I Disagree With People On Tumblr About Dr. Horrible And About The Minimum Wage

I disagree with people on Tumblr: Is Dr. Horrible A Sexist “Nice Guy” Narrative?

I disagree with people on Tumblr part 2: Why We Should NOT Abolish The Minimum Wage

This entry was posted in Class, poverty, labor, & related issues, Economics and the like, Men and masculinity, Minimum Wage, Popular (and unpopular) culture. Bookmark the permalink.

32 Responses to I Disagree With People On Tumblr About Dr. Horrible And About The Minimum Wage

  1. KellyK says:

    I totally agree with your characterization of Dr. Horrible. There are some “Nice Guy” elements to Dr. Horrible’s character, but I think that’s critiqued rather than meant to make him the good guy. The fact that he *never asks her out* has more to do with her dating Dr. Horrible than her “choosing” one over the other. (The scene where she’s sitting in the laundromat with two frozen yogurts kind of highlights this.)

    I think the real sexism in Dr. Horrible is that Penny as a character seems to exist totally for Billy’s character development. She even gets fridged. I liked Penny, but I would’ve liked her to be a more developed character who mattered for her own sake rather than as “the love interest.”

  2. Harlequin says:

    One thing that is a problem on all sides of the political idea space when talking about economics, but that I found especially egregious for some reason in the minimum wage post, is the assumption that you can understand economics as if everyone behaved perfectly logically and with perfect information about alternatives and perfect ability to take advantage of them. That is…not how things work even in fairly high-information and high-salary areas, where competition for jobs is not terrible. Using those assumptions for low-wage and often inexperienced workers, with few fallbacks and higher unemployment, would seem to make those problems worse rather than better. (On top of, as you pointed out, all the other knobs you can turn besides benefits and working conditions to affect employment costs for a given low-wage worker.)

    Anyway, I think the economic argument for the minimum wage isn’t the strongest one–it’s the more civil rights-y argument, that when you look at all such workers on average, exploitation of workers is likely to win out over any benefits they might receive when paid below (some definition of a) minimum wage, even if some individual workers are greatly benefited. Exactly where that bar sits is worthy of discussion, but I think it must be above $0. (I remember a whole slew of articles about internships a couple of years ago, at the height of the recession–they were often very advantageous for the people who had them, but it was also common that interns received few of the benefits they were offered, instead being used for e.g. stuffing envelopes and receiving no useful experience or job training.)

  3. Ruchama says:

    My impression of internships has generally been that they’re much more useful for making connections and getting something to put on your resume than for actually learning much. And that just becomes another way that the already-rich get ahead, since the only college kids who can afford to have internships are the ones whose parents are paying all their expenses.

  4. Pesho says:

    Ruchama, there is a difference in internships as you seem to know them, and the internships I am used to. I and every one of my friends from the Institute tried to line up internships every Summer. They were the most lucrative way to spend the Summer, much better than being an RA at MIT, and that was pretty well paid, as well. Until 2008, I was making sure that there was an internship position in my department every Summer. They weren’t filled by rich drones, either.

    When you are in Science, Engineering… you can probably offer some value to a company in the right field. (Ours is a manufacturer, and the positions were for either Material Science or Computer Science majors) The pay was not significantly less than what we would pay anyone working on a similar project. As a matter of fact, I am still working for the company in which I did two of my three internships. The only reason my best friend did not do the same is that he started his own business. Two other friends ended up working for the companies with which they did their internships: Nvidia and VMware. Not only were they well paid for their Summers, the companies were helping with tuition. If I remember correctly, they also remained involved with their internships’ projects during the semesters, as well. I certainly did.

    From what you say, I gather that being paid and actually working on real projects is not the rule for the internships you’re familiar with. But isn’t the ability to work with people, i.e. networking, the skill one needs the most in the industries concerned? As for how much you are getting paid… well, I was negotiating for my remuneration, and in the late nineties, my skills were valuable. I am reasonably sure that, even during the recession, valuable skills would have commanded non-zero pay, as well.

    So, as far as I am concerned, anyone working for free has reasons for it. I firmly believe in the saying “It’s not how much you’re making for your employer, it’s how much it would cost to replace you.” And yes, if you can replace interns for free, you will end up with interns who works for free. Whether they are rich kids, or insightful people who are wisely investing in their future, who knows?

    Of course, it is hard to invest in your future if you have nothing. But what else is new? I learned that in Communist run schools in the 70s, but now I am “fat and happy” serving my corporate masters, and I am damn happy not to be serving them back in Bulgaria.

