Murray Rothbard was an inhumane lunatic. The Mises site is collection of such inhumane lunatics. And you might try instead a graph that is actually supported by real numbers and not some idiotic economic theory that has never been shown to have a basis in fact:
Do you see the ever enlarging gulf between corporate profits and the minimum wage? And, nitwit, 2/3rds of minimum wage jobs are with large companies like Walmart and McDonalds.
Now for a basis in fact, first:
For the range of minimum wage increases over the past several decades, methodologies using local comparisons provide more reliable estimates by controlling for heterogeneity in employment growth. These estimates suggest no detectable employment losses from the kind of minimum wage increases we have seen in the United States. Our analysis highlights the importance of accounting for
such heterogeneity in future work on this topic.--MINIMUM WAGE EFFECTS ACROSS STATE BORDERS: ESTIMATES USING CONTIGUOUS COUNTIES, Dube, Lester & Reich, 2010
Next up:
Contrary to the central prediction of the textbook model of the minimum wage, but consistent with a number of recent studies based on cross-sectional time-series comparisons of affected and unaffected markets or employers, we find no evidence that the rise in New Jersey's minimum wage reduced employment at fast-food restaurants in the state. Regardless of whether we compare stores in New Jersey that were affected by the $5.05 minimum to stores in eastern Pennsylvania (where the minimum wage was constant at $4.25 per hour) or to stores in New Jersey that were initially paying $5.00 per hour or more (and were largely unaffected by the new law), we find that the increase in the minimum wage increased employment. We present a wide variety of alternative specifications to probe the robustness of this conclusion. None of the alternatives shows a negative employment effect. We also check our findings for the fast-food industry by comparing changes in teenage employment rates in New Jersey, Pennsylvania, and New York in the year following the increase in the minimum wage. Again, these results point toward a relative increase in employment of low-wage workers in New Jersey. We also find no evidence that minimum-wage increases negatively affect the number of McDonald's outlets opened in a state.
Finally, we find that prices of fast-food meals increased in New Jersey relative to Pennsylvania, suggesting that much of the burden of the minimum-wage rise was passed on to consumers. Within New Jersey, however, we find no evidence that prices increased more in stores that were most affected by the minimum-wage rise. Taken as a whole, these findings are difficult to explain with the standard competitive model or with models in which employers face supply constraints (e.g., monopsony or equilibrium search models).--American Economic Review: Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania, Card & Krueger, 2000
And here are some other inhumane lunatics weighing in to dispute those conclusions:
According to economists Donald Deere (Texas A&M), Kevin Murphy (University of Chicago), and Finis Welch (Texas A&M), Card and Krueger's conclusions are contradicted by "
common sense and past research". They conclude:
Each of the four studies examines a different piece of the minimum wage/employment relationship. Three of them consider a single state, and two of them look at only a handful of firms in one industry. From these isolated findings Card and Krueger paint a big picture wherein increased minimum wages do not decrease, and may increase, employment. Our view is that there is something wrong with this picture. Artificial increases in the price of unskilled laborers inevitably lead to their reduced employment; the conventional wisdom remains intact.
Nobel laureate James M. Buchanan responded to the Card and Krueger study in the Wall Street Journal, arguing:
...no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimum scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores.
See, it's "common sense". Which is what is usually said when when one cannot argue the case on the factual merits. Hence the appeal to "common sense". And by the way, there is nothing scientific whatsoever in economic theory. The laws of physics are immutable. Ditto the laws of organic and inorganic chemistry. They don't ever change. Again, your Econ 101 has never been shown to be demonstrably valid, instead, all it is a mutually reinforcing construct of a priori assumptions. Which brings me to the response to the inhumane lunatics:
Alan Krueger responded in The Washington Post:
More was at stake here than the minimum wage – the methodology of public policy analysis was also at issue. Some economists, such as James Buchanan, have simply rejected the notion that their view of economic theory possibly could be proved wrong by data [my note, hence the appeal to "common sense"].
Nobel laureate Paul Krugman, has argued in favour of the Card and Krueger result, stating that Card and Krueger;
... found no evidence that minimum wage increases in the range that the United States has experiences led to job losses. Their work has been attacked because it seems to contradict Econ 101 and because it was ideologically disturbing to many. Yet it has stood up very well to repeated challenges, and new cases confirming its results keep coming in.
All of that is from Wikipedia, which goes on to report:
Several researchers have conducted statistical meta-analyses of the employment effects of the minimum wage. In 1995, Card and Krueger analyzed 14 earlier time-series studies on minimum wages and concluded that there was clear evidence of publication bias (in favor of studies that found a statistically significant negative employment effect). They point out that later studies, which had more data and lower standard errors, did not show the expected increase in t-statistic (almost all the studies had a t-statistic of about two, just above the level of statistical significance at the .05 level).[75] Though a serious methodological indictment, opponents of the minimum wage largely ignored this issue; as Thomas C. Leonard noted, "The silence is fairly deafening."[76]
In 2005, T.D. Stanley showed that Card and Krueger's results could signify either publication bias or the absence of a minimum wage effect. However, using a different methodology, Stanley concludes that there is evidence of publication bias, and that correction of this bias shows no relationship between the minimum wage and unemployment. In 2008, Hristos Doucouliagos and T.D. Stanley conducted a similar meta-analysis of 64 U.S. studies on dis-employment effects and concluded that Card and Krueger's initial claim of publication bias is still correct. Moreover, they concluded, "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."
And you can read Dube, Lester and Reich's 2011 piece, Allegretto, Dube and Reich's 2011 piece, and Katz and Krueger's 1992 piece as well.
And let me leave you with:
The Whole Truth about Minimum Wages | Economics Intelligence
Sorry, here's another bit for you:
“The paper presents a fairly irrefutable case that state minimum wage laws do raise earnings in low wage jobs but do not reduce employment to any meaningful degree,” said David Autor, Professor of Economics at MIT and editor of the Journal of Economic Perspectives. “Beyond this substantive contribution, the paper presents careful and compelling reanalysis of earlier work in this literature, showing that it appears biased by spatial correlation in employment trends.”
Oh, for another reason why the Mises crowd are a collection of ill-informed nitwits:
Minimum wage-unemployment studies - The Mises Community
Now note again, 2/3rds of minimum wage workers do not work for small business but large corps like McDonalds and WalMart. But these nitwits claim the opposite. Note the remarks re small business being hurt by minimum wage increase. Actually not. Small business wants minimum wage increase since they already pay their workers more, since they don't have the luxury of economy of scale and really can't offer much otherwise in the way of employee discounts on all those things that folks like WalMart sell. So small business wants the rise, to make their inefficient selves, relatively speaking, more competitive, since Walmart would presumably have to pass on the cost of min wage hike to their consumers via price hike, which would make their small business competitors more competitive. In other words, your fellow nitwits at Mises don't really understand the world. And here's how dumb they are:
What I would like to see is how their supposed statistical data can disprove a theory deduced from logic. It's really simple supply-and-demand.
For how completely and utterly insane that is, there is more to life than supply and demand. Here's a word for you, and them, frictions. And a phrase, employers' market power. Learn them. And share them with your Mises crew.
Which brings me to, frictions:
Guest Post: Minimum Wage Laws and the Labor Market: What Have We Learned Since Card and Krueger
And note that your Mises' heroes, Neumark and Wascher are roundly debunked. So, please, tell your crew. And note that you can find the links to the other described pieces in that piece, plus links to some other pieces as well.
83LikesOriginally Posted by Amnesiac
