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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wednesday, August 5, 2015 at 7:58:59 AM UTC-4, Ed Huntress wrote:




Minimum wages are set on the basis of maintaining a socially and
economically viable minimum for workers at the bottom, for the sake of
the society and the economy as a whole. Raising it is justified when
those at the bottom can't sustain themselves to a degree that the
society finds acceptable on their present income (and polls make it
clear what most people think about it). It isn't about those who are
already making more. It isn't because we feel sorry for Bambi or for
the engineers who already are making much more.

I am a cynic. Minimum wages are set by politicians who want to increase their chances of being re-elected.

Dan seems to think it's all about relative proportions of income.
That's a bogus argument. Those who were near the bottom, and who now
find themselves at the very bottom because the minimum wage was raised
to match what they're making now, will need a small raise. Above them,
nobody is going to care. They're already well above the bottom. The
minimum wage isn't about them, and nobody will think it is.


You need to figure out how the relative proportions of income came about. And then figure out why raising the minimum wage will not affect the relative proportions of incomes.

Increasing the minimum wage by law will have no effect as long as the minimum wage as dictated by law is less than the minimum wage dictated by supply and demand. But raising it above the minimum dictated by supply and demand will increase inflation. So a raise in the Federal rate to $10 / hour is no big deal. I can not find anyone to hire for $10 now. But raising it to $15 will have an effect. Hours will be cut, jobs will not be created, jobs will be lost, unemployment costs will rise, jobs will go overseas, jobs will be automated.

Think of what an increase of the minimum wage to $30 / hour would do. Now think how a raise to $15 / hour will have the same type of effect but not as large an effect. And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.

Dan

--
Ed Huntress


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wed, 5 Aug 2015 10:40:57 -0700 (PDT), "
wrote:

On Wednesday, August 5, 2015 at 7:58:59 AM UTC-4, Ed Huntress wrote:




Minimum wages are set on the basis of maintaining a socially and
economically viable minimum for workers at the bottom, for the sake of
the society and the economy as a whole. Raising it is justified when
those at the bottom can't sustain themselves to a degree that the
society finds acceptable on their present income (and polls make it
clear what most people think about it). It isn't about those who are
already making more. It isn't because we feel sorry for Bambi or for
the engineers who already are making much more.

I am a cynic. Minimum wages are set by politicians who want to increase their chances of being re-elected.

Dan seems to think it's all about relative proportions of income.
That's a bogus argument. Those who were near the bottom, and who now
find themselves at the very bottom because the minimum wage was raised
to match what they're making now, will need a small raise. Above them,
nobody is going to care. They're already well above the bottom. The
minimum wage isn't about them, and nobody will think it is.


You need to figure out how the relative proportions of income came about.


Supply and demand.

And then figure out why raising the minimum wage will not affect the relative proportions of incomes.


Within the ranges we're talking about, relative proportions don't
matter. The gaps are too large for it to matter.


Increasing the minimum wage by law will have no effect as long as the minimum wage as dictated by law is less than the minimum wage dictated by supply and demand. But raising it above the minimum dictated by supply and demand will increase inflation.


Show us what has happened after minimum wages were increased in the
past.

Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218

You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.

So a raise in the Federal rate to $10 / hour is no big deal. I can not find anyone to hire for $10 now. But raising it to $15 will have an effect. Hours will be cut, jobs will not be created, jobs will be lost, unemployment costs will rise, jobs will go overseas, jobs will be automated.


Here, let's add employment to see how that works out in real life
(wages and employment are scaled to show the relationships):

https://research.stlouisfed.org/fred...0&category_id=

Employment follows recessions (the gray bars), not minimum wage hikes.


Think of what an increase of the minimum wage to $30 / hour would do.


Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.


Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.


According to what you've said, it should increase employment.

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wed, 05 Aug 2015 14:34:09 -0400, Ed Huntress
wrote:

snip


Show us what has happened after minimum wages were increased in the

You have a period of inflation, and then a minimum-wage hike to try to
past.

Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218


I think that one got buggered. Try this one:

https://research.stlouisfed.org/fred...8&updated=4913

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wednesday, August 5, 2015 at 2:34:13 PM UTC-4, Ed Huntress wrote:


You need to figure out how the relative proportions of income came about.

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wednesday, August 5, 2015 at 3:11:35 PM UTC-4, Ed Huntress wrote:

Show us what has happened after minimum wages were increased in the

You have a period of inflation, and then a minimum-wage hike to try to
past.

Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218


I think that one got buggered. Try this one:

https://research.stlouisfed.org/fred...8&updated=4913

--
Ed Huntress


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

Dan


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wed, 5 Aug 2015 13:32:42 -0700 (PDT), "
wrote:

On Wednesday, August 5, 2015 at 3:11:35 PM UTC-4, Ed Huntress wrote:

Show us what has happened after minimum wages were increased in the

You have a period of inflation, and then a minimum-wage hike to try to
past.

Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218


I think that one got buggered. Try this one:

https://research.stlouisfed.org/fred...8&updated=4913

--
Ed Huntress


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/fred...raph_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


Dan

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wed, 5 Aug 2015 13:28:16 -0700 (PDT), "
wrote:

On Wednesday, August 5, 2015 at 2:34:13 PM UTC-4, Ed Huntress wrote:


You need to figure out how the relative proportions of income came about.


Supply and demand.

And then figure out why raising the minimum wage will not affect the relative proportions of incomes.


Within the ranges we're talking about, relative proportions don't
matter. The gaps are too large for it to matter.

But you can not explain why the gaps are too large to matter.


You didn't ask. d8-)

In actual fact you are wrong.


You did not explain why you think I'm wrong. Tell us what kind of
misfit, making over $40/hr., is going to complain because people at
the bottom got a $5 raise and he just got...a $5 raise.




Increasing the minimum wage by law will have no effect as long as the minimum wage as dictated by law is less than the minimum wage dictated by supply and demand. But raising it above the minimum dictated by supply and demand will increase inflation.


Show us what has happened after minimum wages were increased in the
past.

Show us when the minimum wage was raised above the minimum wage dictated by supply and demand.


There are 3.3 million people making minimum wage, and they are the
ones that will get the raise. What do you think the "minimum wage
dictated by supply and demand" is?

Now do that for when the demand for minimum wage workers is declining.


What would that show you?

And finally for when the economy is doing so poorly.


What is "so poorly"? You mean like now, when GDP is at an all-time
high?


Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218

You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.

So a raise in the Federal rate to $10 / hour is no big deal. I can not find anyone to hire for $10 now. But raising it to $15 will have an effect. Hours will be cut, jobs will not be created, jobs will be lost, unemployment costs will rise, jobs will go overseas, jobs will be automated.


Here, let's add employment to see how that works out in real life
(wages and employment are scaled to show the relationships):

https://research.stlouisfed.org/fred...0&category_id=

Employment follows recessions (the gray bars), not minimum wage hikes.


Think of what an increase of the minimum wage to $30 / hour would do.


Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.


Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.


According to what you've said, it should increase employment.

I never said that. I do say that when the minimum wage dictated by supply and demand is higher than the minimum wage dictated by law, then the wage dictated by law has little or no effect.


So what is the minimum wage "dictacted by supply and demand"?
Remember, there are 3.3 million making the minimum wage *dictated by
law*. Should they be making more?

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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/fred...raph_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
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wednesday, August 5, 2015 at 5:41:25 PM UTC-4, Ed Huntress wrote:

In actual fact you are wrong.


You did not explain why you think I'm wrong. Tell us what kind of
misfit, making over $40/hr., is going to complain because people at
the bottom got a $5 raise and he just got...a $5 raise.


