Missing Portraits

by Russ Roberts on January 16, 2006

in Seen and Unseen, Work

[This post has been edited since it was first posted]

A picture is worth a thousand words.  So the New York Times Sunday Magazine article (discussed earlier here and here by Don and me) that found so many reasons to love living wage ordinances and so few reasons to be skeptical of their virtues, included powerful photographs of workers who expect to benefit from the Santa Fe living wage ordinance with poignant descriptions of what these workers plan to do with their raises:


Alessandra Petlin for The New York Times

Name: Manuela Soto. Marital status: Single mom. Occupation: Assistant
hotel housekeeper. Home: Santa Fe, N.M. Hourly wage before local
"Living Wage" ordinance: $7.50. Hourly wage now: $9.50. What she’ll do
with raise: Pay bills faster, offset higher gas prices, buy more
supplies for sons. More Photos >

Strangely enough, there were no pictures of the workers who expect to lose their jobs because the legislation will price them out of the job market, though some of the pictured workers may tragically fall into this group.  Nor were there any descriptions of how anyone who loses their job plans to cope with being unemployed.

I am proud not to be a progressive.

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Sean January 16, 2006 at 3:25 pm

And, I bet they didn't copy and paste pages from the high school yearbook; this would have been an apt exercise to show that the young and inexperienced will either (A) have huge problems getting a job or (B) simply give up in frustration and go to college/start a life in another community. Oh…wait, I think that's the hidden reason behind that legislation, anyway (I mean, not place for young, poor people in an "artist's haven" like Santa Fe, right?).

Swimmy January 16, 2006 at 4:43 pm

This reminds me of an argument from Sowell's The Vision of the Anointed:

"Over the years, studies have repeatedly shown people in the mass media to be overwhelmingly of the political left but this kind of media bias may not be as important as a bias inherent in the way both broadcast and print media operate. Radio, television, and motion pictures can readily dramatize an indvidual situation, in a way in which the larger relationships and the implicit assumptions behind that situations cannot be dramatized. For example, the media cannot identify, much less dramatize, all those individuals who would have come down with some deadly disease if it were not for their being vaccinated. But nothing is easier to dramatize than the rare individual who caught the disease from the vaccine itself and is now devastated by illness, physically or mentally crippled, or dying. When the government creates some new program, nothing is easier than to show whatever benefits that program produces. Indeed, those who run the program will be more than cooperative in bringing those benefits to the attention of the media. But it is virtually impossible to trace the taxes that paid for the program back to their sources and to show the alternative uses of that same money that could have been far more beneficial."

This goes on for several more pages, and is a very convincing argument regarding media presentation and its relationship to reality. I'm not a crucify-the-media person because of this inherent bias, but every time I see a face of a person rather than a graph, I know to be wary.

K January 16, 2006 at 5:26 pm

The cynic might ask "how did she stay alive before she got a living wage?"

But seriously. The mimimun wage is part of life in nearly every nation. And some localities will pass still higher minimums. There is no reason to believe any economic arguments will change this.

One may argue that there should be no minimum at all. Excepting that position how can we say one minimum is good and others too high or low?

John Pertz January 16, 2006 at 7:36 pm

Thats a good point K and it may mean that we need to alter the structure of our government. Over at Cato unbound Dr. Buchanon has a great blog essay on how we can alter the U.S constitution to protect our liberties as citizens. Provisions such as the min wage, the Kelo Admendent, and almost any other regulation are just tools to for the political class to maximize their power.

Brandybuck January 16, 2006 at 11:39 pm

She got a raise from $7.50 an hour to $9.50 an hour. A hotel that could previously afford to hire fifteen maids can now only afford to hire only twelve. Ain't liberal compassion wonderful?

spencer January 17, 2006 at 8:14 am

Did you even read the article. Do you know that there is a section at the end of the paper on the results of the Sante Fe experiment.

According to the University of New Mexico Bureau of Business and Economic Research employment in the city remained positive over the period and was especially strong in the low wage restaurant and hotel industries. The author quote several opponents of the law and none of them on the scene said the jobs loses you are talking about occured. they are even seeing the higher wages draw labor into the ity from outside — exactly what theory says it would do. But that strongly implies that the new wage is not the price at which no transactions occur — what you are claiming.

Read the evidence. it says that businesses adjusted by raising prices, not cutting employment. It says that inflation in santa Fe was about 1.5% above the national average over the period. If this is accurate then what we saw was a shift of income from profits and consumers to the low wage employees. So they got raises
and increases in their real income.

I'm glad you are proud to be a progressive. So why are you trying to destroy the reputation of progressives by doing such slip shod economics. If this is an example of the caliber of economics done at James Mason University remind me never to hire one of your graduates.

spencer January 17, 2006 at 8:22 am

Sean — did you read my comments the other day that talked about the very strong evidence that the teenage participation rate has a very strong positive correlation with the minimum wage. That actually the evidence is that a higher minimum wage lead to higher teen age employment, not lower.

