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Steve Ahlquist is an award-winning journalist, writer, artist and founding member of the Humanists of Rhode Island, a non-profit group dedicated to reason, compassion, optimism, courage and action. The views expressed are his own and not necessarily those of any organization of which he is a member.

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"We must take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented.” - Elie Weisel

“If you are neutral in situations of injustice, you have chosen the side of the oppressor." - Desmond Tutu

"There comes a time when neutrality and laying low become dishonorable. If you’re not in revolt, you’re in cahoots. When this period and your name are mentioned, decades hence, your grandkids will look away in shame." - David Brooks

8 responses to “Studies show increasing minimum wage has no effect on job numbers”

  1. jgardner

    Mendonca’s claim that increases in the minimum wage may “accelerate the schedule” of bringing these machines on-line is nonsense.

    My apologies for initially misunderstanding your “economic nonsense” target. That said, Mr. Mendoca’s claim is only nonsense if you don’t believe in economic substitution. By artificially increasing a firm’s labor costs it could make investments in economic substitutes more attractive by comparison. Here’s a simple back-of-the-napkin example to illustrate: Let’s say a firm currently pays $100k/yr in direct labor costs and an investment in capital goods (automation) would cost $500k, an investment which would decrease their labor costs by 30%. In such a scenario the break-even point for that investment would be 17 years. However let’s say their labor costs were artificially increased to $250k. That same $500k investment would now take only 7yrs to payoff. Since a 7 year ROI is much more attractive than 17, it may cause some firms to make the investment sooner than they would otherwise.

    As far as Prof. Reich’s response, I believe it’s likely pointless to argue further about whether it fully addresses his criticisms since neither you nor I are professional economists. At best you could argue that the debate over the minimum wage remains unsettled.

    Studies continue to show that increasing the minimum wage is good for workers and has no impact on jobs.

    You are grossly misrepresenting the studies that support your position. No economist will argue that if we were to increase the minimum wage to $1,000/hr that it would have no impact on jobs. If you don’t believe me, ask Professor Reich. He will likely argue that it would cause serious problems. Then ask Professor Reich on what data he bases his response. Spoiler alert: No data exists so he’s working off the logical assumption that increasing the minimum wage causes unemployment. Liberal champ Dr Paul Krugman even argues that there would be “lots of problems” at a minimum wage of $20/hr. So at $20/hr logic applies but at $7.25 or $10.10 or whatever pulled-from-the-rear minimum wage mandate data applies. Here’s the real fun part: ask them at what exact penny between the minimum wage and $20 do they no longer reject logic?

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    1. Deforest

      — “No economist will argue that if we were to increase the minimum wage to $1,000/hr that it would have no impact on jobs.”

      And surely no economist would argue that if we were to decrease the minimum wage to $0.01/hr that it would have no impact on business. So an extreme hypothetical such as yours means nothing. So somewhere between a penny an hour and a thousand dollars an hour lies a realistic figure that would be both good for workers and good for business and the general economy. The average age of the minimum age worker is 35 so we’re not talking about just teenagers.

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      1. jgardner

        And surely no economist would argue that if we were to decrease the minimum wage to $0.01/hr that it would have no impact on business.

        That’s a fair point; I should have qualified my statement better by saying “negative” impact on jobs. In fact if you were to eliminate the minimum wage it would marginally increase employment because you would eliminate the (economically-speaking) dead-weight loss that accompanies a binding wage floor.

        So somewhere between a penny an hour and a thousand dollars an hour lies a realistic figure that would be both good for workers and good for business and the general economy.

        Here’s the thing, if the minimum wage is non-binding, e.g. $0.05/hr, then it’s a pointless policy and if the minimum wage is binding then you are logically eliminating some employment that would have otherwise existed. How is eliminating jobs that would have existed in the absence of government interference good for workers, businesses or the economy as a whole?

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  2. riprotest

    Mr. Jgardner, I’m finding your responsive a double standard hypocritical with an over simplistic absurdy. For example:”ask them at what exact penny between the minimum wage and $20 do they no longer reject logic?”

    It’s similar the tobacco industry said with one of the cigarette caused someone’s cancer.
    Eventually, they lost this overly simplistic analogy in litigation.

    I’m seeing in your response with: “me, myself and my while I get mine first economics”

    Your hypothesis doesn’t factor the consumer investment. In an economy about 70% of the economy drives in this country, your not including the impediment in this type invented by the cyclic recession factor.

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    1. jgardner

      It’s similar the tobacco industry said with one of the cigarette caused someone’s cancer.

      I see the argument, I just disagree with its applicability in this instance. The logic of “increasing the minimum wage increases unemployment” applies at $20 but it’s rejected at $15? Fine. Where exactly do supporters start to accept the logic again, and why is it at that particular wage? It is a logical trap that supporters simply cannot escape.

      In an economy about 70% of the economy drives in this country,

      I assume you meant to say 70% of the economy is consumer spending, but that’s incorrect. 70% of GDP is consumer spending, but GDP is a poor measurement of the economy. At a minimum GDP only measures the value of final output, which ignores or discounts the supply chain and intermediate stages of production required to produce all the finished goods and services, and cannot tell you if what was produced increased wealth or consumed it. For example, the gov’t could spend a boatload of taxes paying one group of people to dig holes and another group to come behind and fill them in. Such spending would increase GDP but nearly everyone would agree it was also a colossal waste of resources.

      Production is the source of demand, not the other way around. To wit, to buy something, first you have to produce something worthy of exchange. Everyone has to start from this point.

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  3. riprotest

    Mr Jgardner, of cost my industry tobacco analogy discredits your hypothesis apply.
    Ditto for 70% analogy because: “GDP is poor measurement.”

    The Ford Edsel marketing failure in the late 50’s invested over 150 million about 1.2 billion of today’s money and then 350 million valued in 2017 2.9 billion dollars.

    Most consumers didn’t like the Edsel. It fail when customers to invest in it, and a car is the 2nd largest purchase by many buyers make outside of home.

    The consumer is a vital co-investor to any company, however, you debased the customer with your views.

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  4. riprotest

    I need to clarify the For Edsel lost 350 millions valued in 2.9 billions in 2017. In the above post.

    Mr Jgardner, of cause my industry tobacco analogy discredits your hypothesis apply.
    Ditto for 70% analogy because: “GDP is poor measurement.” it’s why you don’t agreement.

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