Ever since that nonsense report by the University of Washington's "economists" (meaning, a school of men and women whose knowledge of the production and distribution of wealth is no deeper and useful than a bunch of logicians who call something a donkey and then close their eyes and feel the hairy thing up and say: ahh, see, that is a donkey) was released on Monday, June 26, we have not heard the end of it. The report did what it was supposed to do: make a lot of noise.
I really do not want to go into the utter stupidity of this report; it's just not worth the time and effort. You only have to think about the maddening matter of CEO pay to realize that all this talk about how high minimum wages hurt the poor is total bunk. (From Seattle Times' post "Former CEO spills secrets of CEO pay, and calls for change": "The nation’s best-paid CEO in 2015 was Dara Khosrowshahi, chief executive of Bellevue-based online travel company Expedia, whose total compensation was $94.6 million.")
But let's instead play this game of ignoring CEO pay, the bonus culture, interest rates, speculation, the inflation of stock prices, and the rest of it, and focus solely on the minimum wage. Only it must answer for itself. The system-wide processes can be left out. They are doing their own things. The wages of the working classes alone can make the laws of supply and demand as naked as a Playboy bunny, or as Noah after he had too much to drink.
The National Review explains why $15 an hour is hurting the poor, why it's making their lives so miserable, why the poor are crying on the streets of Seattle, why they want to be paid less but those damn liberals just won't let them get those wonderfully yummy crumbs falling from the mouths of decadence:
The first lecture in Economics 101 is that supply and demand interact through prices. (And a wage is a price — the price of labor.) Producers will produce more of any given product at a higher price, and consumers will consume less of it at a higher price. At some point, producers’ preferences coincide with those of consumers, and that is the market price that emerges. That’s a rough model, of course, but it describes the basic reality of how commercial transactions actually happen.You always hear this nonsense when it comes to the minimum wage, and not CEO pay. You pay workers less to remain competitive, and you pay CEOs lots to remain competitive. You can never win with these folks, some whom teach economics the UW.
Forbes wastes no time getting all moral about it:
A minimum wage hike back in 2016 in Seattle resulted in lower, not higher, pay for low-wage earners, revealing the ugly truth of the $15 minimum wage movement — a “living wage” isn’t an entitlement, it must be earned by delivering value to the consumer.One wonders if the author was stuffing his pipe while dictating this through the corner of his mouth to his secretary.
A writer for Star Tribune warned Minneapolis that it might become like horrible Seattle if it continued with this unwise high-wage agenda:
[T]he price of labor went up and people bought less of it. Labor demand curves slope downward. This is what standard economic theory would predict.
Whenever you hear this slope and curve stuff (marginal utility curve, demand curve, and what have you), it is time to have an erotic daydream. Think of someone you fucked and recall the hips, lips, rise of the cock, and stiffness of the nipples. You will get more of the real-world from these erotic curves and slopes/rises and falls than anything you will find in the "standard economic theory."
The University of Washington researchers, led by economist Jacob Vigdor, defend their results, which are based on confidential data they see because they’re on a study contract from the city, but which hasn’t been available to previous researchers in the field.
So, Ed Murray must have a cave under City Hall where he hides the special and glowing tablets from all other eyes but those of the high priests of economics. And when they leave this cave (creaking door shut, thick and heavy key turned), they, too, glow like Moses after seeing God's backside.
But if you leave the priests and their cave alone for a minute, and listen to a regional labor economist for the Employment Security Department, you get a completely different picture of things. As the Seattle Times pointed out only last week, workers are actually shunning jobs that pay less than minimum wage:
The higher wages in Seattle may also be making it harder to fill positions for businesses there and nearby cities that don’t pay as much. Under Seattle’s 2014 minimum-wage law, the current minimum ranges from $11 to $15 an hour, depending on the employer’s size and whether it pays medical benefits.
“The companies that are struggling the most—their wages are not up to $15 an hour,” said Aleni Mang, a DSHS caseworker who works with both employers and DSHS clients seeking jobs.
“Those starting at $11.50 an hour—they’re having more problems finding and keeping staff.”
This statement is consistent with the fact that the closer you get to Seattle, the lower the unemployment rate. Statewide unemployment rate was 4.5 percent this May. In the Seattle/Bellevue/Everett area in the same period, it dropped down to 3.3 percent. In King County, it was down to 3.1 percent. Meaning, statistically, there is full employment in the American capital of those damn high minimum wages. (If you want to see some real unemployment and welfare dependence, then go to Ferry County, which is a part of a district, the 7th, that not only voted for Trump but had its state senator join the Trump Administration. This county has nearly 10 percent unemployment.)
While Seattle's economy is booming, Kansas' imploded after implementing deep, "job creating" tax cuts in 2014. The state is totally run by the GOP, and one fine day in the first half of this strange decade, it found the fantasy of a totally free market only a few votes away from reality. The sprung politicians sprang on that opportunity like Pepé Le Pew on that poor pussy. And humped. And three years later, the economy cracked. Important services were being cut. The economic boom that the lower taxes were supposed to ignite did not happen; so there was no increased revenue from free-market excitement because the markets never got excited. The GOP finally came back to reality and raised taxes on the rich and middle class. (Five reasons why the whole thing bit the dust are provided in this post.)
But here is what you should know, and few will tell you: economics has mostly been about justifying the wealth of the rich and the poverty of the rest. Back in the day, in the classical times of Smith and Ricardo, they used to say the rich needed to be rich so that capital can be accumulated. For these apologists, getting things going with capital was as hard as getting cheetahs to mate. After that period was done, the new school, led by Alfred Marshall, said it's right for the rich to make money from their accumulated capital because it's the "reward for waiting." On one side, you worked; on the other, you waited; and all together, they amounted to the same thing.
When experience taught many that not waiting for a reward is not as hard on a person as being unemployed, the children of Hayek (such as the Chicago boys) hit upon this justification, which is still with us to this day: The rich deserve more money because they create jobs for the poor and grow the economy for all. The UW has never broken with this tradition. Their experts have probably never read Keynes or Kalecki or Joan Robinson; or know a thing about the Cambridge capital controversy; nor can tell the difference between a neo-Kenysian and a post-Keynesian, or even a freshwater economist from a saltwater one. All that kind of thing means reading history. The UW's economists have been taught to never go into the alley, but to always stay in the restaurant and only sing "Bella Notte" to the wealthiest patrons.