Intro: the author of this piece, despite his condescending tone, knows basically nothing about even the

most basic economics. His piece is full of grotesque errors of logic. Worse, he openly displays a contempt for even the most rudimentary respect of scientific or historical evidence. If this sort of supercilious bullshit is the best the Right can come up with after all these years, then Well, I guess I wish I was more surprised. But I am not. Obviously, my comments are in red, the article is in black, and a quoted article from CEPR is in blue. Senator Edward Kennedy once called the minimum wage one of the best antipoverty programs we have. Jared Bernstein, former chief economist to Vice President Joe Biden, thinks it raises the pay of low-wage workers without hurting their job prospects. And Ralph Nader thinks low-wage workers deserve a pay increaseand the government should provide it. Yes, all of these claims are true. There is a reason that labor movements fought and died for minimum wage laws (see The Making of the English Working Class by E. P. Thompson for the benchmark history). It turns out that the market value of human life and dignity is well, about zero, actually. Depressing, but true. Lets remember that minimum wage laws arent just good for workers. Many employers, believe it or not, want to pay their workers a living wage. Its true! Shocking to the people at Forbes! But here is how an unregulated labor market actually works - if your competitor is paying workers next to nothing, you cant compete with her by paying your workers more, so you have to also starve your workforce. Lets remember that not just workers, but business owners with morality left also have historically advocated for minimum wage laws to prevent unfair/unscrupulous competition. Why do those beliefs persist in the face of common economic sense? No legislator has ever overturned the law of demand, which says that when the price of labor rises, the quantity demanded will fall (assuming other things are constant)... What a smarmy, disingenuous shit this guy is. No, that is not the law of demand you idiot, because the demand for labor is independent of its cost. The demand for labor depends on the demand for the commodities you are making. If the market demands a hundred widgets a week, and each worker can produce 20 widgets a week, then YOU WILL HIRE 5 WORKERS. If the cost of labor, materials, machinery, and capital is less than the price you can sell the commodities for while making an acceptable profit, then you have a functioning business. If there is demand for a commodity, and you cant produce the commodities under the cost, but want to do so, you can:

1.

Pay your workers less techniques, better organization, etc. thus enabling you to

2. Increase worker productivity through investment in better machines, improving 3. Lower the cost of capital (dont borrow so much and get a direct investor, etc.) 4. Take less profit (!!!!! DUH) 5. Find cheaper materials or a supplier for materials that gets you the same stuff cheaper (e.g. China) So. No, there is not a directly bilateral relationship between the cost of labor and the amount of labor employed. The amount of labor, capital, profit-taking, materials, and machinery are all dictated by demand for the COMMODITY YOU ARE PRODUCING, and labor is factored in to the other costs of production. Hey! Take less profit, you dicks! That same law tells us that quantity demanded (i.e., the number of jobs for low-skilled workers) will decrease more in the long run than in the short run, as employers switch to labor-saving methods of productionand unemployment will increase. You know, its a side note I know, but the law of supply and demand does not hold absolutely. As an elementary example, the demand for whiskey often goes up as the price increases, because it has more prestige. Its but one example. So lets not try to act like SUPPLY AND DEMAND is some iron law of physics like electromagnetism or some shit. Now youll notice in the previous sentence he notes that yes, one option for employers is to increase productivity by investing in machines. True! But by far most of the low-wage jobs were talking about are in the service sector. You cannot automate human service yet And really, if this guy is suggesting we shouldnt pay a McDonalds cashier more because in the long run they might hire the fucking Terminator to do his job then the writer is an idiot. The belief that increasing the minimum wage is socially beneficial is a delusion. It is short-sighted and ignores evident reality. Workers who retain their jobs are made better off but only at the expense of unskilled, mostly young, workers who either lose their jobs or cant find a job at the legal minimum. The classic right-wing strategy: pit one section of the working class against the other. Hey white workers, those blacks/Chinese/Irish/Mexicans are taking your jobs! Theyre the enemy! Hey unskilled, young workers! Paying you more actually screws you to benefit skilled workers! Or something! I am not a crackpot! A higher minimum wage attracts new entrants but does not guarantee them a job. What happens on the demand side of the market is not surprising: if the minimum wage exceeds the prevailing market wage (determined by supply and demand), some workers will lose their jobs or have their hours cut.

There is abundant evidence that a 10 percent increase in the minimum wage leads to a 1 to 3 percent decrease in employment of low-skilled workers (using teens as a proxy) in the short run, and to a larger decrease in the long run, along with rising unemployment. No, again, see my first fucking point. What an asshole this guy is. The amount of labor is set by demand for commodities produced.

