Raising the Minimum Wage

[a500lbgorilla]

Don't forget: experiment suggests raising minimum wage does not necessarily raise unemployment.

http://davidcard.berkeley.edu/papers/njmin-aer.pdf

This well known paper examines the relationship between the minimum wage and employment, an issue on which economists still have a beautifully symmetrical lack of consensus. Card & Kruegers research design was simple. To quote their abstract: “On April 1, 1992, New Jersey's minimum wage rose from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast-food restaurants in New Jersey and [neighbouring] eastern Pennsylvania before and after the rise. Comparisons of employment growth at stores in New Jersey and Pennsylvania (where the minimum wage was constant) provide simple estimates of the effect of the higher minimum wage”.

The graph (made by me based on the original data) shows the results. Since Pennsylvania did not change its minimum wage, this makes it the control group. If we consider New Jersey and Pennsylvania to be comparable, then we would have expected to see Pennsylvania’s downwarding sloping trend replicated in New Jersey if New Jersey had not increased its minimum wage. But we don’t see this; in fact there is a slight increase in the average number of employees in New Jersey restaurants. The authors interpret this as showing that the rise in the minimum wage did not reduce employment. Further studies on this topic are reviewed here ( http://www.cepr.net/documents/public...ge-2013-02.pdf ) by Schmitt (2013).

[wufwugy]

Don't forget: experiment suggests raising minimum wage does not necessarily raise unemployment.

http://davidcard.berkeley.edu/papers/njmin-aer.pdf

The study doesn't come close to evaluating the minimum wage due to a million uncontrolled for variables. As I've said before, about half the studies have shown increases in unemployment and about half have shown decreases, yet about all of them are worthless for the aforementioned reason of unassessed variables.

Economics is rigorous logic with a smidgen of data. Popular sentiments have it backwards. They think any set of data points are key to whatever economic claim they want and the logic doesn't matter.. Sure, logic can get you in trouble, but so does driving a car, but the fact that driving a car can be hazardous doesn't mean the fastest way to get someplace is to jog.

[wufwugy]

Rilla, what happens when the logic somebody employs is technically invalid? Do they still get to say that logic itself isn't perfect and instead cherry pick some data? How about instead the person evaluates their own logic and upon seeing that it's invalid, they change it?

For example, here's a syllogism:

- Living standards increase only by increases in productivity
- Wage floors lower productivity
- Therefore, wage floors lower living standards

There is no question that the first two are true. The first is absolutely true because the only technically possible way for resources people use to live to increase is for those resources to increase. That is called productivity. The second is absolutely true because at every level of cost there are always resources that can produce that otherwise couldn't. This principle is integral to poker. The difference between winners and losers is marginal value. At every level or in any instance of a poker game, every move affects marginal value. A minimum wage is no different than making it illegal for poker players to defend their blinds with the weakest hands they think they can get positive value with.