Jackson Free Press

Breaking

The House passed an ambitious minimum-wage bill before adjourning on Tuesday. HB 237, which passed 68-to-50, calls for every state employer to raise minimum wage to $6.25 by July 1, 2007, and to raise it again to $7.25 beginning Jan. 15, 2008. Before approving the bill, representatives voted 64-to-54 for an amendment exempting part-time high school or college student employees from the bill, arguing that employers hiring part-time students would be likelier to do without the labor than pay higher costs. Amendment opponents argued that businesses like Wal-Mart would likely discriminate against full-time workers in favor of part-time students if the bill became law.

Mississippi AFL-CIO President Robert Shaffer said the unions have been working with legislators to "see where their hearts are."

"We've been encouraging the Democratic Legislature to look at their roots and see who they're really for, and I think Haley Barbour has done a tremendous job of helping us do that," Shaffer said.

Barbour attacked the bill immediately after it left the House Labor Committee last week, telling business leaders from a Mississippi Economic Council gathering last week that other states such as Tennessee and Alabama would be "laughing up their sleeves." Barbour's argument is that jobs would flee to nearby states (which are still saddled with the national minimum wage of $5.15) if Mississippi hikes its own wage.

Shaffer disputes Barbour's argument.

"Is Barbour talking about the businesses they haven't already sent offshore? The thing is, hell, they've been working on outsourcing everything for 10 or 15 years now, and I just don't see what there is left," Shaffer said. "It doesn't make sense to truck chickens to Mexico to get them plucked, does it?"

Shaffer said that many of the businesses still in the state, such as insurance and food service jobs, remain because they have no choice but to stay near their customer base.

"We are only one of five states without (a state minimum-wage requirement), and there are 29, counting Washington D.C., with one higher than the fed requirement," Rep. John Mayo, D-Clarksdale said in a press release. He warned that the business community is already rallying lobbyists to the Legislature to kill the bill.

Ron Aldridge, state director of the National Federation of Independent Businesses, said a statewide wage increase would have a heavy impact on local businesses.

"This particular bill would impose over a 40 percent increase in the minimum wage, which affects small businesses, for the most part, because that's where most of your minimum-wage earners work. … In addition to that, (a business owner will have to pay for) an increase in Social Security, Medicare and your unemployment taxes, because once you increase the wage, you have to pay more on those, too. Your insurance cost for worker comp also goes up with the minimum wage," Aldridge said. "You'll actually have job losses as a result of this. If my costs increase, I'll have to cut the number of hours for employees or cut out some jobs."

Rep. Mike Lott, R-Petal, who joined a largely Republican crowd in opposing the bill, argued that business owners would have to lay off much of their work force, cut back hours or raise prices in response to the higher wages.

"Small businesses cannot afford the hit to their bottom line and will have to make adjustments that will hurt their employees," Lott argued.

County Affairs Committee Chairman Ricky Cummings shouted down opposition on the House floor, however.

"This is the same old doctored-up excuse that this Congress has used for 10 years, the same Congress that has granted themselves almost $40,000 a year. … The average CEO makes the same money in the first two hours on the job as a minimum-wage worker makes all year long. There's something wrong with that," Cummings said, adding that many House members would be tempted to throw their vote in with the "capitol street gang and vote against the bill."

"They'll tell you what a great job you did, but you won't feel good—I can promise you that," he added.

The cost of living in Mississippi has been rising since the last minimum-wage increase in 1996. The Legislature's Performance Evaluation and Expenditure Review office says that the cost of a loaf of bread increased 22 percent, from 87 cents to $1.07, while ground chuck has gone up 38 percent, from $1.84 to $2.54. A gallon of gas, meanwhile, has increased from $1.26 to $2.61—a 107-percent increase, and natural gas took an 87-percent increase, up from $68.23 per 100 therms to $128.36.

Shaffer said that Barbour might avoid a veto if his minions in the Senate sabotaged the bill before it reached his desk. "(Sen.) Terry Brown (R-Columbus) is chairman of the Senate Labor Committee. I did hear that he might be willing to have hearings, but Terry works for Barbour and … (Brown) wouldn't be allowed to be for it," Shaffer said.

Brown confirmed that he would hold hearings on the bill, but doubted the bill would fare well under his chairmanship.

"If it came down to a tie vote, I could not support it," Brown said.

See the roll call of how representatives voted (PDF, 80KB).

Previous Comments

ID

90723

Comment

As someone who worked to help support my family both in high school and college, this SUCKS BIG TIME. What's the deal selling out young people!?! Worried, I guess, about driving McDonald's to other states, eh?

