Below is an article from Island Voices on March 29, 2005. This article is a perfect example of the complete economic illiteracy of the popular press. My comments are in RED.
Facts don't support minimum-wage critics
By James Weatherford
State Rep. Colleen Meyer is sounding a false alarm based on familiar, if unfounded, warnings about increasing the minimum wage ("Minimum wage hike would hurt everyone," March 27). The oft-repeated siren of minimum-wage doomsayers warns that an increase in the minimum wage would close businesses and cost jobs.
To add to this siren, Meyer spreads before us a game of chance: one pea, three shells. I wonder who owns the pea in this game? Not a minimum-wage worker trying to feed a family on $6.25 an hour. For that family, playing a game with a pea doesn't happen. A minimum-wage worker would rather share the pea with her hungry family. (I THOUGHT POOR PEOPLE WERE OBESE?)
The shells? Think shelter.
Rep. Meyer, R-47th (Ha'iku, Kahalu'u, La'ie), alludes cryptically to unidentified "studies" that "show clearly" the dire consequences of increasing the minimum wage.
I refer to research by the Fiscal Policy Institute and the Economic Policy Institute that reveals a reality different from the apocalyptic claims of minimum-wage doomsayers.
The research has found no correlation between minimum-wage increases and a rise in business failures, either in the year the increase occurred or in the following year. The economy, especially small business, has done well in the years following implementation of a minimum wage. In the wake of minimum-wage increases in both 1990 and 1997, the U.S. economy had strong growth (HOW DO YOU KNOW IT WOULDN'T HAVE BEEN EVEN STRONGER? BY THIS SWEEPING LOGIC, NO EVENTS WHATSOEVER IN THOSE YEARS COULD HAVE SLOWED ECONOMIC GROWTH.) Between 1998 and 2001, the number of small-business establishments grew twice as quickly in states with higher minimum wages.(I WOULD LOVE TO SEE THE STATS ON THIS. WHY ONLY A 3 YEAR SAMPLE? WHAT ABOUT GROWTH IN LARGE BUSINESS? WHAT ABOUT THE EXPLOSION IN ILLEGAL IMMIGRATION SINCE THE MINIMUM WAGE INCREASE? THIS CRAP-TISTIC IS NOT EVIDENCE OF ANYTHING.)
A comparison of states with minimum wages above the federal level has shown that increasing the minimum wage has not resulted in less hiring (THIS IS 100% UNTESTABLE HYPOTHESIS. NO MATTER WHAT THE NUMBERS SAY, NO HUMAN COULD PROVE THAT WITH THE MIN. WAGE UNCHANGED, THAT THERE WOULD NOT HAVE BEEN EVEN MORE HIRING. THIS IS ABSOLUTELY UNKNOWABLE.) Since the minimum-wage increase in 1997, low-wage workers, particularly single mothers, have found employment at increased rates (SO SINCE 1997, THE ONLY THING THAT COULD ACCOUNT FOR “INCREASED RATES” OF LOW WAGE EMPLOYMENT IS A RAISE IN THE MINIMUM WAGE? I GUESS THE GREATEST BULL MARKET IN HISTORY HAD NOTHING TO WITH IT. HIGH WAGE EARNERS HAVE ALSO FOUND EMPLOYMENT AT "INCREASED RATES" SINCE 1997. BY THIS SPECIOUS REASONING, I COULD ARGUE THAT THE MINIMUM WAGE INCREASE IN 1997 HELPED THE CEOs EVEN MORE THAN THE LOW WAGE EARNERS.) Those who will benefit most from a higher minimum wage are concentrated among working women, many of whom are single mothers. Among the workers to benefit from a minimum-wage increase, 60 percent are female and 72 percent are age 20 years and over. (ALSO AMONG THE BENEFICIARIES OF A HIGHER MINIMUM WAGE, 100% OF THE ILLEGAL, "UNDOCUMENTED" WORKERS. AMONG THE POTENTIAL LOSERS, ALL OTHER WAGE EARNERS WHO GET SOME OF THEIR HOURLY WAGE REDISTRIBUTED TO THE MINIMUM WAGE EARNERS - NOT EXACTLY A SMALL DEMOGRAPHIC.)
