On Fri, 07 Aug 2015 10:00:35 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

On Thu, 06 Aug 2015 09:21:27 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

On Wed, 5 Aug 2015 20:02:03 -0700 (PDT), "
wrote:

On Wednesday, August 5, 2015 at 5:16:16 PM UTC-4, Ed Huntress wrote:


That one looks more like raising the minumum wage caused recessions.

Then you need to take a closer look at minimum wage increases and GDP:

https://research.stlouisfed.org/fred2/graph/?graph_id=249246

There were two wage increases in '91. GDP climbed after the first, and
then climbed again after the second.

There were wage increases in '96 and '97. GDP went up after each one.

There were two wages increases in 2009. GDP climbed after each one.

On the other side, there was a wage increase in 1990. GDP went down.

You know what happened after 2007; wages weren't involved. Jobs were
hardly involved. g

So, as I said earlier, it's mixed. But minimum wage increases were
followed by GDP growth more often than not over the last 35 years.

--
Ed Huntress



According to the chart there were recessions at about the same time as the
minimum wage increases. The grey bars indicate recessions where the GDP
did
not grow as you claim.

Dan

The GDP grew exactly as I said. If you can't read the graph, I'll pull
out the data for you.

Graph reading isn't the problem.

It's Dan's problem. d8-)

Well, I probably read the graph the same way as Dan, then - the claim
was that raising the minimum wage caused the GDP to increase, but the
graph says exactly the opposite.

No. The "claim" was that it's sometimes up, and sometimes down -- that
there is no correlation.

I don't see how looking at the
numbers that are graphed would change this general observation.

sigh Let's go through it. There was a two-step increase ending in
1991. Just as the second minimum wage increase took effect, the theory
suggesting that the effect on GDP should be at its worst, the
recession ended and GDP took off.

In 1996 - 97, another two-step increase. GDP just keep rising, with NO
effect from the increased minimum wage.

2007 - 2009: Again, a multi-step increase, amidst a recession that was
precipitated by the financial collapse. Just before the end of it, the
increases reached their peak -- just as the economy turned around and
GDP began to grow again.

In all of those cases, the worst effect should have been when the
increase raised wages to their peak. But just the opposite happened.
Just as wages peaked, the recession ended and GDP started to grow.

Are we looking at the same graph?

https://research.stlouisfed.org/fred...raph_id=249246



The chart shows GDP reduction (not
increase) at the same time as increases in minimum wage. The cause is
of course political, not economics: Congress raises the minimum wage
only during hard times, to show that they are doing something, at last.
The subsequent rise is simply the general recovery from recession, and
is not a result of raising the minimum wage.


Then how do you explain raises in '96 and '97? There were no hard
times then. Minimums were raised twice and the GDP kept climbing.

Politics. I don't recall what was going on at the time, 20 years ago.
The mini-recession of 2001 seems to have had no political effect - no
change in minimum wage.


And if you move the slider to the left, you'll see a very complex
situation. There were so many variables at work during those years
that I didn't want to complicate the issue -- 35 years of modern
experience seemed to tell enough -- but you'll see, if you look back,
that in '74 and '75, the minimum was raised twice DURING a recession,
and the GDP started climbing just a couple of months later.

Correlation is not causation.

But how do you show causation if there is no correlation? The answer
is, you don't. A correlation doesn't show causation. But a lack of
correlation shows there is no causation.



Through the late '70s, the minimum was raised three times, and GDP
just kept climbing right through it. No recession then.

If you attribute the GDP increases after periods of both minimum-wage
increases and simultaneous recession to the normal business cycle,
then you have to agree that the minimum-wage raises did not stop or
even slow the recovery. In recessions that were not accompanied by
minimum-wage increases (1982; 2001), the shape of the recovery was the
same as those with a minimum increase. Conservative theory would have
predicted at least a delay. In several cases, with business facing the
newer, higher minimums, growth just went on throughout the following
period.

If the conservative theorists were right, none of this would have
happened.

Not quite. See below.


The minimum wage in Mass is $9/hr, or $3/hr with at least $20 per month
of tips, as of 1 Jan 2015. It was $8/hr before.

In the Boston area, Dunkin Donuts is offering $10/hr plus tips
(according to a sign out front), and has been for some time now, long
before the recent increase. Now one would assume that Dunkin Donuts
knows from long experience exactly how much they must offer to attract
the desired number and quality of employees.

As long as the minimum wage is less than the market-clearing wage for
low-skill jobs, the minimum wage will have no effect.

But we know that the minimum is no more than the "market clearing"
rate for 3.3 million (or 3.6 million, more recently) people. And the
percentage, now at 4.7% of workers, has been much higher in the past.
It was over 17% in the late '60s, IIRC. So the historical examples are
based on much higher percentages. The pattern holds.

I find that conservative theorists have put themselves in a dilemma.
First they say that increasing the minimum will cause a substantial
loss of jobs and business bankruptcies, not to mention inflation, and
then they say that raising the wages will do nearly nothing because
the number who are making minimum is so small; that the
market-clearing rate is higher to begin with.

I fail to see the problem. Both statements are simultaneously true.

The problem is that the theories you guys are going on have no
evidence. You're whipping up ideas like cotton candy, and the
historical record shows that they're crap.


Consider apples. Let's say that apples are an unregulated market, and
the current market price for apples is $11 per pound for better apples,
but only $8 for lower-quality apples. The growers of low-quality
apples are complaining about the unfairness of it all, raising quite
the ruckus. The King eventually decrees that henceforth, apples may
not be sold for less than $9 per pound.

What effect will this have on the apple market? None on the better
apples (which have always complied), but significant on the
lower-quality apples (where sales volume will decrease, because not
everybody is willing to buy low-grade apples at $9 a pound).

Again, you have no evidence that this has happened with minimum wage
increases. In 1991, 1997, and 2009, just as wage increases reachd
their peak, employment either continued to climb steadily, or it
actually jumped.

The correlation is between recessions and employment, not between wage
hikes and employment.



This is the rationale behind the suggestion that we plot wage deciles
against minimum wage over time.

It would add nothing to the employment data, but if it floats your
boat, go for it. You can get quintile data from the IRS.



It would be useful to plot minimum wage and the earning quartiles or
deciles together. That should tell the tale.

That will take you quite a long while, unless you find a way to
extract quintiles from something simpler than IRS data. That stuff is
a bugger to work with.

The FRED site you posted above does have quartile data (see under Add a
Data Series), but I wasn't familiar enough with that site to get it to
work properly. You have far more practice with that site.

Aha. Well, they've added data for the first three quartiles, from some
source I didn't check. I could plot that for you, if you want, over
the weekend. It will be one messy graph, with all three in there
plotted against minimum wage increases, but it can be done.

You need an account with them to show more than a couple of lines on
one graph, and to store them. It's free. If you're interested, it's
worth it. They've set it up very nicely.


Decile data must be somewhere. Actually, the whole percentile curve is
available (there was a thread on this some time ago).

I don't know where. That may be buried in the DoL site, probably at
BLS. It's nowhere near as slick as the St. Louis Fed.



However, you already have the percentages making minimum wage.

What is the source of the percentages given earlier in the posting?

BLS:

http://data.bls.gov/search/query/res...m+wage+workers

This actually gives the percentile limit.

We now know that current minimum-wage workers are in the lowest decile.

Do we have the age and education-level distributions of these workers?

Yes. I think it's all in the BLS reports (one report for each year)
noted above.

One would assume that (excluding teenagers' summer jobs and the like)
these are the people with no better option.

Probably.

--
Ed Huntress



Joe Gwinn