That would be me and most all of the engineers I have known. If the people at the bottom got a 5 dollar raise and the engineer got a $5 raise, then the engineer did not get a proportional increase.



Increasing the minimum wage by law will have no effect as long as the minimum wage as dictated by law is less than the minimum wage dictated by supply and demand. But raising it above the minimum dictated by supply and demand will increase inflation.

Show us what has happened after minimum wages were increased in the
past.

Show us when the minimum wage was raised above the minimum wage dictated by supply and demand.


There are 3.3 million people making minimum wage, and they are the
ones that will get the raise. What do you think the "minimum wage
dictated by supply and demand" is?


The actual wage that a unskilled worker is willing accept for work.


Now do that for when the demand for minimum wage workers is declining.


What would that show you?


That things have changed from what they were when those previous minimum wage increases were made.

And finally for when the economy is doing so poorly.


What is "so poorly"? You mean like now, when GDP is at an all-time
high?


The rate of increase of the GDP is low.


Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218

You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.

So a raise in the Federal rate to $10 / hour is no big deal. I can not find anyone to hire for $10 now. But raising it to $15 will have an effect. Hours will be cut, jobs will not be created, jobs will be lost, unemployment costs will rise, jobs will go overseas, jobs will be automated.

Here, let's add employment to see how that works out in real life
(wages and employment are scaled to show the relationships):

https://research.stlouisfed.org/fred...0&category_id=

Employment follows recessions (the gray bars), not minimum wage hikes.


Think of what an increase of the minimum wage to $30 / hour would do.

Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.

Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.

According to what you've said, it should increase employment.

I never said that. I do say that when the minimum wage dictated by supply and demand is higher than the minimum wage dictated by law, then the wage dictated by law has little or no effect.


So what is the minimum wage "dictacted by supply and demand"?
Remember, there are 3.3 million making the minimum wage *dictated by
law*. Should they be making more?


In some states they should be making more. In other states , no.

Dan

--
Ed Huntress


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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/fred...raph_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.

--
Ed Huntress


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Wed, 5 Aug 2015 20:15:41 -0700 (PDT), "
wrote:

On Wednesday, August 5, 2015 at 5:41:25 PM UTC-4, Ed Huntress wrote:

In actual fact you are wrong.


You did not explain why you think I'm wrong. Tell us what kind of
misfit, making over $40/hr., is going to complain because people at
the bottom got a $5 raise and he just got...a $5 raise.


That would be me and most all of the engineers I have known. If the people at the bottom got a 5 dollar raise and the engineer got a $5 raise, then the engineer did not get a proportional increase.


You got an unshceduled raise and now you're bitching about it. Nobody
is going to care.




Increasing the minimum wage by law will have no effect as long as the minimum wage as dictated by law is less than the minimum wage dictated by supply and demand. But raising it above the minimum dictated by supply and demand will increase inflation.

Show us what has happened after minimum wages were increased in the
past.

Show us when the minimum wage was raised above the minimum wage dictated by supply and demand.


There are 3.3 million people making minimum wage, and they are the
ones that will get the raise. What do you think the "minimum wage
dictated by supply and demand" is?


The actual wage that a unskilled worker is willing accept for work.


Bt how much is that, relative to the minimum wage?



Now do that for when the demand for minimum wage workers is declining.


What would that show you?


That things have changed from what they were when those previous minimum wage increases were made.


And what things would have changed? You seem unwilling to explain your
point.


And finally for when the economy is doing so poorly.


What is "so poorly"? You mean like now, when GDP is at an all-time
high?


The rate of increase of the GDP is low.


Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218

You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.

So a raise in the Federal rate to $10 / hour is no big deal. I can not find anyone to hire for $10 now. But raising it to $15 will have an effect. Hours will be cut, jobs will not be created, jobs will be lost, unemployment costs will rise, jobs will go overseas, jobs will be automated.

Here, let's add employment to see how that works out in real life
(wages and employment are scaled to show the relationships):

https://research.stlouisfed.org/fred...0&category_id=

Employment follows recessions (the gray bars), not minimum wage hikes.


Think of what an increase of the minimum wage to $30 / hour would do.

Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.

Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.

According to what you've said, it should increase employment.

I never said that. I do say that when the minimum wage dictated by supply and demand is higher than the minimum wage dictated by law, then the wage dictated by law has little or no effect.


So what is the minimum wage "dictacted by supply and demand"?
Remember, there are 3.3 million making the minimum wage *dictated by
law*. Should they be making more?


In some states they should be making more. In other states , no.

Dan

--
Ed Huntress

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thursday, August 6, 2015 at 5:07:50 AM UTC-4, Ed Huntress wrote:


You got an unshceduled raise and now you're bitching about it. Nobody
is going to care.


I lost buying power relative to others. I care . And may go into business for myself.



The actual wage that a unskilled worker is willing accept for work.


Bt how much is that, relative to the minimum wage?


Obvious that will vary depending on the time and place.



And what things would have changed? You seem unwilling to explain your
point.

You stated that previous increases in the minimum wage have had little effect. I am just pointing out that the past is not necessarily a good predictor of what will happen in the present.


And finally for when the economy is doing so poorly.

What is "so poorly"? You mean like now, when GDP is at an all-time
high?


The rate of increase of the GDP is low.

The recovery after the last recession has been weak. In times past the recovery has been much faster. Just showing that the past is not a good predictor of the present.



Think of what an increase of the minimum wage to $30 / hour would do.

Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.

Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.

According to what you've said, it should increase employment.

I never said that. I do say that when the minimum wage dictated by supply and demand is higher than the minimum wage dictated by law, then the wage dictated by law has little or no effect.

So what is the minimum wage "dictacted by supply and demand"?
Remember, there are 3.3 million making the minimum wage *dictated by
law*. Should they be making more?


In some states they should be making more. In other states , no.

Dan

--
Ed Huntress


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thu, 6 Aug 2015 04:29:47 -0700 (PDT), "
wrote:

On Thursday, August 6, 2015 at 5:07:50 AM UTC-4, Ed Huntress wrote:


You got an unshceduled raise and now you're bitching about it. Nobody
is going to care.


I lost buying power relative to others. I care . And may go into business for myself.


Go for it! And the next time you hear about your CEO getting an
increase in his bonus, be sure to bring up the fact that you've "lost
buying power" relative to him -- perhaps by a factor of 10 or more
greater than the *amount* of buying power you've lost.

That's not the mentality of most businesspeople I've known. Not even
of engineers.




The actual wage that a unskilled worker is willing accept for work.


Bt how much is that, relative to the minimum wage?


Obvious that will vary depending on the time and place.


Right. So you're talking about an unknown, in unkown terms. The actual
wages of most workers, skilled or not, is greater than the minimum.
The minimum sets a competitive floor. But without it, wages for others
would be less. We've seen this in our own history, before we started
putting a floor under a minimum wage.

Once you have one, however, it has a sharply declining effect on wages
above the minimum. It flattens the curve. That's what happened through
the '50s and '60s.



And what things would have changed? You seem unwilling to explain your
point.

You stated that previous increases in the minimum wage have had little effect. I am just pointing out that the past is not necessarily a good predictor of what will happen in the present.


If you have reason to believe it will be different, you'd need some
reasons for that. The pattern is pretty clear; the effect is slight,
up or down, but, historically, it's mostly up. That's what I showed
you with those graphs.



And finally for when the economy is doing so poorly.

What is "so poorly"? You mean like now, when GDP is at an all-time
high?

The rate of increase of the GDP is low.

The recovery after the last recession has been weak. In times past the recovery has been much faster. Just showing that the past is not a good predictor of the present.