Author

DonnaLadd

Date

2007-01-09T18:02:36-06:00

ID

90724

Comment

...and on the flip side, this will mean that corporations are less likely to hire minimum-wage employees over a certain age. The job market will suddenly boom for young folks, but they'll make less money; the job market will shrink for older folks, but they'll make more money. Weird. From a bookkeeping standpoint, I don't even know how this will be enforced. Cheers, TH

Author

Tom Head

Date

2007-01-09T18:36:09-06:00

ID

90725

Comment

Agreed. It's shortsighted. I don't want a minimum-wage bill that discriminates against young people. Not to mention how many young people *are* in school, while they're working to support families, and even children of their own. This is the kind of stupidity that makes Mississippi look bad.

Author

DonnaLadd

Date

2007-01-09T18:40:33-06:00

ID

90726

Comment

The only silver lining I see here is that the bill will probably either die in conference or get vetoed--which, given how Machiavellian our legislature is, was probably the idea all along. Barbour is on record as opposing the minimum wage, and I don't think they had a veto-proof majority (Brian, am I right?). What we really need is a dramatic, progressive national minimum wage increase scaled to cost of living. Once we have that, we won't really need a Mississippi-specific minimum wage increase because we already have one of the lowest costs of living in the country. Cheers, TH

Author

Tom Head

Date

2007-01-09T19:02:54-06:00

ID

90727

Comment

I need to read this bill, anyone have the link? being an older worker, ha. I think all workers deserve the same treatment. If , heaven forbid, I am dishing up fries somewhere, .. work is hell, and deserves the same compensation whoever does it. frankly, as an older person, I can't even get my foot in the door. I did see the Dems are trying to do something about min. wage on the nat'l level. too little too late as usual. even if it's raised to whatever, it's still below poverty level. This country lives on the backs of poor workers. Oh, it helps the economy. Yes, think that the next time you're at xxx fast food, for that really good deal on a taco.

Author

sunshine

Date

2007-01-09T19:25:18-06:00

ID

90728

Comment

It kind of reminds me of the abortion bill last spring. No one should get bragging rights with the public for passing this.

Author

DonnaLadd

Date

2007-01-09T19:56:51-06:00

ID

90729

Comment

Donna, I was thinking the same thing--not because the bill is bad (though it is), but because, like the abortion bill, it is being proposed without any of the people involved giving any real thought to the possibility that it might be enacted. The House is proposing this so that they can say Haley Barbour vetoed a minimum wage increase when November rolls around, or at least say it was killed in the Senate, I'd bet you a dollar to a donut. It's bad legislation because it's not really intended to become law. Cheers, TH

Author

Tom Head

Date

2007-01-09T21:06:33-06:00

ID

90730

Comment

sunshine, the only long-term solution is a borderline socialism, where basic cost-of-living is always paid by the government if the income isn't there by other means. Nobody should live without the option of sending themselves or their kids to college, with food insecurity, with inadequate health care. Not in America. But that's crazy talk. The next best thing is the U.S. House proposal, which I support as a tiny incremental step closer to something that doesn't depress the hell out of me. Cheers, TH

Author

Tom Head

Date

2007-01-09T21:10:16-06:00

ID

90731

Comment

I agree, Tom. It reminds me of the damn Clinton administration—and all those smart meritocratic attorneys in it—endorsing the patently unconstitutional Communications Decency Act because they need it would never pass Supreme Court muster, and they could still pretend that they were trying to "protect" children. I hate political games like this one. The people deserve better. It's taken the House all of a week to p!ss me off again.

Author

DonnaLadd

Date

2007-01-09T21:13:23-06:00

ID

90732

Comment

Agreed, Donna, and well put. I don't mean to keep promoting my own content, so call me on it if it becomes a pain, but I wrote pieces not long ago bashing Clinton's overall civil liberties record and calling particular attention to the way he basically got all the ducks in a row for Bush's imperial presidency. There is a Democratic Party that is not worth having, and sometimes I get so fixated on the bad Republicans that it's easy to forget the bad Democrats exist, too. Mississippi has had a Democratic legislature for a long, long time, but there are states out there with more progressive Republican legislatures that I'd trade for ours any day of the week. And I'd be just as happy to contribute to that process here, if the right candidates come along... The overall sliminess of the 2006 abortion ban drama is not something I'm going to forget. Cheers, TH

Author

Tom Head

Date

2007-01-09T21:24:16-06:00

ID

90733

Comment

Damn, I was all for this bill until they cut out my teenage sons who were the most likely benefactors. Viva la Democrats in control of the Congress! My boys need a raise bagging groceries to pay for their cell phone bills! Sorry, pardon my sad attempt at satire, all do respect to Ray.

