I need to focus on work over the next 10 days, but let me just outline some thoughts.

First, having separate states try different minimum wages is a good approach. It does enable us to compare different policies with real data (that would nevertheless have to be adjusted for various reasons because Mississippi and California are very different places). Right now, California, the rest of the west coast, and much of the northeast has a minimum wage that is about 15% higher than the bulk of the country. As a result, these regions have a minimum wage that is comparable to France and higher than some Canadian provinces. If Freeman wants to increase the California minimum wage, then he wants to dramatically increase the minimum wage of red-state America (30 to 40% it seems).

Ricky's invoking of the civil war is the type of hyperbole that insults thinking people throughout the world. If he thinks that a dollar an hour of pay belongs in the same sentence as the evils of slavery, then you understand why I just ignore him these days. (I'd say worse, but what's the point?)

I agree that progressive legislation has overall been positive. Minimum age laws (I started working for the family business at age 10 so I have deep views on this) and workplace safety laws are a good thing. However, that doesn't give all progressive legislation a free pass. It can go too far and it can be misguided. Teacher unions have a stranglehold on education in some US jurisdictions and prevent education reform. There are laws on the books in the name of progressivism that are silly and counterproductive. Ethanol is exhibit 1. I understand that dairy farms are struggling in California because of all sorts of progressive legislation on milk and cheese prices.

There are limits to all things, including progressive legislation. It seems to me that Europe and the US to a lesser extent are bumping up against those limits.

In Oregon, you cannot pump your own gas. This does employ some people, who presumably would benefit from an increased minimum wage. Of course, it can be problematic if you need gas at midnight. It also means that the lines are longer, which incidentally wastes gas as well as time. It also means your gas costs a few cents more per gallon, which is not a big deal, although it might be if you work at Walmart and make minimum wage.

Re citing studies, that will have to wait till I have more time. However, if you want to change the laws, I think it is incumbent on you to fully study the issue and make sure that you have absorbed the known unknowns as well as the unknown unknowns. Classical economics still holds that increasing minimum wages increases unemployment. That makes intuitive sense to me.

ray you're the one who brought up States rights. The standard excuse for excusing or ignoring the uneven application of rights across your nation.
I grant that there are reasons why local policies can be more responsive or apply more aptly than national laws. However the concept that an American in California can't stand up for poor people in Alambama or Missiissippi and demand fair laws defies the notion of citizenship.
Every time "states rights" are used as an excuse to allow the unequal treatment of citizens it is inappropriate.
If the case for differing minimum wages by state is made to apply, it needs a common denominator like a ratio against an average cost of living index. (Presumably it is cheaper to live in some states) Of course the problem with that is that cost of living is sometimes an urban/smal town/ rural thing...and not so much a state by state thing.

ray

There are limits to all things, including progressive legislation. It seems to me that Europe and the US to a lesser extent are bumping up against those limits

.

When people start talking about the dire consequences of increasing the minimum wage, they raise the spectre of all kinds of things, Includiing regulations that have nothing to do with minimum wage.
I guess its important to make the issue fuzzy and complicated when its really not that complicated..
Why is it that nations that are considered more prosperous than the US can afford to maintain a minimum wage for all of their citizens than the US can, or more aptly is willing to? Whats the fundamental difference that means that the US would suffer dire consequences that they haven't? (That list includes Australia, New Zealand, Sweden, Norway, Denmark, Finalnd, Canada, The Netherlands, and others..)

The answer is, that most, if not all, US industries could easily absorb a higher minimum wage. Most would rather not so they build a case against it that includes rhetoric and hyperbole that has nothing to do with the effect on profits, employment or competitiveness. Retailers that complain that they won't be competitive already compete primarily with others who also use minimum wage employees. Their relative position to their competitors doesn't change ....
Its about defending profits. Nothing more.

Well, in the meantime, I will try and get some UK stats for you on the period from the 90s to the mid 00s on minimum wage introduction (as a universal rather than for a few sectors) and the subsequent increases.

however, I would caution you on basing your argument on 'classical economics' as a lot of it has been found wanting (neither the Keynesian view, nor the post-Keynesian monetarist view agrees with it on some fundamental issues) let alone what seems to be intuitive. If we are to be rigorous, intuition should only be used for theorising, not for actually backing theories. There is a lot in economics that is counter-intuitive. For example, I've seen case studies that showed a company cutting down production numbers, increasing prices and yet making a greater annual profit. 'intuitively', selling less of something should not work. Intuitively, increasing your prices should make you less attractive than competitors and lose you sales, despite a higher unit margin. But of course doing this while focusing on quality or another USP can be more useful than what intuition might tell you to do.

