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February 18, 2013

Fun with the Minimum Wage

Mark J. Perry has an interesting chart up that plots excess teen unemployment against changes to the minimum wage:

Now that Obama’s calling for a 24% increase in the minimum wage to $9 per hour, it might be instructive to review what happened the last time the minimum wage was increased – from $5.15 per hour in 2007 to $7.25 in 2009 (in three stages, see chart). Those most affected by increases in the minimum wage are the least skilled, least experienced, and least educated workers, i.e. teenage workers.
...when the minimum wage rose by 41% between 2007 and 2009 – it had a disastrous effect on teenagers. The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009. Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%. Therefore, the graph attempts to better isolate the effects of the minimum wage increases between 2007 and 2009 on teenagers by plotting the difference between the teenage jobless rate and the overall jobless rate, i.e. “excess teen unemployment,” and the minimum wage.

During the 2002-2007 period when the minimum wage was $5.15 per hour, teenage unemployment exceeded the national jobless rate by about 11% on average. Each of the three minimum wage increases was accompanied by a 2 percentage point increase in the amount that the teenage jobless rate exceeded the overall [unemployment] rate...

Go read the whole post - it's excellent. I want to call particular attention to the final excerpt, because it bears directly on a post I've been noodling over:

“Most readers remember the work habits they learned from their first job. Showing up on time, being courteous to customers, learning how to use technology—such habits are often more valuable than the actual paycheck. Studies have confirmed that when teens work during summer months or after school they have higher lifetime earnings than those who don’t work. So raising the minimum wage may inadvertently reduce lifetime earnings.”

Behavior and habits - both of which require self discipline - can affect lifetime earnings? Who knew? The Editorial Staff shall return to this insight anon. But first, a bit of equal opportunity snarking:

For a fourteen-year period in American history, minimum-wage laws were officially verboten in every last state of the union, having been declared unconstitutional by the Supreme Court on April 9, 1923. The case, Adkins v. Children's Hospital, concerned a Washington D.C. law that established a minimum wage for women and children employed within the city. Two appellants challenged it: a hospital that employed a number of adult women, some at wages below the minimum; and a 23-year-old woman employed by the Congress Hall Hotel as an elevator operator. Earning $35 per month plus two meals each day, the elevator operator avowed that her "work was light and healthful, the hours short, with surroundings clean and moral," and that her employer would be glad to retain her, as she ardently wished, but only at her present wage.

...What's largely forgotten are the early feminists who hailed the 1923 decision as a heartening victory. They'd been perturbed, fifteen years earlier, by the decision in Muller v. Oregon, a case that pitted a laundry owner against a state law that forbade working female employees longer than 10 hours per day. Justice David Brewer wrote in his majority opinion that the labor protection law passed constitutional muster because "history discloses the fact that woman has always been dependent upon man," and like a minor, she requires "special care that her rights may be preserved.... In the struggle for subsistence she is not an equal competitor to her brother.... She is properly placed in a class by herself, and legislation designed for her protection may be sustained, even when like legislation is not necessary for men and could not be sustained."

When Justice Sutherland struck down the minimum wage for women and children -- and helped that 23 year-old keep her elevator job -- he also repudiated the sexist logic of that earlier case:

The ancient inequality of the sexes otherwise than physical, as suggested in Muller, has continued with 'diminishing intensity.' In the view of the great -- not to say revolutionary -- changes which have taken place since that utterance, in the contractual, political and civil status of women, culminating in the 19th Amendment, it is not unreasonable to say that these differences have now come almost, if not quite, to the vanishing point... We can not accept the doctrine that women of mature age require or may be subjected to restrictions upon their liberty of contract which could not lawfully be imposed in the case of men under similar circumstances. To do so would be to ignore all the implications to be drawn from the present day trend of legislation, as well as that of common thought and usage, by which woman is accorded emancipation from the old doctrine that she must be given special protection or be subjected to special restraint in her contractual and civil relationship.

The blog princess has often pointed out that many of the jobs she held before she got her college degree paid wages at or below the minimum wage:

During her years as a stay at home wife and mother with no college degree, the blog princess worked at mostly menial jobs (child care, lawn care, small repairs and painting) for pocket money. My earnings, though meager, yielded just enough extra money to fund DITY home improvement projects and a few small luxuries we would not otherwise be able to afford. Most weeks, she worked 25 hours or less.

Now, with a college degree and 14 years of continuous FT work experience, her earnings have multipled by a factor or 40 or 50 and yet, the Obama administration's policies bid fair to make working 50+ hour weeks no more profitable than it was to work fewer than 25 hours a week at a salary 40+ times smaller.

If this administration had purposely designed its economic policy to inflict maximum damage on women who aspire to move up the economic ladder through education and hard work, it could not possibly have done better. WAR ON WOMYNS!!11!

To add to the hilarity, the decision to stop working would mean less work for the Hispanic men and women we have been able to employ with my earnings.

The agony! The irony!

Posted by Cassandra at February 18, 2013 12:09 PM

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"It was widely assumed that no one would or could impinge upon the ability of an adult male to negotiate his own wage."

Those were the days. Baroness Blixen is said to have snapped in response to a demand that "women and children" move into town during WWI in East Africa: "Is that one category, or two?" Men, women, and children are increasingly part of a single, protected category.

Posted by: Texan99 at February 18, 2013 03:43 PM

Guys: You don't get it. We drive up the minimum wage, consequently underskilled unemployment skyrockets, we therefore have a "Crisis" (Which we have all been instructed not to waste) and therefore we must increase welfare--which enlarges the dependent class upon whom someone depends to be elected.

Simple and effective. Rinse and repeat whenever the Diktat is in danger of being exposed.

Posted by: CAPT Mongo at February 18, 2013 04:21 PM

Salaries will be frozen, and workers will be let go, and prices will soar. Again.

So, Congress is voting this pay increase by fiat; because it is a 'living wage.' NOT.

Congress gets a raise because of the dignity of their office; they think they have earned it, but will rag on CEOs and others who get pay increases as incentives for increasing business.


Posted by: Lost Logic at February 19, 2013 10:08 AM

Why do these things start in Taxachusetts?
Minimum wage. Ted Kennedy. John Kerry. Induhvidual Mandates.

Since teenagers are the most affected by this change, it stands to reason that the teens in Chicago, Washington D.C. and other urban areas will become competitive. Honestly, I am afraid that this might degenerate into killing off the competition.

What is this new drop in jobs going to accomplish?
I thought Obama was going to INCREASE jobs.

Posted by: Criquette at February 19, 2013 11:47 AM

No, he's going to tell you he's going to increase jobs. He's really going to implement policies that decrease them, and then blame it on the 1%.

Much like the computer programmers who were given bonuses for finding bugs, a black market in creating bugs inevitably popped up.

Capt Mongo has the right of it. Politicians who are rewarded for "solving problems" will soon conspire to create problems for them to "solve".

Posted by: Yu-Ain Gonnano at February 19, 2013 12:08 PM

Politicians who are rewarded for "solving problems" will soon conspire to create problems for them to "solve".

I love the smell of job security in the morning.

Posted by: Barack Obama at February 19, 2013 12:12 PM