It’s difficult to listen to talk radio without hearing arguments about the minimum wage.
Pundits on both sides of the ideological fence are expecting the federal price floor for labor to increase. Where they differ, as one might imagine, is how such an increase will affectlow wage workers.
Right-wingers cry at the top of their lungs that such a raise will put everyone out of work. Okay, maybe that’s hyperbole, but hyperbole seems appropriate when discussing pundits. However, in their moments of calm, they do claim higher minimum wages harm workers living on lower wages by forcing their employers to get by with fewer, more expensive workers.
The lefties plead that no one can live on $5.15 an hour (the minimum wage is $6.40 in Florida, but it’s soon to be $6.77). They also claim the government subsidizes companies that offer minimum wages by assisting the poor with government programs such as food stamps and the Special Supplemental Food Program for Women, Infants and Children.
Those on the right have seemingly powerful evidence on their side, too – Economics 1000.
Any freshman bothering to show up to their basic economics class every once in a while can tell you what happens when the government raises the price floor on labor or minimum wage. Everyone who was selling their labor at a price below the new floor is in jeopardy of losing their job.
ECO 1000 is a commonly required course; if you haven’t taken it, I’m sure you know someone who has, so this evidence is almost common knowledge among the college educated andtheir associates.
There’s a reason you don’t get a degree in economics after a one-term introduction course. The simple, two arrow models in this course are about as representative of reality as the “reality” shows on television. My basic economics instructor told my class that economics was an unusual science because economists don’t have a laboratory and can’t run experiments. To test their hypotheses, they must use models and extrapolate from available data on the real-world effects of policies enacted.
So, let’s look at our fair state. Here in Florida, the minimum wage increased to $6.15 per hour, with adjustments for inflation each year, on May 2, 2005.
According to the simple, two-line, basic economics models, the unemployment rate should have increased each time the minimum wage increased. Furthermore, Florida should have a higher unemployment rate than states without minimum wage laws.
Reality, however, has not conformed to said models, exposing a problem of treating them as real, empirical data.
According to the United States Bureau of Labor Statistics, Florida’s unemployment rate dropped from 3.9 percent in May 2005 to 3.0 percent in January 2006, after which it has oscillated between 3.0 and 3.3 percent. According to a report published by the Florida Agency for Workforce Innovation, an organization created by Governor Jeb Bush and the Florida legislature, Florida’s unemployment rate has been about a percentage point lower than the national average since the new wage law.
But the argument is often that the people hurt are those at the low end of the wage scale, such as food service workers. The argument doesn’t hold true with them either.
According to the WFI, employment in the “food services and drinking places” sector increased 3.7 percent from October 2005 to October 2006, and retail trade, another sector associated with low wages, increased employment 1.5 percent in the same period.
So does the evidence supporting the relationship between minimum wage increases and reduction in unemployment make sense? No, of course it doesn’t.
However, it does show that the claims of labor price floors hurting workers are dubious at best. While I do not believe most economists who claim such things have an agenda, it can’t be ignored that many of the people against raising the minimum wage are those who pay their employees less than the proposed new floor.
If you don’t believe in raising the minimum wage because you believe it’s a person’s own fault they earn so little, that’s fine. But don’t try to argue that raising it only hurts those it’s trying to help – evidence in support of such a claim is weak.
Josh Corban is a senior majoring in anthropology.