No Minimum Wage vs Minimum Wage - Social Anxiety Forum
 
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post #1 of 18 (permalink) Old 05-09-2016, 05:01 PM Thread Starter
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No Minimum Wage vs Minimum Wage


Let the Data Speak: The Truth Behind Minimum Wage Laws
http://www.cato.org/publications/com...imum-wage-laws

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President Obama set the chattering classes abuzz after his recent unilateral announcement to raise the minimum wage for newly hired Federal contract workers. During his State of the Union address in January, he sang the praises for his decision, saying that “It’s good for the economy; it’s good for America.” As the worldwide economic slump drags on, the political drumbeat to either introduce minimum wage laws (read: Germany) or increase the minimums in countries where these laws exist — such as Indonesia — is becoming deafening. Yet the glowing claims about minimum wage laws don’t pass the most basic economic tests. Just look at the data from Europe (see the accompanying chart).

There are seven European Union (E.U.) countries in which no minimum wage is mandated (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden). If we compare the levels of unemployment in these countries with E.U. countries that impose a minimum wage, the results are clear. A minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%. Whereas, the average unemployment rate in the seven countries without mandated minimum wages is about one third lower — at 7.9%.

This point is even more pronounced when we look at rates of unemployment among the E.U.’s youth — defined as those younger than 25 years of age (see the accompanying chart).

In the twenty-one E.U. countries where there are minimum wage laws, 27.7% of the youth demographic — more than one in four young adults — was unemployed in 2012. This is considerably higher than the youth unemployment rate in the seven E.U. countries without minimum wage laws — 19.5% in 2012 — a gap that has only widened since the Lehman Brothers collapse in 2008.

The glowing claims about minimum wage laws don’t pass the most basic economic tests.

So, minimum wage laws — while advertised under the banner of social justice — do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels employed in Europe — push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.

As Nobelist Milton Friedman correctly quipped, “A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.”

Dr. Jens Weidmann, President of Germany’s Bundesbank,must have heard Prof. Friedman and looked at these European data before he took on Chancellor Angela Merkel for proposing the introduction of a minimum wage law in Germany. In short, Dr. Weidmann said that this would damage Germany’s labor market and be a German job killer. He is right.

And, executives surveyed in the recently released Duke University/CFO Magazine Global Business Outlook Survey agree, too. Indeed, Chief Financial Officers from around the world were interviewed and a significant number of them concurred: a minimum wage increase in the United States –from the current $7.25/hour to President Obama’s proposed $10.10/hour — would kill U.S. jobs. The accompanying table shows what the CFOs had to say.

Perhaps, Prof. Friedman said it best when he concluded that “The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by high minimums are the most poverty stricken.”

High mandated minimum wages will throw people out of work and onto the welfare rolls in cases where unemployment benefits exist. When it comes to welfare payments, they obey the laws of economics, too. Indeed, if something — like unemployment — is subsidized, more of it will be produced. When the data on unemployment benefits speak, they tell us that if the unemployed receive unemployment benefits, the chances that they will become employed are reduced. Those data also show that the probability of an unemployed worker finding employment increases dramatically the closer an unemployed worker comes to the termination date for receipt of his unemployment benefits. In short, when the prospect of losing welfare benefits raises its head, unemployed workers magically tend to find work.

The most important lesson to take away from allowing the minimum wage and unemployment benefit data to talk is that abstract notions of what is right, good and just should be examined from a concrete, operational point of view. A dose of reality is most edifying.

- Steve H. Hanke is Professor of Applied Economics at the Johns Hopkins University in Baltimore, MD. He is also a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C. You can follow him on Twitter: @Steve_Hanke
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post #2 of 18 (permalink) Old 05-09-2016, 05:18 PM
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Well, the Cato Institute certainly has it's goals, and what they're looking for the data to say. Are those European countries without minimum wage laws the same as every other European country but for that one difference? No, certainly not. Several of them actually have very robust welfare programs, at a level that would be impossible to ever get passed in the US or even taken seriously as a suggestion. None of them have the type of wealth gap that is seen in the US.
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post #3 of 18 (permalink) Old 05-09-2016, 05:41 PM
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If we compare the levels of unemployment in these countries with E.U. countries that impose a minimum wage, the results are clear. A minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%. Whereas, the average unemployment rate in the seven countries without mandated minimum wages is about one third lower — at 7.9%.
There is correlation, in this particular dataset. This isn't demonstrated causation. There are quite a few variables that can have an effect on unemployment rate , maybe I am mistaken but this seems to me to just be a classic case of:

