payroll taxes would be $125,000.00 per year, multiply that by all the businesses in this country and you can see why the government wants minimum wage raised so much. They will collect billions of dollars more in payroll taxes on just the increase. They don’t want to tell you that!!!!!

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"So, employees making $15-$20 now will be brought down into poverty level because they will not get an $8 an hour raise."

I don't understand how you made this conclusion. Raising the minimum does not change the circumstances of those currently making more than the minimum is raised to. I believe there is evidence that raising minimum wage does not have a strong impact on inflation, meaning those currently making 15-20 will continue to not be in poverty, and others will be brought out of it.

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He's saying that people who already make $15-20/hr will likely not get a wage increase and will therefore be unlikely to be able to absorb a large price increase.

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Nobody talks about this aspect. It’s all about the dual purposes of buying votes and raking in more in taxes. Your increased rates to parents plus all the other price increases will also erode the additional income created by the rising minimum wages.

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You’re effectively arguing it’s impossible for an entire area to get richer at once because their cost of living will just go up, but this isn’t true, economies are not zero sum.

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Your statement is true when increases happen organically, but when forced through a large minimum wage increase it’s not true. If it went up a dollar or so, then relatively few employers would be impacted, and most impacted would be minimal. These small wage increases would likely affect a small increase in those goods or services associated. However more than doubling the wage floor will impact almost every employer of non skilled labor, and significantly. In Ed’s example above that’s an $8000 increase per payroll. I seriously doubt he has profits that large to cover that increase, so prices go up significantly to effectively cover the wage increase and keep Ed in business. Any service industry with high labor levels will be particularly affected. Then multiply this times every business who has a large portion of their workforce below that new wage threshold. Prices all go up with a cascading effect. So yes, I am arguing that it’s impossible for an entire area to get richer all at once if those riches are forced from area businesses. If they can’t make profits then they shut down, so prices have to increase to cover increased labor prices.

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Big corporations like Amazon regularly lobby to increase minimum wage while small businesses regularly fight it. This tells me who it benefits and who it harms. Increasing minimum wage may cause the economy to become more of a monospony than it was before? If there is a way to force minimum wage only for companies above a certain market cap, that would be better.

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They typically give partial exemptions for small businesses.

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States are free to structure their minimum wage laws however they see fit, but there’s absolutely no such exemptions under the federal FLSA.

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This is some of the laziest "analysis" I have ever seen by a professional "economist" (granted, he's not exactly an endowed chair at Harvard). Given that we are subscribing to the reification fallacy, I'd point out that the data "says" no such thing regarding increases in minimum wages. The data's sensitivity curves indicate that marginal increases in the effective price floor do not meaningfully decrease labor force participation rates during the time periods of study (some of the increases in the actual price floor were very high, but generally in areas where few earned minimum wage).

This is a far cry from saying that "a more than doubling of the wage floor will have no effect whatsoever in the labor markets." Rather, it is clear that there will be effects on a regional level (which would be clear if you did any actual analysis).

For instance, three states (WV, MS, & AR) have median wages below $15, another 11 have median wages below $16. If you actually think that this will have no impact on the labor market than you are even less sophisticated than your published research would lead an unbiased observer to assume.

The above point is doubly reinforced given that you cannot even bother to get basic information correct: The BLS reports the median wage in the US at $19.33 per person in all states. No state has a median wage of more than $23 per hour (the highest are CT, MA, & AK). Only Washington D. C. has a median wage in excess of $24 (at $33 or $34 - the data is a couple of years old). Given your claim that price floors are only net detrimental at 60% of the median wage and that no state has a median wage of $15/.6 = $25, we are forced to conclude that this new labor floor would be net harmful in every state. Furthermore, we can introduce a little bit of marginalization (and common sense) to show that large employers located in the geographies with the cheapest labor likely do not do so with their outside option being relocation to California. Rather, their outside option is likely to re-locate abroad. Rather than the Monopsony model, you should consider that employers have a greater ability to relocate than do employees (especially in the long run) which would imply that their best strategy is to relocate in the long run.

Who was the empiricist again?

TL;DR: Noah proves the counter due to his inability to collect actual data.

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I wonder what you think of Tyler Cowen's arguments, can you respond point to point?

1. https://marginalrevolution.com/marginalrevolution/2021/01/consistency-about-elasticities.html

2. https://marginalrevolution.com/marginalrevolution/2020/10/minimum-wage-laws-during-a-pandemic.html

3. https://marginalrevolution.com/marginalrevolution/2020/03/minimum-wage-hikes-are-a-much-worse-idea-now.html

How about the non-partisan CBO report which says MW would cut of 1.3 million jobs? Or how about David Neumark's meta-analyses from 2007 of 96 studies which showed zero to negative effect?