Another example of intuition being at odds with the actuality is the Monty Hall problem.

From Wikipedia:

Under the Constitution of Canada, the responsibility for enacting and enforcing labour laws, including minimum wages in Canada, rests with the ten provinces as well as the three territories also having been granted this power by virtue of federal legislation. This means that each province and territory has its own minimum wage. The lowest general minimum wage currently in force is that of Saskatchewan ($9.50/hour) and the highest is that of Nunavut ($11.00/hour). Provinces allow lower wages to be paid to liquor servers and other tip earners, and/or to inexperienced employees. The Employment Standards Act of British Columbia had up to 2011 formerly allowed employers to pay as little as $6/hour to new workers with less than 500 hours of work experience[1] (about three months of full-time employment, six months half-time, or one year quarter-time).

Ricky:

However the concept that an American in California can't stand up for poor people in Alambama or Missiissippi and demand fair laws defies the notion of citizenship.
Every time "states rights" are used as an excuse to allow the unequal treatment of citizens it is inappropriate.

By the way, RJ, I think you are conflating all 'progressive' legislation/regulation. Of course some regulations go too far. Some don't go far enough. Each should be taken on their own merits. It would be better, perhaps, to start with the issue and question at hand based on the topic title and first post (and the one I'm trying to address primarily) of minimum wages, levels and applicabilty thereof.

To widen it into a whole 'regulation v markets' thing seems reductive, and at the same time to introduce things about unrelated employment laws just makes it too hazy.

Yes, I know there is context, and that may be why a Federal rate may not be approriate (not sure why a Texan's work should be valued less than a Californian's, if they do the same thing, but I understand how wage markets vary as do living costs), but it seems unhelpful to just lump this in with the bad.

I don't actually agree we are going 'too far' in general. Employment regulations appear - if anything - to be weakening. I can see how to some they can be a target during economic strife, but I'm not convinced it was 'red tape' that led to our problems. Mainly it was property bubbles bursting (not just the US, but also Ireland and Spain), combined with low regulation of investment banking. Whether it is hampering recovery is a good question, but I am wary of choosing to erode employmeny rights that were hard won so we can compete with countries that have few of them by dint of being autocracies or just very poor.

While I may think the Oregon self-serve pump law a poor one (which I do), I don't see why that affects the minimum wage question. And the fact that I disagree with that law should hopefully indicate that it's not simply a case of me thinking 'government always right'.

indeed, some 'regulation' is actually there to help protect us from poor decisions by government. I'm seeing today our PM saying we should make it harder for people to launch judicial reviews of granted planning permission. The main uses of that are when commercial competitors against successful applicants or local residents who feel detrimentally affected are challenging a decision made by government at some level. Because we have to allow for the possibility that goverments make poor decisions and/or may be corrupted by powerful interests.

By the way, RJ, I think you are conflating all 'progressive' legislation/regulation. Of course some regulations go too far. Some don't go far enough. Each should be taken on their own merits. It would be better, perhaps, to start with the issue and question at hand based on the topic title and first post (and the one I'm trying to address primarily) of minimum wages, levels and applicabilty thereof.

I agree, if you read through the thread, you'll see that Ricky is the one to bring up health care policy, education policy, slavery, BP, mining disasters, and child labor.

For work reasons, i will try not to respond for a while.

Oh, I get you. But experience has taught me that ricky does not respond well to such criticism.

While you take a sabbatical from the thread, I'll try to remember to get those stats. That would be mim wage rate and increases over time, median wage, unemployment rates, growth rate and inflation, all for the UK (as it's the place I know best and where we have a recent 'experiment' you can look at). Anything else you'd want taken into consideration?

Some empirical data:

First the UK experience: http://econ.economicshelp.org/2008/04/w ... d.html?m=1

A 30 year old paper from Stanford that shows some effect. http://www.stanford.edu/class/econ101c/class2.pdf

A study indicating that higher minimum wage rates did not lead to higher unemployment http://www.epi.org/publication/briefingpapers_bp150/
A paper indicating that studies done with improved methodologies have shown no increase in unemployment rate due to raising the minimum wage (and casts doubt on older studies such as the ones in the Stanford paper)http://www.epi.org/publication/bp178/

Another study showing that increases in state minimum wage laws did not cause unemployment
http://www.irle.berkeley.edu/workingpapers/157-07.pdf
Another paper of a lack of effect of raising the minimum wage on teenage unemployment
http://www.irle.berkeley.edu/workingpapers/166-08.pdf
A study of the impact of the Clinton era increases in minimum wages
http://keystoneresearch.org/publication ... rkers-us-a

I think it's a great idea. Workers should demand unrealistic wages and go on strike, if necessary, to get them.

