Yeah, we could have another looong thread about Teslas, but you know, the long-running minimum wage–employment debate has actually been around a lot longer than TSLA.
DB2
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I see no fault in their research; though I would like to see what it looks like outside of a pandemic. They accounted for this in their research but it is difficult to separate how an employer may have otherwise reacted if not for the pandemic.
Compare this to the existing issue with corporate workplace vacancies. If not for the pandemic, we would likely have 1/10th the number of new work from home jobs. The pandemic changed that dynamic, likely forever. Might their have been employers who used the confluence of both the pandemic and raising labor costs to change their headcount and FTE (a tipping point) where as absent a pandemic and simply an increase in wages, they would have behaved differently? There is no way for us to know based on the time period measured.
Regardless, I find that this study further supports my opinion that a robust EITC coupled with a SLOWLY increasing min wage is likely a better alternative than a dramatic increase in the min wage (29% in 4 years as was this case).
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But the thesis of your argument Doc was so jacked up that all I needed to do was google What is the unemployment rate in St. Paul Minnesota and it came back with 2.8 percent. That is full employment, anyone that wants a job can have one. So your study was obviously wrong, maybe it didn’t have a long enough timeline? Maybe the data was corrupt due to the pandemic? I don’t know but if you want to have a discussion about minimum wage- employment debate I would think you would need a better study to lead with.
Andy
2 Likes
Perhaps to you, but it has been an area of intense discussion for years.
If you are interested and have the time, you can listen to six hours of presentations on the trade-offs involved in raising the minimum wage.
This conference will convene economists and policymakers from across the country to shed light on recent evidence on the effects of minimum wage increases on various aspects of the labor market. Minneapolis Fed President Neel Kashkari will moderate a policy panel to discuss how policymakers might think about the trade-offs associated with minimum wage increases and what questions policymakers most need researchers to answer.
It is worth noting that the study period began in 2017 and will continue until 2029.
DB2
You can’t consider this in the aggregate. You have to look at the actual jobs lost, not the overall unemployment (which only accounts for people actively looking for work, not those that have either stopped looking, or have a job outside of the area surveyed).
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I can think of at least three reasons why “lower unemployment” would be noted from 2017 to 2021, none having anything to do with minimum wage rates going up.
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a pandemic exposed a unique risk for death or disabling conditions to a portion of the working population dealing more with the public and less able to afford health care, reducing labor supply
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a pandemic resulted in white collar firms adopting WFH which many are finding difficult to leave behind, resulting in many workers STILL working 40% of each week from home – reducing demand for restaurants, meals and hotels in downtown areas, all reducing employment of minimum wage kitchen and cleaning staff
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remote work also allowed some categories of workers to relocate entirely, thus shifting populations away from more expensive urban areas, reducing overall demand for minimum wage workers in retail
The economy is not a controlled lab experiment with only one variable changing at a time. There’s no way to draw scientifically / mathematically prove-able causation. The fact that the study was associated with a whopping 0.5% increase in hourly wages is even more odd. If minimum wage was $10.00, that would only result in a new MW of five cents. That sounds like the market was already having to pay FAR above minimum wage to get any potential worker in the door so the MW itself did NOTHING at the margin to materially raise wages.
WTH
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From page 26 of the study:
The average of time series estimates of the wage increase is 0.3 percent. We calculate this number as the average wage increase across all two-digit industries, where wage gains are weighted with the employment share of the corresponding industry in total Saint Paul employment before the minimum wage increase.
My interpretation of that is that the per person wage increase was offset by the total reduction in hours worked. In other words, the total wage paid only increased 0.3% because hours worked were reduced and jobs were eliminated.
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You also can’t just look at such a short period of time. Especially when the time we are looking at has been so volatile that I do not even know if any of the statistics they are using would be valid. This has been a weird and strange time.
Andy
Absolutely - which was the point I was also making in my first comment on this thread. The pandemic presented a black swan event that you simply can’t regress out of the data.
Businesses made many changes during the pandemic that may not have happened under any other circumstance - and a choice to reduce FTE may have been significantly impacted by the confluence of factors. You can control for a lot of variables but there was no part of the country that didn’t experience Covid that could serve as an analog.
