Category: News and politics

Low-Skilled Workers Flee the Minimum Wage


What happens when, in a country where workers are free to move, a region raises its minimum wage? Do those with the fewest skills seek out the regions with the highest wage floors?

New minimum wage research by economist Joan Monras of the Paris Institute of Political Studies (Sciences Po) attempts to answer that question. Monras theoretically shows that there should be a close relationship between the employment effects of raising the minimum wage and the migration of low-skilled workers.

When the demand for local low-skilled labor is relatively unresponsive (or inelastic) to wage changes, raising the minimum wage should lead to an influx of low-skilled workers from other states in search of better-paying jobs. On the other hand, if the demand for low-skilled labor is relatively responsive (or elastic), raising the minimum wage will lead low-skilled workers to flee to states where they will more easily find employment.

To test the model empirically, Monras examined data from all the changes in effective state minimum wages over the period 1985 to 2012. Looking at time frames of three years before and after each minimum wage increase, Monras found that

  1. As depicted in the graph below on the left, those who kept their jobs earned more under the minimum wage. No surprise there.
  2. As depicted in the graph below on the right, workers with the fewest skills were having an easier time finding full-time employment prior to the minimum wage increase. But this trend completely reversed as soon as the minimum wage was increased.
  3. A control group of high-skilled workers didn’t experience either of these effects. Those affected by the changing laws were the least skilled and the most vulnerable.

These results show that the timing of minimum wage increases is not random.

Instead, policy makers tend to raise minimum wages when low-skilled workers’ real wages are declining and employment is rising. Many studies, misled by the assumption that the timing of minimum wage increases is not influenced by local labor demand, have interpreted the lack of falling low-skilled employment following a minimum wage increase as evidence that minimum wage increases have no effect on employment.

When Monras applied this same false assumption to his model, he got the same result. However, to observe the true effect of minimum wage increases on employment, he assumed a counterfactual scenario where, had the minimum wages not been raised, the trend in low-skilled employment growth would have continued as it was.

By making this comparison, Monras was able to estimate that wages increased considerably following a minimum wage hike, but employment also fell considerably. In fact, employment fell more than wages rose. For every 1 percent increase in wages, the share of a state’s population of low-skilled workers in full-time employment fell by 1.2 percent. (The same empirical approach showed that minimum wage increases had no effect on the wages or employment of a control group of high-skilled workers.)

Monras’s model predicts that if labor demand is sensitive to wage changes, low-skilled workers should leave states that increase their minimum wages — and that’s exactly what his empirical evidence shows.

According to Monras,

A 1 percent reduction in the share of employed low-skilled workers [following a minimum wage increase] reduces the share of low-skilled population by between .5 and .8 percent. It is worth emphasizing that this is a surprising and remarkable result: workers for whom the [minimum wage] policy was designed leave the states where the policy is implemented.

These new and important findings reinforce the view that minimum wage increases come at a cost to the employment rates of low-skilled workers.

They also pose a difficult question for minimum wage proponents: If minimum wage increases benefit low-skilled workers, why do these workers leave the states that raise their minimum wage?


Corey Iacono

Corey Iacono is a student at the University of Rhode Island majoring in pharmaceutical science and minoring in economics. He is a FEE 2016 Thorpe Fellow.

This article was originally published on FEE.org. Read the original article.

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Gun Shop Owner Stands to Challenge Obama on Second Amendment


Homeland Insecurity Status AlertsCreating conflict. It’s what politicians do. Pointing the finger at the supposed boogeyman and saying “HERE! THIS IS THE CAUSE OF ALL YOUR WOES!”, and crying out for more power under the rubric of “safety”.

“I just came from a meeting today in the situation room in which I’ve got people who we know have been on ISIL websites living here in the United States…and we’re allowed to put them on the no-fly list when it comes to airlines, but because of the National Rifle Association, I cannot prohibit those people from buying a gun,” Obama said.

Do you see the problems with the above quotation? Let me spell it out for you:

1) They can add you to a no-fly list simply for visiting a website. This means that without being accused and convicted of a crime, you can lose your right to travel unmolested by government. That is exactly the opposite of rights expressly spelled out in the Constitution.

2) The NRA is painted as the bad guy simply for insisting (in a court of law) that the Federal Government be subject to the limitations placed upon it by the Constitution and specifically the 2nd Amendment. Somehow “they” are the evil ones.

Where does it end? Where does it ever end? 100 new laws? 1000? 10,000? When will the slew of laws, regulations, licenses, mandates, executive orders, fines, penalties, restrictions, public humiliations, etc., etc. ad nauseam, bring about the perfect society?

And when will the American People grow tired of electing demagogues who promise everything and deliver nothing of value?

Source: Gun Shop Owner Stands to Challenge Obama on Second Amendment — Listen Closely to the President’s Response | Video | TheBlaze.com

Don’t Be Fooled by the Political Game: The Illusion of Freedom in America


The shaping of the will of Congress and the choosing of the American president has become a privilege reserved to the country’s equestrian classes, a.k.a. the 20% of the population that holds 93% of the wealth, the happy few who run the corporations and the banks, own and operate the news and entertainment media, compose the laws and govern Continue Reading

Source: Don’t Be Fooled by the Political Game: The Illusion of Freedom in America – The Future of Freedom Foundation

Seymour Hersh: Everything Obama said about the Bin Laden Raid is a Lie!


Puppet Masters

When I first heard about the so-called raid, it turned my stomach. When I was excoriated by an enthusiastic public for not supporting the mission, or the methods, I was called “unpatriotic”. Now it turns out I was right. Anything originating with this Whitehouse is Kabuki Theater, designed solely to manipulate you and keep you passive.

therightwingextremist

Seymour Hersh: Obama’s Entire Account Of bin Laden’s Death Is One Big Lie; This Is What Really Happened

Tyler Durden's picture

The last time famed US investigative journalist Seymour Hersh made news in the global media was with his massive, 5000-word expose from December of 2013 “Whose sarin?” revealing the true motives behind the Syrian near-war of 2013 including what we had said from the very beginning: the very professionally created YouTube clips showing the consequences of what was said to have been an Assad poison gas attack, were nothing but a fake (subsequent reports identified the propaganda source as Rami Abdul Rahman of the Syrian Observatory for Human Rights, whose entire operation has been funded by an unidentified European country.)

Fast forward to today when in a report whose word count doubles his previous record for the London Review of Books, Hersh…

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Public Pensions $2 Trillion Short of What They Owe Retirees


“A new report by Moody’s Investors Service finds that public pensions are $2 trillion short of the amount they owe current and future retirees.  “Combined with large unfunded liabilities, aging plan demographics effectively transfer costs incurred by a previous generation onto the present one, increasing the burden on current government operations,” the report stated.”

So what does this mean? Higher taxes to fund the liabilities, cutting of public services (aka austerity), and insolvency. Most likely all three. This is what happens when you pair public employee unions and the politicians who feed off of them.

The next time a union endorses a politician, you can be sure they are in league to fleece the tax payers.

http://feedproxy.google.com/~r/BigGovernment/~3/hatnDRG2fmE/story01.htm

Of Course the People Don’t Want War


“Why of course the people don’t want war… That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country.” – Hermann Goering, Nazi officer

Or you can denounce the peacemakers as “isolationists”. That seems to work as well.