Employers have more flexibility in the long run and will find ways to economize on the higher-priced labor. New technology will be introduced along with labor-saving capital investment, and skilled

workers will tend to replace unskilled workers. Those substitutions will occur even before an increase in the minimum wage, if employers believe such an increase is imminent. There will be fewer jobs for low-skilled workers and higher unemployment ratesespecially for minoritiesand participation rates will fall as workers affected by the minimum wage drop out of the formal labor market. Again, yes, it is true that one of the ways employers cut costs is to improve labor efficiency through investment in machinery or improvements in the labor process. This is not a bad thing all the time - who the hell do you think builds the machines? And this jerk claiming that employers will get rid of workers if they even THINK theres a wage hike coming. I sure would like to see that savvy (I mean idiotic) businessperson. No, you hire enough workers to make your product, not enough to satisfy an arbitrary labor cost you have in mind. The minimum wage violates the principle of freedom by limiting the range of choices open to workers, preventing them from accepting jobs at less than the legal minimum. It also prohibits employers from hiring those workers, even if both parties would be better off. Thus, contrary to the claims of minimum-wage proponents, the government does not increase opportunities for low-skilled workers by increasing the minimum wage. If a worker loses her job or cant find one, her income is zero. Employers will not pay a worker $9 per hour if that worker cannot produce at least that amount. Sweet mother of God. The effect of honoring THE PRINCIPLE OF FREEDOM is to pit all workers on an open market against themselves. Guess what happens when every worker is competing against every other when you are at conditions of less than full employment? Yes, wages drop to fucking zero. This has happened so many times throughout history I cant believe I have to say it here, but apparently I do! And his example. Fuck me. Of course employers wont hire someone to produce Wait, of course they will! What about your secretary? Your janitor? What about THE BOSS? Oh yeah, all of them draw a fucking salary, dont they. I hope I dont have to explain why this is economically rational (but again, this guy is s fuckwit so Ill probably have to later). Politicians promise low-skilled workers a higher wage, but that promise cannot be kept if employers cannot profit from retaining those workers or hiring similar workers. Jobs will be lost, not created; and unemployment will rise as more workers search for jobs but cant find any at the above-market wage. Most employers cannot simply raise prices to cover the higher minimum wage, particularly in the competitive services sector. And if they do increase prices, consumers will buy less or have less money to spend on other things, meaning fewer jobs on net. Moreover, if the minimum wage cuts into profits, there will be less capital investment and job growth will slow.

Ahem. What a shitwit. Look at that first sentence. Most employers cannot simply raise prices to cover the higher minimum wage, particularly in the competitive services sector. This is going to hurt, so stand back. If you make it the law that all companies have to pay their workers more, then they WILL NOT HAVE TO COMPETE WITH THE OTHER COMPANIES BECAUSE THEY WILL ALL BE PAYING THE SAME RATE. That is PRECISELY the whole point of a minimum wage law. Without it, companies have to match the lowest prevailing wages or their competitors will put them out of business. WITH it, companies can pay a living wage because they wont have to compete on wages with other firms (and, as I mentioned before, many firms are HAPPY to pay their workers enough to eat! Believe it or not, not all capitalists are scumbags like whoever sent you this shitty article to read). Now, also, he notes that if worker pay cuts into profits in the broader macroeconomy, then investment will slow. OK, maybe. But maybe not. Its more complicated than that, for instance: When you pay workers more, they have more money in their pockets. The thing about the poor is, they really need things. Like, yesterday. So they go out and immediately spend all the moneys. This raises aggregate demand in the economy - so businesses have to make more commodities - which means they can hire new workers! Capital, in general, seeks the highest rate of return on its investment commensurate with the amount of risk its prepared to accept. If in the broader macroeconomy, the profit rate on investments in sectors that rely on low wage work is lowered, but there is no suitable substitute for capital investment in the broader economy, youll still see investment in that sector. Its not like theres a 1-1 correspondence (oh, I forgot, the LAW OF DEMAND) between profit rates and capital investment. Jesus, I cant believe I had to type that. A recent study by Jonathan Meer and Jeremy West, economists at Texas A&M University, found that the most prominent employment effect of minimum wage laws is a decline in the hiring of new employees. That effect takes place over time as employers shift to labor-saving methods of production. Since the minimum wage has the largest impact on the least-skilled workers who have few alternatives, their lifetime earnings will be adversely affected by delaying entry into the work force and losing valuable job experience. OK look, Im not going to individually rebut all this fucking hacks cherry-picked studies. The vast majority of historical research has shown, if any, only an infinitesimal effect on employment by minimum-wage laws. A useful summary can be found here: http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

