Pope: 'unjust' unemployment can mean sin, suicide

[freeRadical]

Several decades of studies using aggregate time-series data from a variety of countries have found that minimum wage laws reduce employment. At current U.S. wage levels, estimates of job losses suggest that a 10 percent in crease in the minimum wage would decrease employment of low-skilled workers by 1 or 2 percent. The job losses for black U.S. teenagers have been found to be even greater, presumably because, on average, they have fewer skills. As liberal economist Paul A. Samuelson wrote in 1973, “What good does it do a black youth to know that an employer must pay him $2.00 per hour if the fact that he must be paid that amount is what keeps him from getting a job?”3 In a 1997 response to a request from the Irish National Minimum Wage Commission, economists for the Organization for Economic Cooperation and Development (OECD) summarized economic research results on the minimum wage: “If the wage floor set by statutory minimum wages is too high, this may have detrimental effects on employment, especially among young people.”4 This agreement over the general effect of minimum wages is long-standing. According to a 1978 article in American Economic Review, 90 percent of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers.5

Australia provided one of the earliest practical demonstrations of the harmful effects of minimum wage laws when the federal court created a minimum wage for unskilled men in 1921. The court set the wage at what it thought employees needed for a decent living, independent of what employers would willingly pay. Laborers whose productivity was worth less than the mandated wage could find work only in occupations not covered by the law or with employers willing to break it. Aggressive reporting of violations by vigilant unions made evasion difficult. The historical record shows that unemployment remained a particular problem for unskilled laborers for the rest of the decade.

At about the same time, a hospital in the United States fired a group of women after the Minimum Wage Board in the District of Columbia ordered that their wages be raised to the legal minimum. The women sued to halt enforcement of the minimum wage law. In 1923, the U.S. Supreme Court, in Adkins v. Children’s Hospital, ruled that the minimum wage law was price fixing and that it represented an unreasonable infringement on individuals’ freedom to determine the price at which they would sell their services.

Emphasis mine.

Source: econlib.org/library/Enc/MinimumWages.html

There are many studies that show that the minimum wage prices low-skilled workers, especially minorities, out of the labor market.

 

[ProVobis]

Show me conclusive proof that any increases in the minimum wage were solely because of the increase and not other factors considering that 98% of the labor force makes well above the minimum wage.

Stinkcat who has his Doctorate in Economics will refute what you are saying.

I suppose one can say that minimum wage laws, especially on the federal level, are set after the fact and don’t have much effect. After all, many, if not most, states have minumum wages which are modestly higher than the fed’s.

 

[saintjohnxxiii]

Emphasis mine.

Source: econlib.org/library/Enc/MinimumWages.html

There are many studies that show that the minimum wage prices low-skilled workers, especially minorities, out of the labor market.

The key phrase in the source you cited is too high. I agree with that. For instance some people want to take the current minimum wage of approximately $7.25 and double that. I would agree that would be too much of an increase. They want to make the minimum wage to be a living wage. What I am proposing is a moderate increase, indexed annually for the inflation rate.

 

[markomalley]

The key phrase in the source you cited is too high. I agree with that. For instance some people want to take the current minimum wage of approximately $7.25 and double that. I would agree that would be too much of an increase. They want to make the minimum wage to be a living wage. What I am proposing is a moderate increase, indexed annually for the inflation rate.

How about this instead:

Create an economic climate that will increase the demand for labor (just examples…not intended to be an exhaustive list):

• Reduce taxation
• Eliminate overly onerous government regulation
• Control the uncontrolled entry of people into the country who would flood the market with ample supplies of cheap labor (which has the effect of artificially lowering the price of labor)

 

[freeRadical]

The key phrase in the source you cited is too high. I agree with that. For instance some people want to take the current minimum wage of approximately $7.25 and double that. I would agree that would be too much of an increase. They want to make the minimum wage to be a living wage. What I am proposing is a moderate increase, indexed annually for the inflation rate.

Well, we disagree on what is too high, as do many economists. Do you disagree with the basic economic theory that the minimum wage prices low skilled workers, especially minority workers, out of the labor market? The current minimum wage is already above the market wage, pushing it higher will just create a bigger surplus of low skilled workers and thus more unemployment among low skilled workers, most of which are the young and minorities.

The minimum wage interferes with the freedom of people to sell their labor as they see fit and to make contracts with employers as the see fit. If I want to sell my labor for $5 an hour, who are you to say I can’t? The government gets involved in things that are none of its business and usually ends up hurting those it is claiming to help.

 

[Bubba_Switzler]

The key phrase in the source you cited is too high. I agree with that. For instance some people want to take the current minimum wage of approximately $7.25 and double that. I would agree that would be too much of an increase. They want to make the minimum wage to be a living wage. What I am proposing is a moderate increase, indexed annually for the inflation rate.

