It's been a few years since I talked about this in depth, so I thought it was worth revisiting. Here is an interesting link that shows the value of the minimum wage, both in nominal terms, and in real terms (adjusted for inflation). Take note that during the 60's and 70's the minimum wage was raised almost every year. Take note that the real value of the minimum wage reached it's peak in the late 60's/early 70's.
http://oregonstate.edu/instruct/anth484/minwage.html
Here is a historical chart of the increases in the minimum wage.
http://www.dol.gov/whd/minwage/chart.htm
Here is an interactive history of the month to month unemployment rate.
http://data.bls.gov/timeseries/LNS14000000
Here's a table I made that shows the 1) the dates when the minimum wage was increased, 2) how much it was raised 3) the value of that increase in 2013 dollars 4) the unemployment rate when that increase kicked in 5) the unemployment rate 1 year later after the increase has had it's time to filter through the economy and 6) the percent decline in the unemployment rate. Note that when the unemployment rate went up, this is marked as 0.
Jan 1950 0.35 3.40 6.5 3.7 -43%
March 1956 0.25 2.15 4.2 3.7 -12%
Sept 1961 0.15 1.17 6.7 5.6 -16%
Sept 1963 0.10 0.76 5.5 5.1 -7%
Sept 1964 0.15 1.13 5.1 4.3 -16%
Sept 1965 0.10 0.74 4.3 3.7 -14%
Feb 1967 0.15 1.05 3.8 3.8 0
Feb 1968 0.20 1.34 3.8 3.4 -11%
Feb 1969 0.15 0.96 3.4 4.2 0
Feb 1970 0.15 0.90 4.2 5.9 0
Feb 1971 0.15 0.87 5.9 5.7 -3%
May 1974 0.40 1.90 5.1 9.0 0
Jan 1975 0.10 0.43 8.1 7.9 -2%
Jan 1976 0.20 0.82 7.9 7.5 -5%
Jan 1977 0.20 0.77 7.5 6.4 -15%
Jan 1978 0.35 1.26 6.4 5.9 -8%
Jan 1979 0.25 0.81 5.9 6.3 0
Jan 1980 0.20 0.57 6.3 7.5 0
Jan 1981 0.25 0.64 7.5 8.6 0
Apr 1990 0.45 0.81 5.4 6.7 0
Apr 1991 0.45 0.77 6.7 7.4 0
Oct 1996 0.50 0.75 5.2 4.7 -10%
Sept 1997 0.40 0.58 4.9 4.6 -6%
July 2007 0.70 0.79 4.7 5.8 0
Jul 2008 0.70 0.76 5.8 9.5 0
Jul 2009 0.70 0.76 9.5 9.5 0
What you'll find is that historically, the minimum wage has been a handy tool to lower the unemployment rate. If the increase is large enough, it will decrease the unemployment rate more. If it's a small increase, not much movement will happen. If we have an economy that is contracting, and the increase is small, there won't be any reduction in the unemployment rate.
I was trying to figure out if you could get an estimate of how much you could reduce the unemployment rate by a given increase in the minimum wage, but given that our labor force has historically been rather dynamic, it would be quite a pain to calculate.
they would make it happen.
I think they want the unemployment rate to stay where it is.
I don't know the answer and I sure do not have data, but your correlation of change in unemployment rate with minimum wage assumes that the minimum wage is the sole independent variable. Potential other independent variables are tax rates and interest rates. I also think that the data should include every year's minimum wage rate (or change) and unemployment rate to validate the correlation. For example with no changes in the minimum wage for quite a period in the 80's (I believe) the unemployment rate was low (but changed).
Willy's charts, graphs, etc tend to work in a vacuum and often assume cause and effect when there really is no correlation between the two.
If you sift through enough data you can always find coincidental "trends" that are statistically meaningless, yet can be quoted to "prove" a point. Case in point, does anyone really believe that a National or American conference winner of the Superbowl really portends a Democratic or GOP victory for POTUS? There are stats that back this up, but those stats, like Willy's here and completely irrelevant and have no meaning in the real world.