You probably did not read the article either. It discused the point that the higher wages would cause teenagers to drop out. Yes, I know working as a youth is good for your, but not if it causes your education to suffer.

come on you guys, black is not white.

Neal Phenes January 17, 2006 at 8:42 am

NYT writer Gertner contends that the Card and Kreuger study along with The Economic Policy Institute “has succeeded recently in getting hundreds of respected economists…to support raising the minimum wage to $7 an hour.”

Why didn't the article find one of the "hundreds" to quote in support of the notion that minimum wages increase employment? Maybe there is a higher level of integrity found among economists. Why didn't the article deign to quote a single economist that disagreed with the claimed consensus?

Why didn't the article discuss the study done by economists Neumark and Wascher who double checked the Card and Kreuger study? Their conclusions differed significantly.

John Pertz January 17, 2006 at 9:25 am

The Card-Krueger study is a fraud. Their methodology was highly highly controversial. Go look up minimum wage on Wikipedia and you can read for yourself.

"It says that inflation in santa Fe was about 1.5% above the national average over the period. If this is accurate then what we saw was a shift of income from profits and consumers to the low wage employees. So they got raises
and increases in their real income."

-oh my god, I think Im gonna be sick.

anony January 17, 2006 at 11:35 am

As I get older and see these same debates continue to replicate themselves ad nauseam I feel there is little to be said for persuasion.

Perhaps at the end of the day this is an argument for a stronger version of States-rights, so that different areas are free to experiment with everything from minimum wages to affirmative action to drug legalization to socialism or even intelligent design and let the chips (and the migrants) fall where they may.

It just never seems to end. If there were only a way to limit the consequences to the groups that lobby for the legislation in the first place. But that will always be subject to the caveat that those who stand to lose the least will always argue for changing the rules first.

John Pertz January 17, 2006 at 11:58 am

We cant have a government based upon pure state's rites for the notable reason that we need the federal check and balance of the supreme court to ensure that people's rights are being upheld. I think that if state's were given more sovereingty then populism could reign supreme because state governments are much more efficient in passing legislation than the federal government. If you are a libertarian then I dont neccesarily believe that stronger state's rights will guarentee protection of our liberties. If anything the current system with a few constitutional amendments would be prefereable to increasing state's rights.

joemorz January 17, 2006 at 1:49 pm

People talk so glib about business "just" raising prices. I'm sure if these people were presented with a choice they would select the cheaper over progressive. Why do you think Wal-mart is so successful?

Another point is that we now have an experiment to examine. That's what’s important about states rights. How can we know if social legislation works with no experimentation? Do progressives really think they know everything?

Tom January 17, 2006 at 3:46 pm

Spencer, the study you cite by the University of New Mexico Bureau of Business and Economic Research says, "the living wage does not appear to have resulted in employment declines." The data they site do not support such a claim. And to make such a claim based on two digit level NAICS data from the QCEW that includes the entire County of Santa Fe and not just the city is shear incompetence on the part of the authors of this fradulent study.

The minimum (“living”) wage ordinance only applies to businesses within the city limits that have 25 or more employees. The QCEW employment data is not broken down by business size. To make any claim about the impact of this minimum wage law at the two digit level NAICS, as this study does, is pointless. The aggregation is too great to saying anything meaningful about the minimum wage law impact on employment one way or the other.

In addition, the QCEW data used by the University of New Mexico Bureau of Business and Economic Research study is for Santa Fe County which includes businesses outside the city limits of Santa Fe city.

Although the QCEW data the study cites are too aggregated to make any claim about employment effects, the study does say this:
"Restricting the application of the $8.50 minimum wage to businesses with 25 or more employees creates some perverse incentives. It appears that at least some employers are using a variety of means to keep their workforce below 25."

Alberich January 17, 2006 at 6:00 pm


Wow, hold on there. Evidence supports increasing minimums lead to increased teenage employment? Well I missed the thread but how about this panel review of minimum wage research:

"While it is not yet clear why Card, Katz and Krueger got the results that they did, it is clear that their findings are directly contrary to virtually every empirical study ever done on the minimum wage. These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%. "


(The link includes summaries of the studies)

Granted, that is close to 11 years old but it does covers 50 years of research.

Noah Yetter January 18, 2006 at 2:13 pm

"If this is accurate then what we saw was a shift of income from profits and consumers to the low wage employees. So they got raises
and increases in their real income."

Assume this is true. Now ask, should we bless this legislation, as economists?

The answer is still no. Raising prices to consumers and reducing entrepreneurial profits is no less an economic distortion than reducing employment. The pattern of resource allocation is now less well-aligned with underlying economic realities, and we are all poorer for it.

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