It worked so well with Hostess.

all fair ... here's something else to add to the equation.

http://upload.wikimedia.org/wikipedia/c ... t_rate.png

http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

You should also look at employment numbers for these various countries (and states) over say the last 30 to 60 years. Has Europe with its more generous minimum wages experienced the same sort of employment growth as the US?

ray

agree, if you read through the thread, you'll see that Ricky is the one to bring up health care policy, education policy, slavery, BP, mining disasters, and child labor.

Actaully Freemand2 was first... And you responded this way...

Ray

Yes, it should not do anything about that. When the government shows competence in the other jobs that it does, we can then look at expanding its responsibilities

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Wages are part of compensation.... Working conditions, worker protections and benefits are also part of compensation. It isn't unfair to consider the entire compensation package
Without government interventions, as Freeman originally said, the conditions of workers would not have improved from the Industrial revolution.

Ray

Has Europe with its more generous minimum wages experienced the same sort of employment growth as the US?

Europe's a big place. Encompassing Spain Greece and Portugal.
As well as prosperous nations like Denmark, Sweden, Norway, Finland, and The Netherlands.
Why not look at prosperous nations that have higher minimum wages, equal or better mandated benefits... One learns from Best practices by looking at those who've suceeded. Success isn't necessarily measured by employment levels if those employed are a constant underclass of cheap labour.

By the way, I don't get your reference to Canada. Is it to point out that Saskatchewan has a higher minimum wage than anywhere in the US? (Its also the birth place of universal health care)
If its to point out regional disparities are acceptable. I already granted that, if there exist rationale for differing cost of living that they might make sense. Saskatchewn has the lowest Cost of living in Canada. Nunavut perhaps the highest due to its remote location. But there's only 40,000 people up there...

Doctor Fate wrote:I think it's a great idea. Workers should demand unrealistic wages and go on strike, if necessary, to get them.

It worked so well with Hostess.

As I understand it, they were being asked to take a pay cut, which is slightly different.

That 'offer' was made six months after the company went into administration, so clearly it was already in trouble. It was also bankrupt between 2004 and 2009. The 2009 emergence from bankruptcy included a deal whereby employees made contract concessions.

But as the company was heading back towards the more recent bankruptcy, its senior management were taking bigger and bigger wage increases (so much for the 'risk' aspect of people making decisions in high positions!). Let us at least be consistent when looking at whose salary demands were an issue.

The real problem for the company appears to have been that it's a consolidation of many different bakery companies, and in the 1990s when they tried to save costs by using shelf-life enzymes and homogenisation of processes, their food started to taste odd. And, of course, increased competition from new entrants, a change in the consumer markets and the problem of trying to rely on old fashioned brands won't have helped.

Maybe the strike was what killed it off, but the company appears to have been suffering a long drawn out fatal condition for years before then. The union are claiming that a consultant hired by Hostess was saying it was not salvageable even with their plans.

danivon wrote:

Doctor Fate wrote:I think it's a great idea. Workers should demand unrealistic wages and go on strike, if necessary, to get them.

It worked so well with Hostess.

As I understand it, they were being asked to take a pay cut, which is slightly different.

Unrealistic = unrealistic.

Rj, I looked at the charts and i guess from a scan of the charts (it's tedious to try and assimilate all of the data) that are you are trying to show a correlation between higher minimum wage laws and higher unemployment...but isnt it also true that we could say that higher minimum wage laws correlate with a higher standard of living (given that higher minimum wage laws appear to be concentrated in states with higher levels of income)? Correlation is one thing, causation is another

freeman2 wrote:Rj, I looked at the charts and i guess from a scan of the charts (it's tedious to try and assimilate all of the data) that are you are trying to show a correlation between higher minimum wage laws and higher unemployment...but isnt it also true that we could say that higher minimum wage laws correlate with a higher standard of living (given that higher minimum wage laws appear to be concentrated in states with higher levels of income)? Correlation is one thing, causation is another

Hey, here's an idea: let's put everyone, no matter what type of work they do, on the same pay level! And, if they don't work, we'll pay them the same thing!

It just might work!