    Making a law saying that internships must pay a minimum wage will achieve exactly nothing. The companies that pay real wages for real work will not be affected. Those who want to get labor for free will be “providing a paid service”, like the real estate agents who take on “apprentices” and expect them to “commit their own resources”. i.e. to pay for the privilege.

  5. gin-and-whiskey says:

    I don’t support abolishing MW entirely, but I think there are ways in which the minimum wage (especially the really high ones of $15/hour) is starting to raise the bar to entry too high. And I think that is concerning.

    Still, I support raising it to $15 in a few areas, mostly because it will provide some actual data about elasticity of employment demand.

    This is, after all, the fundamental debate. If employment demand is “inelastic” then employers keep the same # of employees irrespective of wage increases, which leads to a net increase in worker income. If it’s “elastic” then they reduce the # of people hired in response to wage increases, which can lead to a net decrease in worker income.

    Nobody agrees on this.

    The complicated part is that most economists seem to think that elasticity can change depending on the relative increase in MW, which is why folks can logically assert both (a) that there is zero effect from a five cent increase and (b) that there would be a non-zero effect if you raised it to $35/hour.

    But how it might change isn’t agreed on. How much can it change? Assuming it changes, is it a gradual thing, where elasticity just goes up as wages increase? Or is it a relatively sudden thing, where elasticity jumps radically once you cross some unknown threshold–and if so, what’s the threshold? And so on.

    The top economists in the world don’t seem to be able to agree on this. But they would make better predictions if they had better data. So, places like LA just raised it from $9/hour to $15/hour. That’s a huge jump. It will provide valuable data on elasticity, and therefore even though I think it will cause problems I think it’s a great test bed: whether I’m right or wrong about the “it will cause problems” part it will be good to know.

    (But I do think that higher-MW advocates don’t always pay enough attention to the fact that jobs, including low wage jobs, teach valuable “soft skills.” Like showing up on time; looking neat; talking professionally; owning your conduct; performing as asked; etc. Without those soft skills it is really hard for people to get and keep decent jobs, much less higher paying ones. Moreover, by and large those soft skills are transmitted culturally, by having an experienced friend/parent who teaches you what to do. And as a result they’re unusually lacking in low-employment areas. If you cut down on soft skills training I fear you’ll have some bad long term effects.)

  6. JutGory says:

    Anectdatum:

    One of our employees had a family friend who wanted to intern at a law firm (with aspirations to go to law school someday). She wanted to work for free to get experience. The IRS frowns on that, of course. We did not really need an intern, anyway, but foolish business people that we are decided to pay her to intern with us. However, we fit within certain guidelines that meant we did not have to pay her the minimum wage. So, we paid her less.

    Three bad things happened: 1) we did not really need her in the first place so we did not use her well and she probably did not learn much; 2) eventually, we hit the point where we would have been required to pay her minimum wage; so 3) we let her go, because she was not worth it, at that point.

    The silver lining: she got a job at a different law firm. From this, I conclude: 1) her ambitions and talents landed her the job; 2) her experience with our firm was enough of a resume-builder to help her in the market; or 3) both.

    -Jut

  7. RonF says:

    Amp, you missed one alternative that businesses have when faced with an increase in the minimum wage – automate. There has been a fundamental change in the “automate vs. human” employment – the rapid change in the amount of “intelligence” that you can build into devices. Half the time that I go to the store now, I use some version of an automated cashier. I used to be a cashier, back in the day. But it’s often more convenient and faster. There went a bunch of cashier jobs. And the more you raise the minimum wage, the better the cost/profit looks for McDonalds to finally start putting those automated burger machines in their restaurants – which greatly favors big business over “Barry’s Burgers”, because Barry’s can’t afford the capital outlay to buy machines and McD’s can.

  8. Ampersand says:

    Ron, I suspect John Schmidt, the economist I quoted, would say that increased automation is included in “take action to increase worker productivity.”

    The evidence is unambiguous that raising the minimum wage doesn’t cause a (measurable) increase in unemployment. Outlier studies have occasionally found the minimum wage is correlated with lower unemployment, or increased unemployment; but the empirical evidence as a whole is clear in showing no significant change in unemployment associated with raising the minimum wage.