Author

Doc Rogers

Date

2007-01-09T22:44:07-06:00

ID

90734

Comment

We'll forgive you. I know you know as well as I do that many young people work to put food on their family's table. I did.

Author

DonnaLadd

Date

2007-01-09T22:47:21-06:00

ID

90735

Comment

Ahhh, but the census statistics don't bear this out. The popular myth of a lot of families trying to raise the "family" on a minimum wage is toast. But, " a lot" is subjective. To some, one family would be "a lot". To others, 20% of the population is a "few". And predominately, those on minimum wage trying to raise a family are single household moms. Compromise less than 10% of those earning minimum wage if the local talk radio dude is correct (a sad attribute, I agree). As an employer of minimum wage workers , they don't stay that way if they're worth the pay. Good employess get raises really quick to keep them from leaving. Free enterprise at work.

Author

Doc Rogers

Date

2007-01-09T23:12:27-06:00

ID

90736

Comment

First of all, I don't see any evidence presented that "this" isn't borne out. There is *no question* that many young people work to put foot on their family's table. (You know where the label "teenager" came from in the first place, and why, right?) Also, as you know, the constitutional rights of just one person for the law to apply to them the same as anyone else is all it takes. And, as staunch libertarianism always bears out, your "free enterprise" survival-of-the-fittest example is extremely limited and utopian. (The reason staunch Libs fall down, just as staunch left-wingers, right-wingers, communists or anyone else.) That is, it doesn't always work like that, and not all employers self-regulate as you apparently do. Let's just say that a minimum-wage floor isn't to protect employees from folks like you. I assume your research has looked at who is working for what in the state of Mississippi, what their educational levels are, and how many of them are living below the poverty line.

Author

DonnaLadd

Date

2007-01-09T23:26:00-06:00

ID

90737

Comment

Ok, I'll do the research, I figured you would call me out on it. Your a journalist through and through. With regard to my Libertarian point of view, it's served capitalism well. I don't consider it Utopian. Un constrained, it doesn't serve society well. Just for the enviroment, it needs limits from capitalism. Will post my results later!

Author

Doc Rogers

Date

2007-01-09T23:42:09-06:00

ID

90738

Comment

Agreed. And you're nailing one of the biggest reasons that I'm not a Cllinton fan (other than the fact that he cheated on his wife with a barely legal intern while his teenage daughter was in the same building). What a feminist.

Author

DonnaLadd

Date

2007-01-09T23:44:33-06:00

ID

90739

Comment

(The last post was for Tom's earlier one.) Doc, don't just do research on libertarian or business Web sites now. That's my journalistic advice o' the day. ;-) When has libertarianism served capitalism well? Have we ever seen it "serve" capitalism? Of course, it's utopian—the idea that companies are going to self-regulate all the good stuff if they're left alone by government?!? Please. We've seen the evidence over and over again that greed wins out the vast majority of the time. That said, utopian is good in that it gives us goals and makes us think and aspire, but no staunch (read extreme) political/economic ideal is good enough on its own: not libertarianism, capitalism, socialism, communism. And as much as I dig most ideals of libertarianism, it is extreme and will never work. Not with humans anyhow. Maybe with toasters.

Author

DonnaLadd

Date

2007-01-09T23:49:22-06:00

ID

90740

Comment

Good discourse, I'll reserve my comments for a better argument. And y'all willl make me search the web for the statistics I'm looking for. Love an intelligent discussion!!!

Author

Doc Rogers

Date

2007-01-10T00:06:23-06:00

ID

90741

Comment

I will be devil's advocate and argue this is not totally reprehenible... Granted it is not a great bill by any means. However, it is BETTER than the status quo, depending on how it is written At LEAST, those working full time that are not students would benefit (I know it sucks for students and I was one working for minimum wage during high school and college) Also, again depending on the language that I have not seen, it might be possible for those not in school, young, and need the money the most, to get some help. The minimum wage is a below poverty wage. There should be change, and little as this is, Mississippi is taking a STEP, although a small one that will be vetoed, in the correct direction. That is something, especially for Mississippi. Tom, I would love a differnent forum to discuss the past abortion bill. I agree it was HORRIBLE and should have been killed. I (from a scholarly perspective, as well as a political perspective) was impressed with the amendment that killed it. (I think we actually sat in on a meeting to kill it and I am think that is where I met you, but that remains to be seen)

Author

AGamm627

Date

2007-01-10T00:58:51-06:00

ID

90742

Comment

I'm not getting it. How is discrimination against young people who ARE trying to get an education "better than the status quo"?!? It's a terrible amendment. It needs to go. TODAY.