Executive Summary The employment effect of the minimum wage is one of the most studied topics in all of economics. This report examines the most recent wave of this research roughly since 2000 to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage. The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases. Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers. And BOOM goes the dynamite. Again, if you want details, read the report. But the executive summary above says everything I need to. [See my final note for more details about this] Basically, for those that wont read the whole study (its long), firms do not fire workers or reduce hours due to raises in the minimum wage. This is because working-hours are determined not by the cost of labor, but the number of labor-hours necessary to make a product. Its way less costly to enact wage-compression, raise prices a bit, or save money through reduced turnover! As any actual businessperson will tell you, as opposed to some hack writing for Forbes. The gloom and doom predicted by the Forbes guy simply has never, ever been shown to exist! The real question is why, which is what the CEPR article tries to answer. And it does so convincingly! Empiricism! Try it! It works! Proponents of the minimum wage such as John Schmitt, a senior fellow at the Center for Economic and Policy Research in Washington, like to argue that the mean effect of the minimum wage on jobs for low-skilled workers is close to zero. But a preponderance of evidence has shown that there are no positive effects on employment of low-skilled workers that offset the negative effects from an increase in the minimum wage. The trick is to control for other factors (confounding variables)

affecting the demand for labor and to make sure the data and research design are valid. The focus should be on those workers adversely affected by the minimum wagenamely, younger individuals with little education and few skills. In a recent case study that controls for confounding factors that make it difficult to isolate the impact of an increase in the minimum wage on employment for low-skilled workers, Joseph Sabia, Richard Burkhauser, and Benjamin Hansen find that when New York State increased the minimum wage from $5.15 to $6.75 per hour, in 200406, there was a 20.2 to 21.8 percent reduction in the employment of younger less-educated individuals, with the greatest impact on 16-to-24 year olds. Advocates of the minimum wage like to point to the natural experiment that David Card and Alan Krueger conducted to see whether a minimum wage hike in New Jersey adversely affected employment in the fast-food industry compared to Pennsylvania, which did not increase its minimum wage. Based on telephone surveys, the authors concluded that the minimum wage hike significantly increased jobs for low-skilled, fast-food workers in New Jersey. Not surprisingly, their results were overturned by more careful research that found an adverse effect on employment (see David Neumark and William Wascher, American Economic Review, 2000). It should be obvious that limiting ones study to franchise restaurants like McDonalds ignores smaller independents that are harmed by increases in the minimum wage and cant compete with their larger rivals. No one interviewed those workers who lost their jobs or could not find a job at the higher minimum wage. Proponents of the minimum wage focus on workers who retain their jobs and get a higher wage, but ignore those who lose their jobs and get a lower wage or none at all. Using econometrics to pretend that the law of demand is dead is a dangerous delusion. If one gets empirical results that go against the grain of long-held economic laws, one should be very wary of advocating policies based on those results. One should also not stop with the short-run effects of the minimum wage but trace out the longer-run effects on the number of jobs and unemployment rates for affected workers. Oh my GOD. This is my new favorite sentence: If one gets empirical results that go against the grain of long-held economic laws, one should be very wary of advocating policies based on those results. Fuck yes. If the DATA and REAL LIFE SHIT doesnt agree with my ridiculous economic ideology, its safe to just ignore it, because I hate science. Today black teen unemployment is more than 40 percent; nearly double that for white teens. In 2007, prior to the Great Recession, the black teen unemployment rate was about 29 percent. There is no doubt the increase in the federal minimum wage from $5.15 to $7.25 per hour contributed to the higher unemployment rate. If Congress passes a new minimum wage law that makes it illegal for employers to pay less than $9 per hour, and for workers to accept less than that amount, we can expect further erosion of the market for unskilled workers, especially black teens.

