Thanks for agreeing with me 100% Roger.

As for the union correlation, unions represent a small proportion of the workforce. Those unions that may tie their wage base to the minimum wage would be an even smaller subset--likely much smaller. Thus, any impact to the larger economy would presumably be modest indeed. And again, not all bad.

Amy Ridenour agrees with Dave Schuler.

Janice Houston of the NBER.

United Farm Workers

For the first time, a union contract will require that agricultural guest workers receive a 2 percent pay increase above the Adverse Effect Wage Rate mandated under federal law, which is always higher than the state or federal minimum wage. Currently, the wage rate for agricultural guest workers in Washington state is $9.01 an hour.--emphasis added

Iâ??d like to see how doubling the minumum wage paid to a kid making your morning latte at Starbucks is going to ripple right on through the economy to double all these peoples incomes as well.

It wont. Just because you double one economic variable such as price of a given good does not mean that everybody purchasing the spends double. The proof is left as an exercise.

How many times the minumum wage is a airline pilots wage set, or a school teacher, or fireman, policeman, steelworker, teamster, stevadore, electrition, plumber, or nurse?

I'd like to see how doubling the minumum wage paid to a kid making your morning latte at Starbucks is going to ripple right on through the economy to double all these peoples incomes as well.

Actually, I think you are just making it all up.

Barring some reason to anticipate a negative effect, I would tend to think the reasoning in my last paragraph would apply here as well. That's not to say I don't also approve of the EITC approach as a factor in promoting a living wage.

That raising the minimum wage substantially impacts employment rates or hurts the poor it is intended to help is not supported by the studies cited so far in this thread.

That's a misstatement of what the studies show, Roger. What the studies show is that the employement effects are negligible to modest in the lowest-wage group.

The studies say nothing, as far as I can tell, about the unemployment effects of the increase in the minimum wage on employment in higher wage groups. To the best of my knowledge that's never been studied and that's my concern and the reason that I'm inclined to favor reform in the EITC rather than the minimum wage as a means towards helping the working poor.

In addition to Max Sawicky, Brad DeLong also favors the EITC as a means to the desired end. However, DeLong believes in a modest increase in the minimum wage until it would begin to have employment effects (which acknowledges that there would, indeed, be employment effects at some level).

I'm not as confident as he is in the ability to finetune this closely.

Note also that most of the studies of the impact on employment cited (and apparently provided by Republican sponsors--i.e., big business interests)involve data affected by the interaction between pre-1990s welfare program structures and a minimum wage. I.e, they include persons who presumably chose not to work rather than accept an increased wage while losing welfare benefits. With welfare reform, these particular studies are no longer relevant--not to mention that they are flawed as actual measurements of impact on available employment.

Additionally, the presumption informing the argument that modest minimum wage increases will affect low wage employment is that employers currently operate as charities and provide employment from the goodness of their hearts. I.e., they let excess unneeded workers just hang around and draw a paycheck now, but if employers are required to up this charitable giving, they will cease to do so. Actually, few low wage employers employ more workers than they need for the sake of charity and thus are not in the position to arbitrarily cut their workforce for spite.

I fully understood your argument that the increase could have an indirect negative effect in that it works similar to a tax on businesses, and hence consumer products. Thats why I went on to claim that the effect, to the extent that it is present, is minimal.

Actually the size of the effect is something that can only be determined empirically, which you have not done. However, there is no reason to suffer such an effect when we can use the EITC which also has the added benefit of providing and incentive to work and not distorting wages which can lead to excess supply (in labor markets we call this unemployment).

In the political realm, the positive benefit to â??Billy Bobâ?? is most certainly relevant - which is why it is a smart political move. I am sure the dems would be quite happy to have Billy Bobâ??s vote back. And you should recognize, if your reading skills were a little better, that that was my basic point. You would also recognize that I (provisionally) agreed with you that the EIC might be wiser path to achieve this in an ideal world.

The problem is that Billy Bob might not be one of the lucky one's that lands the job with the higher minimum wage. In fact, it also possible Billy Bob loses his job due to the increase (or has his hours cut back). The EITC doesn't have that problem, and Billy Bob still comes out ahead.

You have 50 years of research that points to minimum wages generally being a bad thing. We have evidence pointing to the EITC being a pretty good alternative and it isn't that hard to understand. And based solely on political expediency do we decide that the minimum wage is the better policy. Could there be a better argument as to why government does such a rotten job at allocating resources? I don't think so.

It also highlights how Arnold Kling views the government:

The Welfare State supposedly redistributes income and reduces poverty. In fact, I believe that the Welfare State redistributes poverty and reduces income.--emphasis in the original

Simply because I state the arguments for why the wage increase is beneficial does not imply that I am claiming that you said the opposite.

I fully understood your argument that the increase could have an indirect negative effect in that it works similar to a tax on businesses, and hence consumer products. Thats why I went on to claim that the effect, to the extent that it is present, is minimal.

In the political realm, the positive benefit to "Billy Bob" is most certainly relevant - which is why it is a smart political move. I am sure the dems would be quite happy to have Billy Bob's vote back. And you should recognize, if your reading skills were a little better, that that was my basic point. You would also recognize that I (provisionally) agreed with you that the EIC might be wiser path to achieve this in an ideal world.

I wan't making anything up, I know how to read, and I understand how markets work, and how they don't sometimes. I also know how to keep invective out of my discourse when none is directed at me. Its a good thing.

In your article you allude to a â??market clearingâ?? price for labor. Since the minimum wage is a politically arbitrary wage, why do you assume it is the equilib?

I didn't, read it again.

Additionally, doesnâ??t paying someone too little for their labor also result in a market distortion? Ie..we need to spend too much on public programs to make up for the economic rents businesses are pocketing by paying folks too little?

And pray tell how exactly does this happen?

Man you guys are canâ??t think straight. How about some demand side economics? its gotta be more effective than supply side economics at increasing AG and helping the middle class.

Please refrain from commenting after drinking heavily. Nothing in my post was "supply side". Sheesh.

Tano,

I disagree with the claim that raising the minimum wage would actually hurt those who are the recipients.

It is a direct wage increase. It is not taken away by higher taxes, since those at that level are not paying much in taxes at all.

Please sharpen your reading comprehension. I didn't say that the increase in the minimum wage would be taxed away. What I did note is that the increase in the minimum wage is very much like a tax on employers and consumers and that the minimum wage worker is also a consumer. Hence, it hurts them indirectly in terms of higher prices just as a higher sales tax would hurt them. Really, this isn't hard.

And if it causes incremental increases in prices for the products that they consume, such an effect is not going to come close to erasing the benefit that the wage increase gives, at least not in the short to medium term.

Sure, some who find jobs at the higher minimum wage will benefit. However, those who don't wont have the higher wage benefit and will face higher prices. We are talking in aggregate here, not that Billy Bob has a slightly higher wage.

Further, all of this is irrelevant with an EITC. It would accomplish the same thing, but more efficiently.

Yet another chapter in the long thesis regarding how pure market forces, the optimally clean theoretical basis of capitalism, needs to have its edges rounded in order to work in the real world where human beings are not idealized factors.

No Tano, it is actually a case of where you are making stuff up, not reading carefully nor understanding how markets work.

I was going for something pitying, but Charles' comment will suffice.