JMHO Loc: Utah

The head of a Los Angeles-based nonprofit "sustainable economy" association calls for a higher minimum wage. No surprise there. But he cites a major pro-minimum wage study that responsible academics long ago abandoned.

Daniel Flaming of the Economic Roundtable, in a recent Los Angeles Times op-ed, said: "The conclusion that wage fairness is not a zero-sum game was established by a landmark study comparing neighboring counties in New Jersey and Pennsylvania, after New Jersey increased the minimum wage but Pennsylvania did not. It found that after the wage hike, employment in the fast-food industry increased more in New Jersey counties than in neighboring Pennsylvania counties."

Well, actually, no. This now infamous study by David Card and Alan Krueger did not prove such an outlandish thing. Here's what happened.

New Jersey raised its minimum wage. Pennsylvania did not. What will happen to the fast-food industry in these adjacent states? Good test case, right? If New Jersey fast-food workers suffered, it proves what most economists believe -- that minimum wage harms workers, particularly unskilled men, women and minorities, the kind of folks the left claims they care about. If, on the other hand, New Jersey's new wage law had no effect -- or even helped -- so much for the "artificially increase the cost of labor and you decrease the demand for it" argument.

Surprisingly, researchers discovered that New Jersey fast-food restaurants saw an increase in employment relative to Pennsylvania. The study flew around the liberal world faster than a Sarah Palin joke. President Bill Clinton cited it. But a funny thing happened when the study was peer reviewed.

Researchers seeking to replicate the results obtained actual payroll records -- rather than simply phoning and asking hiring personnel whether they hired people during the period studied. Turns out, payroll records did not corroborate the verbal assertions made by employers. New Jersey actually suffered a decline in employment relative to Pennsylvania -- just as traditional economic theory would have anticipated.

So why is this bogus study still cited? I put that question to Ohio University economist Lowell Gallaway, who has written critically about the study. Gallaway said: "The Card-Krueger study is still cited because it is useful politically. ... It still has legs because the minimum-wage notion is an idea that just will not die. You cannot put it to rest by any amount of evidence demonstrating its problems. Whenever people want to believe something strongly enough, any study that supports that belief -- no matter how bad it is -- will be accepted."

Vice President Joe Biden recently met with Los Angeles Mayor Eric Garcetti to support the mayor's plan to raise the minimum wage in Los Angeles to $13.25 an hour. Days before that, the L.A. City Council approved another Garcetti plan to increase minimum wage for workers in large hotels to $15.37 per hour. Now back in 2008, the L.A. City Council passed a "living wage ordinance" for hotel workers in the L.A. airport area.

As with the minimum wage study of New Jersey and Pennsylvania, this, too, presented us with a real-world test case. What happened?

Beacon Economics, chosen by both management and labor to give an objective, nonpartisan report on the effect of a $15.37 hourly minimum wage, concluded that the effect of this 2008 wage hike was devastating. Beacon's founding partner, economist Christopher Thornberg, said: "The data clearly show that hotels around the airport have seen a sharp decline in employment relative to hotels in Los Angeles County overall. Some 12 percent more people are employed at hotels in the county than in 2007. ... But in the airport hotels covered by the law, hotel employment has declined 10 percent."

Even the editorial board of the Los Angeles Times, a supporter of the minimum wage, warned of the negative impact if surrounding cities failed to follow suit: "It's important that Los Angeles not go it alone. ... This is important to keep the city from becoming an island of high wages and to keep businesses from fleeing to cheaper locations outside L.A.'s borders." In other words, if Los Angeles acts stupidly, we hope and expect everybody else to do so as well.

More? How about the respected and widely cited leftwing think tank, the Brookings Institution? Brookings economist Gary Burtless, who specializes in labor, also says a $15-an-hour wage goes too far. While supportive of Obama's call for a $10.10 minimum wage, Burtless objected to Seattle's newly enacted $15 minimum wage: "Consider a business that mainly sells low-cost, fast-food meals. If it must pay $15 an hour to its low-wage employees, while its competitors less than a mile away are only required to pay $10 an hour, the companies outside Seattle can charge lower prices to their customers for shakes, burgers and fries, and yet still make a profit." Well, duh.

Why the madness despite its clear job-killing stupidity? L.A. City Councilman Mitch O'Farrell, a Democrat who represents the Hollywood area, said he understood the anti-minimum-wage Beacon report. But, said O'Farrell, "At the end of the day, between the intellect and the heart, the heart wins out."

Now go find a job.

Larry Elder

moldyoldy

I noticed that you did not include the dates of this study.

