Please share their methodology so we can show you where they went wrong.
Convenient for you that the study over looked other sectors...like manufacturing.
You'd have to be an imbecile to believe an empirical study can disprove that price floors cause surpluses. All that is demonstrated is that an error has been committed in compiling data....for example, an overly narrow scope.
Where to start, how about the beginning:
1. The unemployment rate is a lie. There are a myriad of other factors that affect the unemployment rate in addition to minimum wage. There is no way a statistician can work these things out. Then the unemployment rate drops people when their unemployment benefits run out or they go on government assistance. Furthermore, the unemployment rate does not count people working off the books.
2. The rate of unemployment is not the individual rate. If the unemployment goes down and my personal unemployment rate goes up to 100% then I am not better off and really don't care about the unemployment rate.
3. Losers and winners: Minimum wage like other policies is just a system of the government using force over people in an effort to pick winners and losers. The losers: Minorities, mainly black and hispanic men, especially younger men. The winners: Working class women, married women and bum kids of middle and upper income parents.
4. Substitutions: Like any consumer who faces higher prices, buyers of labor, employers, will find substitutes for their low wage labor as the costs go up. So these laborers face competition for jobs from the winners in 3 who are normally more educated and skilled. And they face competition from equipment. So a McDonalds can simply purchase more efficient equipment instead of paying labor.
How the hell did they 'know' where to look for disemployment? There's no guarantee where it will show up. Oh yeah, was the study done during an inflationary boom? Because if so, those effects will overshadow any price floor increase so trends will still be up, but less up than they would be otherwise.
Those that support the elimination of minimum wages are therefore effectively demanding greater unemployment.
Or they reject garbage that tries to square the circle. The "whinge'n'whine" is from MW supporters who can't swallow this fact and try concoct trash that rationalises their conclusions. Pity they're just throwing darts randomly at a wall, isn't it?
Oh, but they know! Their oracle tells them! It's funny how many economists are like kids trying to bash a cube through a star-shaped slot.
To darkness I condemn you...
"Please share their methodology so we can show you where they went wrong."
They use a regression technique which takes into account that minimum wages may not be binding. The main econometric model is based on the following specificationlog(Yist)=φlog(MWst)+γ′Xist+μi+λit+τt+(epsilon)istwhere i, s, and t refers to county, state and quarter of observation. Y is employment. X is a vector of variables, which includes factors that vary across counties and over time.
"Convenient for you that the study over looked other sectors...like manufacturing."
The majority of analysis into minimum wages will focus on the retail trade. The reason? A tad obvious! There are more 'low wage' workers and therefore any impact of the minimum wage should be visible. That you don't know that suggests that you're quite innocent over the available literature. Perhaps you should sort out that flaw?
"You'd have to be an imbecile to believe an empirical study can disprove that price floors cause surpluses."
The rather lengthy paper can be found here. They admit, in the very first paragraph, that there is (in their opinion "slight", nonetheless") a reduction in employment when there is a minimum wage. The arguments are valid, except they are studying periods in which there was employment under the rate of natural employment. In other words, in periods of boom, when wages undergo a drastic increase in adjusted real value (see: Vedder and Gallaway, Out of Work; this is one of the best books ever published on the subject of unemployment). I, unfortunately, don't have the time to read the entire paper, but my questions to those who do and will:
1. Do they look at the retail sector in aggregate, or at certain retail companies? It is much easier for Walmart to cope with increasing wages, since they also have increasing profits. For Kmart, on the other hand, an increase in the minimum wage could be disastrous for many people in times of recession.
2. They mention that the majority of their data is from 1984 to 1989. To they gather any other data from a wider range of dates? It seems as if they are cherry picking data to support their conclusions, although they seem to admit that as a whole they are wrong.
Their econometrics seem iffy, given that I could just as well provide econometrics that suggest they are wrong. What matters is their theory, which they provide little of and even admit that in theory they are not right.
Economic Thought (Latest Post): Don't Be Fooled by GDP
process: Indeed, in many sectors the evidence points to modest (but robust) positive employment effectsThose that support the elimination of minimum wages are therefore effectively demanding greater unemployment.
Correlation does not show causation. There are many factors not being included, such as the robust inflationary boom during this period. Inflation does indeed stimulate economic activity; unfortunately, it's not stable and will inevitably destroy itself (our current economic condition). I suggest you research a period without an inflationary boom and measure the effects of wage rigidity on employment; good luck finding this period. Either way, regressions are not required, simple intuition would suffice: as the price of something goes up, it's demanded less.
Common sense: a scarce commodity.
process:The majority of analysis into minimum wages will focus on the retail trade. The reason? A tad obvious! There are more 'low wage' workers and therefore any impact of the minimum wage should be visible.
My point entirely. They completely ignore thousands of jobs that no longer exist.
They don't exist because they are illegal, thanks to minimum wage and union laws.
This is a deliberate corruption of macroeconomics. Be it the natural rate or the non-accerelating inflation rate of unemployment, the panel techniques adopted controls for these factors. Its also amusing that you'd suggest that the NRU would have any bearing on an analysis from 1990 to 2005. Gosh, what exactly is your definition of the short run?
Then you won't be able to achieve relevance.
You clearly haven't read any of it, given the nature of the dependent and indepedent variables are clearly defined. They disaggegate according to: "Food and Beverage Stores (NAICS 445), Supermarkets (NAICS 44511), Convenience Stores (NAICS 44512), Specialty Food Stores (NAICS 4452), Beer, Wine, and Liquor Stores (NAICS 4453), Gasoline Stations (NAICS 447), Sporting Goods, Hobby, Book, and Music Stores (NAICS 451), General Merchandise Stores (NAICS 452), Department Stores (NAICS 4521), and Miscellaneous Store Retailers (NAICS 453)".
They refer to 1984 to 1989 given other minimum wage studies, determined by the data sources available, have chosen that period. The study is actually from 1990 to 2005. Wrong again!
This is drivel. If you can attack their econometrics then provide an argument.
They clearly refer to both monopsony and efficiency wage arguments. If you'd like to dispute either, be my guest. So far you've provided zip!
my theory is that umbrellas cause rain, look at the data for umbrella ownership against precipitation analysed across geographic regions....
what you have is lies, damned lies or statistics...
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
So.....about that question as to whether or not the study looked at only boom years caused by the federal reserve's policies.....?
Why would it?
process:Those that support the elimination of minimum wages are therefore effectively demanding greater unemployment.
Leaving the economics alone (other than to parenthetically remark that correlation is not causation) you act as if, on an ethical/policy level, such a position would be absurd. But there are plenty of times that I'd demand greater unemployment. If there were a policy requiring all people to consume exactly the same in 2010 as they did in 2009, and prohibiting companies from downsizing, I'd advocate to repeal that policy - hence I'd demand greater unemployment. I'd also oppose laws against firing people, or against quitting jobs, or establishing universal slavery - all of which would decrease unemployment. So, too, I oppose threatening to shoot people who make voluntary agreements to exchange at a rate you don't like.
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