[BirdieNZ]

Last year's Nobel Prize in Economics went to researchers who showed, via natural experiments, that raising minimum wage does not decrease employment.

It's counter-intuitive, to be sure, and there are vested interests who want minimum wage to stay down or be removed, but "the facts" are there and observable in the real world.

[throwaway73838]

Re: Krueger’s study:

“The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that “water runs uphill,” no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores.” ~James M. Buchanan, 1986 Nobel laureate in economics, writing in the Wall Street Journal on April 25, 1996

[BirdieNZ]

Yes, economists thought for a long time that minimum wage increases reduce employment, as their models showed that it should.

Reality doesn't care about models, though. In reality, you can increase minimum wage without decreasing employment.

[throwaway73838]

You clearly have no idea what you’re talking about.

If you understood economics, you would understand the absurdity of what you just said.

You’re rejecting the most fundamental basic of economics. It’s what you learn on day one. Changes to price will alter the equilibrium point and therefore quantity demanded.

For example: If I raise the price of milk, people will buy less milk. How much less they buy depends on elasticity of demand. But to say that increasing the price of milk will result in increased demand for milk is the equivalent of saying that water flows uphill.

[BirdieNZ]

Economics 101 might start with that, but you need to progress to Economics 201 and so on. "Changes to price will alter the equilibrium point and therefore quantity demanded." is only true if certain assumptions are true, such as "people are rational actors that have sufficiently complete knowledge to act in their own self-interest", and "people always work to maximise meeting their own needs and wants".

In reality, people act against their own self-interest, people don't always act rationally, and people have limited knowledge.

This is why when we look at specific real world examples of price changes, sometimes a change to price does not affect quantity demanded. With minimum wage, a common explanation for this is that minimum wage workers have limited knowledge of the available supply of workers, and don't realise they could bargain for higher wages. In other words, there is a market inefficiency that they are unable to exploit because of limited knowledge; moving the minimum wage higher results in that inefficiency being reduced or removed, despite the workers not having increased knowledge.

We can see this at a very simple level: I have worked with colleagues who are unaware that they are being significantly under-paid for their skills and experience. Technically, the price on offer for their services is set at a higher point than what they are being paid, but due to limited information, they are not selling their services at that point.

Sometimes, even though they have the information, they don't act in their own self-interest and don't change job or bargain for higher pay, for a variety of reasons. Now, if the software firms around collectively increased pay to all those under-paid workers by $10,000, there would be no reduction in employment. There would be a reduction in profits for the software firms, because they were exploiting a market inefficiency that was reduced, but they are still making sufficient profits that they won't change their number of employees in response.

[throwaway73838]

That would work both ways though. Employers could also be overpaying staff by the same token. So what you are saying is just a lie told to stupid people to take their money away from them.

[formerkrogeremp]

Minimum wage increases decreasing unemployment were still taught as dogma at my college four years ago up until senior evel courses. When I was working at minimum wage and could barely afford school and rent, my own coworkers with the same costs of living were advocating against minimum wage increases because they claimed minimum wage increases unemployment and increases inflation dramatically.

My college's entire department relied on grants largely funded by private libertarian think tanks who promulgated nonsense like removing the minimum wage. Correct economic theory and practice are cold comfort when they're still routinely applied decades after the field has moved forward allegedly. Especially as incorrect and dogmatic economics are used to justify screwing over people living paycheck to paycheck decades onwards.

I don't doubt the applications of economics and its uses, but the suffering, inequality, and excesses caused in its name (even if economics is being applied incorrectly) are where others and I angrily and perhaps justifiably ascribe economics and economists blame. One can blame politics or lobbying or what-have-you, but one cannot deny the culpability in part of economics and its (incorrect) application. What others and I rightly critique is the practice and promulgation of economics that cause suffering for the benefit of the those funding these economists.

I highly doubt I'll change anyone's mind or that there's much point in my discussing this further. Others more articulate than me have tried already.