Liberalism in America

[Malacasta]

Here are a few articles I found refuting the claims made in the Talking Points report.

Effect of the Minimum Wage on Prices.

The Effect of the Minimum Wage on Prices (2004)
Sarah Lemos

3.Conclusion
Despite the different methodologies, data periods and data sources, most studies found that a 10% US minimum wage increase raises food prices by no more than 4% and overall prices by no more than 0.4%. This is a small effect. Brown (1999, p2150) in his survey remarks "the limited price data suggest that, if anything, prices rise after minimum wage increase".

The overall reading of the above evidence on the price effects, together with the evidence in the literature on wages and employment effects is that the minimum wage increases the wages of the poor, does not destroy too many jobs, and does not raise prices by too much. This evidence is an important input to reconcile theory predictions of negative employment effect and the mixed empirical evidence of negative and non-negative employment effects in the literature. Empirical evidence of positive wage and price effects and non-negative employment effects is consistent with standard theory. This suggests that firms respond to minimum wage increases not by reducing production and employment, but by raising prices. This is indeed what is observed in practise, as documented by Converse et al. (1981), "The most common types of responses to the increase in the minimum wage were price increases and wage ripples. No single type of disemployment response was reported with nearly the frequency of these".

The 4% increase in food prices refers to a fast-food industry study by Card and Kreuger in 1995.

Effect of the Minimum Wage on Poverty.

Raising the minimum wage: effects on family poverty (1990)
Ronald B. Mincy

A study of household data demonstrates that increases in the minimum wage reduce poverty among families more then previously estimated. This article examines the effects that raising the minimum was has on family poverty.

Do Living Wage Laws Help Low-Wage Workers and Low-Income Families?
Public Policy Institute of California

Although the evidence is not always strong in a statistical sense, the best estimates imply that a 50 percent increase in the living wage would reduce the poverty rate by 1.4 percentage points.

Effect of the Minimum Wage on Employment.

The Effects of Increases in the Minimum Wage
Discussion of the Card and Krueger Study that found employment increased in the food fast food industry after a minimum wage pay rise.

Youth Minimum Wage Reform and the Labour Market (2004)
Dean Hyslop, Steven Stillman

This paper analyses the effects of a large reform in the minimum wages affecting youth workers in New Zealand since 2001. Prior to this reform, a youth minimum wage, applying to 16-19 year-olds, was set at 60% of the adult minimum. The reform had two components. First, it lowered the eligible age for the adult minimum wage from 20 to 18 years, and resulted in a 69 percent increase in the minimum wage for 18 and 19 year-olds. Second, the reform raised the youth minimum wage in two annual steps from 60% to 80% of the adult minimum, and resulted in a 41 percent increase in the minimum wage for 16 and 17 year-olds over a two-year period. We use data from the New Zealand Household Labour Force Survey (HLFS) to estimate the impact of these changes on a variety of labour market and related outcomes. We compare the average outcomes of these two groups of teenagers, before and after the policy reform, to those of 20-25 year-olds, who were unaffected by the reform. We find no robust evidence of adverse effects on youth employment or hours worked. In fact, we find stronger evidence of positive employment responses to the changes for both groups of teenagers, and that 16-17 year-olds increased their hours worked by 10-15 percent following the minimum wage changes. Given the absence of any adverse employment effects, we find significant increases in labour earnings and total income of teenagers relative to young adults.

Effect of the Minimum Wage on Welfare.

The Effects of Higher Minimum Wages on Welfare Recipiency (1999)
Mark D. Turner

Controlling for an array of factors, static models predict that a 50-cent minimum wage increase would reduce welfare participation by 1.3 percentage points, resulting in 41,000 fewer single mothers receiving welfare. Dynamic models predict that the higher minimum wage would increase welfare exit rates by 2.5 percentage points and would have no effect on former welfare recipients' chances of re-entering welfare.

Effect of the Minimum Wage on Training.

