Unemployment among British 16- and 17-year-olds suddenly began to surge after 2005. “It’s ‘difficult to explain’ … right. A total mystery. I can’t think What might have caused it.” [BritMouse via Scott Sumner.EconLog]
More: Don Boudreaux. “A poor way to reduce poverty” [Joseph Sabia, Cato Tax and Budget Bulletin, PDF] And don’t hold back, SmarterTimes, tell us what you think re: New York Times hand-wringing on the subject.
Heeding demands from constituency groups, President Obama orders a $10.10 hourly wage even for the most severely disabled workers under the scope of his federal-contractor order [USA Today] Writes Mike Bennett on Twitter: “As a parent of a disabled son, I would much rather he have a real job at five dollars an hour then a theoretical job at $10.10.”
Study here and coverage here, here, and here. The actual number in CBO’s view could be as low as near-zero or as high as a million jobs lost. “Spin it as you wish, we should not have a major party promoting, as a centerpiece initiative and for perceived electoral gain, a law that might put half a million vulnerable people out of work, and that during a slow labor market.” [Tyler Cowen] And imagine indexing the $10.10 number to ensure that its damage goes on indefinitely. More: Ramesh Ponnuru, Philip Klein, Emily Ekins, Trey Kovacs (role of unions’ self-interest). Earlier on minimum wage.
The Microsoft founder “warned against raising the minimum wage Tuesday on Morning Joe, saying it results in a ‘huge tradeoff’ that can adversely affect households in poverty.” [Free Beacon] Gates has pledged most of his fortune to philanthropic efforts, much of it targeted toward problems of poverty. [Wired]
Related: David Henderson has more on Gates’s point about how the minimum wage is not well targeted to reach poor people, and on how the impact on consumers of things like fast food is itself somewhat impoverishing. William Poole at Cato begins with the oft-repeated War of Economists’ Letters over whether minimum wage hikes do a lot of damage to employment or only a little, and then turns to the ethical questions. Tyler Cowen exposes some of the holes in the relatively new argument that the existing Earned Income Tax Credit (EITC) unfairly subsidizes employers and that minimum wage hikes are somehow an efficient way to recapture part of the transfer. More links: Twitter hashtag #CatoMinWage; James Dorn, Cato (“Hong Kong grew rich without a minimum wage because it undertook the reforms that fuel growth”). And on layoffs following an arbitrated doubling of wages at a New York City casino: “This just in — demand curves slope down.” [Coyote] Plus: Teen employment after minimum wage hikes: “Is there any other issue where the data conforms so strongly to basic economic intuition, and yet is widely written off as a coincidence?” [Kevin Erdmann via Tyler Cowen]
John Steele Gordon, Commentary:
[Steve Coll] also leaves out the fact that very, very few people earning the minimum wage are the sole breadwinners of a family of four. Most are entry-level employees, often teenagers, with no developed skills. Most people who take a job at the minimum wage are earning above that level within a year, having learned marketable skills.
To be polite, Mr. Coll is being tendentious.
P.S. Meanwhile, as part of its “new focus on inequality,” the New York Times ran a feature on “Life on $7.25 an Hour” and chose to profile someone whose lifestyle includes three cars and a NYC residence bought for more than $500,000. [SmarterTimes] And the Washington Post awards President Obama two Pinocchios for his comments on what economists think. Yet more: Coyote.