Our minimum wage debate vs. the UK’s: they win by a round-one knockout

March 16th, 2015 at 7:45 am

Over at PostEverything. And if you have the time, listen to the Alan Manning lecture at LSE. In fact, I find that LSE podcast series to be a goldmine. And if you jog as slowly as I do, you can get through a full lecture, including Q&A! Learn while you burn, OTE’ers!

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7 comments in reply to "Our minimum wage debate vs. the UK’s: they win by a round-one knockout"

  1. Tom in MN says:

    So you give us cause for hope. If we could just get conservatives over here instead of Republicans, we might be ok. I think you could get your compromise with a conservative, but you can’t even start with a Republican as they live in a world that is not warming and where tax cuts always trickle down. Heck, their world does not even have money: http://www.bradford-delong.com/2015/03/time-for-a-rant-why-oh-why-cannot-we-have-better-economists.html


  2. Kevin Rica says:

    The “fast-food lobby’s” position is inconsistent with the facts? How could that happen? The restaurant industry’s position isn’t even consistent with itself.

    See NRA (National Restaurant Association) website on minimum wage:

    Alarmingly, the nation is experiencing the lowest labor participation rate in three decades. Unemployment in the U.S. remains at 5.9 percent. Teen unemployment is at 20 percent, with higher rates in some urban and rural areas. According to the U.S. Bureau of Labor Statistics, 9.3 million Americans are unemployed, and another 7.1 million are involuntarily working part-time. An astounding 698,000 persons are classified as “discouraged workers” by BLS and, therefore, are not accounted for in the unemployment rate. These are persons not currently looking for work because they believe no jobs are available for them. Collectively, 18.2 million Americans are unemployed, involuntarily working part-time or have given up on finding a job.

    http://www.restaurant.org/advocacy/Minimum-Wage

    Bottom line: Too many people (especially young people), not enough jobs.

    Now see what they say on immigration:

    The restaurant industry is expected to add 1.8 million positions over the next decade, which would represent a 14 percent increase in the industry’s workforce. But the U.S.-born workforce is expected to grow by just 10 percent over the same period.

    Even more troublesome for the industry is that the population of 16- to 24-year olds, an important source of restaurant employees, isn’t expected to grow at all. Without meaningful immigration reform, restaurants will be unable to keep up with the growing demand for their service. That will ultimately slow economic growth and result in fewer jobs being created.

    http://www.restaurant.org/advocacy/Immigration

    Bottom line: Too many jobs (especially for young people), not enough people.

    They are as confused (and about the same issues) as the body snatchers that run what used to be the Democratic Party.

    On Monday, the Pseudo-Dems complain that we don’t have enough jobs and that the ones we have don’t pay enough, especially for the young and unskilled.

    On Tuesday, the Pseudo-Dems complain that we have a labor shortage especially of low-wage workers and it’s an emergency. Please! Please! It’s an emergency! We need more immigrants!

    So much confusion!


    • Jared Bernstein says:

      Surely holding down min wages and increasing labor supply is consistent with the (other) NRAs goal of paying low wages, no?


      • Kevin Rica says:

        You are absolutely right Jared. The NRA’s position is entirely consistent with keeping wages low and it is absolutely consistent with the Congressional Pseudo-Dems position.

        Remember when the Democratic Party used to stand up for higher wages or are you too young?


  3. Resolved says:

    I’ll look forward to hearing about your TPP briefing later this week. It seems as though you are the blogging economists of choice for the administration on this issue.


  4. urban legend says:

    “. . . it’s not that the minimum wage never costs anyone a job, but that the beneficiaries far outweigh the losers . . . ”

    I wish you didn’t feel the need to make concessions like this, which suggests that there are winners but there are also losers. The idea of job losses is purely on the basis of theory and some highly unreliable anecdotes dredged up for strictly propaganda purposes. This is not like job losses in connection with trade agreements, where the data on trade balances supports the hostile view of such agreements and the supporters are compelled to find reasons to explain away the trade data as the result of other causes. Continued growth in employment after minimum wage increases, on the contrary, seems to have occurred in virtually every instance.

    The better view, it seems to me, is that when wages have been so depressed for so long, the Econ 101 (Chapter 1) simplistic theories do not apply, Rather, millions of people having thousands of dollars more to spend will not only make lower wage jobs more secure, but also will create many more opportunities. And not only does it force wages up for people at minimum wage, but it also pushes up the wages of other workers when it is important for employers to maintain a differential from the lowest paid workers. Why don’t we just full-throatedly say that, and say it every time?


  5. Fred Donaldson says:

    While many factors contribute to unemployment, particularly for the young and the near retired, much of the bad result is from low wages offered. You cannot support a couple, let alone a family, on slave wages. Sadly for some jobs, it is better for you to work off the books (under the table) or not work at all and collect government benefits such as free healthcare, nearly free food, housing and utilities.

    The argument that a higher minimum wage will increase unemployment is backwards. Higher wages lead to more workers who will accept jobs. Lower wages frustrate people who otherwise would work. Jobs are the result of employer’s needs, not the price of the employees. Anyone who argues that low wages make you hire more workers is insane, especially for jobs that can’t be outsourced easily.

    It’s back to the argument that “these are jobs that Americans don’t want.” Unsaid is that wages for these jobs are too low for what is required. Try hiring policemen for $7.25 an hour, or CEOs, and you will be astonished at the unemployment level in those fields.

    The wage participation rate is one flag that we are on the wrong path to more employment. Workers are discouraged because there are no decent-paying jobs, not because there are not enough jobs.

    Hiking the minimum wage to my often repeated $15 an hour (since May, 2011) will put the responsibility on employers equally across the nation, lower unemployment and boost the economy as more folks have the choice to buy less macaroni and cheese and more steaks and salads.


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