The Impact of Minimum Wages on Job Training: An Empirical Exploration with Establishment Data (2003)
David Fairris Roberto Pedace
CES-WP-03-04 February 2003

We find no evidence indicating that minimum wages reduce the average hours of training of trained employees, and little to suggest that minimum wages reduce the percentage of workers receiving training.

[Malacasta]

Table1: Minimum Wage since 1938 compared to Min Wage 2005

Years 	Min	Min wage adj	$5.15 in 2005	% comparison
Paid	Wage 	for inflation	purchasing	purchasing power
	dollars	2005 dollars	power for	of 2005 min wage
				previous years

1938	0.25	3.22		0.40		 60
1939-44	0.30	3.94-3.21	0.39 0.48	 30  60
1945-49	0.40	4.20-3.07	0.49 0.67	 23  66
1950-55	0.75	5.81-5.15	0.66 0.75	-11   0
1956-60	1.00	6.90-6.34	0.75 0.81	-25 -19
1961-62	1.15	7.17-7.10	0.83 0.83	-28
1963-66	1.25	7.64-7.32	0.84 0.88	-33 -30
1967	1.40	7.97		0.90		-36
1968-73	1.60	8.85-7.06	0.93 1.17	-42 -26
1974	2.00	8.32		1.24		-38
1975	2.10	7.87		1.37		-35
1976-77	2.30	7.90-7.46	1.50 1.59	-35 -31
1978	2.65	8.07		1.69		-36
1979	2.90	8.21		1.82		-37
1980	3.10	7.87		2.03		-34
1981-89	3.35	7.50-5.22	2.30 3.30	-31  -2
1990	3.80	5.65		3.46		 -9
1991-95	4.25	6.00-5.29	3.65 4.14	-16  -3
1996	4.75	5.77		4.24		-11
1997-05	5.15	6.07-5.15	4.37 5.15	-15   0

*This place was used to calculate inflation (there seem to be different ways of calculating inflation but the numbers I've seen elsewhere aren’t significantly different eg Bureau of Labor Statistics gives 8.89 instead of 8.85 for 1968)
*min wages: This place

Table2: Minimum Wage vs Average Wage

Year	Min	Ave Wage $	Ave Wage vs
	Wage $			Min Wage %
				
1955	 1560	 3301.44	111.63
1956	 2080	 3532.36	 69.83
1960	 2080	 4007.12	 92.65
1961	 2392	 4086.76	 70.85
1962	 2392	 4291.40	 79.41
1963	 2600	 4396.64	 69.10
1966	 2600	 4938.36	 89.93
1967	 2912	 5213.44	 79.03
1968	 3328	 5571.76	 67.42
1969	 3328	 7580.16	127.77
1974	 4160	 8030.76	 93.05
1975	 4368	 8630.92	 97.59
1976	 4784	 9226.48	 92.86
1977	 4784	 9779.44	104.42
1978	 5512	10556.03	 91.51
1979	 6032	11479.46	 90.31
1980	 6448	12513.46	 94.01
1981	 6968	13773.10	 97.66
1989	 6968	20099.55	188.46
1990	 7904	21027.98	166.04
1991	 8840	21811.60	146.74
1995	 8840	24705.66	179.48
1996	 9880	25913.90	162.29
1997	10712	27426.00	156.03
2003	10712	34064.95	218.01

Min wage: min hourly wage *40*52
Average Wage: This Place
Ave vs Min: (Ave – Min)/Min*100

Table3: Percentage of Workforce earning minimum wage or lower.