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This piece is incredibly scary when "recent PHDs and Economists" sit around offering endless theory of the effects of a $15 min wage with NO analysis of any data on whether businesses can afford it.

And using the US state median income as a basis means 24 states are going to have negative impact on trying to adjust to it.

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The theory presented here is incorrect. The x-axis should not be "number of people employed" but instead "hours of labor for jobs paying the proposed minimum wage or less." A reason many studies fail to find a detrimental effect of the minimum wage is because they focus on employment numbers, which are easy to find, rather than hours worked. The most comprehensive analysis done on this subject was on Seattle's hike, where it was found that increases in the minimum wage were offset by reduced hours and slower low wage job growth. Single study sure, but much more in depth than Card and Krueger and many others commonly cited.

https://evans.uw.edu/faculty-research/research-projects-and-initiatives/the-minimum-wage-study/

Researchers also wrote opinion on the disappointing results, although they make a caveat that a national min wage might do better:

https://www.seattletimes.com/opinion/lessons-from-a-wage-experiment/

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Noah is deleting any negative comments. Another problem with academics is that they can curate things. They also only seek approval from other academics. PhD economists and academics are talkers, but not doers. Listen to tinkerers, inventors, and entrepreneurs big and small, those with actual skin in the game that don’t rely on theory. Sooo many uncontrollable variables for minimum wage. I wish Nassim, and other complexity scientists who actually understand mathematics and statistics at the deepest level would come across this piece and shred it. Noah pumps out content without rigor simply for financial and status gain. Deep down he knows he’s not doing the due diligence or rigor in regards to his “work”. Economists, specifically Keynesian, love to think they are the ones who know what good economic policy is, but no one in the world is smart enough to model the world at a macro level. Once people realize this then there is no use for economists because it’s a fake job.

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I cannot comment on most of your post, as my comments have been critical and they are still posted, but I will address my opinion on the last sentence.

It is not a "fake" job in my experience. It is a tool with many uses . I prefer to use Economic theory to take a "plate tectonics" view of economic activity/human behavior, trying to predict the logical outcomes of millions of people making decisions about how to spend their scarce resources (time, money, attention, affection, any choice made) compared to some other activity.

Public Policy based off of Economics is usually a political outcome, not economic. So while it is an economists job to predict the most likely outcome of policy choices, once the analysis is done it becomes a part of a political process that might have an outcome that does not resemble what an economist would recommend.....

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We do not have the tools or intelligence to predict the outcomes of millions of people. One cannot understand an ant colony by studying an individual ant. There are individuals (all irrational and unpredictable), those individuals interact differently together in groups. Those groups interact differently with other groups. Those bigger groups interact with other bigger groups etc. these interactions are often non-linear and cannot be abstracted out to linear. This is the curse of dimensionality. Humans are not capable. Instead these theories cause more harm than good when academics and economists try to play god with complex systems they do not understand and they think intervening is better than going nothing. It makes me think of Warren Buffet saying I like companies that are so robust an idiot can run them. Well the same applied to the economy. A robust economy built on market signals can work with a group of idiots and better than a soviet style interventionist top down approach with a population of “geniuses”. Again listen to those with skin in the game that face consequences for their actions. Not academics isolated from their consequences and reality. Economists have done so much unquantifiable harm to the world. To all academics, “if you manage to convince yourself that you are right in theory, you don’t really care how your ideas affect others. Your ideas give you a virtuous status that make you impervious to how they affect others.” Krugman, Stiglitz, and their ilk are repulsive and a danger.

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I should have been clearer, I do not use Economics to predict the individual actions of millions of people, it is possible to model the outcomes of millions of people responding to stimuli.

The rest I do not know. I have 30 years of experience working in and running small and locally owned businesses, then went back and got a B.S. in Economics. To me it is one of the most powerful tools to understand behavior. But I, and most people, do not use Economics in the way you describe above, so your results might be different.

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And this is the problem. You think you can predict the outcomes of millions of people responding to stimuli (doubtful), but let’s say you do, what you miss are the second order, third order, higher order effects. Keynesians don’t understand this. Again they think they’re smart enough to play God with complex systems. They cause so much damage to the economy it’s unreal, but before we see their ideas play out enough time has passed, so they can pass blame or cherry pick data to cover themselves. Keynesians and all PhD/ academics in social sciences are a danger.

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I don't have to know where every grain of sand on a beach is to know that it will be smoothed out when the tide comes in.

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