JMHO Loc: Utah

I didn't write the article, Larry Elder did. Are you incapable of using that computer to find those dates? Take a break from watching porn, and look it up yourself...or, are you getting too moldy?

lindajoy Loc: right here with you....

Maybe this will help you, although the date changes what?? Given the topic we know its the hot button of late and wouldn't be all that old~~As if the date has relevance I mean...The article is dated, the date of the actual study is not defined as far as I can see here, anyway~~
http://townhall.com/columnists/larryelder/2014/10/16/if-minimum-wage-is-so-great-why-cite-bogus-study-n1905730/page/full

bahmer

That appears to be another deflection tactic. Can't think why the date would matter at all.

moldyoldy

2008 wage hike, exactly when everything was going downhill. It has norelevence on todays economy. larry elder knows that.

no propaganda please Loc: moon orbiting the third rock from the sun

This is from Forbes regarding the study


Alan Krueger's Mistake on the Minimum Wage


The Card and Krueger paper on how the minimum wage rise did not reduce employment in fast food restaurants is justly famous. It’s such a counter-intuitive result that, well, lots of people have been crowing about it for years and lots of others have been insisting that there’s something wrong with it.

The full academic to and fro is ably described by Susan Adams here. I, and I admit to a bias here, would say that the paper has been shown to be at least not proven even if saying it has been shown to be wrong is too strong.

However, I now want to go on and make a much stronger claim: Card and Krueger were looking for their evidence in the wrong place. A mistake which I would and do argue means that whatever they found where they were looking the result just isn’t either interesting or important. Brave words from someone like me about the academic research done by someone who has just been appointed Chair of the Council of Economic Advisers but bear with me a moment.

It isn’t actually correct to regard the fast food chains (which is what Card and Krueger studied) as the fast food industry. There are two very different groups that make up that industry as a whole.

Firstly there are the chains, yes. The Burger Kings, Arby’s and the like which were studied. Then there’s the other part, the independents. The delis, Mom and Pop stores, meatball and subs places, these make up the second part of the fast food industry.

Now, something that might not be obvious from the outside but is very much so from those who have worked in the industry (yes, that would be me) is that the independent sector is much more labour intensive than the chain sector. The chains are better equipped, differently supplied (things as seemingly trivial as buns for hamburgers arriving pre-cut instead of having to be sliced open in store) and labour as a portion of turnover is much lower (and capital correspondingly higher) than in that independent sector.

So, if the price of labour rises, we would traditionally say that the amount of labour used in the entire sector, independents and chains, would decline. However, we would expect the use of labour to decline more in the independent, the more labour intensive, sector than in the chain, the capital intensive sector. In fact, we can construct entirely believable models which show employment rising, falling or staying stable in the chain sector while labour employed in fast food as a whole declines from the rise in the cost of labour.

For example, the rise might be sufficiently severe that a goodly portion of the independent sector simply goes out of business. This could increase the trade of the chain sector sufficiently that labour demand there rises despite (or even because of) the rise in labour costs.

Please note, I’m not saying that is what happened: only that it is possible and entirely consistent with simple basic economic understanding. By studying only one part of the sector we don’t in fact find out anything useful at all about the entire sector’s response to a change in the minimum wage. By looking only at the response of the capital intensive part we are ignoring the response of the labour intensive part. It really is possible that a minimum wage rise will increase the demand for labour in the capital intensive, chain, sector while reducing it by more in the labour intensive, independent, sector.

Which leads to an interesting conclusion: it doesn’t actually matter whether the chain restaurant employment rose or fell as a result of the minimum wage rise. Doesn’t matter whether Card and Krueger were right or wrong in their original findings. As they weren’t looking in the right place, employment across the entire fast food sector, they couldn’t find the answer we wanted. Does a rise in the minimum wage reduce the number employed in minimum wage jobs?

That is what we want to know but unfortunately the original study structure makes it impossible to derive an answer to that question from the study.

no propaganda please Loc: moon orbiting the third rock from the sun

This is from National Review online

Hope these two articles are helpful

After President Obama tapped Princeton University professor Alan Krueger to chair the Council of Economic Advisors, Washington Post blogger Ezra Klein wrote that Krueger “is arguably the leading labor economist in the country” and “known for bringing a near-superhuman rigor” to the subject.

One wonders how any economist would earn a “near-superhuman” superlative for their research. One can particularly wonder in the case of Professor Krueger, who is known for his 1990s academic research that attempted to prove that employee wages were not subject to the laws of supply and demand.