Are you willing to throw some people out of work in order that others should have a slightly higher wage? That is the trade off.

“Too high” simply means higher than employers would otherwise pay in a free market. The only time that a minimum wage is truly harmless is when it’s truly meaningless, i.e., when it is lower than the market rate.

 

[stinkcat_14]

Consider whose policies are creating unemployment and other injustices and moral hazards. Christians don’t let Christians vote for bigger government.

There is nothing inherently unchristian about voting for a larger amount of government spending. I personally don’t think it is prudent, but there is nothing particularly immoral about it.

 

[stinkcat_14]

Setting a price floor above the market price always results in a surplus. That’s Economics 101. In the case of the labor market, a surplus of labor is commonly called unemployment.

The real question is whether the minimum wage is really above the market price. For the most part, the answer is clearly no. But if we increased it to say, $25 an hour, it would clearly create unemployment.

 

[ishii]

Show me conclusive proof that any increases in the minimum wage were solely because of the increase and not other factors considering that 98% of the labor force makes well above the minimum wage.

Stinkcat who has his Doctorate in Economics will refute what you are saying.

If you line up 20 economists and ask them a question on economics they will often give you 20 different answers and disagree with each other. A mere doctorate in Econ does not make one’s statements on this topic sacrosanct.

Ishii

 

[Bubba_Switzler]

There is nothing inherently unchristian about voting for a larger amount of government spending. I personally don’t think it is prudent, but there is nothing particularly immoral about it.

Imprudence is unChristian and immoral. Saying that something entails prudence does not empty it of moral or theological content. It says, simply, that it is not a revealed truth and not a mater of orthodoxy.

In the case of bigger government spending (and the taxes and regulations that go with it), it’s imprudence is obvious to all who have eyes to see and leviathon is one of the main causes of structural and unjust unemployment.

 

[stinkcat_14]

Imprudence is unChristian and immoral. Saying that something entails prudence does not empty it of moral or theological content. It says, simply, that it is not a revealed truth and not a mater of orthodoxy.

I agree, one can debate what is or is not prudent. Just because I think something is imprudent does not make it definitively so.

In the case of bigger government spending (and the taxes and regulations that go with it), it’s imprudence is obvious to all who have eyes to see and leviathon is one of the main causes of structural and unjust unemployment.

Reasonable people can differ as to whether more government spending is or is not prudent. It is not a simple cut and dried matter.

 

[stinkcat_14]

If you line up 20 economists and ask them a question on economics they will often give you 20 different answers and disagree with each other.

Can you give an example of different questions on economics where economists have twenty different answers?

A mere doctorate in Econ does not make one’s statements on this topic sacrosanct.

Ishii

This I agree with. I would further add that nobody has a sacrosanct answer when it comes to economics.

 

[Bubba_Switzler]

I agree, one can debate what is or is not prudent. Just because I think something is imprudent does not make it definitively so.

That is one aspect of prudence, yes. The point is that if you know something is imprudent then it is wrong to do it and you ought to seek truth so as to improve your prudential judgement.

Reasonable people can differ as to whether more government spending is or is not prudent. It is not a simple cut and dried matter.

That’s debatable. It may not be a matter of orthodoxy or even a matter of scientific proof but it is certainly a matter of reasonable judgement of fact. But suffice it to say that abortion and gay marriage are not the only reasons that Catholics should vote against socialist candidates. Voting against politicians who favor policies that increase long term, structural unemployment is at least as good a reason.

 

[stinkcat_14]

That is one aspect of prudence, yes. The point is that if you know something is imprudent then it is wrong to do it and you ought to seek truth so as to improve your prudential judgement.

That’s debatable. It may not be a matter of orthodoxy or even a matter of scientific proof but it is certainly a matter of reasonable judgement of fact. But suffice it to say that abortion and gay marriage are not the only reasons that Catholics should vote against socialist candidates. Voting against politicians who favor policies that increase long term, structural unemployment is at least as good a reason.

Of course, whether increasing government spending increases long term structural unemployment is certainly debatable.

 

[ishii]

Can you give an example of different questions on economics where economists have twenty different answers?

This I agree with. I would further add that nobody has a sacrosanct answer when it comes to economics.

The recently elected seattle city council member has a PhD in Econ and is a socialist. She’s of course calling for the nationalization of Boeing, corporations etc. one wonders what she learned in her economics classes. Too bad Milton Friedman isn’t around to set her straight.

I suppose no one has a sacrosanct answer but some are more plausible than others.

Ishii

 

[stinkcat_14]

The recently elected seattle city council member has a PhD in Econ and is a socialist. She’s of course calling for the nationalization of Boeing, corporations etc. one wonders what she learned in her economics classes. Too bad Milton Friedman isn’t around to set her straight.