Author

DonnaLadd

Date

2007-01-10T11:07:12-06:00

ID

90743

Comment

The whole bill will go. I mean, it went in 68-50; that's not a veto-proof majority. It's going to the Senate, where it will either stall or be defeated. If by some unlikely series of events it passes the Senate, Haley Barbour has already sworn to veto it. And if Barbour were to confuse it with an abstinence pledge or something and sign it, then it still duplicates the House minimum wage proposal, which does not include the age discrimination clause. This is a political display House Democrats are putting on so that they can say they supported raising the minimum wage. That's all it is. It will never become law. Cheers, TH

Author

Tom Head

Date

2007-01-10T11:21:58-06:00

ID

90744

Comment

I agree, Tom. What a waste of time.

Author

DonnaLadd

Date

2007-01-10T11:38:46-06:00

ID

90745

Comment

Any step to raise the minimum wage is a step better than the staus quo. This is not the step I would prefer, however, it is important to see the positives, few as they are.

Author

AGamm627

Date

2007-01-10T12:37:40-06:00

ID

90746

Comment

Hi folks. Long time reader, first time poster. Not sure just why I feel compelled to chime in here. I suppose it's this: Although I disagree with most of the positions taken by the JFP on political issues (not on food or music, incidentally, which are just swell) those positions are usually defensible and need to be articulated and addressed in order to sharpen state and local policy debates. All that to say this: while I think you're wrong on minimum wage, I appreciate that the JFP, its contributors, and its posters are generally engaged in a thoughtful conversation about how Mississippi, and Jackson in particular, can be made better. To the point at hand, then. If you support a minimum wage increase (or any minimum wage, for that matter), on what do you base that support? Many of the posts above, like much of the commentary found elsewhere, implicitly or explicitly assume that a minimum wage hike amounts to a redistribution of wealth from the rich to the poor. Let's posit that, if that were the case, society's overall utility would be enhanced by wealth transfers (based on welfare economics -- i.e., the first dollar you receive produces more happiness than the millionth, laying aside the obvious depressive effect on overall happiness that comes from removing private incentives to produce). Assuming as much, a minimum wage hike might, or might not, result in such a transfer. Why do you assume the former? I don't want to come off as pedantic, but it may help to frame the argument in basic economic terms, just so we can understand one another's positions and assumptions better. Here goes: If labor markets (and secondary markets -- i.e., the market for the good or service that the employer sells) are competitive and efficient, and the transacting parties are rational and have adequate information, they will agree upon a labor price that reflects the value of the labor to society. If the above assumptions are right, and one side is compelled by law to demand a higher price, the transaction will fail and the good or service will not be produced, resulting in a loss of overall societal happiness. If that happens, there is no wealth transfer because there is no employment agreement. Everybody --both parties and society as a whole-- loses because the government made it illegal for laborers to sell their labor at a price they'd be willing to accept. Of course, there are plenty of cases in which the assumptions stated above are not true. Employers (and employees, through unions) wield market power to carve themselves a bigger slice of the pie created by the mutually-beneficial transaction described above. Markets aren't always efficient, and employees are often unsophisticated bargainers. In any given case, it's certainly possible that an employer is taking advantage of information assymetries to extract more from employees for less money. Supporters of minimum wage laws presume that the free market assumptions are false, and that these assymetries and market inefficiencies are the real factors driving down the wages of the least skilled workers. And they presume to know precisely what the "real" price of labor would be, absent such complicating factors -- i.e., that employers would go ahead and strike a deal at $7.25/hour if they had to, rather than the $5.15/hour they could otherwise get; they'd make less money, but would still profit overall. Sometimes they're right; some employers would make that deal. In those cases, you've got yourself a wealth transfer, which we'll assume is a good thing. (Put to one side the problem that many minimum wage employers, like Wal-Mart and most fast-food chains, are relatively low-margin enterprises, who will likely pass some of the cost right back to low-income consumers.) But sometimes, they're wrong; and as noted above, the deal fails and everybody loses. How do you know which scenario will predominate at a given margin (here, an additional $2.10/hour)? The answer: You don't, unless you've reviewed reams of economic data about what forces are actually driving labor prices in a given industry. In other words, the minimum wage question isn't one that can be answered by gut feelings or appeals to "justice" or "progressivism" (shudder), it's a question that boils down to empirical data and math. Period. If you haven't seen the empirics and done the math, you don't know what the net societal effect will be. So maybe a little more modesty is in order, in lieu of these broad pronouncements that any increase in the minimum wage is better than the status quo. (Incidentally, we do know from historical experience that statistically significant jumps in unemployment have accompanied minimum wage increases far more frequently than increases in real income among the poor. But that's beyond the scope of my argument here.)