Year	Total no of	% of Total
	workers at	Workforce
	or below min
	wage (000)
	
1979	6,912		13.4
1980	7,773		15.1
1981	7,824		15.1
1982	6,496		12.8
1983	6,338		12.2
1984	5,963		11
1985	5,538		 9.9
1986	5,060		 8.8
1987	4,698		 7.9
1988	3,927		 6.5
1989	3,162		 5.1
1990	3,228		 5.1
1991	5,283		 8.4
1992	4,921		 7.7
1993	4,332		 6.7
1994	4,128		 6.2
1995	3,656		 5.3
1996	3,724		 5.4
1997	4,754		 6.7
1998	4,427		 6.2
1999	3,340		 4.6
2000	2,724		 3.7
2001	2,253		 3.1
2002	2,168		 3

From Bureau of Labor Statistics Table10: Employed wage and salary workers paid hourly rates with earnings at or below the prevailing Federal minimum wage by sex, 1979-2002 annual averages

[Aristotle]

Originally posted by Malacasta

For me the answer is still unclear but recent studies do back the conclusions of David Card and Alan Krueger of Princeton, and Lawrence Katz of Harvard who found no loss of jobs occurred after minimum wage increases in the late 80’s and early 90’s in the states studied

Their work has been repeatedly discredited for a number of reasons, not the least of which is the absolute AVALANCHE of research in the other direction.

This is in addition to plain logic: if you make businesses pay more in wages, they are obviously going to recoup those costs through a combination of increased prices, lower job benefits, less on the job training, and more part time workers (who get paid less and get less benefits). Even before readhing the research, this should be self evident.

The crime of the whole issue is that the people who use minimum wages as a political rallying point KNOW they don't work, but they use them anyway.

I’m reasonably convinced that there is a section of the workforce in America that relies upon full time work on the minimum wage as the main part of their income and that these people live in poverty (see my post from yesterday). I

I agree with you, but that is their fault and their responsibility. There are many options available to anyone earning minimum wage as the primary earner in their family:

1) Move somewhere with better jobs.
2) Stay at the same job long enough to get raises.

The answer is not government price controls that do not work and as the overwhelming evidence shows (see the ~50 citatinos above), actually hurt the poor.

I love how one of the strongest pro-minimum wage articles you cited still has to say this: "does not destroy too many jobs, and does not raise prices by too much.". Wow, that kind of lukewarm, wishy-washy "defense" of minimum wages would make me laugh if it weren't so depressing.

Every article I have ever read (including the ones you cited) that tries to minimize the job loss and inflationary effects ALWAYS chooses to analyze market sectors where employers cut job benefits and training instead.

There are at least 4 major ways that business operators/employers try to maintain profitability in the face of government force. Every article that tries to minmize the negatives does so by cherry picking data where 2 of the 4 are lower, and then focusing on those. This is a very dishonest way to do research. The really amazing thing is that even when engaging in this type of bogus research, they STILL have to admit that minimum wages DO increase prices, DO lower purchasing power of the poor, and DO result in loss of jobs. Even they are unable to cook the research enough to eliminate these realities entirely.

While I don’t doubt that the Democratic party tries to hold onto its constituents in ways that make them fear for their hip pocket (as does the Republican party), I still think it is unreasonable to characterise liberal supporters of higher minimum wages as people who wish to economically enslave the poor.

Wow, I wish your idealistic view were accurate. The current outrageous lying about social security reform is an even clearer example that the Democratic party of the US relies on people wallowing in squalor to deliver them a huge bloc of votes. That is disgraceful in my opinion.

We can talk about the disgraces of the Republican party just as vociferously, but we already have another thread for that.

[Salimar]

I agree with the last post from Aristotle. They are both the same. It is not only a problem in the U.S. but in many of the old democracies. We got to a biparty situation where supposedly both parties are different in their approach, but when they get to power: THEY ARE ROUGHLY THE SAME. Nobody wants to be extremist or radical.... they are both defined as centre... the same phenomenum happens at people's level, nobody nowadays want to have strong beliefs, everybody wants to be of centre thought, otherwise you are an extremist far left or far right.

Some people say that this situation is good for stability: One party wins the elections and stays in power until it becomes so corrupt that people votes for the other party ... and so on... I call it, the degradation of democracy, where it is completely irrelevant who you vote for.

Salimar
p.d: I think in this post, you are talking about progresists, the term liberal has an economical meaning which most progresists do not indentify with.