Just remember "figures don't lie, but liar figure"
First, let me say that I'm not assuming that the minimum wage is the only variable. I think I said that in my OP, noting that raising the minimum wage, at least slightly, doesn't improve anything when you have a contracting economy. A number of things effect the total unemployment rate, but what's interesting is that when it was changed on a year to year basis, you can limit these other variable to quite a degree, and see what the minimum wage itself is doing. The minimum wage is most certainly an important factor, as it provides for the floor for all consumer demand, which is 70% of all aggregate demand.
But take look at the unemployment rate in the 80's, Duane. The 1980's had the worst unemployment rate of any other decade since The Great Depression. As bad as unemployment is now, it's still better today than it was in the 80's. In the 80's, unemployment surged to double digit levels for the first time since the Depression. Reagan's unemployment rate was higher than Carter's, with the exception of his last year in office.
The 80's also saw weak GDP growth. Here is the average GDP growth decade by decade.
50's: 4.1%
60's% 4.4%
70's: 3.1%
80's: 2.7%
90's: 3.1%
-- Modified on 9/20/2013 9:59:41 AM
I'm sorry but (in about 30 minutes) I do not see the correlation of unemployment with Minimum wages. I ran a correlation of change in Monthly real Minimum wage with 12 month change in unemployment for 1950 through mid 2013 and got a correlation coefficient of 0.067.
I then looked at the decade average data which also did not show me much correlation
Decade Start Avg Min Wage Avg Unemployment Avg Real Min Wage
1950 0.85 4.51 7.34
1960 1.27 4.78 9.23
1970 2.05 6.22 9.14
1980 3.33 7.27 7.52
1990 4.44 5.76 6.92
2000 5.45 5.54 6.58
2010 7.25 8.64 7.52
But you are right about the 80s being the highest average unemployment other than the current decade...but unemployment fell through the 80s with almost no change in the minimum wage while in the 70s unemployment stayed high despite a number of increases in the minimum wage
-- Modified on 9/20/2013 10:36:20 AM
between "leading" and "lagging" indicators.
I would do it, but I just don't have the time or the inclination to do so, because I know on this subject Willy simply doesn't want to be "confused" by the facts.
The 70's was a bit of an aberration, due to a lot of factors. We had an oil embargo at the beginning of the decade and at the end of the decade. We had a lot of war bonds that needed to be paid off at the end of Vietnam. Then Nixon took us off Bretton Woods and let the dollar float. We had stagflation at the end of the decade, which I don't think we've ever had before or since.
But despite all that, the 70's saw more GDP growth than the 80's, and also had lower unemployment rates.
Duane, it would be interesting to run your calculation again, while taking out periods of recession.
-- Modified on 9/20/2013 1:39:17 PM
by either adding or subtracting data all willy nilly, like taking out periods of recession, you can make the numbers say anything you want to. Also keep in mind that unemployment is usually a lagging indicator of recession, so your numbers are going to really be skewed by taking out recessionary periods.
You are simply going about this assbackwards, you have a predetermined result that you want to prove, and you keep fucking with the numbers until they prove what you want them to.
I am sure you know that anyone with any mathematical backround at all can PROVE that 2+2=5, What you are doing is just a simpler exercise doing the very same thing.
...is what the minimum wage does to the unemployment picture, if you remove all other factors, which is a giant PITA, given how diverse and dynamic our economy is.
It's clear to me that when you have a sudden market correction, unemployment is going to increase, no matter what you do. For that reason, I want to take the recessions out, not to get a pre-determined result, but because those numbers don't really tell me anything. If we knew for sure what the unemployment rate would have been without a given increase, that would be one thing, but we don't have access to data from alternate universes. 
This is my reasoning for looking closely at the numbers in the 60's and 70's when we had a minimum wage increase almost every year. I'm just trying to figure out ways to try to limit the influence of other economic factors on the result.
is the fact that recessions usually cause unemployement not the other way around. Also market corrections are a function of Wall St and often have no correlation to Main St, and further more, when market corrections lead to recessions they are a leading indicator to the recession itself and the resulting unemployment is a lagging indicator. Before I go any further, am I making sense to you so far?