    In the past, increased automation hasn’t increased unemployment, because (as I understand it, I’m no expert, of course) the unemployment effects are offset by the pro-employment effects of increased productivity. To use an oversimplified example, if groceries become marginally cheaper because of automation, the money customers save will be spent elsewhere – and although that might not be much money per person, cumulatively, that increased spending elsewhere means more jobs will be created elsewhere in the economy. Also, if the grocery store’s sales increase marginally because of automated cashier stations, then the grocery store needs to marginally employ more people elsewhere, for instance more stockers. (How can you “marginally” employ more people? Well, by having current stockers work 26 instead of 24 hours a week, for example.)

    That’s more or less how it’s worked in the past. However, there is a concern, as computers get cheaper and better, we will see the increased automation become so efficient that the unemployment effects of automation will become too large to be made up for by increased productivity. If that’s the case, then we need to fundamentally rework how our economy functions – but just getting rid of the minimum wage will not even come close to solving the problem.

    Also, I think you’re underestimating how soon tech enabling customers to check themselves out will be accessible to small businesses. To a great extent, you could already do this today, at a small business like a coffee shop owned by some friends of mine, with a tablet and the Square. The main reason not to do it, I think, is that part of the appeal of a small business like that is the human level interaction between customers and owners.

  9. gin-and-whiskey says:

    Amp said:
    Employers wanting to avoid giving full-time hours to avoid hitting the threshold for required benefits is caused by having a threshold for required benefits, not by the minimum wage

    Do you think this is a thing? I think so, but I was under the (mistaken?) impression that you disagreed with me.

    Employers not competing hard enough for employees by making workplaces pleasant is caused by unemployment being too high, not by the minimum wage.

    Economic minds disagree about the degree to which those two things are linked. If minimum wage increases unemployment, for example.

    “Okay, you say, prohibit companies from doing that. Then the company won’t hire them at all.”

    Excellent! Without employees, that company will go out of business, or at least severely limit its growth,

    Yes.

    and then more skilled businesspeople who are capable of turning a profit while paying decent wages and treating employees well will take that portion of the market instead. It’s a win-win.

    Certainly the people who take over the market are likely to be those who are more skilled, unless it’s one of the presumably-rare situations where the government just does it with unpaid volunteers.

    But they’re more skilled at MAKING MONEY. Not necessarily more skilled at being nice. So what I want to know is where the bold part came from. Why will they pay better? Why will they treat employees better? Why not automate? Or move to a different state? Or move out of the US entirely; or ship manufacturing overseas, or hire more contractors, or sponsor more J-1s, or anything else?

    I don’t think most poor people would agree that they’d be better off paid $4 an hour or $15 an hour.

    That’s a straw. The quote should assert, if you want to be reasonable:
    I don’t think most poor people who already have a job would agree that they’d be better off paid $4 an hour or $15 an hour.

    Which, of course not. But that’s preselecting your groups.

    To look at the other side: if you were a poor person with minimal skills and you didn’t already have a job, then what? Would you rather be earning $0/hour, or would you rather have a job which paid you, say, $5/hour? Would you rather, at least, have the option to choose?

    When I worked as a minimum wage grocery store worker, I would not have been better off being paid less.

    Right. That is because you already had a job.

    …The minimum wage does not take jobs or money away from “single mothers, the disabled, the chronically ill” and “everyone incapable of working.”

    Well, that’s a strange list; what does motherhood have to do with job competence? But anyway, what I think you’re trying to say is that raising MW won’t make anyone harder to hire. That’s not true.

    1) The value that people can produce is distributed on some sort of scale, from “zero” on up. You probably don’t dispute that…?

    2) If you can’t produce value equal or greater to minimum wage, you will probably not get a job because your employer will lose money by hiring you. You probably don’t dispute that…?

    3) As the minimum wage increases, the #of people to the wrong side of the “value” line goes up. More people will functionally become unemployable. Maybe not enough to change the cost/benefit balance, but more nonetheless. You probably don’t dispute that, either…?

    4) You can’t just look at unemployment figures to determine that, because higher MW also pulls some folks out of leisure. Perhaps I would stay home with my kids if I could otherwise make $10/hour, but not if I could make $15/hour. The fact that I would choose to enter the workforce has nothing to do with the effect of increased MW on Ian Incompetent, who is only “worth” $10/hour and now cannot find a job.

    5) The people with shitty skills and/or poor value are, in many cases, precisely the people we WANT to be getting jobs. The people who come out of leisure to work are valuable, but not in the same social need class.

    You can make a lot of good arguments in favor of minimum wage, but it is always a balance, with costs and benefits. Makes no sense to talk as if the costs aren’t there.