Author

laughter

Date

2007-01-10T14:09:04-06:00

ID

90747

Comment

Compensation is not the only issue here. If these corporations do let go full-time workers in favor of part time students, they don't have to pay insurance benefits. The people who need the full-time wage the most are shafted out of their job (in the worst possible scenario) or reduced hours and no insurance. This bill sucks. Big time.

Author

Lady Havoc

Date

2007-01-10T14:12:27-06:00

ID

90748

Comment

Asymmetries. Not assymetries. Heh.

Author

laughter

Date

2007-01-10T14:26:37-06:00

ID

90749

Comment

Law Talking, I've heard your questions and argument a little too much the last several days. I'm overdosed. All I'll say right now is that I'm for an increase and am not worried about any unsustainable fallout, if there be any at all.

Author

Ray Carter

Date

2007-01-10T14:56:26-06:00

ID

90750

Comment

Additionally, I believe there are brillant economists on both sides disagreeing as to any fallout or harm that will be caused by any increase. These people are aware of the data and math? Where does this leave us? And we don't know if tomorrow will come but we assume and have faith it will. Feelings and emotions are sometimes the way to go. Math and data have their limitations, too.

Author

Ray Carter

Date

2007-01-10T15:05:54-06:00

ID

90751

Comment

I just posted a link up above to a PDF that lists how every representative voted.

Author

Brian C Johnson

Date

2007-01-10T15:19:33-06:00

ID

90752

Comment

well my friend john reeves voted with the Democrats

Author

chimneyville

Date

2007-01-10T15:32:06-06:00

ID

90753

Comment

The answer: You don't, unless you've reviewed reams of economic data about what forces are actually driving labor prices in a given industry. In other words, the minimum wage question isn't one that can be answered by gut feelings or appeals to "justice" or "progressivism" (shudder), it's a question that boils down to empirical data and math. Period. If you haven't seen the empirics and done the math, you don't know what the net societal effect will be. So maybe a little more modesty is in order, in lieu of these broad pronouncements that any increase in the minimum wage is better than the status quo. Actually, it's a question that can be -- and often is -- answered by gut feelings and appeals to justice. The notion of what a job is "worth" can be argued on both economic and moral grounds. The notion that any able-bodied worker in our economy is *worth* more than $5.75 per hour is one that it seems a majority of Americans can go along with. Your argument is probably more effective if you're arguing to abolish the minimum wage. It's there that you could make a purely economic argument, perhaps even suggesting that by paying someone who is "worth," economically, $3 per hour would free up some dollars in a given budget to pay someone who is "worth" $10 per hour that 10 bucks. I can at least envision participating in that argument. :-) Supporters of minimum wage laws presume that the free market assumptions are false, and that these assymetries and market inefficiencies are the real factors driving down the wages of the least skilled workers. Some supporters of the minimum wage can likely see more nuance than that. In the framework of the current debate, the problem is that the minimum wage (a.) exists and (b.) doesn't exist in a vacuum. Because it exists, it becomes a problem that we don't index it to inflation. Instead, we have the wage dipping well below inflation, where minimum-wage businesses benefit from an artificial dip in what they pay their workers vs. what they pay for goods, and then every 10 years or so Congress comes along to eliminate that benefit, making it seems like a harm in the process. Beyond that, the minimum wage exists in a world where there are considerable other factors that effect equal access to the marketplace. For instance, a worker making the minimum wage in a depressed part of Jackson has fewer options for negotiating a higher wage than does a worker who lives in Flowood. That's not just "the market at work," in terms of growth and development, but a result of a slew of policy decisions -- our historical subsidies of the automobile, a lack of a transportation infrastruture (e.g. Jackson buses can't go to the suburbs and suburbs don't have buses for transfers) and even municipal code decisions that encourage highway-like metrics on new roads instead of urban metrics to make neighborhoods more walkable. In other words, yes, you could theoretically could boil this down to an empirical argument, but it doesn't work as a "all other factors being equal" argument. Instead, I posit that in order to make a good decision about the minimum wage, you have to include both the social will of the people (i.e. whether or not it's a moral issue) and empirical data that takes fully into consideration the fact that the minimum wage already exists.

