A few months ago, I wrote “Why President Obama can blame President Bush“. However, I was somewhat criticized–and rightfully so–that part of my argument was a matter of correlation that may not necessarily imply causation when I presented this chart (also below) as evidence of minimum wage’s effect on unemployment, thereby blaming President Bush rather for contributing significantly to the worst unemployment in the United States since the early 1980s.

Unemployment-and-Minimum-Wage

Now, over at Political Calculations, they have done the math to show that “the federal minimum wage hikes of 2007, 2008 and 2009 account for 41.8% of the total reduction in jobs seen since 2006″ or 2,234,383 total jobs lost.

Here is a graphical representation of the data from Political Calculations:

number-earning-nom-min-wage-785-or-less-2006-2010

As you can see, while the minimum wage is sold as something to “help those in need”, in reality it destroys jobs, increases unemployment, and deprives the opportunity for many teens and young adults to work, as 49% of workers making minimum wage are 24 or younger.

This destructive policy should be eliminated.

Comments

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    That is an awfully astounding column you’ve posted.Thanks a lot for that a fantastically amazing post!

  • Edgar

    Oh back to what I was originally saying. I really liked your previous two posts. To me it seemed like you were trying to have an honest discussion. I really can’t believe that you buy into the oversimplified model that is being presented by Political Calculations. They’re being elementary in their logic. Their evidence is anecdotal at best. I can’t imagine an economist looking at a single minimum wage hike and making conclusions based off of that. Especially when that minimum wage hike occurred during an economic anomaly; such as a complete collapse of the financial sector.

    • http://scottslant.blogspot.com/ Scott A. Robinson

      This economist, who writes the text book that a majority of college students use for introductory economics seems to agree.

      • Edgar

        Actually he doesn’t draw any conclusions. He merely restated the facts presented by Political Calculations.

        I have to confess that I was completely unfair to Political Calculations. They actually don’t draw any conclusions either. They simply crunched some numbers and presented the results.

  • Edgar

    And I was starting to like your posts Scott, but now you have to post this garbage.

    You don’t really believe this do you Scott? Political Calculations is engaging in some pretty creative interpretation here. Basically what they’re saying is in 2006 there were 6 million jobs at the $7.25/hour level or less, and in 2010 there are 4 million jobs at that rate. Then they’re concluding that the only reasons these jobs were lost was because minimum wage went up. Because clearly there’s no other reason why these jobs aren’t available. It’s not like we just went through the worst collapse of the financial sector since the Great Depression or anything. The only explanation why these jobs were lost is the minimum wage hike.

    The fact of the matter is there have been many minimum wage hikes throughout our history, and they’ve never led to a recession of this magnitude. There have also been some severe collapses of the financial sector, and those almost always lead to recessions. The evidence that this recession was caused by the collapse of the financial sector is overwhelming, to argue otherwise is foolish. In fact I don’t even know why I’m debating you on this. I may as well be arguing that the sky is blue.

    As I’m sure you’re aware my wife and I own a daycare. I can tell you from our own personal experience that the minimum wage hike has had little impact on hiring employees for our small business. The fact of the matter is if unemployment was lower, and we had more demand for our services we would hire more employees. Unfortunately the financial sector collapsed in 2008, leading to very tight restrictions on the flow of money in our economy, leading to businesses finding themselves in a position to where they could not pay their employees, leading to massive unemployment, leading to a situation where people no longer need daycare. The minimum wage hike was hardly ideal for us, but the real problem is this recession, and it wasn’t created by a hike in minimum wage.

    • Troy La Mana

      “It’s not like we just went through the worst collapse of the financial sector since the Great Depression or anything. The only explanation why these jobs were lost is the minimum wage hike.”

      No, but, it would explain why the recovery is so slow. The higher the minimum wage the fewer people that can be hired.

      • Edgar

        I read over your article again, and it seems I misinterpreted what you were trying to say. While I don’t think you could make the argument that increases in minimum wage led to the recession, I do think you could make the argument that the increase in minimum wage has slowed down hiring for low income earners. The evidence your presenting here seems to help back that claim, but I don’t think it’s conclusive by any stretch. There is also a lot of evidence that suggests low income earners are hit harder by a recession no matter what the minimum wage is at. Currently unemployment among college educated workers is at 4.5%, and that’s a two decade high. Obviously college educated workers tend to make more than $7.25/hour. It’s possible that recessions just simply hit unskilled workers harder.

        I suspect that even if minimum wage was completely eliminated we would still see unskilled workers being disproportionately hit by the recession, because there is just simply less demand for an unskilled worker’s services during a recession. When money is tight most of us choose to simply perform the unskilled labor ourselves and save the money.

        At any rate, while I think there’s a good chance that the minimum wage hike slowed down hiring, I suspect you’re overstating its impact.

        I’m sorry I so badly misinterpreted your post. You’re making an argument that I can respect.

      • Edgar

        Correction. Unemployment among college graduates is at 5.1%. That’s still significantly better than the rest of the nation.

  • Troy La Mana

    Wouldn’t raising the minimum wage be the fault of Congress?

    • http://scottslant.blogspot.com/ Scott A. Robinson

      Yes and no. The Congress drafts and approves the legislation but the President must also sign it into law. However, at the time, President Bush gave no indication that he wouldn’t support the bill.