How Did THIS Happen? ? ? ? ? ? ? ?

[TommyGunn]

Listening to the top of the hour news, the reader stated that the 13 states that recently raised their minimum wage enjoyed a better job growth rate than the other states, which did not.
 
Conventional theory has always claimed that raising the minimum wage hurts employment stats, as making something more expensive makes it less desirable; ie., employers don't have huge stashes of MONEY they go to to pay the higher wages.  They cut back time or workers to compensate.
Now, if one state had experienced this I'd say it was a conflation, or a coincidence, some other event or force was at play allowing businesses to hire more workers in spite of the extra cost.
But 13 states?
I'm flummoxed.
Somewhere out there one of you economy geniuses MUST have a idea about how this happened!!??!?!

[lee n. field]

"Lies, damned lies, and statistics."

Just in general, I assume we're being lied to.

[Ben]

Without being an economic expert, I'll throw out the fact that it appears to be only six months of data. Not enough for statistical significance for cause and effect. It's also during a time when High School and college kids are out of school and getting summer jobs.

South Dakota popped up as #1 in job growth. One could say that it was because they didn't raise the minimum wage, or one could say it's because they have a booming oil economy that workers are flocking to.

[wmenorr67]

They said more employees but no mention of how many hours those employees are getting paid.  Bottom line is are the old employees making more money or the same but think they are better off because they get more per hour?

[RocketMan]

"Lies, damned lies, and statistics."

Just in general, I assume we're being lied to.

Yup, that's probably the reason.  I don't trust .guv's employment stats anymore, since statistical manipulation and outright lying has become their SOP.

[MillCreek]

Yup, that's probably the reason.  I don't trust .guv's employment stats anymore, since statistical manipulation and outright lying has become their SOP.

I would add only the same skepticism regarding the statistics from our friends who have only our best interests at heart: big business.

[Perd Hapley]

I'm pretty sure we just did this.

http://www.armedpolitesociety.com/index.php?topic=43459.0

They said more employees but no mention of how many hours...

Haven't some employers already reduced full-time positions to part-time, in response to the health control bill? That could mean a lot of jobs multiplying into two jobs. Obamacare wurks!


Sorry if this is a dumb question, but is there generally an exemption to minimum wage for part-time?

[wmenorr67]

I'm pretty sure we just did this.

http://www.armedpolitesociety.com/index.php?topic=43459.0


Haven't some employers already reduced full-time positions to part-time, in response to the health control bill? That could mean a lot of jobs multiplying into two jobs. Obamacare wurks!


Sorry if this is a dumb question, but is there generally an exemption to minimum wage for part-time?

Most exemptions I know of are seasonal employees and those in a service industry where tips are expected to supplement for minimum wage.

[RocketMan]

I would add only the same skepticism regarding the statistics from our friends who have only our best interests at heart: big business.

This, too.  Especially with regard for the need of more people coming in on H1B visas.

[roo_ster]

1. Economic incentives act at the margins.  If there is a strong overall trend upwards, such an incentive will eat at the growth, not necessarily negate all growth.

2. Minimum wages have little effect when the market-clearing wage for most jobs is higher than the minimum wage.

Still, many of the above observations are sound. And a minimum wage eliminates opportunities a business owner might take on an untried potential employee.  Such as, "Work at X/2 wage for a month and if you work out, I'll pay you X wage."  Gov't has increased the cost and risk of hiring new employees.

[cordex]

I would add only the same skepticism regarding the statistics from our friends who have only our best interests at heart: big business.

Considering the incestuous relationship between big business and big government, that is kind of a distinction without a difference.

[TommyGunn]

Thanks Rooster ... that sounds like a reasonable explanation to me.   

[French G.]

Consider that all of the min wage laws that have passed have long and incremental phase in periods and exemptions everywhere. When they are fully implemented the people that passed the laws will be forgotten along with their optimistic and wildly inaccurate statements about how great the laws were. I keep seeing progressives saying how great these laws are, how great the ACA is and such. Neither is still fully implemented so the most honest thing to say is that no one knows. Any student of economic history can then tack on a bet about how bad it will be.

[makattak]

Wow. What a non-sequitor.

They are looking at growth in employment. How about overall employment?