Slow or fast, it recovers. And more times than not, a minimum wage
increase is followed shortly by an increasing GDP. So the old economic
theories on this subject, probably the ones you were taught, are
completely demolished by the facts.

We have much better data today. If they had it a century ago, there
probably would have been no "neo-liberal" (conservative) economics.




Think of what an increase of the minimum wage to $30 / hour would do.

Too big of a shock.

Now think how a raise to $15 / hour will have the same type of effect but not as large an effect.

Much less of a shock. Outcome unknown.

And finally think of the effect that eliminating the Federal minimum wage would have. Almost none.

According to what you've said, it should increase employment.

I never said that. I do say that when the minimum wage dictated by supply and demand is higher than the minimum wage dictated by law, then the wage dictated by law has little or no effect.

So what is the minimum wage "dictacted by supply and demand"?
Remember, there are 3.3 million making the minimum wage *dictated by
law*. Should they be making more?

In some states they should be making more. In other states , no.

Dan

--
Ed Huntress

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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. 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.

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.

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

Joe Gwinn
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thursday, August 6, 2015 at 9:21:32 AM UTC-4, Joe Gwinn wrote:

Graph reading isn't the problem. 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.

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.

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

Joe Gwinn


Ed sometime has problems with reading graphs when they do not agree with what he wants them to show.

Dan


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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-)

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.

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.

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.


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.


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.

However, you already have the percentages making minimum wage.

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thu, 6 Aug 2015 07:52:18 -0700 (PDT), "
wrote:

On Thursday, August 6, 2015 at 9:21:32 AM UTC-4, Joe Gwinn wrote:

Graph reading isn't the problem. 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.

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.

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

Joe Gwinn


Ed sometime has problems with reading graphs when they do not agree with what he wants them to show.


No. You just can't read that one. That's why I suggested using the
data instead of the graphs. I think it's available on the same pages
as the graphs themselves. Look for a button or a tab.

You may have forgotten the relationship between GDP and recessions. I
note that you were using the gray bars, rather than the GDP curves, in
your last post.

Or you're messing up the timing of relationships. Consistently,
shortly after the minimum wage is increased, the recession ends. That
would not be possible if the increased wages actually put a damper on
the economy.

--
Ed Huntress

Dan

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thursday, August 6, 2015 at 7:59:54 AM UTC-4, Ed Huntress wrote:


Go for it! And the next time you hear about your CEO getting an
increase in his bonus, be sure to bring up the fact that you've "lost
buying power" relative to him -- perhaps by a factor of 10 or more
greater than the *amount* of buying power you've lost.

That's not the mentality of most businesspeople I've known. Not even
of engineers.


Well I kind of have gone into business for myself. I think a lot about various businesses I could go into. But none of my ideas seem like they would be real businesses. They all seem like they would be hobby businesses. And they all require work. And I do not need the money. So I just do a little investing and make more money than when I was working as an engineer.

And I am trying to get the next generation interested in investing. I funded my sister's granddaughter's Roth IRA. And am hoping she will eventually get interested.

Dan




--
Ed Huntress


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thu, 6 Aug 2015 14:45:32 -0700 (PDT), "
wrote:

On Thursday, August 6, 2015 at 7:59:54 AM UTC-4, Ed Huntress wrote:


Go for it! And the next time you hear about your CEO getting an
increase in his bonus, be sure to bring up the fact that you've "lost
buying power" relative to him -- perhaps by a factor of 10 or more
greater than the *amount* of buying power you've lost.

That's not the mentality of most businesspeople I've known. Not even
of engineers.


Well I kind of have gone into business for myself. I think a lot about various businesses I could go into. But none of my ideas seem like they would be real businesses. They all seem like they would be hobby businesses. And they all require work. And I do not need the money. So I just do a little investing and make more money than when I was working as an engineer.

And I am trying to get the next generation interested in investing. I funded my sister's granddaughter's Roth IRA. And am hoping she will eventually get interested.

Dan


I hope you succeed. It sounds like you're a good example for her.

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thursday, August 6, 2015 at 5:49:58 PM UTC-4, Ed Huntress wrote:


And I am trying to get the next generation interested in investing. I funded my sister's granddaughter's Roth IRA. And am hoping she will eventually get interested.

Dan


I hope you succeed. It sounds like you're a good example for her.

--
Ed Huntress


I am beginning to believe that main thing is whether someone can delay gratification. Teaching the basics of investing is fairly simple. The key is not immediately spending every cent one gets. And I am not sure if that can be taught.

Dan



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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Thu, 6 Aug 2015 18:28:52 -0700 (PDT), "
wrote:

On Thursday, August 6, 2015 at 5:49:58 PM UTC-4, Ed Huntress wrote:


And I am trying to get the next generation interested in investing. I funded my sister's granddaughter's Roth IRA. And am hoping she will eventually get interested.

Dan


I hope you succeed. It sounds like you're a good example for her.

--
Ed Huntress


I am beginning to believe that main thing is whether someone can delay gratification. Teaching the basics of investing is fairly simple. The key is not immediately spending every cent one gets. And I am not sure if that can be taught.

Dan


It seems to me that if she was brought up that way, your job is half
done. If she wasn't, it's going to be an uphill task all the way.

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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


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.


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.

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).


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


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.

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


However, you already have the percentages making minimum wage.


What is the source of the percentages given earlier in the posting?
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?
One would assume that (excluding teenagers' summer jobs and the like)
these are the people with no better option.


Joe Gwinn
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Posts: 12,529
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

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

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Posts: 416
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

In article , Ed Huntress
wrote:

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.


In fact, in the window shown, the biggest changes in both GDP and
minimum wage occurred during the 2008 recession, during which the
minimum wage went up as the GDP went down.


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/fred2/graph/?graph_id=249246


Yes. See part about correlation below.


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.


If there is no correlation, causation is unlikely for sure.

If there is correlation, there is still much to be proven. The biggest
danger (aside from coincidence) is when the two timeseries showing
correlation are in fact both dependent on some other timeseries.

The classic example is the fact that there is a positive and
significant correlation between automobile accidents and the sale of
ice cream. This is true, even if you discount kids running into the
street at the sound of an ice cream truck.

So, to save lives, we must outlaw ice cream. It's the only moral
course of action.

Why the correlation? In the summer, people drive more and eat more ice
cream, because it's warm and nice out.

..https://www.google.com/search?q=fals...es&client=oper
a&hs=DlD&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDgQ sARqFQoTCKaB37iPmMcCFY
SUHgodezQGYw&biw=1216&bih=1271


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.


Which guys are you talking about? There is sufficient foolishness to
go around. Many times over.


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.


A lot of random motion to be sure.

Do you deny the truth of the parable of the apples above? It's Econ
101. If yes, what is your reasoning?


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


Well, both are likely. Usually, wages go down during recessions, and
rise when times are good. Supply and demand.

And it's really unwise to be demanding a raise or threatening to leave
while others are being laid off.


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.


The point was not to add to employment data (which we cannot do
anyway), but to put the minimum wage into economic context.


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.


I think we only need the minimum wage and the lowest quartile lines to
give the context.


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.


I'll dig that thread up.


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/results?cx=013738036195919377644%3A6ih0hfrgl50&q=c haracteristics+of+minimum+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.


I'll look into it. There is a lot there, all in a big pile.


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


Probably.



Joe Gwinn
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Posts: 56
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

SNIP
There are 3.3 million people making minimum wage, and they are the
ones that will get the raise. What do you think the "minimum wage
dictated by supply and demand" is?


The actual wage that a unskilled worker is willing accept for work.



