TheGreatGodPan on 4/4/2006 at 02:52

---

I am currently a freshman, and not taking econ. I'm in engineering and I already have credit for taking A.P tests for Micro and Macro (honest disclosure obligates me to state that I did not actually take the latter course and used the former as a study hall because it fulfilled my consumer ec requirement).

With regards to being out of touch with economics, it sounded like that page was saying economists were the ones out of touch: "not surprising anyone but an economist".

You have to pay to read Card & Krueger's book, so I'll restrict my commentary to the Slate piece. It is stated that the effects of the minimum wage law on employment are small. I would agree with scumble here in the minimum wage is not very important (I still believe they are harmful), because the minimum wage (in America at least) is too low for it to matter for most people. Raising it is not going to affect people already earning above what it will be set at (I'll discuss the consumers Landsburgh mentions later). In other words, a price floor below the natural price will not be effective, just as a price ceiling above the natural price will not. Of course, that is only the case under the imaginary "perfect competition" condition in which all goods of a certain type have the same price. In real life equilibriums are only tendencies the economy will tend toward and there will be variation, which is why there will be some (but not necessarily a lot) "Losing a lousy job" while their luckier peers get a raise (at least partially) from the money saved by not hiring them. Now here's where I'd like to see the data being discussed: Landsburgh says the minimum wage acts as a transfer from employers and consumers to minimum wage workers. Is there a sudden rise in the labor expenditures of employers of minimum wage workers? If there were a pure zero sum transfer it should be equal to the increase in pay to minimum wage workers. Classical economics would usually state that an increase in the price of a resource results in a downward shift in demand and production, so there would be dead-weight loss. In reality there are substitutes for labor: automation and illegals (who can be payed below minimum wage). This would still result in dead-weight loss (otherwise they would have substituted even without the law). The topic of economic law being proved wrong empirically, with the reception of the Card & Krueger minimum wage study by mainstream economists (which could quite possibly mean something different from the labor economists referenced in the Crooked Timbers link) being used as an example is presented (http://www.mises.org/journals/qjae/pdf/qjae6_3_4.pdf) here (you should be warned that's in the middle of a long-running debate and while the previous and ensuing papers help to understand this one, they're rather superfluous in the context of this discussion), and the author of that piece also focuses specifically on the Cark & Krueger minimum wage study (http://www.mtsu.edu/~jee/pdf/100minwg.pdf) here.