News for hackers. Stuff that matters.

A comment on Alone on the Open Road: Truckers Feel Like ‘Throwaway People’. Parent comment

Re:Alone on the Open Road: Truckers Feel Like ‘Throwaway Peo... by wahern on Tuesday May 23, 2017 @03:56AM (#14399631)
The problem with that paper is that other research that looks at employment figures across industries doesn't show a decrease in employment when the minimum wage is raised. Which I assume is why you cited that paper.

So while that paper's data and conclusion may be sound, neither that paper nor other research supports the notion that low-skilled labor demand is, overall, strongly responsive to changes in the minimum wage.

That said, there are a ton of problems in that paper. Their estimates on changes in restaurant entry in the same timeframe as exit were statistically insignificant, so they gratuitously look at a completely different timeframe and data set which happens to support their conclusion.

Economies are just too complex and multifaceted to be able to say that a minimum wage bump will clearly decrease employment. It's worth noting that the political pressure to increase wages doesn't happen in a vacuum. For example, presumably the political pressure exerted is a function of wealth inequality and thus of the capacity for the local economy to redistribute income downward.

This incredible complexity is why you get such counterintuitive results, such as that American corporate investments were highest when taxes were highest, decreasing as corporate taxes decreased, so that today both investment and taxes are at their lowest.

  https://www.ft.com/content/a4e01ef4-3c8d-11e7-821a-6027b8a20f23
[ Parent | on HN ]
Re:Alone on the Open Road: Truckers Feel Like ‘Throwaway Peo... by malandrew on Tuesday May 23, 2017 @11:11AM (#14401881)
What other industries? Are these other industries businesses where minimum wage laborers are a significant part of the labor? An increase in minimum wage isn't going to hurt businesses in an industry where you have few if any minimum wage laborers.

If you have specific contradictory evidence, cite it instead of a vague handwavy response.

[ Parent | on HN ]
Re:Alone on the Open Road: Truckers Feel Like ‘Throwaway Peo... by wahern on Tuesday May 23, 2017 @02:17PM (#14403722)
By across industries I meant studies that look at the impact of minimum wage changes in geographic regions, which would include not only the restaurant industry but all industries. For example, some studies have looked at metropolitan areas that span multiple jurisdictions (i.e. straddling a state line) where one jurisdiction increased the minimum wage but the other didn't, so that you have something approximating a control group.

If you look at all the literature, the results are mixed and equivocal, at least for modest changes in the minimum wage. See the empirical studies section on Wikipedia

  https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies
or a discussion of minimum wage studies in an economics textbook, such as

  The Economic Way of Thinking, Paul L. Heyne, et al.
Fundamental economic laws tells us that an increase in the minimum wage should result in a decrease in labor demand. But the numerous empirical studies are so equivocal and so obviously confounded that it's utterly naive to assume (as we normally assume, and indeed normally should assume) to see a simple labor demand response. Exogenous and second-order effects seem to be huge. So whenever you see a study that purports to claim (or is held out to evidence) either that an increase in the minimum wage decreases overall labor demand _or_ that it decreases income inequality, we should be highly skeptical.

Of course, the paper you cited doesn't make any claims about aggregate labor demand, nor even labor demand in the restaurant industry. It only looks at exists and entries using some novel data sources. The only truly interesting thing about that paper, IMO, is it's novel use of Yelp. That paper raises a ton of questions--good questions--about data sources and methodologies. I wouldn't venture to rely on it's conclusions for any economics argument.

[ Parent | on HN ]