The actual wage that an unskilled worker is willing to accept for work
cannot be computed, because the data is skewed. They have to accept
whatever they can get, or starve. Ask any unskilled worker, which he
would rather do, work for less or starve.

SNIP



Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218


Dang, Ed. Just when I was getting ready to go to sleep, I read this. Now
I gotta go graph some stuff.






You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.



Very informative. I would have never guessed. Maybe because minimum wage
increases don't hardly affect the total amount of wages paid to all
workers to produce the GDP.


SNIP



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Posts: 12,529
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Sun, 09 Aug 2015 00:30:31 -0400, Steve Walker
wrote:

SNIP
There are 3.3 million people making minimum wage, and they are the
ones that will get the raise. What do you think the "minimum wage
dictated by supply and demand" is?


The actual wage that a unskilled worker is willing accept for work.



The actual wage that an unskilled worker is willing to accept for work
cannot be computed, because the data is skewed. They have to accept
whatever they can get, or starve. Ask any unskilled worker, which he
would rather do, work for less or starve.

SNIP



Here, I'll help you out. Wages are scaled to show the relationship:

https://research.stlouisfed.org/fred...raph_id=249218


Dang, Ed. Just when I was getting ready to go to sleep, I read this. Now
I gotta go graph some stuff.


It's addictive. g I think every economics student should have to
spend two hours per week with those graphs, looking for surprising
relationships -- or lack of relationships. It would make hash out of a
lot of economic theory.



You have a period of inflation, and then a minimum-wage hike to try to
keep up. Inflation is pretty steady; it does not react to wage hikes.
Consistently.



Very informative. I would have never guessed. Maybe because minimum wage
increases don't hardly affect the total amount of wages paid to all
workers to produce the GDP.


That's the confounding factor, Steve. The amount of additional wages
paid, after a raise in the minumum wage, is a miniscule percentage of
total wages paid to everyone. So if there is any direct effect, it's
so small that it's totally submerged in the consequences of other
dynamics in the economy.

When you see the data laid out graphically like that, however, it's
immediately apparent that the claims that raising the minimum will
kill jobs, or economic growth, or inflation, are all so much bunk.

It hasn't happened. And there's no way to tell how much of an increase
would have a significant effect. That's why Seattle has a commission
studying it and trying to predict results. I doubt if they'll succeed
at that, however.

--
Ed Huntress



SNIP

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Fri, 07 Aug 2015 19:45:43 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

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.


In fact, in the window shown, the biggest changes in both GDP and
minimum wage occurred during the 2008 recession, during which the
minimum wage went up as the GDP went down.


This is why I say you have to look at those graphs carefully. During
the period from the end of 2007 through the first quarter of 2009, the
correlations we

July 2007 -- min. goes up, GDP goes down.
July 2008 -- min. goes up again, GDP goes down.
July 2009 -- min. goes up again, GDP goes up.

So what is the correlation? It's the same pattern as 1975 and 1990:
Small increases in minimum wage correlate with a decline in GDP. The
highest level of min. wage in all three periods correlates with GROWTH
in GDP. Small increases bad; big increases good. g

Of course, that's unlikely to have any causative relationship, but the
point is that the overall correlation coefficient is close to zero,
whether you look at it from the standpoint of minimum wage increases
(1997; Mar 1975 through May 1979) or the standpoint of recessions
(2001, 1970, 1960, etc.).

The correlation with recessions seems shot to hell by the fact that,
consistently, the highest raise in an annual series of raises occurs
roughly at the time the economy turns up.

Again, no correlation with any direction: there are ups, and there are
downs. The number of samples is too small to rely much on the
coefficient, but it's surely close to zero.



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/fred2/graph/?graph_id=249246


Yes. See part about correlation below.


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.


If there is no correlation, causation is unlikely for sure.

If there is correlation, there is still much to be proven. The biggest
danger (aside from coincidence) is when the two timeseries showing
correlation are in fact both dependent on some other timeseries.

The classic example is the fact that there is a positive and
significant correlation between automobile accidents and the sale of
ice cream. This is true, even if you discount kids running into the
street at the sound of an ice cream truck.

So, to save lives, we must outlaw ice cream. It's the only moral
course of action.

Why the correlation? In the summer, people drive more and eat more ice
cream, because it's warm and nice out.

.https://www.google.com/search?q=fals...es&client=oper
a&hs=DlD&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDg QsARqFQoTCKaB37iPmMcCFY
SUHgodezQGYw&biw=1216&bih=1271


So, based on your conclusion and example, what is the likelihood of
causation between the peak of each two- or three-year rollout of a
series of minimum wage increases, and its correlation with an economic
upturn and growth in GDP?



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.


Which guys are you talking about? There is sufficient foolishness to
go around. Many times over.


The only theories are coming from those who say minimum-wage increases
cause loss of jobs, inflation, or economic downturns. There is no one
on the other side of this discussion except me, and I present only
evidence, not theories.



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.


A lot of random motion to be sure.


It's hardly random, but there is no sensible connection between
economic upturns or downturns and increases in the minimum wage. The
evidence says that the correlation is close to zero.


Do you deny the truth of the parable of the apples above? It's Econ
101. If yes, what is your reasoning?


Having spent most of my years since Econ 101 (and up through 300)
paying attention to evidence and facts rather than theory, I'd like to
see that theory in actual practice. The general tendency, as I've
learned in recent years, is for unintended and unexpected
consequences, with theorists scrambling after the fact to re-build
their models so they can better predict the past.

Today, a lot would depend on the marketing skills of the people
selling lower-quality apples. They may actually make more money,
despite a small decline in the volume sold.

This is a good example of why classical economic theories are suspect.
They may work on very large scales (although they may not), but you
never know if apple marketers in the next town are charging $10 for
all apples, and when their customes start seeing your ads and get wind
of the fact that you're selling apples for $9, you could start selling
like crazy.


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


Well, both are likely. Usually, wages go down during recessions, and
rise when times are good. Supply and demand.


Again, look at the evidence. MINIMUM wages, at least, tend to go up
during recessions. Why do you think that is? And why does the economy
tend to turn up after a string of two or three years of minimum wage
increases?


And it's really unwise to be demanding a raise or threatening to leave
while others are being laid off.


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.


The point was not to add to employment data (which we cannot do
anyway), but to put the minimum wage into economic context.


Well, you can plot the first three quartiles against anything else you
desire on the St. Louis Fed research page.



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.


I think we only need the minimum wage and the lowest quartile lines to
give the context.


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.


I'll dig that thread up.


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/results?cx=013738036195919377644%3A6ih0hfrgl50&q=c haracteristics+of+minimum+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.


I'll look into it. There is a lot there, all in a big pile.


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


Probably.



Joe Gwinn

  #28   Report Post  
Posted to rec.crafts.metalworking
external usenet poster
 
Posts: 416
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

In article , Ed Huntress
wrote:

On Fri, 07 Aug 2015 19:45:43 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

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.


In fact, in the window shown, the biggest changes in both GDP and
minimum wage occurred during the 2008 recession, during which the
minimum wage went up as the GDP went down.


This is why I say you have to look at those graphs carefully. During
the period from the end of 2007 through the first quarter of 2009, the
correlations we

July 2007 -- min. goes up, GDP goes down.
July 2008 -- min. goes up again, GDP goes down.
July 2009 -- min. goes up again, GDP goes up.

So what is the correlation? It's the same pattern as 1975 and 1990:
Small increases in minimum wage correlate with a decline in GDP. The
highest level of min. wage in all three periods correlates with GROWTH
in GDP. Small increases bad; big increases good. g


The biggest move was in 2008, by far.