    The minimum wage forces low-wage employers to put more of their resources into paying workers.

    Well, no. That only happens if their demand is inelastic, and if they can’t otherwise compensate through automation, efficiency, etc.

    Not all that long ago, I’d have had to hire a secretary to do typing, documentation, recording, research, etc. These days I pay a few legal services firms to do it, which costs me less than half as much as the comparable people power. If there’s an LA firm with 50 minimum-wage, full-time employees, they are about to have a payroll increase of 600,000 BEFORE taxes and insurance. Per year. That’s a hell of an incentive to become more efficient.

    What MW does is to force inelastic-demand industries to put more of their resources into paying workers.

    What that does is to create incentives for efficiency and elasticity.

    What that does is to make it so “more skilled businesspeople who are capable of turning a profit” have opportunities to gain market share.

    Problem is, “turning a profit” doesn’t always happen like you wish it would. Know anyone who works at a bookstore? Want to ask them how the whole Amazon thing shook out? Everyone in Silicon Valley is thinking “hmm. How many LA businesses are about to have a half-million dollar pay increase? How much would it take me to write a program to triple efficiency and let them fire 1/3 of their employees?”

    * I agree with all your non-minimum-wage-banning goals – basic income, expanded housing, healthcare, etc. But banning the minimum wage will not make reaching any of these goals easier.

    Sure it would. There’s a limit on how much we can ask people to contribute. There’s also a limit on how much people are willing to trouble themselves. I don’t think we should ban the minimum wage, on balance, but it seems silly to suggest that there wouldn’t be some benefits from doing so (just not ones which would be worth it.)

  10. Harlequin says:

    Well, that’s a strange list; what does motherhood have to do with job competence?

    It’s a quote from the post Amp is replying to (which, I suppose, doesn’t change the strangeness of the inclusion, just the person you should be asking about it!).

  11. Patrick says:

    I’m not impressed by claims that empirical evidence shows no effect of minimum wage increases on unemployment. I’m pretty sure the past eight years established that wages are sticky. Well, the mechanism by which they’re sticky should also make employment sticky.

    The best argument I know for a minimum wage or a minimum wage hike is to point out that sweatshop societies really suck, and the claim that we couldn’t have that here is pollyanna-ish. You can wax eloquent on the value of the high employment a low or non existent minimum wage would bring, but that argument is only convincing because we assume that having a job means being capable of supporting yourself, and that’s only true when we have a decent minimum wage. Meanwhile, the specific level of the minimum wage doesn’t track inflation, and is at a low point in it’s cycle. So it’s probably time to raise it.

    Simple enough.

  12. gin-and-whiskey says:

    Harlequin says:
    May 26, 2015 at 2:16 pm
    It’s a quote from the post Amp is replying to (which, I suppose, doesn’t change the strangeness of the inclusion, just the person you should be asking about it!).

    THAT explains it; it didn’t seem very Amp-ish.

  13. It’s been awhile since I watched Dr. Horrible, but I think I agree with every bit of your analysis, Amp.

  14. gin-and-whiskey says:

    In the “you can’t make this up” category, it appears (at least at first glance) that some of the unions who pushed for the $15/hour minimum wage are now requesting exemptions…. for union shops only.

    Here’s the article. I have not dug deeper.

  15. Christopher says:

    Gin & Whiskey

    Would you rather, at least, have the option to choose?

    No thank you.

    Well, really, what you’re asking is whether I would choose between an exhausting life that doesn’t support me, or an exhausting life that doesn’t support me but also I have a job.

    Okay, that’s not totally fair; maybe the shit job that pays $800 a month (Before taxes!) leads to an actual job down the line. The real fear is that it doesn’t, that it becomes the new normal for low-wage employees to live in tar-paper shacks or hostels or something.

    The argument Amp is responding to assumes that every employee has good prospects; that companies are competing for employees who are likely to be entertaining offers from other companies, and so they’ll have to compete by making their job more appealing than the next guy’s job offer.

    It seems like the whole thing completely falls apart if there are fewer jobs than there are applicants. I mean, it seems like in that case a lot of employers would go “We pay $5 an hour. Oh, you want benefits or flexible hours? Well, goodbye, I’m sure the next applicant won’t be so picky.”

    Actually a lot of discussion about economics among ordinary people seems to be based on the idea that the employer and the individual employee are negotiating from a position of relative equality, which just seems bonkers to me.

  16. gin-and-whiskey says:

    Christopher says:
    May 27, 2015 at 4:46 pm

    Would you rather, at least, have the option to choose?