Author

Todd Stauffer

Date

2007-01-10T16:53:33-06:00

ID

90754

Comment

Excellent rebuttal, iTodd!

Author

Kacy

Date

2007-01-10T16:58:27-06:00

ID

90755

Comment

Law talker, Your last point, that we "know from historical experience that statistically significant jumps in unemployment have accompanied minimum wage increases" is vastly overstated. Here's as good a brief as any. The traditional economists’ view has been that a higher minimum wage would mean some job losses for low-wage workers. But a landmark 1994 study by David Card and Alan Krueger upset the common wisdom by finding that there were no overall job losses when New Jersey raised its minimum wage. David Neumark, a longtime critic of that study and an economics professor at the University of California, Irvine, said most credible studies had concluded that an increase in the minimum wage did hurt employment for unskilled workers, although most studies did not find major job reductions. He said an increase to $7.25 might reduce job levels for the least skilled workers by 4 percent. I know that 4 percent is a "statistically significant" jump, but I hope you'll agree that it's awfully underwhelming.

Author

Brian C Johnson

Date

2007-01-10T17:21:19-06:00

ID

90756

Comment

Thanks for the column/article from the New York Times, Brian. I needed to hear that! A black friend of mines who unknowingly has blinding affinity and likeness to staunch conservatives has nearly sickened me with law talk's exact positions the last few days. I'm leaning toward not even talking to him for about 6 months to keep from having a dual in the streets.

Author

Ray Carter

Date

2007-01-10T17:37:19-06:00

ID

90757

Comment

iTodd, thanks for your response. Briefly (trying to finish up a brief and get home to see the kids), your initial point about determining "worth" on moral grounds only works if you accept the premise that it can be "moral" to make society as a whole, and minimum wage workers in particular, worse off economically. I don't believe that. That was the unstated premise of my argument. I'm sorry if I was oblique. Regarding your second point, my post didn't address how a minimum wage policy, if it must exist, should be implemented. Surely, that's an interesting topic, but it's not one I'm inclined to debate right now. Not surprisingly, the short version of my argument would be: It should be as low as is politically possible, so as to do as little damage as possible. Generally, the remainder of your response directly supports my point -- i.e., you have to look at the forces that actually drive wages, as they exist in the real world. But if the factors you're looking at --you mention transportation in particular-- are external to the employment agreement (i.e., don't tell us anything about what deal the parties might be willing to accept), then they have no bearing on whether a minimum wage is a good idea. Put another way, a minimum wage law will either (a) transfer wealth, or (b) kill employment (or do both to some indeterminate degree). If the latter (or predominantly the latter), the fact that bad transportation infrastructure exists doesn't make it any more justified. What you have here is an argument for better public transportation, not a minimum wage hike.

Author

laughter

Date

2007-01-10T17:37:57-06:00

ID

90758

Comment

I meant a duel. There will be a dual, too, though.

Author

Ray Carter

Date

2007-01-10T17:44:30-06:00

ID

90759

Comment

BCJ, you said: "I know that 4 percent is a "statistically significant" jump, but I hope you'll agree that it's awfully underwhelming." I wouldn't use the term "underwhelming" to describe a 4% jump in unemployment. I'd put it somewhere around "very, very bad indeed." Also, the 4% statistic you quote is misleading, because it applies to "the least skilled workers," not to actual "minimum wage earners". The latter are a fairly small subset of the former, meaning that the actual impact on the relevant population is probably much higher. (Or, depending on your point of view, that minimum wage laws are largely ineffectual because so many unskilled workers already make more than the mandated minimum.) This is actually a pretty common critique of the handful of studies (often conducted by admitted activists like AFL-CIO) and re-analyses that purport to show relatively low increases in unemployment. And, of course, none of this takes in to account reductions in hours and demanding greater efficiency of employees to offset increased cost.

