[ad_1]
If you're like most college graduates, you need to understand that you need to learn a little bit more than that. When our politicians and others say that "the market will come out," a belief that one of the world's most popular consumers and consumers is in the marketplace. How much of a tumble of free enterprise?
According to the sketch above, mandating a minimum wage above that market-determined sweet spot should be people out of work. The higher wage rate is the minimum wage rate, which depends on the minimum wage sits. Above a certain level, a minimum wage would have to be paid.
In the real world, however, mandated minimum wages do not necessarily lead to job losses. There are theories as to how an innocuous job might be possible.
Just last year, separate Seattle minimum wage studies by researchers at the University of Washington and the University of California Berkeley suggests polar opposite effects.
But the research evidence of what is new many studies find that minimum wage laws reduce employment, and many other studies on the exact same laws. Some 60 years and hundreds of research papers from universities, government agencies and private organizations have created a consensus on the subject, academic or otherwise. Just last year, separate Seattle minimum wage studies by researchers at the University of Washington and the University of California Berkeley suggests polar opposite effects.
Sorting out the controversy is urgent.
Many newer state minimum wage. By 2022, 17% of Americans will live with a $ 15 minimum wage. (Change could be more rapid in the wake of Amazon's decision to boost pay to $ 15 an hour for all its workers. the Fight for $ 15 movement to gain support, more cities and states will adopt higher minimum wage rates, even if the federal government and some states stay stuck at $ 7.25.
In recent years, the minimum wage has been reduced to pure economics. Do not miss hikes cut job hours? hurt small businesses? boost consumer spending? cause prices to rise?
"The basic supply and demand model just does not work for the labor market."
Contradictory findings, even by economists analyzing the same data sets, have been frustrating norms in this field since David Card first proposed in the 1990s that a New Jersey minimum wage hike did not actually put people out of work. A pattern followed: a respected researcher publishes an important minimum wage and employment study, and another respected researcher follows a direct take-down of its findings. The work has created protracted debate and dueling findings among the field's top experts.
Edward E. Leamer, a UCLA Anderson economist, has walked the controversies and confounding contradictions in this field, using his own research experience and talent for skepticism to find truths amid the crash. He's not a fan of minimum wage hikes, but he's agnostic in his reviews of minimum wage research. "Ninety-nine percent of what economists believe is the theories they put forward," he said. "That's what leads most of them to ignore evidence. I'm a believer in evidence, not theory. The basic supply and demand model just does not work for the labor market. "
In search of the perfect control group
Much of the controversy in this field boils down to disagreements over research studies designs. In particular, the control group selection in any minimum wage study is likely to spark a hot debate, no matter what method the researchers used to motto it.
Ideally, a control group for each treatment is measured. The standard approach for empirical economics calls for a minimum wage rate and then a minimum wage event, then an unaffected control group. In a perfect set-up, only the minimum wage differences in the experiment and the control group. But in the real world, no two geographical locations have the same effect.
The earliest studies compared data from a state of the art. But is the economy of California really comparable to that of nearby Utah or Idaho?
States with a $ 7.25 minimum wage are clustered in places with fewer unionized workers. Some of those areas of migrant and immigrant workers. Employment trends vary by state and region, largely for reasons that have nothing to do with minimum wage events.
For many years, researchers have manipulated these control groups to ensure that they do not affect employment in both locations. But there are huge differences among experts over how the data can justifiably be manipulated.
Synthetic controls
As scholars struggle to find a universally accepted model for these studies, some econometricians are building artificial control groups to substitute for real-life geographic areas.
A UC Berkeley study that looked at the impact of Seattle's minimum wage, for instance, relies on a sample of localities with stagnant minimum wage rates in recent years.
When it comes to adding value to the economy, it creates an economy very similar to Seattle, according to the researchers who developed this synthetic control group. Walla Walla-Carbon-Snohomish-and-42-other-counties combined should be the same as Seattle $ 13 an hour, and as it moves to $ 15 an hour.
Using this comparison, the study concluded that Seattle's minimum wage did not lead to job losses.
Of course, synthetic control groups have their critics too, including Leamer. "This is ridiculous," he says. "I suggest that a synthetic cohort for me would be Roger Federer and Stephen Hawking."
Imperfect data sets
The University of Washington's Seattle Minimum wage study-the one that said Seattle lost lots of jobs from the rate hikes-contrary another obstacle to credible findings in this field.
These researchers used individual pay records to see if low-wage workers lost jobs when the minimum wage rose.
Theoretically, this was an improvement over data sets of past studies, which, for lack of anything better, usually relies on some overall wage and payroll data.
But the UW data set had too many shortcomings too: it did not include data from employers to multiple locations that are believed to employ some 40 percent of Seattle's low-wage earners. So, mom-and-pop retailers were counted, but McDonald's franchises and the like were not.
Self-serving advocates
Opinionators in this field often attack the credibility of studies they do not like by pointing out biases of the institutions that support them.
Job-killing results are applauded by business groups, such as the National Restaurant Association, that all the higher unemployment effects are bad for the economy. Their members set minimum wages for Americans.
Labor organizations, like Service International Employees Union, promote studies that find minimum wage hikes create positive changes for workers and the economy. This union was a driving force in getting $ 15-an-hour minimum in Los Angeles and Seattle. Purpose per SIEU request, the new laws made its own dues-paying members ineligible for the higher minimum wage, arguing that they might want to negotiate lower-than-minimum-wage.
Monopsony vs. that classic labor curve
Why would not the minimum wage hikes kill jobs, as that classic labor curve predicts? Recent researches to monopsony, a lot of monopoly Monopsony could not be expected to be forced.
Monopsonists can not care less because they are little more than a few other people. Monopsony also thrives in fields where not-compete agreements keep a job for a better paying job at a competitor. In cities, employers gain monopsony power when they do not compete for labor through wages, that is, they pay the same low rates. Economists agree that monopsony can significantly reduce the wage floor.
Too High, Too Low, or Just Right?
Regardless of any employment is a natural wage-setting power, most economists believe the classical laws of supply and demand take over at some level. Theoretically, for example, a $ 100 minimum wage in Kansas would kill businesses there, because many do not have profits to pay it, or the ability to pass the customers.
The ideal minimum wage counteracts the power of monopsony, leaves and employers' profits relatively stable, and employs the workforce, while avoiding that doomsday scenario. Although there are questions about the rate of increases, the minimum rate of change is important. Is the market true equilibrium at $ 15 an hour? $ 7.25 an hour? Or is it some amount above or below those?
Perhaps one day a consensus on the research will decide. But municipalities are not waiting. Last week, the Port Authority of New York and New Jersey agreed to lift minimum wages for $ 40,000.
This article was adapted from the Wage Looking Glass, a guide by UCLA Anderson Review.
Source link