Ah. It took this long for this guy to play the racial-competition card. In reverse this time! I called it above, you saw me. Its funny - the Right used to go around to white workers and claim that non-whites were coming for their jobs. Theres been an interesting pivot where, in an effort to downplay the obvious racism of many (not all) of their members, they claim to be the REAL advocates for minority workers. Here, he takes the position that the right is the real friend of the poor black worker, while the left is only going to hurt them. Watch out black workers, the left wants to fire you to benefit white workers! Republicans, friends of the black American worker. I mean, its cynical, but you have to admire the fucking balls on someone that can claim that minimum wage laws are going to hurt black workers. That is just stupendous. With so many young, unskilled workers looking for work, employers can pick and choose. They can cut benefits and hours; and they can substitute more-skilled workers for less-skilled workers. Recent studies based on data for contiguous counties across state borders have ignored labor-labor substitution and wrongly concluded that higher minimum wages do not adversely affect employment. Arindrajit Dube, T. William Lester, and Michael Reich, for example, use county-level data over a 16.5 year period to examine the impact of local differences in minimum wages on employment in restaurants, which primarily hire low-skilled workers. Based on their analysis and assumptions, they find no adverse employment effects. Proponents of a higher minimum wage have rested their case on Dube et al. and related studiessuch as Sylvia Allegretto, Dube, and Reich, who conclude that minimum wage increasesin the range that have been implemented in the United Statesdo not reduce employment among teens. Neumark, Salas, and Wascher, in a new study for the National Bureau of Economic Research, argue that neither the conclusions of these studies nor the methods they use are supported by the data. Indeed, Dube et al. admit that their data prevent them from testing whether restaurants respond to minimum wage increases by hiring more skilled workers and fewer less-skilled ones. Existing evidence supports labor-labor substitution in response to a higher minimum wageespecially over the longer run. Employers have a strong incentive to retain better-educated teens and train them, and to hire skilled workers to operate labor-saving equipment. Contrary to the claims of Bernstein and others who support the minimum wage, a higher minimum (other things constant) will decrease employment opportunities for the least-skilled workers. Workers who retain their jobs will be higher productivity workersnot low-wage workers in low- income families. Minimum wage laws harm the very workers they are intended to help. Small businesses are already laying off low-skilled workers and investing in self-service tablets, robotics, and other labor-saving devices in anticipation of a higher minimum wage; and hours are

being cut. Those trends will continue, especially if the minimum wage is indexed for inflation. This is ridiculous. FIND ME the small business owner that cant afford to pay someone minimum wage but can BUY FUCKING ROBOTS. I dont even... Advocates of higher minimum wages confuse cause and effect. They think a higher minimum wage causes incomes to go up for low-skilled workers and doesnt destroy jobs. Thats not what we think, its what we KNOW, because every time the minimum wage has been instituted or raised, its EXACTLY what happened. There have been ZERO cases in history were a raise in the minimum wage caused a mass layoff. Zero. Thats why this piece of shit has to warn us not to believe the data and instead trust in his bullshit LAW OF DEMAND that he totally didnt just make up about 5 minutes ago. Workers are assumed to have higher wages and retain their jobs as a result of government policyeven though they have done nothing to improve their job skills. But if a worker is producing $5.15 per hour and now the employer must pay $9 per hour, there will be little incentive to retain her. There will also be little incentive to hire new workers. Without an increase in the demand for laborthat is, an increase in labor productivity due to better technology, more capital per worker, or additional educationa higher minimum wage will simply price some workers (the least productive) out of the market, and their incomes will be zero. If your workforce is only producing $5.15 per hour per worker, then you have an EXTREMELY shitty workforce. Just saying. And look at this idiot! Without an increase in the demand for labor - that is, an increase in labor productivity due to better technology, more capital per worker, or additional education Ahem. All of those things REDUCE the demand for labor. Higher mechanical productivity eliminates jobs. More capital per worker makes them more expensive. Higher educated workers cost more. Attention. Demand for workers is not caused by workers getting educated. Demand for workers is caused by demand for commodities that the workers produce. End of story. The minimum wage is not a panacea for poverty. Indeed, Neumark, Schweitzer, and Wascher examine the evidence and conclude that the net effect of higher minimum wages is . . . to increase the proportion of families that are poor and near-poor (Journal of Human Resources, 2005). Thus, the minimum wage tends to increase, not decrease, the poverty rate. Listen closely, because a lot of people on the Right dont get this. There is an easy way to eliminate poverty. Ready for it? Give the poor money. THATS IT! Its actually that easy! And there are many ways to do it! Heres a partial list: Pay them more money when they work

Pay them welfare when they dont work (or when their shitty jobs dont pay them enough to actually survive to get to work again the next day) [OMG WELFARE] A Universal Basic Income! (Yaaaaaaay) (Even fucking Nixon was considering this! Its true! How far to the right this country has gone) [OMG WELFARE] Food stamps[OMG WELFARE] Free medical care[OMG WELFARE] Free child care[OMG WELFARE] Free rent[OMG WELFARE] Tax credits or vouchers for all of the above[OMG WELFARE] See how easy it is? Find someone in poverty and GIVE THEM STUFF. Now, of course the Right hates OMG WELFARE, so the only other option is to raise wages. So THATS WHAT WERE DOING, DINGUSES.

