Thursday, January 30, 2014

Stats Simply Do Not Lie, Unfortunately, the President Does

Forbes drills past the hyperbole on both sides to look at the raw numbers on minimum wage.

  • "3.6 million workers at or below the minimum wage (you can be below legally under certain conditions)"
  • "That is 2.5 percent of all workers and 1.5 percent of the population of potential workers."
  • "Within that small group, 31 percent are teenagers and 55 percent are 25 years old or younger. "
  • "That leaves only about 1.1 percent of all workers over 25 and 0.8 percent of all Americans over 25 earning the minimum wage."

But who are those in that tiny 1.1 percent of workers earning minimum wage?

  • "according to a recent study, 63 percent of workers who earn less than $9.50 per hour (well over the minimum wage of $7.25) are the second or third earner in their family and 43 percent of these workers live in households that earn over $50,000 per year."
  • "minimum wage earners are not a uniformly poor and struggling group; many are teenagers from middle class families and many more are sharing the burden of providing for their families, not carrying the load all by themselves."

Even better, the number of people earning the minimum wage is shrinking:

  • "In 1980, 15 percent of hourly workers earned the minimum wage. Today that share is down to only 4.7 percent. "
  • "almost two-thirds of today’s minimum wage workers are in the service industry and nearly half work in food service."

Jeffrey Dorfman, the author and professor in the department of agriculture and economics at the University of Georgia, goes on to use Bureau of Labor Statistics data to show that jobs that typically earn minimum wage have actually decrease in productivity while their wages increased.

2 comments:

Anonymous said...

If the minimum wage had kept pace with inflation the last fifty years the minimum wage would be $30/hour.

I'd have expected nothing less from you. I'm sure your worried about the price of your McDoubles going up and every time the minimum wage needs to go up you scream and shout that prices will skyrocket.

How can you trot out the same talking point over and over and over again when it has been demonstrably NOT TRUE OVER AND OVER AND OVER AGAIN?

You'd think that you guys would be more angry that companies were abusing welfare systems by underpaying their employees and passing that cost onto the taxpayer.

I thought that. But I guess you never think.

theKansasCitian said...

Rather than waste my time on your unwillingness to learn basic economics, I will let Professor Dorfman retort.

"Thanks for the comment, but inflation is not really relevant. As I try to explain, wages are based on worker productivity not the cost of living. Low wage workers have seen their productivity rise very slowly, so their wages will not rise very fast either... The point is that if we want to help people out, minimum wage is the wrong tool to use."

"My university has not provided raises for six years and counting. They understand that there has been inflation but also that our state funding has been cut and students and their parents are not eager for more large tuition increases. I understand what people are going through. That does not mean businesses can call afford to give workers raises just because there has been inflation. Jobs are not part of the social safety net. Employers pay employees based on their worth. If society does not find the outcome acceptable they can provide income supplements like welfare, food stamps, and the earned income tax credit. Employers do not exist to be social service agencies and you need to stop confusing them with one."

"As to inflation, the productivity gains I reported for food service workers are based on the value of output produced per hour, so they would already account for inflation. If we raise workers’ wages just because of inflation, profits will have to drop and employment will decline again."