Unemployment Rates for States
Monthly Rankings
Seasonally Adjusted
Dec. 2013
Rank   State   Rate

• 1   NORTH DAKOTA    2.7
• 2   NEBRASKA    3.6
• 2   SOUTH DAKOTA    3.6
• 4   UTAH    4.0
• 5   IOWA    4.2
• 5   VERMONT    4.2
• 7   WYOMING    4.4
• 8   HAWAII    4.7
• 8   MINNESOTA    4.7
• 10   KANSAS    4.9
• 11   NEW HAMPSHIRE    5.2
• 11   VIRGINIA    5.2
• 13   LOUISIANA    5.4
• 13   MONTANA    5.4
• 13   OKLAHOMA    5.4
• 16   IDAHO    5.6
• 17   MISSOURI    6.0
• 17   TEXAS    6.0
• 17   WEST VIRGINIA    6.0
• 20   ALABAMA    6.1
• 20   MARYLAND    6.1
• 22   COLORADO    6.2
• 22   DELAWARE    6.2
• 24   FLORIDA    6.3
• 24   WISCONSIN    6.3
• 26   ALASKA    6.4
• 26   MAINE    6.4
• 28   NEW MEXICO    6.6
• 28   SOUTH CAROLINA    6.6
• 30   WASHINGTON    6.7
• 31   INDIANA    6.8
• 31   PENNSYLVANIA    6.8
• 33   NORTH CAROLINA    6.9
• 34   NEW YORK    7.0
• 35   MASSACHUSETTS    7.1
• 35   OHIO    7.1
• 35   OREGON    7.1
• 38   NEW JERSEY    7.2
• 39   ARKANSAS    7.4
• 39   CONNECTICUT    7.4
• 39   GEORGIA    7.4
• 42   ARIZONA    7.6
• 42   DISTRICT OF COLUMBIA    7.6
• 44   TENNESSEE    7.7
• 45   MISSISSIPPI    7.8
• 46   KENTUCKY    7.9
• 47   CALIFORNIA    8.3
• 47   MICHIGAN    8.3
• 49   ILLINOIS    8.9
• 50   NEVADA    9.0
• 51   RHODE ISLAND    9.3
Now, minimum wages:


• Alabama   none
• Louisiana   none
• Mississippi   none
• South Carolina   none
• Tennessee   none
• New Hampshire   none
• Georgia   $5.15
• Wyoming   $5.15
• Minnesota   $6.15
• Arkansas   $6.25
• Delaware   $7.25
• Hawaii   $7.25
• Idaho   $7.25
• Indiana   $7.25
• Iowa   $7.25
• Kansas   $7.25
• Kentucky   $7.25
• Maryland   $7.25
• Nebraska   $7.25
• North Carolina   $7.25
• North Dakota   $7.25
• Pennsylvania   $7.25
• South Dakota   $7.25
• Texas   $7.25
• Utah   $7.25
• Virginia   $7.25
• West Virginia   $7.25
• Wisconsin   $7.25
• Oklahoma   $7.25
• Michigan   $7.40
• Maine   $7.50
• New Mexico   $7.50
• Missouri   $7.50
• Alaska   $7.75
• Arizona   $7.90
• Montana   $7.90
• Florida   $7.93
• Ohio   $7.95
• California   $8.00
• Colorado   $8.00
• Massachusetts   $8.00
• New York   $8.00
• Rhode Island   $8.00
• D.C.   $8.25
• Illinois   $8.25
• New Jersey   $8.25
• Nevada   $8.25
• Connecticut   $8.70
• Vermont   $8.73
• Oregon   $9.10
• Washington   $9.32
Now, the ones with no minimum or lower than the Federal level are, effectively $7.25.

So, looking at the data... there is a fairly clear correlation between a higher minimum wage and a higher unemployment rate. Washington (and Vermont, for that matter) is what we refer to as an "outlier."

I will also note that among the 30 states with the same minimum wage, there is a pretty wide disparity. This also illustrates that minimum wage is not the sole determinant of employment rates. It still clearly affects the rates, but when you cherry pick a single data point out of 51, (like this article did) you can tell whatever story you want.

They chose "rate of growth", not employment level.

It's part of how to lie with statistics: make it sound like they are doing better, when it's a matter of having lower overall employment and even a better "growth rate" leaves them worse in overall employment.

If you are at full employment levels (as many booming states are) it takes a lot more jobs for a higher job growth rate than places where employment is low.  (See above numbers)[/list]

[KD5NRH]

2. Minimum wages have little effect when the market-clearing wage for most jobs is higher than the minimum wage.

This also means the types of employment have to be taken into consideration; a state with a much higher percentage of jobs being low-skill, low-intensity labor (as opposed to the stuff that gets paid higher because it's just plain harder work) will feel a much more significant impact from a high minimum wage than a state with more skilled jobs that were already averaging well over minimum.

[Fitz]

How do congresscritters get away with making slaves out of unpaid "interns?"