The reality is that minimum wages do not cause business failure nor result in job losses, as claimed by the doomsayers. (THERE IS A LOT OF RED INK IN THE ARGUMENTS ABOVE.)
How does a higher minimum wage affect the economy?
Raising one worker's "minimum wage from its current rate of $6.25 to as much as $8" does give that one worker a "28 percent wage hike." However, for a wage-earning worker now at $6.75 or $7.75 an hour, the pay raise is less than a "drastic" 28 percent. (IGNORING THIS NON SEQUITUR.)
Nevertheless, about that one worker: Ms. Cleaning Lady would get a 28 percent raise on her job where she empties the trash cans and washes the urinals of million-dollar executives. (SHE COULD GET A 28% RAISE OR SHE COULD LOSE HER JOB. ALMOST EVERY OFFICE I HAVE WORKED IN WAS CLEANED BY “UNDOCUMENTED” JANITORIAL SUBCONTRACTORS. AND APPARENTLY ONLY "MILLION-DOLLAR EXECUTIVES" GET THEIR URINALS CLEANED.)
Ms. Cleaning Lady might spend some of the extra wage on clothes for herself and her family, or maybe for a new sofa or refrigerator. If she is frugal, she can save some of these extra earnings for her child's high school education. If she is a miracle worker, she can save for the child's college education. (NOW THE ARGUMENT GETS EMOTIONAL FOR THIS THEORETICAL ALLEGED BENEFICIARY.)
When a low-income worker with minimal material wealth gets an increase in wage, a large part of that increase is spent on basic personal and household items. Purchases of clothes, sofas and refrigerators circulate money in the economy and register demand for these products. Because satisfying customers' needs is what matters most in a market economy, employers increase hiring to satisfy demand generated by increased income. (BY THIS REASONING, WE SHOULD INCREASE THE MINIMUM WAGE TO SAY $20 AN HOUR. IF WE DID THAT, THE MINIMUM WAGERS WOULD BE FLUSH WITH CASH, BUYING SOFAS AND TVs, AND THE ECONOMY WOULD EXPLODE!!)
The economic common sense of workers as buyers, and wages as expenditures, seems to escape minimum-wage doomsayers, who also appear naive to the futility of trying to sell anything to a customer who has no money. (SO IT IS THAT SIMPLE, IF BUSINESSES JUST PAY EVERYONE MORE, THEN THEY WILL MAKE MORE MONEY. WOW. THANK GOD THIS MORON IS DONE.)
James Weatherford is a resident of Kea'au, Hawai'i. He wrote this commentary for The Advertiser.
I am not arguing here against raising the minimum wage. The purpose of this post is to demonstrate the classic econo-moronic newspaper article. If this pseudo-savant had ever read a Statistics 101 book, he may have learned that correlation does not imply causation. Meaning that just because the economy did well overall, post-1997, one cannot infer that raising the minimum wage had no negative economic impact.
I don't see how any minimum wage debate can ignore the issue of illegal immigrants today. Raising the minimum wage is only going to enlarge the under-the-table job market. A wage raise would have to be coupled with a tighter border to have any efficacy.
Back to this moron. One of the focuses of my blog will be to show that this article is not of anomalous form. These econo-illiterate journalists all cook from the same recipe - sophistic arguments based on dubious statistics that dramatize the pitiable victims of rich evil CEOs (men and women that pee standing up - the "urinal" jibe).
A teacher of mine once said that it is socially acceptable in the United States to say, "Well, I am not good at math...." (as opposed to maybe Asia). But you will never hear anybody say, "I can't read or write..." This couldn't be more true.
Likewise, here in the epicenter of capitalism, economic illiteracy should be much less prevalent.
Many more examples to follow.
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