There are a few ways to tell if a correlation could be due to
causation. The first is causal order - effect must follow purported
cause. The second is the the bigger the cause, the bigger the effect.
And the sign of the correlation coefficient must be all positive or all
negative.

But even if these tests all pass, the correlation can be due to some
un-modeled common cause. It can also be difficult to decide which is
cause and which is effect if cause and effect happen simultaneously (to
the resolution of the measurements).


Of course, that's unlikely to have any causative relationship, but the
point is that the overall correlation coefficient is close to zero,
whether you look at it from the standpoint of minimum wage increases
(1997; Mar 1975 through May 1979) or the standpoint of recessions
(2001, 1970, 1960, etc.).

The correlation with recessions seems shot to hell by the fact that,
consistently, the highest raise in an annual series of raises occurs
roughly at the time the economy turns up.

Again, no correlation with any direction: there are ups, and there are
downs. The number of samples is too small to rely much on the
coefficient, but it's surely close to zero.


Oh, there is a correlation there, but it is more political than
economic, and doesn't happen every time. This isn't Physics.

The minimum wage changes only when Congress changes it. This happens
only when Congress is under considerable political pressure. Like
during a recession.

The Minimum Wage is not an economic variable like Supply and Demand.


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/fred2/graph/?graph_id=249246


Yes. See part about correlation below.


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.


If there is no correlation, causation is unlikely for sure.

If there is correlation, there is still much to be proven. The biggest
danger (aside from coincidence) is when the two timeseries showing
correlation are in fact both dependent on some other timeseries.

The classic example is the fact that there is a positive and
significant correlation between automobile accidents and the sale of
ice cream. This is true, even if you discount kids running into the
street at the sound of an ice cream truck.

So, to save lives, we must outlaw ice cream. It's the only moral
course of action.

Why the correlation? In the summer, people drive more and eat more ice
cream, because it's warm and nice out.

.https://www.google.com/search?q=fals...es&client=oper
a&hs=DlD&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDg QsARqFQoTCKaB37iPmMcCFY
SUHgodezQGYw&biw=1216&bih=1271


So, based on your conclusion and example, what is the likelihood of
causation between the peak of each two- or three-year rollout of a
series of minimum wage increases, and its correlation with an economic
upturn and growth in GDP?


See above comment on the role of Congress.


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.


Which guys are you talking about? There is sufficient foolishness to
go around. Many times over.


The only theories are coming from those who say minimum-wage increases
cause loss of jobs, inflation, or economic downturns. There is no one
on the other side of this discussion except me, and I present only
evidence, not theories.


See the parable of the apples, below.


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.


A lot of random motion to be sure.


It's hardly random, but there is no sensible connection between
economic upturns or downturns and increases in the minimum wage. The
evidence says that the correlation is close to zero.


Do you deny the truth of the parable of the apples above? It's Econ
101. If yes, what is your reasoning?


Having spent most of my years since Econ 101 (and up through 300)
paying attention to evidence and facts rather than theory, I'd like to
see that theory in actual practice. The general tendency, as I've
learned in recent years, is for unintended and unexpected
consequences, with theorists scrambling after the fact to re-build
their models so they can better predict the past.


Hmm Econ 300 does not replace Econ 101. This is basic Supply and
Demand, which has not been overthrown, and never will be.


Today, a lot would depend on the marketing skills of the people
selling lower-quality apples. They may actually make more money,
despite a small decline in the volume sold.


This assumes that the other apple growers are all asleep at the switch.

More generally, advertising tends to balance out - they drown each
other out.


This is a good example of why classical economic theories are suspect.
They may work on very large scales (although they may not), but you
never know if apple marketers in the next town are charging $10 for
all apples, and when their customes start seeing your ads and get wind
of the fact that you're selling apples for $9, you could start selling
like crazy.


Yes markets have always been imperfect for just the reasons you give
above, but the advent of modern communications (including but not
limited to the Internet) have greatly reduced such imperfections,
especially concerning commodities like apples and low-skill labor.

Particularly informative (and heartening) are the news accounts of the
economic effects of cell phones in third-world counties - centuries-old
inequities are being erased because people can now reach around
traditional middlemen (who would be classified as pure rentiers by
Marx) and discover what the market price for their products are, and
seek the best price. And keep a far higher fraction of the proceeds.


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


Well, both are likely. Usually, wages go down during recessions, and
rise when times are good. Supply and demand.


Again, look at the evidence. MINIMUM wages, at least, tend to go up
during recessions. Why do you think that is?


Because Congress raises the floor under political pressure.

If it were due only to economic forces, the minimum wage would rise and
fall all by itself, long before Congress was invented.


And why does the economy
tend to turn up after a string of two or three years of minimum wage
increases?


Because the broad economy recovers. There is always a dispute as to
the effect of Congress, harmful or beneficial, too little too late, or
nothing at all.

Flipping the question around, how can those unfortunate folk making
minimum wage, being the least well paid 5% of the workforce, have any
effect whatsoever on the broad economy?


And it's really unwise to be demanding a raise or threatening to leave
while others are being laid off.


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.


The point was not to add to employment data (which we cannot do
anyway), but to put the minimum wage into economic context.


Well, you can plot the first three quartiles against anything else you
desire on the St. Louis Fed research page.


Yep. There is a lot in there. And in the BLS data.

The BLS data mentioned later actually answered the question of
percentile of workforce getting minimum wage - 5% these days.

Joe Gwinn


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.


I think we only need the minimum wage and the lowest quartile lines to
give the context.


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.


I'll dig that thread up.


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/results?cx=013738036195919377644%3A6ih0hfrgl50&q=c haracteristics+of+minimum+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.


I'll look into it. There is a lot there, all in a big pile.


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

Probably.



Joe Gwinn

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Posts: 12,529
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Sun, 09 Aug 2015 16:48:06 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

On Fri, 07 Aug 2015 19:45:43 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

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.

In fact, in the window shown, the biggest changes in both GDP and
minimum wage occurred during the 2008 recession, during which the
minimum wage went up as the GDP went down.


This is why I say you have to look at those graphs carefully. During
the period from the end of 2007 through the first quarter of 2009, the
correlations we

July 2007 -- min. goes up, GDP goes down.
July 2008 -- min. goes up again, GDP goes down.
July 2009 -- min. goes up again, GDP goes up.

So what is the correlation? It's the same pattern as 1975 and 1990:
Small increases in minimum wage correlate with a decline in GDP. The
highest level of min. wage in all three periods correlates with GROWTH
in GDP. Small increases bad; big increases good. g


The biggest move was in 2008, by far.


The thing is, if increases in the minimum wage caused a decline in
economic growth, the growth following an increase to an even HIGHER
level in 2009 would be impossible.

Or, more sensibly, the level of the minimum wage has nothing to do
with GDP, that one can measure.


There are a few ways to tell if a correlation could be due to
causation. The first is causal order - effect must follow purported
cause. The second is the the bigger the cause, the bigger the effect.
And the sign of the correlation coefficient must be all positive or all
negative.


Um...do you mean each correlation? If so, then no. What we're really
talking about here is covariance. Some can be negative while most are
positive, and you get a positive overall covariance and correlation
coefficient. Only if you assume that the "cause" is exclusive -- that
there is nothing else going on that would affect the relationship --
can you say that a cause must be all positive or negative, in every
case, to prove causation.

Even a strong positive correlation can have an occassional negative
value in the sample, due to other causative issues.

In real-world economics, there are few causative relationships that
show up with a purely positive or purely negative relationship. In
most cases there are multiple influences at work.