-- Modified on 9/20/2013 4:22:06 PM
Willy;
I haven't ever posted on this board before, someone told me to check it out for a good laugh though so I've been lurking and reading a bit. Your post just has me laughing my ass off so I thought I'd ask a few questions.
Have you ever owned a business? Ever run one? So you claim that increases in the minimum wage lower unemployment? And that the larger the increase the more it lowers unemployment? Good grief!!!
So willy, how high should the minimum wage be to do away with unemployment? Would maybe $25 per hour minimum lead to full employment? Again, good grief!
Regards.....RR
Can you imagine what $100hr would do?
Yes, this place is good for a laugh or two, especially if you don't take the trolls too seriously.
Welcome to the loony bin, I hope you stick around a while. If you think Willy's statement regarding unemployment is funny, "You haven't seen nothing yet" lol
I build audio electronics for musicians. Really, it's just a hobby that I make a few bucks on. I'd love to do it full time, but there aren't enough hours in the day to do that.
I would point out that I'm not pulling these numbers out of the air. Productivity is the main source of supply. Wages are the main source of demand. For an economy to remain balanced, supply must equal demand. Otherwise you have either inflation or overproduction.
What I'm saying is that we have had large increases in productivity gains since the early 70's, while wages have remained (mostly) flat. This leads to a debt bubble, overproduction, and it explains why we've had one bubble after another. This is precisely why the economy crashed in '08.
In the food service industry, you have pretty horrific wage to productivity ratios averaging about 1:4. In the economy overall, it's 1:2. What this means is that half of all consumption MUST be consumed with new debt creation. We are reinflating the bubble.
There are only two ways to fix this. Increase demand or reduce productivity. Since burger flippers have a 1:4 wage to productivity ratio, then if we returned to a 1:1 ratio like we had prior to the early 70's, then burger flippers would be making 4 times higher wages, i.e. the minimum wage times 4 = $29 an hour.
Note that this is what their labor is actually worth. They just don't keep it. Instead it goes to the top 1%. Which, among other things, explains why the top 1% has seen 95% of the income gains since '09.
All I'm saying is that when someone talks about paying burger flippers $12 or $15 an hour, that's not crazy. In fact, they would STILL be getting robbed blind. They would just have their wage to productivity ratios reduced slightly.
somewhere in the data I quickly found I saw that the % of workers living off minimum wage has fallen since the 1970s......so whatever impetus higher minimum wage might have to the economy (I'm not saying I agree on that) it would be less now than 40 years ago.
I imagine that is the case, especially as our currency has devalued over the years. Even many burger flipper jobs pay more than minimum wage, if only slightly. It does have a real impact though, as it does determine what the wage floor is.
The government in collusion with the corporatocracy is seeking a non violent method of ridding themselves of every surplus human being that is breathing. This means they must marginalize and make unemployable anyone and everyone that doesn't fit the "New Millennium" image. Or get us into a third World War thus subsequently thinning the herd.
OH! You don't have sufficient funds in your bank account to cover the automated withdrawal by a corporation; No prob, the bank will pay them and charge you $40 dollars plus the principle because of your impoverishment. But wait; isn't the bank supposed to work for me? Fuck you citizen/customer! We're not a book-keeping service (although we advertise book keeping services from one end of the bank to the other) a corporation said they wanted X-amount of your money, and we work for them, NOT you!
We’re fuck'n DOOMED! The banks and Wall Street own us and they make the Goddamn rules. Every President since Truman has been a complicit tool to the bankster corporatocracy with Obama being their shining glory. Wealth disparity is as high as ever been in recorded history, and the corporate plutocracy still demands MORE from the peasants!
If you get rid of people, then you lower the labor supply, which would drive up wages. I think that is why Dubya didn't really have any issue with illegal immigration. It cuts worker's wages.
