Factual Reality: Increases In Minimum Wage Do Not Increase Unemployment

I recently encountered a libertarian online who was peddling a slew Reason-dot-com and Mises-dot-org articles to prove the proposition: ‘when minimum wage is increased, unemployment will go up.’ We’ve all heard this one a million times before. But what puzzled me was the prescriptive nature of all these articles. They simply claim this relationship is necessarily the case, like some immutable physical law. Minimum wage goes up; unemployment goes up. The sun always rises in the east.

This position puzzles me because a ‘minimum wage’ is not some new economic idea that doesn’t have a historical track record, like, for instance, a ‘Universal Basic Income’ (which is the idea that everyone should be given no-strings-attached cash to have a minimally decent-and-normal human life by the standards of the day, even if their jobs have been eliminated by macroeconomic gains in mechanical and logistical efficiency). No: ‘minimum wage’ has been around for nearly eighty (80) years! Do we then really need, at this late historical hour, yet more prescriptive inferences of what ‘will happen’ if we raise it? Or can we just look at what actually does happen in factual reality?

Turns out what happens when minimum wage is increased in factual reality is pretty easy to find. To begin, I looked up the years in which the Federal minimum wage was first established and later raised at the Department of Labor’s website. These years are: 1938 (first established), 1939, 1945, 1950, 1956, 1961, 1963, 1967, 1968, 1974, 1975, 1976, 1978, 1979, 1980, 1981, 1990, 1991, 1996, 1997, 2007, 2008, and 2009.

Then I looked up the unemployment rates in (i) the years in which minimum wage was increased and (ii) the years prior to those increases (when the minimum wage was lower), through the Census Bureau and the Bureau of Labor Statistics. If, in factual reality (and not in prescriptive, inferential, theoretical right-wing think-tank fantasy-land where Lord Ludwig von Mises sits upon the Iron Throne), increases of the minimum wage bear a clear, direct, and unavoidable causal relationship to increased unemployment, it then follows we should see an increase in unemployment in the wake of every single increase in the minimum wage. If we don’t, it means either minimum wage increases are (i) not related to employment figures at all, or (ii) have too weak an effect to overpower other economic variables, like capitalism’s predictably harmful boom-and-bust cycles, historical events, etc., in which case we shouldn’t pay the weak effect too much mind when making real human beings’ lives better with stronger wages.

So I sat here on my Saturday with the sun shining outside and voluntarily looked at tables, numbers, and percentages for our mutual benefit, so that we together can put this Chimera to sleep once and for all. I created the chart at the bottom of this article which demonstrates that no causal relationship exists between minimum wage increases and unemployment. Sometimes when the minimum wage goes up, unemployment goes up. Sometimes unemployment stays exactly the same. And sometimes unemployment goes down after minimum wage is increased.

In any event, these factors are not related in any way near the extent that those on the political Right try to have us believe. If minimum wage increases were in fact inextricably tied to increased unemployment, we should see a consistent drop in national employment every single time national minimum wages were was raised. We clearly, certainly, most definitely don’t. I see, in factual reality, no clear, direct, and unavoidable causal relationship between the two factors based on what actually happened in actual historical reality upon looking at the actual numbers. Do you? This Chimera conjured by the Right needs the pentobarbital needle post-haste.

The libertarians can show us as many Reason-dot-com and Mises-dot-org articles making the religious claim that increased minimum wages cause higher unemployment as they want. Like religion, this position is a silly article of faith not born out by factual reality. Below, you can view the chart demonstrating the actual history of minimum wage increases and unemployment rates. I will finish with a quote by billionaire venture capitalist and businessman Nick Hanauer, a much smarter person than me, on this very topic:

“To understand how wage suppression works, it’s important to understand . . . the idea that drives that, [which] is this incredible, insidious, repeated thing, which is [the idea that] if wages go up, employment goes down. . . . It has been repeated endlessly in our country. And the facts are there is no evidence for this whatsoever. But if you can get the broad public to believe that if wages go up, employment will go down, you get forty years of wage suppression. . . . In fact, the fundamental dynamic in a capitalist economy is that when workers have more money, businesses have more customers and hire more workers.”