Author

laughter

Date

2007-01-10T17:54:36-06:00

ID

90760

Comment

The Mississippi legislature's minimum wage increase is now obsolete. The U.S. House of Representatives just voted in the same two-year increase to $7.25 with a veto-proof 315-116 majority. If it gets 67 votes in the Senate--all of the Democrats plus 16 Republicans--then it won't matter whether or not Bush supports it, because he will lack the power to veto it. If it passes the Senate by less than a 67-33 majority, then Bush might be able to veto it--but it'll cost his party dearly in 2008 if he does, so I expect he won't. Cheers, TH

Author

Tom Head

Date

2007-01-10T18:18:58-06:00

ID

90761

Comment

Briefly (trying to finish up a brief and get home to see the kids), your initial point about determining "worth" on moral grounds only works if you accept the premise that it can be "moral" to make society as a whole, and minimum wage workers in particular, worse off economically. I don't believe that. That was the unstated premise of my argument. I'm sorry if I was oblique. No...you're begging the question. You're presenting your belief -- that raising the minimum wage categorically makes society and minimum-wage workers worse off economically -- as a truism that would therefore force one into a ridiculous argument that making society worse off is the morally correct decision. A != B. From there, the "morality" becomes a philosphical discussion. (Welcome to "Economics Is a Social Science"...with your host, iTodd!) Is abortion "moral" in the case of a working mother because not having the baby is likely to increase her wage earning potential while placing less of a burden on society as a whole to feed that child through subsidized programs? Abortion is the only universally beneficial -- and therefore moral -- choice under those circumstances, right? Put another way, a minimum wage law will either (a) transfer wealth, or (b) kill employment (or do both to some indeterminate degree). If the latter (or predominantly the latter), the fact that bad transportation infrastructure exists doesn't make it any more justified. What you have here is an argument for better public transportation, not a minimum wage hike. Well, you're probably right that it's an argument for better public transportation, but you're missing my point. I'm saying *you* don't really have an argument *against* a minimum wage *hike*. Against a minimum wage, perhaps. But not against a marginal increase in that brutally immoral institution. ;-) Seriously...all I'm saying is that I think it's a gross oversimplification to say that (and excuse me if this puts words into your mouth) "we can't raise the minimum wage because it will have a deleterious effect on jobs." Given that the minimum wage does exist, and it doesn't index to inflation in some more clever way, and according to numbers on the current state of our economy (that probably need to looked at seriously themselves, but that's another discussion) we're in a situation of statistical full employment with stagnant wage growth, it seems that raising the minimum wage would, in the aggregate, not be bad public policy. Plus it plays well in Peoria. And just to pick nits in something you're saying to Brian: Also, the 4% statistic you quote is misleading, because it applies to "the least skilled workers," not to actual "minimum wage earners". Again, this is social science guess-ery at work, but isn't it likely that many employers "index" their wage levels to -- or spitball their wage levels based loosely on -- the minimum wage? From a purely pragmatic point of view, paying your workers a buck or two more than the minimum wage is one way a small business owner (or Nissan, for that matter) "negotiates" with employees to help them feel their job has greater value, while perhaps suggesting to them that quitting when things get tough because they could just "go flip burgers" wouldn't be in their best interest.

Author

Todd Stauffer

Date

2007-01-10T19:25:44-06:00

ID

90762

Comment

iTodd, I'm not begging the question. Your original point was that one can set a minimum wage based on either of two distinct criteria: (1) that which maximizes society's overall economic welfare, and the economic welfare of unskilled workers; or (2) "gut feelings and appeals to justice." I disagree; I believe that only the former is a legitimate criterion. To the extent the latter prescribes a result that differs from that prescribed by the former, it is illegimate. And there's no truism to be found, either. My original point was simply to note that the desirability of a higher minimum wage is a question that turns solely on empirical analysis, which many minimum wage supporters eschew entirely in favor of appeals to "economic justice" and the like. My only assumption is that it is inherently moral to enhance the economic well-being of society as a whole and individuals. (The abortion point is mildly interesting: of course there are non-economic goods that enhance a person's overall utility, like being alive. None of those discrete goods need be addressed here, however, as they all increase right alongside improving economic welfare.) Within that ontological framework, I welcome debate. Although, of course, I believe my side will win. Also, the arguments I've raised apply equally, whether the question is enacting a minimum wage or raising it. The same economic principles apply, whether $2.10 is added to $0 or to $5.15. You're just setting the margin at which you'll make consensual transactions illegal; there's nothing magical about one threshold or another.

Author

laughter

Date

2007-01-10T23:36:34-06:00

ID

90763

Comment

Similarly, some would argue that the Constitution is perfectly clear and can be strictly applied. Many others would argue that context, history, present community sentiment, the times, practical outcomes, realism, practicality, flexibility, curiosity, compromise, modesty, et al, are necessary to make the Constitution work properly. They would also argue there are no absolutes or infallibilities of any idea or ideology or data or criterion.

