Tag Archives: David Neumark

2020 State Minimum Wages

Raising Minimum Wages, Good So Far

New Orleans       While much of the country is stuck at the level of the federal minimum wage, there are enough states and cities that have nudged the numbers up that economists and others are starting to be able to tell with certainty whether the competing claims are correct.  Opponents argue that raising wages above plantation level reduces the number of jobs.  Proponents, and I’m in that number, have claimed that the benefits of increasing wages, lowering inequality, and putting more money into local economies, wildly offsets any small job loss, if in fact, any jobs at all are lost.

Arindrajit Dube, an economist at the University of Massachusetts at Amherst, did a study of state minimum wage increases in California, Oregon, Washington, Colorado, Massachusetts, and New York.  These states had bumped up the numbers in recent years to at least $10.50 per hour through 2018.  The impact would have been directly felt by 20% of the workforce, not counting the multiplier impact of increases for other workers in order to prevent compression of wages causing non-minimum wage workers to feel crimped and resentful of the increases.  Professor Dube found that the job losses were minimal, although not painless.  He found that some businesses raised prices, others improved production methodology, and some actually absorbed the increases by reducing their profit margins.

All of this is good news for our case.  Additional studies in New York State, as well as reporting by the New York Times, seem to confirm that even in the border counties between New York, with an escalating minimum wage now, and Pennsylvania still stuck at $7.25, there were minimal adverse impacts for workers on job losses.  Obviously, it helps that the economy has been good and unemployment low, making this an ideal time, economically, to push wages up from the bottom.

In the days of ACORN’s living wage campaigns, we have gone back and forth over the years with Professor David Neumark, an economist at the University of California at Irvine, who has long studied minimum wage impacts on workers.  He cautions that the results in these relatively higher wage states might not translate in the South “where low-wage workers aren’t evenly distributed across industries and ‘you have fewer and fewer avenues of adjustment.’”  Since there’s absolutely no immediate danger of Southern states getting the raise wages religion for workers, it will be awhile before we have to struggle with this problem.  Meanwhile we are forced to live through the galloping gap between lower wage and higher wage states that is occurring with no action on the federal minimum wage, meant to cope with this problem.

Now, if only the reason that wages weren’t rising was based on the facts, rather than stone cold ideology, we would be in good shape.

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Increases in the Minimum Wage Correct Inequalities in Wage Distribution

Capital_in_the_Twenty-First_Century_(front_cover)Kiln     One of my projects for my wor-cation had been to finally finish reading Thomas Piketty’s Capital in the Twenty-First Century.  I had ordered the book from the first notice, read 50 pages, and then just couldn’t see hauling the weight on airplanes.  I even read that Amazon e-book surveys based on noting “underlining” on Kindles and other devices found that the Piketty book was setting new records for how few people actually read the book.  Having finished it and made notes throughout, it’s a shame, because it in fact it really is an excellent book, if you care about equality, citizen wealth, and what’s happening in the world anyway.

            A small example concerns the still raging issue about the critical importance of the minimum wage in creating any kind of equality for lower waged workers.  Piketty is very clear:

Inequalities at the bottom of the US wage distribution closely followed the evolution of the minimum wage:  the gap between the bottom 10 percent of the wage distribution and the overall average wage widened significantly in the 1980s, then narrowed in the 1990s, and finally increased again in the 2000s.

Comparing the US to France, where for a long time that country continued to keep pace with inflation, Piketty notes that,

As in France, changes in the minimum wage played an important role in the evolution of wage inequalities in the United States.  It is striking to learn that in terms of purchasing power, the minimum wage reached its maximum level nearly half a century ago, in 1969, at $1.60 an hour (or $10.10 in 2013 dollars, taking account of inflation between 1968 and 2013.)

            On the other hand Professor David Neumark from UC-Irvine continues to rail against minimum wage increases, but largely these are two ships passing in the night without seeing each other.  Neumark wants to argue, as he does in the Wall Street Journal, recently that the issue is about whether or not the minimum wage reduces poverty, rather than helping achieve wage equality.  These are actually two different issues, as he surely must know, so his argument is all about the apples and oranges and hoping to create confusion.  With a student’s research he makes the case that “…to raise the minimum wage to $10.10 nationally, 18% of the benefits of the higher wages (holding employment fixed) would go to poor families.  Twenty-nine percent would go to families with incomes three times the poverty level or higher.”

            The first response to Neumark still has to be, “so what?”  That sounds like a win compared to where we stand now, dude!  And, as Piketty notes where we are now on wage and capital inequality (and, yes, these are different, too) is comparable to the historic highs ever, and getting worse.

            There really isn’t an honest, factual argument any more for not raising the minimum wage.

Ironically, both Piketty and Neumark come to agreement, even from their different directions, on the fact that moving to $15 per hour or higher could have what Neumark calls “sizable employment losses that would likely result from such a large minimum-wage increase,” and Piketty’s note that, “If the minimum wage were doubled or tripled, it would be surprising if the negative impact were not dominant.”

Either way you cut it, there’s no excuse not to at least bring us up to $10.10 per hour so that we can buy as much with that wage as we could back in 1969, forty-five long years ago.

 

 

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