Where it gets really interesing, to me, is in those cases where a
small force drives a result in one direction, while a larger value of
the same force drives a result in the other direction. For example, an
improvement in one's ability to get family health care as an
independent insured (no group policy, no Medicare, etc.) has been
shown to improve the level of risk-taking and individual
entrepreneurship.

That doesn't seem to hold when safety-net measures grow large. A
massive unemployment system, such as the ones they have in much of
western Europe, does not seem to improve such risk-taking, and
actually hinders it, compared to countries with more modest safety
nets (particularly the US).


But even if these tests all pass, the correlation can be due to some
un-modeled common cause. It can also be difficult to decide which is
cause and which is effect if cause and effect happen simultaneously (to
the resolution of the measurements).


Right.



Of course, that's unlikely to have any causative relationship, but the
point is that the overall correlation coefficient is close to zero,
whether you look at it from the standpoint of minimum wage increases
(1997; Mar 1975 through May 1979) or the standpoint of recessions
(2001, 1970, 1960, etc.).

The correlation with recessions seems shot to hell by the fact that,
consistently, the highest raise in an annual series of raises occurs
roughly at the time the economy turns up.

Again, no correlation with any direction: there are ups, and there are
downs. The number of samples is too small to rely much on the
coefficient, but it's surely close to zero.


Oh, there is a correlation there, but it is more political than
economic, and doesn't happen every time. This isn't Physics.

The minimum wage changes only when Congress changes it. This happens
only when Congress is under considerable political pressure. Like
during a recession.


If you look at the pattern, you'll see that most of them are
multi-step raises that either start before the recession, or that had
to be signed into law before the recession.

I agree that it's political, but the pressure seems to occur when CPI
and employment are rising sharply:

https://research.stlouisfed.org/fred...0&category_id=

I suspect that CPI is what applies the political pressu Prices are
rising,and there is a clamor for higher wages. Then, at about the same
time, we fall off of the economic boom and go into a normal
business-cycle recession. That's happened several times since 1980.
Before then, it was more complicated, as our monetary responses were
really messy and uninformed. That's the "before Volcker" period.

Look at it from that perspective and see if that doesn't agree closely
with the evidence.


The Minimum Wage is not an economic variable like Supply and Demand.


Right.



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/fred2/graph/?graph_id=249246

Yes. See part about correlation below.


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.

If there is no correlation, causation is unlikely for sure.

If there is correlation, there is still much to be proven. The biggest
danger (aside from coincidence) is when the two timeseries showing
correlation are in fact both dependent on some other timeseries.

The classic example is the fact that there is a positive and
significant correlation between automobile accidents and the sale of
ice cream. This is true, even if you discount kids running into the
street at the sound of an ice cream truck.

So, to save lives, we must outlaw ice cream. It's the only moral
course of action.

Why the correlation? In the summer, people drive more and eat more ice
cream, because it's warm and nice out.

.https://www.google.com/search?q=fals...es&client=oper
a&hs=DlD&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDg QsARqFQoTCKaB37iPmMcCFY
SUHgodezQGYw&biw=1216&bih=1271


So, based on your conclusion and example, what is the likelihood of
causation between the peak of each two- or three-year rollout of a
series of minimum wage increases, and its correlation with an economic
upturn and growth in GDP?


See above comment on the role of Congress.


Yeah, but the *effect* of the min. wage increase on the economy is
minimal or nonexistent. It may even be one of those "small safety net"
phenomena that have an overall beneficial effect. I suspect it is, but
proving it is beyond my analytical skills -- or time.



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.

Which guys are you talking about? There is sufficient foolishness to
go around. Many times over.


The only theories are coming from those who say minimum-wage increases
cause loss of jobs, inflation, or economic downturns. There is no one
on the other side of this discussion except me, and I present only
evidence, not theories.


See the parable of the apples, below.


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.

A lot of random motion to be sure.


It's hardly random, but there is no sensible connection between
economic upturns or downturns and increases in the minimum wage. The
evidence says that the correlation is close to zero.


Do you deny the truth of the parable of the apples above? It's Econ
101. If yes, what is your reasoning?


Having spent most of my years since Econ 101 (and up through 300)
paying attention to evidence and facts rather than theory, I'd like to
see that theory in actual practice. The general tendency, as I've
learned in recent years, is for unintended and unexpected
consequences, with theorists scrambling after the fact to re-build
their models so they can better predict the past.


Hmm Econ 300 does not replace Econ 101. This is basic Supply and
Demand, which has not been overthrown, and never will be.


Today, a lot would depend on the marketing skills of the people
selling lower-quality apples. They may actually make more money,
despite a small decline in the volume sold.


This assumes that the other apple growers are all asleep at the switch.


To some degree, they usually are. That's why there are winners and
losers in the marketing game.

You're assuming perfect knowledge. As you know, the lack of it is the
major thorn in the side of basic free-market theory.


More generally, advertising tends to balance out - they drown each
other out.


There are hundreds of counter examples. There are many, many ways to
manipulate demand, some of them very successful.



This is a good example of why classical economic theories are suspect.
They may work on very large scales (although they may not), but you
never know if apple marketers in the next town are charging $10 for
all apples, and when their customes start seeing your ads and get wind
of the fact that you're selling apples for $9, you could start selling
like crazy.


Yes markets have always been imperfect for just the reasons you give
above, but the advent of modern communications (including but not
limited to the Internet) have greatly reduced such imperfections,
especially concerning commodities like apples and low-skill labor.


I don't agree about low-skill labor. Labor mobility is running very
low, not high, and communication advances are one of the reasons, say
the researchers.

http://www.economist.com/blogs/freee...abour-mobility

But we're really getting off-track here. I agree that wages are set by
supply and demand, but with a legislated floor below which they can't
go. Based on the history of min. wages, it doesn't seem to have had
any overall negative effects. If you need workers, you need them, and
having to pay them 50% more than you would like probably does not
change the fact. You either have a market and potential growth in
sales, or you do not. Even taxes have been shown to have a minimal
effect on capital expenditures and hiring.


Particularly informative (and heartening) are the news accounts of the
economic effects of cell phones in third-world counties - centuries-old
inequities are being erased because people can now reach around
traditional middlemen (who would be classified as pure rentiers by
Marx) and discover what the market price for their products are, and
seek the best price. And keep a far higher fraction of the proceeds.


It's positive news.



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

Well, both are likely. Usually, wages go down during recessions, and
rise when times are good. Supply and demand.


Again, look at the evidence. MINIMUM wages, at least, tend to go up
during recessions. Why do you think that is?


Because Congress raises the floor under political pressure.


Yes, but the pressure comes while GDP and CPI are rising. Again, look
at the timing. The beginnings of those min. wage hikes (which usually
occur in multi-year steps) are legislated before the downturn. The
political pressure seems to relate more closely to increases in the
CPI, which also happens to make more sense.


If it were due only to economic forces, the minimum wage would rise and
fall all by itself, long before Congress was invented.


Well, it did, for centuries. And some of the "falls" -- notably from
the 1870s through the Great Depression -- produced catastrophic
results.

That's why we now have minimum wage laws.



And why does the economy
tend to turn up after a string of two or three years of minimum wage
increases?


Because the broad economy recovers. There is always a dispute as to
the effect of Congress, harmful or beneficial, too little too late, or
nothing at all.


The broad economy recovers despite what is going on with wages,
suggesting that minimum wage hikes are not a measureable, causative
factor at all. This is why I think that increasing the minimum wage
has been one of those "small" improvements that makes more economic
activity possible, based on its effect on the behavior of consumers at
the bottom of the economic ladder. The effects, though, as so small
that you can't draw many conclusions, except that people at the bottom
have more money.