Chart: Increases In Minimum Wage Bear No Clear Relationship to Unemployment

1

 

“Capitalism” In Eight-Hundred Years

When we hear the noun “Feudalism,” we think of an outdated socioeconomic system, which was replaced by later systems, because it was sub-optimal for human flourishing in various ways. If we are mentally plastic enough to identify a past socioeconomic system as sub-optimal, flawed, and something that can be (and should be) doffed and replaced, why do we have such difficulty doing that with our own current system?

Eight-hundred (800) years from now, the distance between the height of “Feudalism” and the present moment, one of two outcomes will have occurred if the climatologists are correct:

(1) human flourishing will have been extremely diminished, if not annihilated, by the effects the current socioeconomic system, called “Capitalism,” had on the environment. Surely, the Earth will recover many times over after humans are gone, clearing the stage for later apex predators. The question is: will humans even reign for a few-hundred-thousand years? This would be a paltry fraction of the dinosaurs, who ruled for well over one-hundred million; or

(2) the socioeconomic system called “Capitalism,” like “Feudalism” before it, will be a curiosity in the history books. A sub-optimal arrangement that led to rank inequality, brutality, inhumanity, and the despoiling of the ecosystem, which had been long since replaced by something better (if itself not optimal). If humans are indeed to be flourishing eight-hundred (800) years from now, one aspect of the future socioeconomic arrangement will be that it is environmentally sustainable enough to preserve such flourishing.

If we are mentally plastic enough to conceive of other socioeconomic arrangements as brutal, destructive, and deleterious, why do why have so much trouble doing the same with the one under which we presently suffer? Why do we strangely treat mere current norms and practices as immutable rules?

Hieronymus Bosch - The Conjurer

A Libertarian Thought Experiment

Anarchy Symbol

I have quite a few libertarian and anarchist friends. They are infinitely correct on the horrific degradation of civil liberties and American imperialism, which are out of control, unsustainable, and completely immoral. With our incessant aggression and drone strikes upon nations that never attacked us, regularly killing civilians including women and children, the United States is the largest terrorist organization in the world today. And we all pay for it with our tax dollars, as we eat our submarine sandwiches and watch men in tights pummel one another on giant screens for our distracted enjoyment.

Here, however, I will explain why libertarianism/anarchy is not a tenable societal arrangement. I use those words interchangeably here, although I realize on the margin there is a distinction. Other than that, feel free to point out the errors in my thinking, if you find some.

To begin: libertarianism, like all minority positions, has the luxury of being an argument-in-principle, and never a practical policy. And minority position you libertarians are: have a look around your cohort. You are, as a general rule — subject as are all generalities to exceptions — young, able-bodied persons, or older persons who have already accumulated wealth to be protected (whether by chance-of-birth or a combination of good genes and motivation). Generally, you are white males. I do not encounter many poor libertarians; aged libertarians without money; disabled libertarians; libertarians of racial or ethnic minority backgrounds; mentally retarded libertarians; mentally ill libertarians; sick libertarians; etc. Yet the total population is an amalgam of all these types. So minority position you will remain, and thus you can argue in principle forever, because you will never make actual policy.

However, for the sake of argument, let’s conduct a thought experiment. Let’s put libertarians in power. They must now make the policies by which our entire grouping of humans, called a ‘nation,’ lives. The first libertarian principle translates to an easy-enough policy: ‘everyone is free to behave as they see fit, because everyone’s life is their own.’ Great!

But then anyone with a lukewarm I.Q. asks: ‘wait, what if you murder someone?’ The libertarian policy responds deftly: ‘. . . . so long as you do no harm to others!’ Great! Now we have fleshed out libertarian policy #1, the only law: ‘do no harm to others.’

But then the three questions arise which sink the political ship. The questions that someone arguing in principle can avoid with abstract axioms, but someone making actual policy must actually deal with: (1) what is ‘harm to others’? (2) What do we do when persons break the one law? (3) What about potential harm? How on earth do our libertarian policymakers handle these questions? In turn:

1. Overt harm to others is easy. One person invades another’s bodily autonomy. Great! This is illegal in our libertarian nation. But what about less direct harms? The secondhand smoke of cigarettes? Can we smoke in bars? Perhaps ‘smoking bars’ and ‘non-smoking bars,’ so persons can freely choose what type of bar to patronize. How about public parks, or the sidewalk, where someone might pass who does not want to inhale the secondhand cancer? Or what about the peddlers of cigarettes? We know this product is deadly. Should an ‘I just sold it and nothing more’ argument protect the vendor? How about a vendor who builds a nuclear bomb packaged with deft instructions on how to smuggle it into a metropolitan center? Is an ‘I just sold it and nothing more’ defense airtight?