In 1993, Krueger and David Card published a study that examined employment statistics of fast-food restaurants in New Jersey and Pennsylvania following the Garden State’s minimum wage hike. The authors reported that employment at fast-food chains in New Jersey increased by 13 percent compared to restaurants across the Delaware River in Pennsylvania. Clinton administration Labor secretary Robert Reich, Senator Kerry, Senator Kennedy, and other luminaries of the Left pointed to the study’s findings to call for raising the minimum wage.

But analysis by independent researchers revealed the Krueger-Card report, which was based on a phone survey in which fast food restaurant managers and assistant managers were asked about their staff size, to be deeply flawed. The Employment Policy Institute analyzed the phone survey results against actual payroll data from the restaurants and concluded that “the data set used in the New Jersey study bears no relation to numbers drawn from payroll records of the restaurants the New Jersey study claims to cover.”

According to the Krueger-Card data set, a Burger King in New Jersey went from zero to 29 full-time workers after the minimum wage hike between February and November of 1992, while a Wendy’s in Pennsylvania reduced its workforce from 30 to zero full-time workers during the same nine-month period. Truly radical — indeed, implausible — shifts in a business’s employment strategy. When compared to actual employment records, the EPI analysis found that in one third of the restaurants surveyed, Krueger-Card even got the direction of employment change (whether staff was cut of added) wrong.

A subsequent analysis published by the National Bureau of Economic Research based on payroll records of fast-food restaurants during the same period revealed that Garden State workers experienced a 4.6 percent decrease in employment after the minimum wage hike compared to the Pennsylvania control group. In other words, they confirmed the commonsense economic principle that when something costs more, people can afford less of it. Or in the case of a minimum-wage hike, when workers cost more to employ, businesses can afford to hire fewer workers.

If we weren’t suffering 9 percent unemployment, it would be easy to enjoy the irony of the leader of the “party of science” choosing a man to lead the White House’s “pivot” to jobs who, based on this faulty study, could be called a “supply and demand” denier.

JFlorio Loc: Seminole Florida

You are definitely to nice.

PoppaGringo Loc: Muslim City, Mexifornia, B.R.

:thumbup:

BID Loc: Texas

This is only my personal opinion with factual numbers. I truly believe that every American has the right to make as much money as they can. I also believe it should not be accomplished based on greed. CEO’s and top Executives should make more than the average worker for their company, most earn it and deserve it. They set the agenda for the company to make profits that we enjoy with our stock portfolios and employ workers. BUT the top CEO’s making on average over 290% more than the average worker for their company is plain greed. In the 70’s it was almost 30 times more, 80’s 60 times more, 90’s around 120 times more. To be fair these numbers are based on the top fortune 500. Most true small businesses average a lot less, well under a million. If these top companies would tie their CEO’s salaries to a percentage of the lowest paid employee’s weekly pay including part time employees. There would be no need to even discus minimum wage and the percentage of part time workers would be a lot less. Where did I get these numbers? I looked at several sources liberal and conservative. I used numbers form the © 2014 Economic Policy Institute. Now do I believe those companies will cut these top salaries and pass it down to their workers? You never know. Like I stated, it is only my opinion.

Cherokee38 Loc: Atlanta

*******

If you want to make more than minimum wage, you need more than minimum skills. I hired people not because I liked them and they needed a job, I hired them to make money for me. If they did not produce more than they earned, they would be gone. Sorry, welcome to the real world!!

Louie27 Loc: Peoria, AZ

Why would the dates matter? These figures can still be used today even if we check other geographical areas of the country. This can be proven every where cities have raised the minimum wage and surrounding cities do not follow suit. That is why each state should have a minimum wage that is correct with their areas average income level and not the same level as other states which have a higher average income. Now this would make sense to a normal thinking person but the liberals will not even consider this proposition because it does not meet their, equality agenda.

Cherokee38 Loc: Atlanta

********
I believe the salaries for CEO's are set by the board of directors and is usually tied to achieving a certain profit. However, when you look at Congress please explain how they set their salaries, talk about greed. While discussing greed, Why is it greed to want to keep what you earned, but it is not greedy to take earning for you that someone else earned?? ie, food stamps, welfare and all the other give away programs??

BID Loc: Texas

I agree with your statement about CEO's but I just do not believe it should be that hi. The average is over 15 million per year. Just think about that number for one person, 15 million is he or she really worth that. It is just my opinion and I appreciate yours, I really do. As for Congress I am with you. As for the "give away programs" that's a totally different topic and I understand the frustration.