Flipping the question around, how can those unfortunate folk making
minimum wage, being the least well paid 5% of the workforce, have any
effect whatsoever on the broad economy?


Nothing directly. Mostly, it's social and political.



And it's really unwise to be demanding a raise or threatening to leave
while others are being laid off.


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.

The point was not to add to employment data (which we cannot do
anyway), but to put the minimum wage into economic context.


Well, you can plot the first three quartiles against anything else you
desire on the St. Louis Fed research page.


Yep. There is a lot in there. And in the BLS data.

The BLS data mentioned later actually answered the question of
percentile of workforce getting minimum wage - 5% these days.


Right. The year-by-year BLS reports we've referred to, about the
characteristics of minimum-wage earners, get specific about it and
tell you some things about who they are.

--
Ed Huntress


Joe Gwinn


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.

I think we only need the minimum wage and the lowest quartile lines to
give the context.


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.

I'll dig that thread up.


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/results?cx=013738036195919377644%3A6ih0hfrgl50&q=c haracteristics+of+minimum+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.

I'll look into it. There is a lot there, all in a big pile.


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

Probably.


Joe Gwinn

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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

In article , Ed Huntress
wrote:

On Sun, 09 Aug 2015 16:48:06 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

On Fri, 07 Aug 2015 19:45:43 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

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.

In fact, in the window shown, the biggest changes in both GDP and
minimum wage occurred during the 2008 recession, during which the
minimum wage went up as the GDP went down.

This is why I say you have to look at those graphs carefully. During
the period from the end of 2007 through the first quarter of 2009, the
correlations we

July 2007 -- min. goes up, GDP goes down.
July 2008 -- min. goes up again, GDP goes down.
July 2009 -- min. goes up again, GDP goes up.

So what is the correlation? It's the same pattern as 1975 and 1990:
Small increases in minimum wage correlate with a decline in GDP. The
highest level of min. wage in all three periods correlates with GROWTH
in GDP. Small increases bad; big increases good. g


The biggest move was in 2008, by far.


The thing is, if increases in the minimum wage caused a decline in
economic growth, the growth following an increase to an even HIGHER
level in 2009 would be impossible.

Or, more sensibly, the level of the minimum wage has nothing to do
with GDP, that one can measure.


I agree that changes to the minimum wage have no effect on GDP, plus or
minus.

Although recessions do tend to cause raises in minimum wage, as
discussed.


There are a few ways to tell if a correlation could be due to
causation. The first is causal order - effect must follow purported
cause. The second is the the bigger the cause, the bigger the effect.
And the sign of the correlation coefficient must be all positive or all
negative.


Um...do you mean each correlation? If so, then no. What we're really
talking about here is covariance. Some can be negative while most are
positive, and you get a positive overall covariance and correlation
coefficient. Only if you assume that the "cause" is exclusive -- that
there is nothing else going on that would affect the relationship --
can you say that a cause must be all positive or negative, in every
case, to prove causation.


Correlation and covariance are pretty much the same mathematically
here. The statistics folk and the signal-processing folk use different
aspects of the same math core. Sometimes they use a correlation that
varies from zero to one, and sometimes from minus one to plus one,
depending on intended use.

In any event, the signed correlation is needed to tell direct relations
from inverse relations - both kinds can be causal.


Even a strong positive correlation can have an occassional negative
value in the sample, due to other causative issues.


The point is that if (ignoring a few outliers) one has a scattering of
plus and minus coefficients, the true correlation coefficient may be
difficult to tell from zero: one cannot reject the null hypothesis.


In real-world economics, there are few causative relationships that
show up with a purely positive or purely negative relationship. In
most cases there are multiple influences at work.

Where it gets really interesing, to me, is in those cases where a
small force drives a result in one direction, while a larger value of
the same force drives a result in the other direction. For example, an
improvement in one's ability to get family health care as an
independent insured (no group policy, no Medicare, etc.) has been
shown to improve the level of risk-taking and individual
entrepreneurship.


Yes. This is one difference between macro and micro economics.


That doesn't seem to hold when safety-net measures grow large. A
massive unemployment system, such as the ones they have in much of
western Europe, does not seem to improve such risk-taking, and
actually hinders it, compared to countries with more modest safety
nets (particularly the US).


Exactly. One can be too comfortable. Complacent companies tend to
slide gently into bankruptcy and vanish.

Unfortunately, while governments can go bankrupt, they don't vanish, or
much change. Datapoint: Greece.


But even if these tests all pass, the correlation can be due to some
un-modeled common cause. It can also be difficult to decide which is
cause and which is effect if cause and effect happen simultaneously (to
the resolution of the measurements).


Right.



Of course, that's unlikely to have any causative relationship, but the
point is that the overall correlation coefficient is close to zero,
whether you look at it from the standpoint of minimum wage increases
(1997; Mar 1975 through May 1979) or the standpoint of recessions
(2001, 1970, 1960, etc.).

The correlation with recessions seems shot to hell by the fact that,
consistently, the highest raise in an annual series of raises occurs
roughly at the time the economy turns up.

Again, no correlation with any direction: there are ups, and there are
downs. The number of samples is too small to rely much on the
coefficient, but it's surely close to zero.


Oh, there is a correlation there, but it is more political than
economic, and doesn't happen every time. This isn't Physics.

The minimum wage changes only when Congress changes it. This happens
only when Congress is under considerable political pressure. Like
during a recession.


If you look at the pattern, you'll see that most of them are
multi-step raises that either start before the recession, or that had
to be signed into law before the recession.

I agree that it's political, but the pressure seems to occur when CPI
and employment [unemployment?] are rising sharply:

https://research.stlouisfed.org/fred2/graph/?graph_id=249220&category_id=

I suspect that CPI is what applies the political pressu Prices are
rising, and there is a clamor for higher wages. Then, at about the same
time, we fall off of the economic boom and go into a normal
business-cycle recession. That's happened several times since 1980.
Before then, it was more complicated, as our monetary responses were
really messy and uninformed. That's the "before Volcker" period.

Look at it from that perspective and see if that doesn't agree closely
with the evidence.


Yes. I think it's the joint effect of rising CPI and rising
unemployment that causes the political pressure.


The Minimum Wage is not an economic variable like Supply and Demand.


Right.



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/fred2/graph/?graph_id=249246

Yes. See part about correlation below.


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.

If there is no correlation, causation is unlikely for sure.

If there is correlation, there is still much to be proven. The biggest
danger (aside from coincidence) is when the two timeseries showing
correlation are in fact both dependent on some other timeseries.

The classic example is the fact that there is a positive and
significant correlation between automobile accidents and the sale of
ice cream. This is true, even if you discount kids running into the
street at the sound of an ice cream truck.

So, to save lives, we must outlaw ice cream. It's the only moral
course of action.

Why the correlation? In the summer, people drive more and eat more ice
cream, because it's warm and nice out.

.https://www.google.com/search?q=fals...es&client=oper
a&hs=DlD&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDg QsARqFQoTCKaB37iPmMcCFY
SUHgodezQGYw&biw=1216&bih=1271

So, based on your conclusion and example, what is the likelihood of
causation between the peak of each two- or three-year rollout of a
series of minimum wage increases, and its correlation with an economic
upturn and growth in GDP?


See above comment on the role of Congress.


Yeah, but the *effect* of the min. wage increase on the economy is
minimal or nonexistent. It may even be one of those "small safety net"
phenomena that have an overall beneficial effect. I suspect it is, but
proving it is beyond my analytical skills -- or time.


I doubt you could prove the effect, even if you did have the skills and
time, given the small size of any likely effect. Too much obscuring
noise.


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.

Which guys are you talking about? There is sufficient foolishness to
go around. Many times over.

