Job loss predictions over rising minimum wages haven't come true

Hats off to SBOs hustling just to make rent. Unfortunately, when people are making peanuts, an extra peanut won't tip the scales of inflation over what a few whales would induce if they spent more rather than stashed it at a bank or offshore fund...

Job loss predictions over rising minimum wages haven't come true
The bottom line: Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say.

Eighteen states rang in 2019 with minimum wage increases — some that will ultimately rise as high as $15 an hour — and so far, opponents' dire predictions of job losses have not come true.

What it means: The data paint a clear picture: Higher minimum wage requirements haven't reduced hiring in low-wage industries or overall.

State of play: Opponents have long argued that raising the minimum wage will cause workers to lose their jobs and prompt fast food chains (and other stores) to raise prices.

But job losses and price hikes haven't been pronounced in the aftermath of a recent wave of city and state wage-boost laws.

• And more economists are arguing that the link between minimum wage hikes and job losses was more hype than science.

What we're hearing: "The minimum wage increase is not showing the detrimental effects people once would’ve predicted," Diane Swonk, chief economist at international accounting firm Grant Thornton, tells Axios.

• "A lot of what we’re seeing in politics is old economic ideology, not what economics is telling us today."

The doom-and-gloom that opponents have predicted, "are part of the political policy debate," Jeffrey Clemens, an economics professor at UC San Diego, tells Axios.

• His research for the conservative American Enterprise Institute is often quoted in arguments against minimum wage increases.
• But Clemens told Axios: "People will tend to make the most extreme argument that suits their policy preferences, and it’s not surprising if that ends up being out of whack with the way things unfold on the ground."

Where it stands: Cities and states around the country are taking action as the federal minimum wage — $7.25 an hour — "has remained unchanged for the longest stretch of time since its 1938 inception under the Fair Labor Standards Act," according to a recent paper by the New York Fed.

• Cities like New York, Seattle, Chicago and San Francisco have raised local minimum wages, and individual companies have done so as well: Amazon set its minimum at $15 an hour last year.

As of July: "14 states plus the District of Columbia—home to 35% of Americans—have minimum wages above $10 per hour, as do numerous localities scattered across other states," according to the N.Y. Fed.

• Laws in New York, California, Connecticut, Illinois, Maryland, Massachusetts, and New Jersey will eventually increase minimum wages to $15 per hour.

Axios used Bureau of Labor Statistics data to compare job growth rates in four states with low minimum wages vs. eight states with high minimum wages:

• Since 2016, when California became the first state to pass the $15 minimum wage law, all 12 states have seen growth in restaurant, bar and hotel jobs.
• Three of the four states with job growth higher than the U.S. median have passed laws that will raise the state minimum wage to at least $13.50.
• Three of the five states with the slowest job growth rates did not have a state minimum wage above the federal minimum of $7.25 an hour.
• An outlier was Massachusetts, which had the slowest job growth in the sector and currently has the highest state minimum wage: $12 an hour.

The big picture: A number of peer-reviewed academic studies have found little to no impact on hiring as states and municipalities have raised the minimum wage.

• Rather, such increases are likely to have increased hiring in the strong U.S. economy, Bill Spriggs, chief economist at labor union AFL-CIO, tells Axios.

Yes, but: There could still be negative long-term effects, such as businesses choosing to locate in states with lower minimum wage requirements, according to the N.Y. Fed's study.

• "The danger is extrapolating too far and saying, 'We should raise wages to $30 an hour,'" Swonk says. "The current minimum wage increases were successful because they were regionally based, and not national or one-size-fits-all."

The bottom line: Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say.​

 

So a Cost of Living increase for honest-to-goodness gains-driven labor doesn't reduce jerbs (because the national basement is already pathetically low), it can potentially reduce suicide rates?

Bravo Soros! Andy Yang is just crazy with his moonshot startup Ubi, you tellin the right lies!

[WaPo]Researchers say there’s a simple way to reduce suicides: Increase the minimum wage

Since 2000, the suicide rate in the United States has risen 35 percent, primarily because of the significant increase in such deaths among the white population.