2. Second: in our libertarian reality, someone breaks the one law of ‘no harm to others.’ Perhaps he harms someone with some uncommon weapon, like a personally-owned tank or fighter jet (after all, all weapons are legal and available on the anarchic market). How do we stop him? Must the citizenry band together with their own weapons? Grandma included? And if the Kitty Genovese effect takes over, and no one stops the criminal, is he free? Or do the citizens pool their money together to pay something akin to a police force that has a mandate to stop such criminals? Who oversees this force for corruption, and who commands it? Once the criminal is caught, do we have a public court system? Who pays for it? Do we have prisons, executions, or something else, and who pays for those? Or are all crimes merely punishable by fines? What if the perpetrator does not pay? Who decides what kinds of crimes get what punishments, and by what process? If you’ve instituted a police force, courts, and legal concepts, you’ve just created a government bureaucracy with authority and force, out of necessity. Perhaps much smaller than the current mess, but government nonetheless.  Un-anarchy.

3. Finally, what about potential harm? In our libertarian world, am I free to build weapons of mass destruction in my basement, if I can figure out how? Or am I free to shoot bullets perpendicularly across a busy highway to my heart’s delight, so long as no bullet actually strikes a motorist? Libertarian thinking is wholly reactive, and never regulatory or preventative. The axiom ‘no harm, no crime’ implies any number of such absurdities should be legal: building nukes in home kitchens, shooting wantonly across freeways, suspending toxic and carcinogenic chemicals in a giant vat above the town’s drinking water with a single string of dental floss, so long as the dental floss does not break . . . . There is no limit to this for the imaginative. Or, for a real-world example, should that mentally ill and suicidal man in Ohio a few years back have been allowed to keep a private zoo of tigers and lions?

This is why libertarianism/anarchism can never be more than a tug affecting policy. It is not a tenable social policy on its own, because all actualized policies must answer complex questions. It is a useful anchor in the social dialog to drag the policy towards more freedom and less bureaucracy, but it is not itself a policy. It is a mere principle. When advocating for actual policy, you must answer the above questions and countless more somehow, concretely, and realize other self-described libertarians will answer them differently.

We are on a spectrum, not living in a binary world of the ‘free’ and the ‘unfree.’ Real life is infinitely complex, and common sense demonstrates that the ‘actual freedom’ of one individual in many cases is less valuable than ‘freedom from potential harm’ for the many. So I say: raise your valuable voices to move the marker on the spectrum toward freedom. But stop thinking, implying, or stating as though an anarchic form of societal arrangement can or will ever happen among we humans, who are, after all, a tribal, social, and hierarchical species that depends on one another to survive. Not happening.

Undo the Damage of Reaganomics

You may say: ‘the nation’s economy is weak, so we must deregulate further to stimulate business!’ To which I will reply: ‘Why? In fact, we should further regulate business, and further tax it. Tax it, and wealthy individuals and estates, much, much more. We had the strongest economy and middle-class our country has ever known between World War II and the ascendance of Saint Reagan, when the top income tax rate was between 70% and 94%; the top corporate tax rate constantly flirted with 50%; the long-term capital gains tax rate was between 25% and 40%; and the estate tax exemption was never higher than a lowly $147,000. (Today, these rates have all been garroted: top income tax rate – 39%; corporate – 35%; long-term capital gains – 15%; and the estate tax exemption increased to a whopping $5,000,000).

Now compare the successes of the post-WWII era with the preceding period, where we had massively deregulated markets – the period prior to the Progressive Era and the New Deal. For much of this period, we had no income taxes, no Federal Reserve, no minimum wage, no maximum hours, and no child labor restrictions. Women had to jump out of the Triangle Shirtwaist Factory, to their deaths, because their employers had locked them into the factory building to prevent ‘hooky’, and it caught fire. Bakers in New York City were dying at age 40 due to the incessant inhalation of flour while working eighty-plus hour weeks. Children were injured in industrial accidents. No OSHA then, remember. And income inequality was as high as it would ever be in our nation in 1929. Until 2008, that is, after a generation of undoing the palliative, redistributive tax rates we had established the last time such inequality occurred.’

