Wednesday, August 09, 2006


Going through the right wing Spokeman Review (Spokane WA) editorial page, I bumped into yet another outrageous, misleading collumn by Thomas Sowell. This right winger at the Hoover Institute loves to distort and pull evidence completely out of context to make his case. Today, Sowell claims that increasing the minimum wage causes job losses. Its become apparent in recent years that this analysis of the situation is not evidently true, as a recent Bloomberg article points out:
it's an ``intellectual puzzle'' why a boost in the minimum wage wouldn't lead to wider unemployment, because the economic laws of supply and demand dictate that it should.

Explanations include cost savings from reduced job turnover, increased productivity as a result of better worker morale and the attraction of higher-quality employees through higher wages, Blinder says.

Labor is different than a product because as you pay higher wages and better benefits, employees are more likely to put forth effort. So as wages increase productivity would increase, more than making up for the wage gap. But Sowell says otherwise, and claims that there is a widespread consensus amongst economists that increasing the minimum wage does cause job losses.
A survey has shown that 85 percent of the economists in Canada and 90 percent of the economists in the United States say that minimum wage laws reduce employment. But you don't need a Ph.D. in economics to know that jacking up prices leads fewer people to buy. Those people include employers, who hire less labor when labor is made artificially more expensive.

90% eh? That's pretty compelling I guess. But wait! When was this study? Doesn't the "expert" consensus change as times change? After all, there was a time when scientists legitimately doubted whether global warming was human caused, but now there is a clear consensus that it is. The Bloomberg article thankfully cites the same study to answer my question.
This view once was widespread. A 1978 American Economic Review survey found that 90 percent of economists said the minimum wage boosted unemployment among low-skilled workers.

1978!? Wow Sowell, methinks you're not telling your readers that it was a 1978 study for a reason. Someone is hiding obvious facts in order to shape their argument. At least be honest enough to give your readers a date instead of leading them to believe it was a recent study.

Sowell's dishonesty continues as he argues the job situation was great in the 1940s when the minimum wage was outstripped by inflation.
The hard facts say otherwise. Back in the 1940s, there was no less racism than today and black teenagers had no more education than today, but their unemployment rate was a fraction of what it is now -- and was no different from that of white teenagers.

What was different back then? Although there was a minimum wage law on the books, the inflation of that era had raised wage rates well above the specified minimum, which had remained unchanged for years.

For all practical purposes, there was no minimum wage law. Only after the minimum wage began to be raised, beginning in 1950, and escalating repeatedly in the years thereafter, did black teenage unemployment skyrocket.

Gee, did it ever cross your mind Mr. Sowell, that perhaps there might have been something happening in the 1940s outside of minimum wage rates that would lead to high employment rates? Oh yeah! There was a war going on wasn't there? Nothing big, just a little World War with wartime production. Could it be that the large number of people going off to war as well as a needed increase in production might have caused higher employment? What a thought! Sowell, I know this is no different than anything else you've ever written, but this was a dishonest junk collumn. As a closing remark I leave you with the result of the 1997 minimum wage increase
Some economists say the 1997 increase had no impact on job growth.

``We saw no ripple effect at all in the unemployment rate,'' Stiglitz says. ``Unemployment just continued to go down.'' The minimum wage increase, he said, ``was totally swamped by other factors going on in the economy.'

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