    No thank you.

    Well, really, what you’re asking is whether I would choose between an exhausting life that doesn’t support me, or an exhausting life that doesn’t support me but also I have a job.

    Well, no. I’m asking you whether you would choose between working or not working. Which you are free to choose “not working.” (And since I generally support the expansion of government benefits, then if you were actually poor and were not one of the many minimum-wage workers who don’t seem to be in the situation you describe, you might well choose “not working.” As, I might add, certainly happens right now.

    It seems like the whole thing completely falls apart if there are fewer jobs than there are applicants. I mean, it seems like in that case a lot of employers would go “We pay $5 an hour. Oh, you want benefits or flexible hours? Well, goodbye, I’m sure the next applicant won’t be so picky.”

    Well, there’s the value of leisure, and it doesn’t seem like you’re considering it. Which is to say that even if I had no money and the opportunity to work for a job that pays $1/hour, I actually won’t: I value “not working” and the concomitant opportunity gains more than I value the $1/hour.

    Most people are like that, and the value of leisure can be surprisingly high.

    To use an example, I would happily pay someone minimum wage to spend a few days working on my yard: raking, weeding, mowing, and so on. I have gloves, rakes, a mower, ear protection) and so on. The number of people I can hire for minimum wage is “zero,” because nobody wants to do the work for that rate, INCLUDING the large # of people in my area who are currently unemployed. They value “not raking” more than they value “$8/hour.”

    Most folks on the blog could probably elect to spend some of their free time doing piece work, tutoring, etc. Probably for more than minimum wage. Most of them probably don’t. They value their time more than the money.

    Actually a lot of discussion about economics among ordinary people seems to be based on the idea that the employer and the individual employee are negotiating from a position of relative equality, which just seems bonkers to me.

    Equality? Not exactly. But they certainly each have some non-zero power. I have no ability to force anyone to rake my lawn for $8/hour, no matter how much I might want them to show up and do it. They have no ability to force me to hire them for $18/hour, no matter how much they might want the job.

    Moreover, I have no way to control whether my paralegal (who has a lot of time and money invested in training) will quit, other than to keep her happy. Even if it costs me money. Even if it involves paying well over minimum (which I do, of course) or giving non-mandated benefits (ditto.) And so on. Treating me as having all (or almost all) of the power would be very inaccurate.

  17. Patrick says:

    I love the way economists call that “the value of leisure.” I’d call it, “the marginal utility of money has a floor.”

  18. gin-and-whiskey says:

    Patrick says:
    May 27, 2015 at 6:47 pm
    I love the way economists call that “the value of leisure.” I’d call it, “the marginal utility of money has a floor.”

    Valuing leisure makes more sense, though.

    When my family is away, and it’s a nasty February day, I may well go to work on a Saturday and stay at the office working until 9 PM. When my family is here, and it’s a beautiful August day, I will rarely make that choice.

    The marginal utility of money hasn’t changed; only the value that I put on my free time has changed.

    Of course, utility can change too (if I need money more next week I’ll work longer hours) but tends to change less.

  19. gin-and-whiskey says:

    A detailed, heavily, researched, footnoted and well-linked article regarding the union-led push for a combination of strict/expensive employer laws, and an exemption for union contracts (PDF.)

    I actually didn’t know that this was so widespread.

    Out of curiosity: Are the generally pro-union folks on here on board with this? Were you even aware of this going on? Do you think it’s OK?

  20. Patrick says:

    G&W- it makes more sense for YOU because YOU are motivated by a desire for leisure.

    If I’m flat broke and I need ten grand by tomorrow to pay off a mob boss or else he will kill me, offering to let me work for nine grand a day isn’t going to cut it. The marginal utility of money in that scenario is zero until I can accumulate ten grand.

    Working for a dollar an hour is the same issue. That won’t feed you. It won’t clothe you. It won’t house you. Your welfare will be virtually exactly the same with or without that wage.

    Economists call this the value of leisure for purely political reasons. It implies that poor people choose not to work because they enjoy relaxation, which implies that they’re lazy. An equivalent description, also supported by economic theory, would be that the value of money rises slowly until it reaches subsistence.

  21. gin-and-whiskey says:

    Patrick says:
    May 28, 2015 at 8:16 am
    G&W- it makes more sense for YOU because YOU are motivated by a desire for leisure.