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|Civilian Labor Force(1)|
Oct 22…Nov 22…Dec 22…Jan 23…Feb 23…Mar 23
(r)3,085.5| (r)3,085.5| (r)3,085.9 3,084.6 3,083.3 (p)3,084.1
|Employment(1)|
Oct 22…Nov 22…Dec 22…Jan 23…Feb 23…Mar 23
(r)2,994.2 (r)2,994.0 (r)2,994.9 2,994.7 2,992.3 (p)2,996.5|
Both sets of numbers from BLS. Labor force figures are very stable. Employment figures are mostly constant (i.e. no significant changes that make you wonder “why did THAT big change happen then?”).
That was on the overall job market. In low-wage industries the impact was greater. As linked upthread:
“Take Minneapolis’ retail sector, for example: The minimum wage increase led to 28% fewer retail jobs than researchers would’ve expected from a similar city during the same five-year period. By this comparison, Minneapolis also saw a 20% drop in hours worked and a 13% dip in aggregate worker earnings.”
As for controls, I think they had two types: other ZIP codes in Minnesota and other cities outside of Minnesota.
DB2
I just can’t help but wonder:does anyone predict that lowering the minimum wage will lead to a surge in employment? Does the McDonald’s owner who knows it takes 20 full timers and 4 part timers suddenly increase employment to 23 full timers and 7 part timers if wages go down?
(PS: the numbers in this “study” are so small - and the effects clouded by a once-in-a-century event - that it was silly to even publish such nonsense.)
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I really have just one criteria Doctor and it doesn’t matter what any study says and it’s what I have been telling all the kids. If it can’t support you than it isn’t worth doing. In other words, if they are living at home they can take a less paying job but if they are not than the pay is going to have to be higher. I really don’t care what the Company owners think because if nobody can support themselves why work? I think that is what is going on now. I had a neighbor come over and cry to me that they couldn’t find help and I told her I could fix that in a heart beat, offer more money. That, is called capitalism.
Andy
5 Likes
Does every job have to be one that can support a family?
To answer your question on why work, if it can’t support a family:
- teenager wanting to get some spending money
- job while working your way through college
- first time job just to get experience
- 2nd job in the household to get extra part time income
- baby sitting
- mowing lawns
I don’t think that ALL jobs should have to meet the criteria of a higher minimum wage because then you’d cut out a lot of entry jobs. The problem is, possibly, in the educational system where people exit with no skills or work ethic and think that an entry job is the same as a career.
How one would structure a minimum wage law to handle this…I don’t know.
Mike
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But if you read what I said, I never said support a family.
I don’t either Mike, but I don’t think anyone needs to take a job that doesn’t meet their criteria. Why do you think someone should take a low wage only because you need someone to help you out. All these years we have heard about the work ethic and we all have worked jobs just to get ahead, but now I am thinking we need to start the pay ethic, where someone honors your work and pays you enough to survive.
Andy
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Wouldn’t that be called “pay for performance”?
'38Packard
Lets turn that around “Performance for pay”
Andy
But a great opportunity to take advantage of if you want to do a study about: Minimum wage = “evil!”
For those who are concerned about the period covered in the Twin Cities study, here is one by Yu et al. that covers 2015-2018.
To address these challenges, we conducted a study in which we leveraged a highly granular dataset of worker scheduling data from a national fashion retailer in the U.S. to compare scheduling differences in states with different minimum wage histories. Specifically, we looked at worker schedule and wage data from 2015 to 2018 for more than 5,000 employees at 45 stores in California — where the minimum wage was $9 in 2015, and has increased every year since then — and at 17 stores in Texas, where the minimum wage was $7.25 for the duration of our study. We then controlled for statewide economic and employment differences between California and Texas in order to isolate just the impact of increasing the minimum wage.
Based on this analysis, we found that increasing the minimum wage had no statistically significant impact on the total number of labor hours employed at a given store…
However, our data suggests that the way in which those hours were allocated among workers did change. For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours each worker worked per week decrease by 20.8%. For an average store in California, these changes translated into four extra workers per week and five fewer hours per worker per week — which meant that the total wage compensation of an average minimum wage worker in a California store actually fell by 13.6%.
This decrease in the average number of hours worked not only reduced total wages, but also impacted eligibility for benefits.
DB2
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Sorry I should have said support themselves.
But many in the media often do say support a family.
My main point remains. There ought to be a way to (legally) allow for lower paying entry level jobs.
Otherwise it is sort of like the joke where you can’t hired unless you have experience. So how do you get your first job?
Mike
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