The best antipoverty program is not the minimum wage but economic freedom that expands workers choices and allows entrepreneurs to freely hire labor without the government dictating the terms of the exchange, except to prevent fraud and violence. When entrepreneurs adopt new technology and make capital investments autonomouslythat is, without being induced to do so because of government mandated increases in wage ratesthere is a boost in worker productivity, jobs, and incomes. But when the government increases the minimum wage above the prevailing market wage for low-skilled workers, firms will have an incentive to substitute labor-saving production techniques that destroy jobs for low-productivity workers, especially minorities, and prevent workers from moving up the income ladder. I want to point out how confused this guy is. First he says that a boost in worker productivity will lead to higher incomes for low-wage workers. Next, he says that labor-saving production techniques will destroy jobs and lower incomes for low-wage workers. Wait for it THOSE TWO THINGS ARE THE SAME THING. PRODUCTIVITY = LABOR-SAVING INNOVATION. They are LITERALLY BY DEFINITION the same thing. This guy is a fucking idiot. An increase in productivity cannot both raise and lower wages. Unions are key advocates of higher minimum wages because the demand for union workers tends to increase along with wage rates after an increase in the minimum wage. Likewise, large retailers and franchise restaurants already paying more than the minimum wage may support an increase in the legal minimum because it helps protect their businesses from smaller competitors. Poverty advocates also favor the minimum wage because it is a feel good policy and they believe it will lead to higher incomes for low-wage workers, without seeing the longer-run consequences on jobs and unemployment. Ahem. Unions advocate for minimum wages because they benefit workers. That is

what unions do. I love this: large retailers and franchise restaurants may support an increase May. Nice. Basically, hes saying heres a totally imaginary scenario I made up in my head! Find me ONE large retailer that is advocating for it. Christ. Hint: large retailers like Wal-Mart and fast food companies dont want to pay higher wages because the government steps in and gives their employees welfare already! Its a huge tax subsidy to big businesses! Now, I of course am not arguing against welfare - it is of course necessary to eliminate poverty - but these companies should be legally required to pay minimum wage. Poverty advocates favor a minimum wage because it lifts people out of poverty, you idiot. It has been proven to do so time and time again with little to no effect, EVEN IN THE LONG RUN, on employment, because AGAIN, the number of jobs is set by the demand for commodities, not the price of labor. Ignoring the law of demand to adopt a higher minimum wage in the hope of helping low-wage workers is a grand delusion. The persistence of this false belief ignores economic reality. It is a red herring that diverts attention from alternative policies that would increase economic freedom and prosperity for all workers. Ah, yes, once again with the LAW OF DEMAND. Here, I have a demand. I demand that whoever wrote this article shut the fuck up forever until they read a history book or two and actually learn about the history of the labor movement. People fought and died as a working class for the 40-hour week, minimum wages, and many other benefits we enjoy today. Life without them is a pitiless hell. Look at Bangladesh for your deregulated workplace heaven and get back to me. Finally, one last comment about the LAW OF DEMAND. It bears repeating: Here are the things that firm can do when the price of labor is raised: 1. Lower hours worked

2. Reduce non-wage benefits 3. Reduce training 4. Change employment composition 5. Higher prices 6. Improvements in efficiency 7. Harder work from workers just because theyre happier (it happens!) 8. Wage compression (lowering wages at the top to afford higher wages at the bottom, which makes it more fair! Surprise!) 9. Reduction in profits 10. Increase in demand due to stimulus because the poor want to SPEND THAT CASH 11. Reduced employee turnover due to higher wages saves companies big bucks

Remember, a firm can do ANY OF THOSE 11 THINGS, and firing or reducing the hours of workers are among the most costly. For details, see the CEPR study linked above. A final note. I personally dont believe that the hack that wrote this article even believes this shit. I mean, come on. You cant make that many basic errors in one piece without knowing about it. I think hes just cynical enough to collect a paycheck for writing hack articles advocating the most repulsive wingnut positions. The method for these sorts of op-eds appears to be: 1) make basic logical and factual errors, 2) dismiss actual evidence against your claims as somehow lacking (handwave!), 3) claim that your grotesquely cruel policy recommendations are in fact good for the people youre trying to hurt, and 4) do it all with enough of an arrogant, blustery tone that people who dont know any better will be too intimidated to call you out on your BS.