About the strong economy after World War II, you may say, ‘but it was a fluke! The rest of the world’s manufacturing base had been leveled in a giant, continental war!’ To which I will reply: ‘That is an interesting hypothesis. But does factual reality support it? If our nation’s prosperity after World War II was only due to becoming the world’s temporary crisis manufacturer, then our exports as a percentage of our GDP should have been higher after WWII than before. Were they? Nope! In fact, not at fucking all! Our exports as a percentage of GDP were exactly the same in 1937 (a few years before we entered WWII) as in 1950 (a few years after we exited WWII). Exactly the same. Exports meant no more to our economy after the war than before, and therefore our prosperity was not due to becoming the world’s manufacturer. Sorry, nice hypothesis, but it is, in fact, bullshit.’

And about the terrible working conditions for average people before we instituted Progressive Era taxes and New Deal regulations, you may say: ‘but technology! Things certainly won’t be as shitty today as in the industrial revolution, because we are much more advanced – so we should deregulate!’ To which I will reply: ‘but, as someone speaking of economics, you should be well-aware of that field’s most basic precept: the law of supply and demand. And this simple precept shows us things will be worse, and not better, for average people if we further deregulate.

First, the world’s population in 1930 was only one (1) billion. Today, it is seven (7) billion. Seven times more. Second, we had tariffs on international trade even prior to the Progressive Era and New Deal, which protected us from direct competition with the rest of the world’s subsistence-wage-slaves. For instance, under the Payne-Aldrich Tariff of 1909, the average tariff on imports was over 19%. Smoot-Hawley raised this even further in 1930. Today, the average tariff, thanks to our self-chosen policies after 1980, is a mere 1.5%. We have taken the condoms off our infected global trade partners. And there are now seven times more of them involved in the gang-bang.

‘Technology’ is a word, not an analysis. Supply-and-demand, on the other hand, always provides an analysis, and we have both (1) less need for workers in the U.S. now thanks to our unprotected domestic market and global free trade, and (2) a seven-times-greater supply of global workers available to buy labor from. More supply equals lower price, and the price of labor is called ‘wages.’ Hence, lower wages for all. This is why deregulation, my interlocutor, is full-on-insane-head-up-your-ass bullshit. We must raise taxes to their pre-1980 levels to undo the damage we have done, and again prosper as a nation.’

Thank you,

Sterling

Friedrich Hayek Wants State-Run Universal Healthcare

“Nor is there any reason why the state should not assist individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state helping to organise a comprehensive system of social insurance is very strong.

There are many points of detail where those wishing to preserve the competitive system and those wishing to supersede it by something different will disagree on the details of such schemes; and it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective. But there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom.”

–Economist Friedrich Hayek, calling for the state to ‘organise a comprehensive system of social [health] insurance,’ in his book, ‘The Road to Serfdom (1944)’

Buy The Road to Serfdom by Friedrich Hayek:  http://www.amazon.com/The-Road-Serfdom-Inherent-Planning/dp/1441753877

Lots of Conservatives Like Sports

Lots of conservatives like sports. All of the “big four” American sports have some variation on salary caps (maximum wages), revenue sharing (re-distribution of wealth from the top to the bottom), or both. Lots of conservatives understand this is necessary for the sport to be fair and worthwhile. Lots of conservatives, apparently, are incapable of very obvious analogical thinking.

Thank you,

Sterling

‘Socialism’!? Go Fuck Yourself.

Excuse me: before anyone else ever again calls the current Federal government we have “socialist,” please take a minute to ponder going and fucking yourself, and then go learn something instead. Or do both. In 1942, Franklin Roosevelt and the Treasury Department recommended Congress pass a 100% — yes, one-hundred-fucking-percent — income tax on all salaries above $25,000. In today’s dollars, that’s $380,000. Then capped out. No more. No mas. It was actually *in the public fucking discourse* in your grandparents’ lifetimes to set a *maximum wage* — a maximum-fucking-wage! Imagine that! — at under half-a-million puny bucks in today’s dollars.