The only theories are coming from those who say minimum-wage increases
cause loss of jobs, inflation, or economic downturns. There is no one
on the other side of this discussion except me, and I present only
evidence, not theories.


See the parable of the apples, below.


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.

A lot of random motion to be sure.

It's hardly random, but there is no sensible connection between
economic upturns or downturns and increases in the minimum wage. The
evidence says that the correlation is close to zero.


Do you deny the truth of the parable of the apples above? It's Econ
101. If yes, what is your reasoning?

Having spent most of my years since Econ 101 (and up through 300)
paying attention to evidence and facts rather than theory, I'd like to
see that theory in actual practice. The general tendency, as I've
learned in recent years, is for unintended and unexpected
consequences, with theorists scrambling after the fact to re-build
their models so they can better predict the past.


Hmm Econ 300 does not replace Econ 101. This is basic Supply and
Demand, which has not been overthrown, and never will be.


Today, a lot would depend on the marketing skills of the people
selling lower-quality apples. They may actually make more money,
despite a small decline in the volume sold.


This assumes that the other apple growers are all asleep at the switch.


To some degree, they usually are. That's why there are winners and
losers in the marketing game.

You're assuming perfect knowledge. As you know, the lack of it is the
major thorn in the side of basic free-market theory.


Over the long term, yes, Over the short term, no.


More generally, advertising tends to balance out - they drown each
other out.


There are hundreds of counter examples. There are many, many ways to
manipulate demand, some of them very successful.


The classic example is name-brand soap, where the retail price of a bar
of hand soap is something like 2/3 the cost of advertising.

But labor is not such a market. Nor is apples for that matter.


This is a good example of why classical economic theories are suspect.
They may work on very large scales (although they may not), but you
never know if apple marketers in the next town are charging $10 for
all apples, and when their customes start seeing your ads and get wind
of the fact that you're selling apples for $9, you could start selling
like crazy.


Yes markets have always been imperfect for just the reasons you give
above, but the advent of modern communications (including but not
limited to the Internet) have greatly reduced such imperfections,
especially concerning commodities like apples and low-skill labor.


I don't agree about low-skill labor. Labor mobility is running very
low, not high, and communication advances are one of the reasons, say
the researchers.

http://www.economist.com/blogs/freee...abour-mobility


I'll grant you that mobility of adult minimum-wage workers tends to be
low. It's one of the reasons they remain minimum-wage.


But we're really getting off-track here. I agree that wages are set by
supply and demand, but with a legislated floor below which they can't
go. Based on the history of min. wages, it doesn't seem to have had
any overall negative effects. If you need workers, you need them, and
having to pay them 50% more than you would like probably does not
change the fact. You either have a market and potential growth in
sales, or you do not. Even taxes have been shown to have a minimal
effect on capital expenditures and hiring.


So far. But it's the dose that makes the poison, and governments must
always be restrained, or they will crush their economy.

One example is the loss of energy if the safety net is too comfortable,
as mentioned above.


Particularly informative (and heartening) are the news accounts of the
economic effects of cell phones in third-world counties - centuries-old
inequities are being erased because people can now reach around
traditional middlemen (who would be classified as pure rentiers by
Marx) and discover what the market price for their products are, and
seek the best price. And keep a far higher fraction of the proceeds.


It's positive news.


Yes. And it's happening in the US as well.


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

Well, both are likely. Usually, wages go down during recessions, and
rise when times are good. Supply and demand.

Again, look at the evidence. MINIMUM wages, at least, tend to go up
during recessions. Why do you think that is?


Because Congress raises the floor under political pressure.


Yes, but the pressure comes while GDP and CPI are rising. Again, look
at the timing. The beginnings of those min. wage hikes (which usually
occur in multi-year steps) are legislated before the downturn. The
political pressure seems to relate more closely to increases in the
CPI, which also happens to make more sense.


As discussed above, I think that it's the combination of high
unemployment an high inflation that causes the political pressure.

When times are good, there is little pressure - the party is on!


If it were due only to economic forces, the minimum wage would rise and
fall all by itself, long before Congress was invented.


Well, it did, for centuries. And some of the "falls" -- notably from
the 1870s through the Great Depression -- produced catastrophic
results.

That's why we now have minimum wage laws.


Yes. https://en.wikipedia.org/wiki/Minimum_wage


And why does the economy
tend to turn up after a string of two or three years of minimum wage
increases?


Because the broad economy recovers. There is always a dispute as to
the effect of Congress, harmful or beneficial, too little too late, or
nothing at all.


The broad economy recovers despite what is going on with wages,
suggesting that minimum wage hikes are not a measureable, causative
factor at all. This is why I think that increasing the minimum wage
has been one of those "small" improvements that makes more economic
activity possible, based on its effect on the behavior of consumers at
the bottom of the economic ladder. The effects, though, as so small
that you can't draw many conclusions, except that people at the bottom
have more money.


Yes. Simply put, minimum wage is a form of welfare.

The key question is if it helps or hurts those it claims to help.

By supply and demand, it would seem that it hurts precisely those whose
wages are thereby raised above the free-market level. Some people now
see more money, but some now see zero money.


Flipping the question around, how can those unfortunate folk making
minimum wage, being the least well paid 5% of the workforce, have any
effect whatsoever on the broad economy?


Nothing directly. Mostly, it's social and political.



And it's really unwise to be demanding a raise or threatening to leave
while others are being laid off.


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.

The point was not to add to employment data (which we cannot do
anyway), but to put the minimum wage into economic context.

Well, you can plot the first three quartiles against anything else you
desire on the St. Louis Fed research page.


Yep. There is a lot in there. And in the BLS data.

The BLS data mentioned later actually answered the question of
percentile of workforce getting minimum wage - 5% these days.


Right. The year-by-year BLS reports we've referred to, about the
characteristics of minimum-wage earners, get specific about it and
tell you some things about who they are.



Joe Gwinn


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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Mon, 10 Aug 2015 09:34:15 -0400, Joe Gwinn
wrote:

snip everything

I think we've beaten this dead horse bloody, Joe, and that we're
basically in agreement on everything that's important.

Now I have to leave for a while. I'll be travelling and working too
much to get on RCM. I never do it with my mobile machines, anyway.

So, hasta la vista. I'll be back; I just don't know when.

--
Ed Huntress
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Default Dunkin' CEO: $15 minimum wage is 'outrageous'

In article , Ed Huntress
wrote:

On Mon, 10 Aug 2015 09:34:15 -0400, Joe Gwinn
wrote:

snip everything

I think we've beaten this dead horse bloody, Joe, and that we're
basically in agreement on everything that's important.

Now I have to leave for a while. I'll be travelling and working too
much to get on RCM. I never do it with my mobile machines, anyway.

So, hasta la vista. I'll be back; I just don't know when.


On the road, watching metal be tortured?

Joe Gwinn
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Posts: 12,529
Default Dunkin' CEO: $15 minimum wage is 'outrageous'

On Mon, 10 Aug 2015 22:12:51 -0400, Joe Gwinn
wrote:

In article , Ed Huntress
wrote:

On Mon, 10 Aug 2015 09:34:15 -0400, Joe Gwinn
wrote:

snip everything

I think we've beaten this dead horse bloody, Joe, and that we're
basically in agreement on everything that's important.

Now I have to leave for a while. I'll be travelling and working too
much to get on RCM. I never do it with my mobile machines, anyway.

So, hasta la vista. I'll be back; I just don't know when.


On the road, watching metal be tortured?

Joe Gwinn


Yup. I'm back home now, but I'm off again tomorrow.

--
Ed Huntress
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