    If I’m flat broke and I need ten grand by tomorrow to pay off a mob boss or else he will kill me, offering to let me work for nine grand a day isn’t going to cut it. The marginal utility of money in that scenario is zero until I can accumulate ten grand.

    Working for a dollar an hour is the same issue. That won’t feed you. It won’t clothe you. It won’t house you. Your welfare will be virtually exactly the same with or without that wage.

    Well first of all, we’re talking generalities. I don’t dispute that there are exceptions, but I don’t really think that the mob boss is going to give us much useful data. I think it’ll be a more productive conversation if we use some more realistic examples, which is why I was using terms like “$5/hour.”

    Second, the trade off for “clothes, food, and housing” is not often the case (see the link in #16). Many MW earners are getting income somewhere else; have a primary wage earner; or would otherwise remain unemployed entirely (e.g. teenagers, some stay at home moms.)

    Third the “makes no difference” claim isn’t factually true. As everyone has noted w/r/t food stamps, it’s virtually impossible to eat on $1/day/person. It’s a hell of a lot more possible to eat on $3/day/person, which is a marginal difference of only $8/day for a family of four. Does $8 make a difference? Yup.

    Fourth, I use “leisure” broadly, as intended. Taking care of my sick friend is leisure. Working on the house to keep it from rotting is leisure. Volunteering for pro bono work, or taking care of my own kids, is leisure.

    The cost of choosing to work is most obvious during the summer, when a ton of people rationally decide not to work because they will earn less at work than they will save by staying home and avoiding daycare/camp.

    Economists call this the value of leisure for purely political reasons. It implies that poor people choose not to work because they enjoy relaxation, which implies that they’re lazy.

    It certainly isn’t intended that way. It’s more of a recognition that the cost of a job is always non-zero. There’s always something else you could be doing: helping others, improving your health, going to school, whatever. Those costs are individual, and if the benefits don’t exceed the cost, you won’t work.

    I’m by no means wedded to the “leisure” term, and would be happy to use something else if you can come up with a term you prefer. But I think that this:

    the value of money rises slowly until it reaches subsistence.

    Is dead wrong.

    Most obviously, the marginal utility of money is usually GREATER for poor people. Giving someone $10 if they’re living on $1/day helps them a lot more than giving it to someone who is already living on $100/day.

    The other issue is that this does nothing to predict behavior of people who aren’t responsible for subsistence–second earners, children, etc. But that makes no sense.
    Tara Teenager, Helen Head of Household, and Larry Livealone have different values, to be sure. Tara might demand the least money; Larry more; Helen might demand the most.

    But that is because Helen has more competing and valuable things she might do to get what she wants, whether it’s “stopping leaks” or “waiting in line to get benefits for her kid.”

    It isn’t that money is worth less to Helen than Larry Tara, it’s that she has other costs which are higher. And that is driven, in part, by competition for her time: The more free spoons you have, the less you demand in wages to spend one of them on working.

  22. Elusis says:

    Second, the trade off for “clothes, food, and housing” is not often the case (see the link in #16). Many MW earners are getting income somewhere else; have a primary wage earner; or would otherwise remain unemployed entirely (e.g. teenagers, some stay at home moms.)

    I’m 100% certain I’ve seen this assertion refuted, on this blog, in answer to you, over and over again. It’s pretty telling that you continue to ignore it.

    http://www.epi.org/publication/minimum-wage-workers/

    http://www.raisetheminimumwage.com/pages/demographics

    But go ahead, keep positioning minimum wage as if it’s just a way for teenagers to pay their car insurance and moms to earn a little “pin money.”

  23. JutGory says:

    Elusis,
    I think that is an unfair response.

    Youth unemployment is up everywhere.

    Your use of data from 2012 ignores some important things. The economic recovery has dragged on for a long time. The labor participation rate is low. It could be that teenagers are not doing the minimum wage jobs, because those are being taken up by the more experienced 20-year olds who are scrambling for whatever jobs are out there.

    I don’t think your evidence “refutes” g&w’s claims. Your position may be a completely accurate description of what takes place in an economy that is depressed, recessed, or sluggishly recovering, whereas his position may be accurate in a growing or thriving economy. In short, I don’t think you have a universal principle you can jump on here.

    However, with that in mind, I would not think that the cure to a sluggish economy would be to raise the cost of production. (And, let’s face it: minimum wage laws were designed to price black people out of the labor market; why should we be surprised that they accomplished that goal?)

    -Jut

  24. Harlequin says:

    g&w:

    Fourth, I use “leisure” broadly, as intended.