Author

Ray Carter

Date

2007-01-11T10:31:47-06:00

ID

90764

Comment

All right, let's try this again. Note, first of all, that this example makes a mockery of Barbour's predictions about jobs fleeing the state. Several studies have concluded that modest changes in the minimum wage have little effect on employment. A study two months ago by an economist at Washington State University seemed to back the experience of Clarkston and other border towns in Washington. The economist, David Holland, said job loss was minimal when higher wages were forced on all businesses. About 97 percent of all minimum-wage workers were better off when wages went up, he wrote. Note that he is writing specifically about minimum-wage workers. Note also that this researcher is not an "activist like (the) AFL-CIO." I will not pretend to be an expert in neo-classical economics like our friend Law Talker, but it's clear that his original point, which is that economists overwhelmingly agree that raising the minimum wage causes significant jumps in unemployment. Clearly, there is contention about this point among economists, and it is not a matter of fringe activists distorting the data. You can stick to your point, Law, but you should agree that economists are not univocal. (I understand that for you, the point is almost a priori. Raising the minimum wage must hurt the poor because it introduces inefficiency into the market. More on that when I've had more coffee.)

Author

Brian C Johnson

Date

2007-01-11T10:43:10-06:00

ID

90765

Comment

Your original point was that one can set a minimum wage based on either of two distinct criteria: (1) that which maximizes society's overall economic welfare, and the economic welfare of unskilled workers; or (2) "gut feelings and appeals to justice." I disagree; I believe that only the former is a legitimate criterion. To the extent the latter prescribes a result that differs from that prescribed by the former, it is illegimate. We're just going to argue in circles on this. In the real world, decisions are often made without perfect information and based on "gut feelings" that people call "truth" or "morality" or "justice." As in my abortion example, decisions based purely on your (1) are indeed rare. (Also see: the Iraq War, universal healthcare, oil subsidies, tax credits for Hummers, etc.) Plus, the actual thrust of my argument is that you'd need so many data points for truly measuring the economic benefits/detriments of the minimum wage in the context of other decisions made by the government and municipalities regarding the welfare of low-wage workers that (1) is not a good enough argument for not raising the existing minimum wage to a level that at least catches it up to inflation. You yourself say that you "believe" that (1) is the only legitimate criterion; so we better leave it at that. I don't completely disagree with you, but I *believe* that the solution -- indeed, even discovering all of the information you'd need to make (1) a useful study -- is considerably more complicated than you're suggesting. Until that point, it remains a *belief*, and I can't necessarily support policy decisions based exclusively on your beliefs. :-) Likewise, that solution would have to take into account the *fact* that many political decisions are made based on (2), which probably ain't gonna change any time soon. As Tom would say...Cheers! ;-)

Author

Todd Stauffer

Date

2007-01-11T11:22:49-06:00

ID

90766

Comment

BCJ, I never suggested that there aren't academic studies, using various samples and methodologies, that purport to establish that a particular minimum wage increase improved the welfare of unskilled workers. Given the political predisposition of most academics, it would be shocking if such studies didn't exist. And, of course, there are plenty of studies that show the contrary. Most (certainly not all) economists agree that minimum wage hikes generally have one of two effects: they can either hurt unskilled workers (via increased unemployment, cuts in hours, demands of greater efficiency, inflation, etc.), or they can have virtually no net effect. The former usually occurs when government enacts a very substantial minimum wage increase, which we rarely see in the U.S. The latter, of course, occurs when the increase is relatively modest -- i.e., where (as here) a large majority of unskilled workers already meet or exceed the new minimum. More broadly, the article you cite presents precisely the inverse of the problem Barbour has suggested. Washington is a rich state with good schools and good infrastructure; Idaho is not. As a result, Washington is home to relatively few industries that pay minimum wage to begin with (fast-food type businesses are the exception, but very few consumers are willing to drive even a few extra miles to reach a slightly cheaper Wendy's, so they don't factor into the equation). Mississippi finds itself in precisely the opposite situation: with terrible schools and infrastructure, one of the few things we have to offer is relatively cheap labor. While the Mississippi minimum wage hike is probably now moot, a federal minimum wage increase still may hurt Mississippi, as it prevents certain industries here from undercutting their competition in more affluent states like Tennessee and Texas. Also, I never said that inefficiency is inherently bad. If you read my initial post, I expressly stipulated that marginal utility can be enhanced by wealth transfers in certain circumstances.

Author

laughter

Date

2007-01-11T11:30:18-06:00