This one probably isn’t a very good example, because if you did a survey of economists, you would probably find that 99.9% of them would think nationalizing Boeing would be a bad idea, so there isn’t that much diversity of opinion on that issue. She is an interesting case, because I looked briefly at her dissertation and it does not appear to be the work of a marxist, so perhaps her socialism came after she finished her degree.

repository.lib.ncsu.edu/ir/handle/1840.16/5295

 

[saintjohnxxiii]

How about this instead:

Create an economic climate that will increase the demand for labor (just examples…not intended to be an exhaustive list):

• Reduce taxation
• Eliminate overly onerous government regulation
• Control the uncontrolled entry of people into the country who would flood the market with ample supplies of cheap labor (which has the effect of artificially lowering the price of labor)

Moderate increase of minimum wage is not something mutually exclusive to the above mentioned proposals. I agree with the above proposals.

 

[ishii]

This one probably isn’t a very good example, because if you did a survey of economists, you would probably find that 99.9% of them would think nationalizing Boeing would be a bad idea, so there isn’t that much diversity of opinion on that issue. She is an interesting case, because I looked briefly at her dissertation and it does not appear to be the work of a marxist, so perhaps her socialism came after she finished her degree.

repository.lib.ncsu.edu/ir/handle/1840.16/5295

Probably not the best example. But how about say, Paul Krugman and Arthur Laffer? They would seem to be quite different in their outlook. Or John Kenneth Galbraith and Milton Friedman. How many distinct schools of thought are there in economics? Which one do you think has the most influence on Catholic clergy?

Ishii

 

[freeRadical]

The real question is whether the minimum wage is really above the market price. For the most part, the answer is clearly no. But if we increased it to say, $25 an hour, it would clearly create unemployment.

Sorry it took me so long to respond to you. I was being with Maths homework all day.

I agree. For the majority of workers in the United States, the minimum wage is below the market wage. The premise I was arguing is that the minimum wage prices low skilled labor out of the market. Do you disagree with that premise?

The problem with having a federal minimum wage is it applies equally to all states and all professions. That presents a problem to me. The cost of living in New York is not the same as Indiana. Furthermore, labor markets differ vastly depending on the locality and the industry. I am in favor of eliminating the minimum wage all together as I believe it does more harm than good, especially to low skilled and minority workers, the same people it claims to help. However, I know that’s not realistic.

Thus, since I know the minimum wage is never going away, I am more in favor of local and state government setting a minimum wage then I am the federal government. I am also in favor of a small, limited federal government and strong state and local government because I believe broad federal laws cannot not take into account the various socioeconomic conditions of various locales. I believe that local and state governments are more able to do this.

But back on the topic of the minimum wage and market price. For high skilled workers I would agree that the market price is about the minimum wage but for low skilled labor I don’t see how you can argue that is the case. Let’s examine a local example from my city. Doctors in my city make well above the minimum wage, thus the market price for the labor of doctors is above the minimum wage. The local Toyota plant starts people off at 14 an hour, again, in the particular labor market for this industry, the market price is above the minimum wage.

However, the cashiers at my local Wal-Mart make the minimum wage. It’s obvious the market price for this labor is either below or at the minimum wage because if it was above the minimum wage they would make more then the minimum wage. The same is true of fast food workers in my city. Now, if the federal government increased the minimum wage to 10.10 (which is the most recent value that Obama has called upon Congress to set the minimum wage to) what do you think will happen in my city. Is there going to be an increase in unemployment for high-skilled labor in my city? No. Is there going to be an increase in unemployment for low-skilled labor in my city? I believe you could reasonably say yes, seeing as I just argued that currently the market price for their labor in my city is below or at the minimum wage.

In conclusion, if you look at labor in the United States as a whole, raising the minimum wage probably doesn’t increase unemployment on average. But, if you look at the effect on minimum wage on the unemployment of low skilled workers in certain industries, I think you will find it does. Many economists are in agreement with me on this, including Nobel Prize laureates. So I think I’m in good company.

 

[freeRadical]

Of course, whether increasing government spending increases long term structural unemployment is certainly debatable.

I agree. But you could argue that increased government spending crowds out the private sector and thus decreases consumer spending and investment if GDP does not increase by the same amount of government spending. This could lead to increased unemployment, at least in the short term.

A brief tangent. I am not a Keynesian. I don’t agree with demand side economics. I don’t understand why people still believe in the fallacy that consumer spending grows the economy. Increasing productivity of workers, through saving and investing, is the true engine of economic growth. What we need right now is more saving and investing, not increased government spending. The Fed needs to raise the interest rate. But I digress.

You can probably tell who my influences are.