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post #4 of 18 (permalink) Old 05-09-2016, 06:33 PM
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I found a site that lists unemployment rates it's not as up to date equally for all countries, for instance some are listed as February this year, some March, some April but it lists:

Germany and Denmark as 4.2% Sweden as 7.7% Austria as 9.1% Finland 10.1% and Italy as 11.4% Cyprus as 12.1%

Meanwhile for countries with a min wage:

UK as 5.1% Malta 5.2 % Czech Republic 5.7% Hungary 6% Estonia, The Netherlands and Romania 6.4 % Luxembourg 6.5% Ireland 8.4 % Belgium 8.5% Latvia: 9.8% Bulgaria 9.88% Slovakia 9.9% France is 10% Poland is 10% Portugal 12.2% Croatia 17.2%

worth pointing out these really bump up the average: Spain 21% Greece 24.4%

May have missed a country or two, was getting bored listing them all.

And all of these countries vary quite a bit in other respects too so pointing out if a country has a min wage or not doesn't really say anything. It's not fair for instance to compare some of the Eastern European countries that are now part of the EU with the Northern European bunch, though despite that, in terms of employment rate statistics they are evidently doing not too badly (except Croatia.)

Worth noting that evidently US is 5% (lower than the whole of the EU right now bar Denmark and Germany,) I wouldn't be surprised if all the statistics were inaccurate, but that's why it'd be useful to know where they get them from.

http://www.tradingeconomics.com/unit...tes/indicators
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post #5 of 18 (permalink) Old 05-09-2016, 06:43 PM Thread Starter
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Originally Posted by Wings of Amnesty View Post
Well, the Cato Institute certainly has it's goals, and what they're looking for the data to say.
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Originally Posted by splendidbob View Post
There is correlation, in this particular dataset. This isn't demonstrated causation. There are quite a few variables that can have an effect on unemployment rate , maybe I am mistaken but this seems to me to just be a classic case of:
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Originally Posted by Persephone The Dread View Post
I found a site that lists unemployment rates it's not as up to date equally for all countries, for instance some are listed as February this year, some March, some April but it lists:
Fair points. Should the US raise its minimum wage to $200 per hour?
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post #6 of 18 (permalink) Old 05-09-2016, 06:50 PM
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Fair points. Should the US raise its minimum wage to $200 per hour?
Do you seriously consider that an argument against a minimum wage? That's like the people who try to argue against a wage gap by asking why companies don't just hire only women

A $200 min wage would be just as harmful and ridiculous as a $0 min wage. The minimum wage number shouldn't be some arbitrary figure pulled out of the air, it should be based on the costs of living and the needs of that area.
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post #7 of 18 (permalink) Old 05-09-2016, 07:07 PM
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Fair points. Should the US raise its minimum wage to $200 per hour?
No, lol. Whenever they bump minumum wage a few points there isn't economic chaos like some claim will happen.
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post #8 of 18 (permalink) Old 05-09-2016, 07:17 PM
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Fair points. Should the US raise its minimum wage to $200 per hour?
Lol really? That's your argument? What a reach.
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post #9 of 18 (permalink) Old 05-09-2016, 08:43 PM
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This guy is a total moron.
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There are seven European Union (E.U.) countries in which no minimum wage is mandated (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden).
Wrong. Germany has a minimum wage of $10.79 in U.S. dollars.

While there is no minimum wage in Denmark, unions and employer associations negotiate minimum wages. The average minimum wage for all private and public sector collective bargaining agreements was approximately DKK 110 ($20) per hour, exclusive of pension benefits.

Min wage in Austria: 1138.05 US Dollars a month
Min wage in Sweden: $19 an hour

http://www.politifact.com/truth-o-me...m-wage-united/

And in the U.S., a country with a minimum wage, the unemployment rate is 5.5%.

The Cato Institute was founded by the Koch bros. 'Nuff said.

Conservatives believe crap like this without questioning, like good little authoritarian followers.
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post #10 of 18 (permalink) Old 05-09-2016, 09:45 PM
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If passing a high minimum wage magically solved fundamental problems then why not make the minimum $40 an hour and everyone can be rich.

By fundamental problems, I mean things like workers who have no marketable skills, such as art history grads who are working at Starbucks because a degree in art history is utterly worthless.

Or a public school system that has totally failed, with inner city public high schools having 50% drop out rates.

College degrees today are a god damn joke, with a bachelor's degree (at least most of them) being the biggest fraud around. Students end up deep in debt knowing not a damn thing that will help them get a job.

