Minimum Wage Set to Rise

[Darrell Hougen]

Hi Folks,

I just wanted to pass this along. The Federal minimum wage is set to rise to $7.25/hr today and I read an interesting CNN Money article on the topic -- interesting because it contains the following paragraph:

"Clain conducted an analysis showing that the 13 states with the highest minimum wage -- exceeding the upcoming federal minimum of $7.25 an hour -- experienced higher unemployment levels than the other 37 states. She said the unemployment rates were higher by an average of between 1.75% and 2% in those 13 states during the three-month period ending in May."

This is the kind of tidbit that is often glossed over by the liberal establishment media.

Here is a link to the article.

Darrell

[Selene]

Darrell:

And we are to conclude precisely what in your opinion?

I am asking because, standing alone, it "means" nothing but a difference in 26% of the states in the Union.

Adam

[DavidMcK]

I think he is assuming that we are all aware of basic economics: that labor is subject to the law of supply and demand like everything else, and that raising labor costs dampens demand for labor, thus minimum wages produce unemployment. The only good thing about inflation is that it mitigates minimum wage laws.

[jeffrey smith]

The article would be more useful if it specified which states are involved (or at least linked to the study or a summary that did give details). As it is, without knowing which states are meant, it's impossible to determine the validity of Clain's analysis. To do that one must rule out local factors, such as the decline in real estate and tourism here in Florida, which does have a state mandate higher than the old Federal mandate (but not higher than the new Federal mandate, unless the state mandate will also change) and a relatively high unemployment rate (which means it may or may not be included in the 13 states). Hotels aren't hiring busboys because the minimum wage is too high; they're not hiring busboys because there aren't enough bookings to justify more than a minimal staffing level. (Although that may be improving, slowly.)

[Darrell Hougen]

I think he is assuming that we are all aware of basic economics: that labor is subject to the law of supply and demand like everything else, and that raising labor costs dampens demand for labor, thus minimum wages produce unemployment. The only good thing about inflation is that it mitigates minimum wage laws.

Exactly. Thank you. And sorry if I was unclear.

Darrell

[Selene]

I think he is assuming that we are all aware of basic economics: that labor is subject to the law of supply and demand like everything else, and that raising labor costs dampens demand for labor, thus minimum wages produce unemployment. The only good thing about inflation is that it mitigates minimum wage laws.

Yes, he did assume that, now let's not assume that and that statistic without the states named does not permit us to make the conclusion that we all want to make, but I would like to see

more fleshing out of the argument.

Adam