There are hints that these deaths are the result of worsening prospects among less-educated people, but there are few immediate answers. But maybe the solution is simple: pursue policies that improve the prospects of working-class Americans.

Researchers have found that when the minimum wage in a state increased, or when states boosted a tax credit for working families, the suicide rate decreased.

Raising the minimum wage and the earned-income tax credit (EITC) by 10 percent each could prevent about 1,230 suicides annually, according to a working paper circulated by the National Bureau of Economic Research this week.

The EITC was designed to boost the wages of low-income workers, particularly families with children. Many states have supplemented or expanded the credit.

Raising the minimum wage and increasing the tax credit help less-educated, low-wage workers who have been hit hardest by what are now known as “deaths of despair,” according to the analysis of 1999-2015 death data from the Centers for Disease Control and Prevention by University of California at Berkeley economists Anna Godoey and Michael Reich, as well as public-health specialists William Dow and Christopher Lowenstein.

Deaths of despair, a phrase popularized by Princeton economists Anne Case and Angus Deaton in a pair of widely cited 2015 and 2017 papers, typically refers to rising death rates among middle-aged white non-Hispanic Americans.

In 2017, Case and Deaton wrote that those rising death rates can be attributed to “drug overdoses, suicides, and alcohol-related liver mortality — particularly among those with a high school degree or less.”


To evaluate how policy choices could affect those deaths, the Berkeley team identified states that had raised their minimum wage or EITC between 1999 and 2015. They also included states whose wages were affected by federal minimum-wage increases. The researchers then measured the change in the rate for such deaths before and after the policies took effect.

To control for national trends, they compared the changes with states that hadn’t changed their minimum wage or EITC.

The researchers looked at suicides and drug overdoses. Unlike degenerative liver disease linked to alcohol abuse, those events can be connected to a single point in time.

The team found little change in drug overdoses, whether intentional or accidental, after the new policies took effect. This falls in line with the growing consensus that, unlike other deaths of despair, drug overdoses probably are linked to increased availability of addictive (and lethal) drugs.

But the number of suicides that weren’t related to drugs dropped noticeably. Among adults without a college education, increasing the EITC by 10 percent appears to have decreased non-drug suicides by about 5.5 percent. Raising the minimum wage by 10 percent reduced suicides by 3.6 percent.


“When they implement these policies, suicides fall very quickly,” Godoey said in an interview.

Although raising the minimum wage led to an immediate decrease in suicides, raising the EITC had a delayed effect, resulting in fewer suicides the following year, once the tax change came into force. In both cases, it appears as though taking home more money had a positive effect.


The effect was strongest among young women and others who were most likely to have minimum-wage jobs. Among men, black and Hispanic Americans saw the largest effect.

A March study in the American Journal of Preventive Medicine also found that a one-dollar increase in the minimum wage was associated with a 1.9 percent decrease in suicides, and that the association was strongest between 2011 and 2016, the most recent year studied.

Leading minimum-wage scholar Arindrajit Dube of the University of Massachusetts at Amherst, who shows in a forthcoming publication in the American Economic Journal: Applied Economics that higher minimum wages increase incomes for the poorest families, said the two studies provide “important additional evidence on the possible impact of a higher minimum wage on the standard of living — or living at all.”

The scholars are contributing to a larger body of work that links health, particularly mental health, with economic policy and outcomes.

In a 2014 analysis in American Economic Journal: Economic Policy, William Evans of the University of Notre Dame and Craig Garthwaite of Northwestern’s Kellogg School of Management found that mothers who received a higher EITC reported better mental and physical health.

In a paper to be published in American Economic Review: Insights, David Autor of the Massachusetts Institute of Technology, David Dorn of the University of Zurich and Gordon Hanson of the University of California at San Diego drew on data from between 1990 and 2014 to find that the death rate among men tended to rise in cities where jobs were vanishing because of competition from cheap foreign goods.​