When the Bubonic Plague hit Europe in the 14th century, it ended up wiping out about a third to half of the entire population. As a result, there was a severe labor shortage. This drove the price of labor sky high. This ended up creating Europe's first Middle Class, who had enough free time to ponder literature, art, and the sciences. This gave rise to the Renaissance, which ultimately created the European Enlightenment. And the philosophy of that Enlightenment became the intellectual foundation for the creation of the US government.
So no, the corporatocracy doesn't want us dead. That's the LAST thing they want.
but the number of POOR has doubled in the United States in the last 5 years while the 1% is getting richer nearly exponentially. Perhaps there is some truth to the "secret internment camps" that wing-nuts and conspiracy theorists tell of.
just sick enough to make a ton of money off us, then dead before I reach retirement at 72 so I get no Social Security
I don't really think much of the minimum wage since it is not a living wage. Too many people in America today are suffering while the wealthy are taking a larger and larger portions of the profits. There is something very wrong with a system when some one can work hard all day and can't make enough to live without outside help. That is a violation of "Natural Law" (look that up if you don't understand what that means)! I believe less government is better but I also believe that moral business practices require an employer to pay a living wage. Too many don't.
If a society fails to provide fair opportunities for it's least I foresee troubling times ahead. I have lived this in my native country and America seems to be moving in that direction which is very sad to me. No one can predict the outcome if the present system collapses. I fear that the loss of liberty is the likely end result.
If you don't know what liberty really is you certainly will when you are choking under the chains of oppression when it is defined by it's absence as I did in my birthplace of Burma.
I know my message is mixed. With great power comes great responsibility. I believe the same can be said of wealth.
-- Modified on 9/21/2013 12:03:01 PM
Nor are minimum wage jobs supposed to be lifetime endeavors. Flipping hamburgers is supposed to be an entry level job that you outgrow when either your education is complete, or you grow into a better job.
Entry level jobs are supposed to be where you get the experience, and get paid, while you learn the skills to get a better paying job. Anyone who is still flipping burgers in their 30's should really look in the mirror and question their own life decisions rather than look to government (taxpayers) to subidize their bad choices in life.
I beg to differ. Your President Franklin Delano Roosevelt wanted Americans to get "a fair day's pay for a fair day's work." I can only conclude that in fact means a fair minimum living wage (note the word minimum). From what I understand of American history during that period large numbers of workers were unemployed as the result of the Great Depression resulting in an excess of available labor. The minimum wage was intended to protect the most vulnerable workers from exploitation by employers which was a common practice at the time.
So much for slogans . . .
A minimum wage does not guarantee that there will be jobs available. Just recently a Wal-Mart near where I live eliminated 33 part-time checkout jobs that paid a very low wage by replacing those people with scanning machines.
Would you not agree that this is the driving trend in America today? My driver used to work for Bristol Myers Squibb. Apparently he was there the day that every secretary was given her pink slip because computers and laptops had advanced so much that the management decided they were no longer needed. He told me that the want ad's used to be full of those jobs. I just checked the paper for my town this morning and there are none listed.
Maybe soon they will be coming for your job if you work for a company as a manager. With computers being so efficient not so many managers will be needed in the future.
So much for all that education when you hit the ranks of the unemployed at age 50 . . . Sorry, we are looking for a younger person whom we can pay less and exploit more easily.
I guess that is why I see more and more older workers flipping hamburgers part time.
There is something seriously wrong when this a common occurrence
is one of the surest ways to eliminate those jobs entirely, or at best create an inflationary spiral that will lead to high interest rates which will crush an already weak economy.
FDR was a Socialist, and Social Security nothing more than a Ponzi scheme. As I have said a thousand times, for a free market to work and thrive, Government needs to regulate, not meddle. The problem today is that people seem to want government to meddle, and then they cry when the results are predictably bad.
Legislating a $15 hr minimum wage won't change what is fundamentally wrong with our economy, and at some point there will be a very high price to pay, just like when the government decided that every one should be able to buy a house, whether or not they were credit worthy or could even afford the payments in the first place, and we all know how well that worked out, don't we?