    I think it is this broad use of “leisure” that is one of the things Patrick is objecting to. One of those terms of art (like “theory” in the sciences) that means something different in the academy and in the public; but in this case it could end up being pejorative to the people most at issue in this discussion.

    And the terminology also privileges work that is typically remunerated in our society over other kinds of work. Which is a general problem, broader than economics.

  25. Patrick says:

    “Most obviously, the marginal utility of money is usually GREATER for poor people. Giving someone $10 if they’re living on $1/day helps them a lot more than giving it to someone who is already living on $100/day.”

    This is simply incorrect. If what you need to live costs $11, then $10 is virtually the same as $9 is virtually the same as $8, etc. The function is not smoothly continuous- it jumps hard when you go from “can’t afford to live as a member of American society” to “can.” The value of money is in the needs it can satisfy. At the bottom end of the income ladder, this creates significant stepwise jumps in money’s value.

    Ironically, this is exactly the same thing as the “value of leisure” analysis, except it doesn’t involve erasing the realities of poverty in service of a political agenda best supported by implying that no meaningful difference exists between a lawyer declining to work on a Saturday, versus an unskilled worker realizing that there’s a limit to how much effort they can rationally put in to finding out about, getting to, then earning 24 bucks raking leaves for half a day out of a rent cycle when they are facing a three hundred dollar a month shortfall that is leading to an eviction, or discontinuation of health insurance, whichever they choose.

  26. Ampersand says:

    Jut:

    It’s not like the empirical evidence about the effects of the minimum wage date back only two years. There’s a great deal of evidence, across a wide variety of economic conditions, and the overwhelming evidence from empirical studies is that the minimum wage doesn’t increase unemployment; not among teens, not among Blacks, not among any group. (There are individual outlier studies – both showing that the MW is correlated with increased unemployment and showing that it correlated with decreased unemployment – but I’m talking about what the mass of empirical studies have found.)

    However, with that in mind, I would not think that the cure to a sluggish economy would be to raise the cost of production.

    That obviously depends on whether high costs of production are a significant cause of the sluggish economy. If the problem is that consumers aren’t spending enough, then raising the minimum wage – which tends to put money into the pockets of lower-income people, who spend a larger portion of their income than other groups – would tend to help a sluggish economy. It’s plausible that’s the case in our current situation.

    However, while raising the minimum wage could help on the margins, I certainly don’t think it would be a “cure” by itself, and I don’t think anyone here has suggested that.

  27. gin-and-whiskey says:

    Elusis says:
    May 28, 2015 at 11:07 am
    I’m 100% certain I’ve seen this assertion refuted, on this blog, in answer to you, over and over again. It’s pretty telling that you continue to ignore it.

    I am 100% sure that something like this has been posted, sure.
    I am 100% sure that it doesn’t actually refute what I just said, though.

    I assume you’ve read your own link, so even if you ignore the word “many” in my post (as opposed to “all” or “most,” which makes me confused about what refuting it would even mean) your link talks about “directly affected” people, which has nothing to do with two of my crucial points:
    a) whether earners are getting income somewhere else; or
    b) whether the household otherwise has a primary wage earner.

    Also, FYI, in case you missed it, hidden in a footnote to the chart is the acknowledgment that “directly affected” is defined as “making from 0.9 of the state minimum in 2008, and $8.72.” In other words, not only isn’t it addressing the issue I raised but it isn’t even answering the question “who works for minimum wage.”

    Anyway. Enough debating what “refute” means. Let’s ask the U.S. Bureau of Labor Statistics for some specifics.

    In 2013, 75.9 million workers age 16 and older in the United States were paid at hourly rates, representing 58.8 percent of all wage and salary workers. Among those paid by the hour, 1.5 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.8 million had wages below the federal minimum. Together, these 3.3 million workers with wages at or below the federal minimum made up 4.3 percent of all hourly paid workers.

    So the first thing to note is that the cohort is already limited severely. We’re talking about the lowest-earning 4.3% of hourly workers here.

    Age. Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.

    OK. Pretty much in line with the sort of thing I’ve been saying. Young employees get paid less, because at that age, youth equates to experience. That is probably why the vast majority of adults don’t make minimum wage.

    This is also the sort of thing that leads to my assertion that low-wage jobs are generally good entry-level positions for the young, and that raising minimum wage levels to places where they are preferentially earned by older and more experienced workers seems likely to significantly change worker demographics away from young/inexperienced folks.

    Among employed teenagers (ages 16 to 19) paid by the hour, about 20 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and older.

