Prices Are Signals — And the Truth of the Message Isn’t Changed by Distorting the Signal

Aw shucks, isn't he really saying the U.S. is rapidly joining the Third World and good times are over. Real incomes have to fall as the U.S. isn't really that productive anymore and all that latest technology usually comes from Japan. Perhaps in the not-too-distant future as the U.S. stagnates further and becomes an agrarian society once again slave labour might come back in fashion as free labour is cost-effective.

Lay of the hyperbole? People like you always say America is about to be finished whenever a recession hits. Geez, we've not even hit 1982 levels!

Prices tell us something about reality and that reality is not altered by interference with that signal.
We respond to the signal and if the signal does not reflect reality, neither will our response.

With a minimum wage shouldn't the US also have a minimum competency level? If employers are not allowed to pay employees below a certain amount per hour's work, then shouldn't there also be legislation in place to limit the type of employees that can be hired?

I urge Congress to take up the Minimum is Really Minimum fight. It's the only honest thing to do with legislative efforts to force a "living wage" for entry/low level employees. The wage should be tied to standards of education or competence so that it is completely "fair and equitable."

No one is going to hire people if they think taxes are going up.

http://www.data360.org/temp/dsg762_360_252.jpg

When nominal minimum wage was high we had no major crashes. Again the data is not onkly lacking but countering the libertarian position.

These people knowingly or not are simply asking for greater inequality, greater injustice, greater market ineffeciency and a more dreay Dickinsonian future.

Prices are signals. Malarky! In the modern Wall Street manipulated market such a belief is nothing but blind faith.

What the hell are you smoking? The number of people making minimum wage in this country is somewhere around 3%. Do you imagine that somehow 3% of the populace earning 7.50 an hour instead of 6.50 has anything to do with stock market crashes? Do you have any evidence whatsoever that this is the case other than a single chart and the complete inability to differentiate between correlation and causation?

Or do you also believe that lack of pirates is what's causing global warming: http://seanbonner.com/blog/archives/001857.php

Or do you also believe that lack of pirates is what's causing global warming

Oh, good God! No! AGW is because we don't give enough corporate welfare to GE and ADM, and other corporations that make products deemed by His Holiness: The Divine Prophet Algore I to be vital to the survival of Mother Gaia.

Learn it. Live it. Follow the teachings of the Divine Prophet, and accept The Almighty Obama as your Savior, or the planet is doomed to be consumed by Hellfire. Cardinal Yasafi Torquemuirduck: Grand Inquisitor of the Church of AGW is watching you.

You have been warned.

All praise the all father, ALGORE!!!!

Muir would love Russia this time of year.

Adjusted for median wages, instead of for inflation, minimum wage in the late 60's & early 70's would have been similar to something like $15 an hour in today's economy. I've never heard of this as a major factor in stagflation, but I can't imagine how an economy could have handled that level of minimum wage without stagflation. Are there studies on that?

That's an interesting way to look at two periods.

Did the gap between median wage rate and minimum wage rate simply grow larger? If so, then adjusting the 1969 minimum wage for median wage changes might not be valid.

Worker productivity gains between 1969 and 2009 should have increased mean compensation and perhaps median compensation. Not all of that real gain was allocated to wages. A significant portion was allocated to benefits increases. But I think real wage rates still increased for the median worker.

The unskilled, inexperienced worker - the one likely to be earning minimum wage - probably did not realize productivity gains which would have allowed employers to increase his wage rate. Bus boys, lawn care workers, and hospital orderlies are doing their jobs in much the same way today as they did 40 years ago.

Assume that unskilled workers realized no productivity gains while almost everyone else did. The real gap between median wages and the minimum wage would surely have grown.

Here is a good austrian argument for how hiking the minimum wage causes slowed economic growth coupled with CPI increase.

1)You raise the cost of hiring workers,
2)This raises costs to produce goods.
3)This means enterprises that are only marginally profitable go out of business entirely. (The economy suffers)
4) Eventually the higher costs leads business to raise prices so they can stay in the black

Tadah, you have CPI increase and economic stagnation.

I wrote a similar, but brief, letter to my local paper last summer. I pointed out the effect of minimum wage law on the Econ 101 law of downward-sloping demand, and the adverse effect on unemployment.

For my trouble, I received anonymous snailmail scolding me for being greedy and heartless. Well excuse me, I didn't advocate anything, but merely wrote to inform or remind readers of this cause-and-effect.

Seems that some individuals cannot get simple principles to take hold in their heads.

No, it's just that ideology trumps reason sometimes.