The False Justifications for a Minimum Wage

On 1/30/14 Forbes published an article by Jeffrey Dorfman titled "Almost Everything You Have Been Told About The Minimum Wage Is False".  The entire article is at this link:

Forbes Article

These are some of the most interesting points:

First, people should acknowledge that this rather heated policy discussion is over a very small group of people.  According to the Bureau of Labor Statistics there are about 3.6 million workers at or below the minimum wage (you can be below legally under certain conditions). That is 2.5 percent of all workers and 1.5 percent of the population of potential workers. Within that small group, 31 percent are teenagers and 55 percent are 25 years old or younger. That leaves only about 1.1 percent of all workers over 25 and 0.8 percent of all Americans over 25 earning the minimum wage.

Within that tiny group, most of these workers are not poor and are not trying to support a family on only their earnings.

This group of workers is also shrinking. In 1980, 15 percent of hourly workers earned the minimum wage. Today that share is down to only 4.7 percent.

Liberals have been trumpeting a study claiming that if the minimum wage had risen in tandem with worker productivity, the minimum wage would be nearly $22 per hour. Senator Elizabeth Warren (D-MA) has gone to great lengths to push this statistic into the policy debate....Labor productivity may have risen faster than the minimum wage over the last twenty or thirty years, but the study getting all the press uses the productivity gains of all workers to calculate a hypothetical increase in the minimum wage. What is needed is a measure of the productivity gains of minimum wage workers....Taking a longer view, from 1987 to 2012 the same BLS data show that worker productivity in the food service sector rose by an average of 0.6 percent per year. In limited service restaurants, the gains were slightly lower, only averaging 0.5 percent per year. Meanwhile, unit labor costs have risen by an average of 3.6 percent. Over this period the minimum wage has risen from $3.35 to $7.25 per hour which is an average annual increase of 3.1 percent. In other words, at least in food service, the minimum wage has risen at a rate five or six times as fast as justified by the gains in worker productivity.

The myth that minimum wage workers are being treated unfairly is exposed by a look at the correct data on labor productivity.  In a truthful debate we see that the minimum wage has been generous to workers receiving it when compared to the changes in the value of their output.

We discussed the minimum wage in a previous post on this blog.  Please review:

Discrimination against low skilled workers

The extent of corruption in Europe is "breathtaking"

An article published by BBC News on 2/3/14 discusses corruption in Europe.  I find the "shocked" tone of the article ironic.  European nations have expansive governments that control all aspects of social and economic interaction.  The fact is that whenever government is large and intrusive corruption will flourish.  You can read the article at this link:

http://www.bbc.co.uk/news/world-europe-26014387#

This article is reporting on a study by the European Union to the European Parliament.  The entire study can be found at this link:

EU ANTI-CORRUPTION REPORT

The BBC News article contains the following paragraphs:

In some countries there was a relatively high number reporting personal experience of bribery.

In Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece, between 6% and 29% of respondents said they had been asked for a bribe, or had been expected to pay one, in the past 12 months.

There were also high levels of bribery in Poland (15%), Slovakia (14%) and Hungary (13%), where the most prevalent instances were in healthcare.

The last sentence could be a prediction for the future direction of healthcare in the USA.  As more government intervention occurs in the healthcare industry we will be subjected to more corruption.