    Same here. Lots of low paid teens.

    About 10 percent of part-time workers (persons who usually work fewer than 35 hours per week) were paid the federal minimum wage or less, compared with about 2 percent of full-time workers.

    This looks familiar. Even for part time workers only ten percent of them earn minimum wage. And for full time it’s TWO percent.
    That said, even those percentages may be high, because

    The industry with the highest percentage of workers earning hourly wages at or below the federal minimum wage was leisure and hospitality (19 percent). Just over half of all workers paid at or below the federal minimum wage were employed in this industry, the vast majority in restaurants and other food services. For many of these workers, tips may supplement the hourly wages received.

    If you look at those numbers and combine them with the link I posted, it looks to me like a fair number (“many”) of people who are earning minimum wage are not the sole wage earner in their household.

  28. Pingback: Black Unemployment and the Minimum Wage | Alas, a Blog

  29. Ampersand says:

    Damn, I just lost a reply when Firefox crashed. Grumble, mutter.

    Okay, shorter version. To G&W:

    We’re talking about the lowest-earning 4.3% of hourly workers here.

    1) If we’re talking about which workers are helped by a MW, then we shouldn’t measure the workers helped by the minimum wage just by looking at workers who make the minimum wage. Due to the ripple effect, the large majority of workers helped by the minimum wage earn more than the MW.

    Of course, everyone does it (me included), because the light is better under the lamppost. But it’s worth remembering that when we’re talking about cohorts helped by the MW, we should at least in theory include many more workers than just those paid the MW.

    Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.

    Wait a sec – workers under 25 includes a lot of full-time workers who aren’t supported by anyone. From BLS: “88 percent of those who would benefit from a federal minimum wage increase are age 20 or older.”

    If you look at those numbers and combine them with the link I posted, it looks to me like a fair number (“many”) of people who are earning minimum wage are not the sole wage earner in their household.

    Yes, but it would also be fair to say that “many” MW earners, and probably more when you include the millions who benefit from the MW due to the ripple effect, are the sole or primary wager earner in their household.

  30. Charles S says:

    g&w:

    Second, the trade off for “clothes, food, and housing” is not often the case (see the link in #16).

    I’m curious, was that bolded claim a typo (for “often not”) or an absurd exaggeration that you are ignoring in order to defend the more defensible “many”?

    Following your link at #16, I find that that author links to a previous post where they state: “there were 13 million Americans, out of the 25 million low-wage earners, who were trying to support themselves on less than $10.10 per hour in 2013.” I cavil at their methods, but I can’t imagine calling 13 million “not often”.

    Also, the Federal minimum wage is not actually the minimum wage in most of the country (of high population states, only Texas and Pennsylvania use the Federal minimum wage), so the 4.3% of wage workers who work for the Federal minimum wage is very misleading in a discussion about the minimum wage generally.

  31. gin-and-whiskey says:

    Charles: typo. should be “often not.” Although in practical terms, 13 million out of roughly 150 million total workers, or even out of roughly 75 million hourly workers, is also “not often;” while 13m out of 25m is “often,” so to a large degree it depends on the comparator.

    Also, the Federal minimum wage is not actually the minimum wage in most of the country (of high population states, only Texas and Pennsylvania use the Federal minimum wage), so the 4.3% of wage workers who work for the Federal minimum wage is very misleading in a discussion about the minimum wage generally.

    That is true, I agree, though unfortunately it is surprisingly difficult to find good sources for the nation and the BLS is good.

    Amp: Do you join my feeling that when high-MW proponents are talking about effects on businesses, they tend to limit those defenses to the actual MW? I’ll certainly concede that there can be a ripple effect, but to the degree that you’re claiming one it makes things a lot harder if you claim there won’t be a significant effect on businesses.

  32. Ampersand says:

    Amp: Do you join my feeling that when high-MW proponents are talking about effects on businesses, they tend to limit those defenses to the actual MW? I’ll certainly concede that there can be a ripple effect, but to the degree that you’re claiming one it makes things a lot harder if you claim there won’t be a significant effect on businesses.

    I don’t join that feeling.

    The way the best empirical studies of the effects of the MW work, is that when a state raises its minimum wage, researchers look for continuous economic zones that have a state borderline going through them. Then, when the MW goes up on one side of the border but not the other, researchers can see if there’s (for example) a measurable change in unemployment on one side of the border but not the other.

    Since I don’t see how this methodology would fail to capture any results caused by the ripple effect.

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