I have a degree in finance. What does that mean? It means that I know what negative convexity & interest rate parity are. Guess what? You can invest exceedingly well without knowing what the hell those things are. And I learned infinitely more from real world investment professionals (for FREE) than I ever did from a finance professor who sits in their ivory tower, having never managed anything other than their own retirement account.
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post #11 of 18 (permalink) Old 05-09-2016, 10:24 PM
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Originally Posted by jonjagger View Post
Let the Data Speak: The Truth Behind Minimum Wage Laws
http://www.cato.org/publications/com...imum-wage-laws
What the article says is just flat out false and manipulating the data.
It is being wilfully dishonest in order to push through a political agenda.
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post #12 of 18 (permalink) Old 05-09-2016, 10:41 PM
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I dont think the minimum wage should go as we still need something to work for but as for ceo and all them kinda people who really dont do much i have been working in my job for 5 years and never meet my ceo who earning 20+ times of what i earn a day i have to deal with the people and make them happy (i work in a nursing home) i have to know what 50+ people dont like to eat what they are allergic to if they are diabetic and these if i stuff up and give them the wrong food and they die i go to jail for manslaughter and i am earning a minimum wage but the IT guy who earning about 2 times as what i am makes a mistake does not have a chance of going to jail so why am i paid so little but have such a high responsibility and i am a high school drop out now i dont have a chance of buy a house close to my work as it would cost me my whole pay so i have had to buy out of town borring some money from my mother no way could i save a deposit for a house in a year
I believe ceo need there pay to be reduced to at least a low paid worker and a forward to buy a house/unit to live in and not have to rent their whole life if i ever some how become a ceo i tell you i will not be gready and pay myself 12m a year while my average worker earns 60k i would earn 1m and pay the employee at least 100k a year why because with out that worker i would not have that 1m a year
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post #13 of 18 (permalink) Old 05-10-2016, 11:38 AM
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*deep breath*

correlation does not equal causation, correlation does not equal causation, correlation does not equal causation, correlation does not equal causation, correlation does not equal causation, correlation does not equal causation, correlation does not equal causation, correlation does not equal causation...

... you get the point by now I hope.

slow progress is still progress.
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post #14 of 18 (permalink) Old 05-10-2016, 11:41 AM
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Originally Posted by splendidbob View Post
There is correlation, in this particular dataset. This isn't demonstrated causation. There are quite a few variables that can have an effect on unemployment rate , maybe I am mistaken but this seems to me to just be a classic case of:

Jesus! Something oughtta be done!

"We have always held to the hope, the belief, the conviction, that there is a better life, a better world, beyond the horizon." -Franklin D. Roosevelt
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post #15 of 18 (permalink) Old 05-10-2016, 11:52 AM
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This guy is a total moron.

Wrong. Germany has a minimum wage of $10.79 in U.S. dollars.

While there is no minimum wage in Denmark, unions and employer associations negotiate minimum wages. The average minimum wage for all private and public sector collective bargaining agreements was approximately DKK 110 ($20) per hour, exclusive of pension benefits.

Min wage in Austria: 1138.05 US Dollars a month
Min wage in Sweden: $19 an hour

http://www.politifact.com/truth-o-me...m-wage-united/

And in the U.S., a country with a minimum wage, the unemployment rate is 5.5%.

The Cato Institute was founded by the Koch bros. 'Nuff said.

Conservatives believe crap like this without questioning, like good little authoritarian followers.
lol I just assumed that part was correct otherwise the entire post falls apart (more than it already has.) But you're right Germany has a minimum wage.

According to Wikipedia though, Sweden doesn't and they have unions to bargain for wages (in 2013 anyway.)

To be fair though, Germany introduced their minimum wage in 2014 (and that article in the OP was posted originally in 2014, data may be older):

http://www.bbc.co.uk/news/business-28140594
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post #16 of 18 (permalink) Old 05-10-2016, 11:52 AM
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Jesus! Something oughtta be done!
The graph cannot lie. Cage is much more of a menace than we previously suspected.
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post #17 of 18 (permalink) Old 05-10-2016, 12:23 PM
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There is correlation, in this particular dataset. This isn't demonstrated causation. There are quite a few variables that can have an effect on unemployment rate , maybe I am mistaken but this seems to me to just be a classic case of:

That seems fun actually, I want to find random things that correlate too. I'm going to make a list of random things now and have a look.

Edit: Finding sales figures for rubber ducks is proving difficult.
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post #18 of 18 (permalink) Old 05-10-2016, 12:32 PM
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That seems fun actually, I want to find random things that correlate too. I'm going to make a list of random things now and have a look.
I have to admit when I find one of these threads, my inner Bob does a little excited cackle at the prospect of finding a silly graph to post . Outer Bob stays stern though, outer Bob is always stern
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