And guess what, kiddos? The compromise: 88%! Eighty-fucking-eight-percent, on everything earned over $200,000! Yet somehow *I am now asked to sit there and listen to ignorant morons* shit-mouthedly claim President fucking Obama, who governs to the right of Richard Nixon, represents the “left wing,” “liberalism,” “progressivism,” or “socialism”? Suck a fucking bleached-white egg. We have two parties in this country: the right-center Democrats and the far-right Republicans. And they are both engaged in Mussolini’s precise definition of Fascism: the merger of corporate and state interests.

Remember, again, the big piece of “socialism” we’ve gotten under the current regime — Obamacare — is a mandate to give profits to *private businesses*, and a version of it was pushed by Richard-fucking-Nixon. So let’s not pretend anymore there is a left-wing movement with a voice in this country, shall we? Because if there were, they’d be calling for things like maximum wages, and electing the human who pushed for them again, and again, and again, and again.

And then that human would put Arabs in internment camps.

Thank you,

Sterling

FDR’s Proposed Maximum Wage:  http://www.presidency.ucsb.edu/ws/?pid=16363

Machiavellian Republican Racism

“You start out in 1954 by saying, ‘nigger, nigger, nigger.’ By 1968 you can’t say ‘nigger’ — that hurts you, backfires. So you say stuff like ‘forced busing, states’ rights,’ and all that stuff, and you’re getting so abstract. Now [in the Reagan era], you’re talking about ‘cutting taxes,’ and all these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites.… ‘We want to cut this’ is much more abstract than even the ‘busing’ thing and a hell of a lot more abstract than ‘nigger, nigger.’”

–Lee Atwater (in 1981, speaking of his strategy on how to get southern votes for the Republican Party). Atwater was Chairman of the Republican National Committee (1989 – 1991), and before his death, consultant to Presidents Reagan and Bush I, and Karl Rove’s political partner.

From the Horse’s Mouth:  https://www.youtube.com/watch?v=AT2fsv7xt4E

‘Equality of Opportunity’ My Fucking Asshole

You want to talk about ‘equality of opportunity’ in this country? Give me a fucking break. Take two newborns. We’ll call one ‘A’ and one ‘B’. ‘A,’ like many of us, has some degree-or-other of assets. One or two parents; public school; assisted lunches; whatever. ‘B,’ like a few of us, has parents who put, say, $1,000,000 in a trust fund for him at birth. At a rate of return of 5%, this trust fund throws off $50,000 in dividends and/or capital gains annually, which may be used for ‘B”s benefit, or which may be reinvested to gain even handsomer sums in the future.

Here is where the bullshit myth of ‘equality of opportunity’ lies. The $50,000 ‘B’ is earning each year, from birth, for doing absolutely nothing at all (other than being formed of a fortuitous semen-and-egg combination), earns more than the median income of a full-grown adult working full-time in our nation. Newborn baby > full-ass-grown-full-time-working human, by fortune of sperm-and-fucking-egg. Of course ‘B’ will neither be attending public school nor eating assisted lunches (remember, Ketchup = a vegetable serving!). But that is not the point. The point is: it is as if ‘B’ were born with a clone, or a slave, capable of earning on its own, at the same time ‘B’ himself earns. That clone, or slave, is his money. Money makes money, and at the right principal balance, it does so more quickly than human labor does. ‘B’ was born with a money-earning-money-slave that will work for him, so he can choose his own path.

‘B’ is now free to entertain a path in the arts, culture, humanities, theater, or whatever else he deems *fulfilling*. To write or idle hours away playing the violin, or charting the stars. A path not open to the vast majority of us, precisely because his manservant, money, is earning for him, while we must earn for ourselves. ‘B”s well-being will assuredly be looked after: janitors will clean his living, working, and playing spaces; nurses attend to his illnesses; and servers attend to his food and other needs. In fact, even his life expectancy will be significantly higher than the national average. And those attending to ‘B’ are the ones born without a money-slave to exploit and grab income-without-labor. So they must labor — and forego a pursuit which might otherwise be their natural calling — for the few born with it, by chance. ‘Equality of opportunity’ my fucking asshole.