There he goes again…

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OK, my blood is boiling. Dr. David Neumark is at it again.

David Neumark in the WSJ

You may recall I explained that his “research” funding comes from the fast food industry. His benefactor is Rick Berman with his one stop shop of “agencies”- Employment Policies Institute, Center for Consumer Freedom, Center for Union Facts, et. al. And, this week Dr. Neumark published in the Wall Street Journal.

He was railing against the raising of the minimum wage. You also should recall that I don’t think the minimum wage should be raised either- because there are a few kids looking for their first jobs, there are a few small companies that have not become successful, etc. But, once a company is making $ 2, 3, 4 million gross and/or has 50 employees- it needs to be assessed a fee for any employee on its payroll that is costing you and me money- for welfare, for AFDC, for Medicaid. There is no way these employers should earn a profit by shifting the costs of their employees onto us- the average taxpayer. That’s the employer’s obligation.

Back to Dr. Neumark. By the fourth paragraph, he was playing fast and loose with the facts. He stated that there is a “difference between low-wage workers and low-income families”. But, instead of proving that distinction,  he switched his terminology to  “being poor”. That immediately clouds the issue- because being poor depends upon how big the family size is and how much income the wage-earners accrue.

He then claimed that “many low-wage workers are in higher-income families”. Did he offer any proof for this “fact”? Heck, no.  As a matter of fact, the US Census data demonstrate that only 25% of those earning minimum wage are teenagers. And, that does not reflect the fact that some of these teens might also be parents or the primary wage-earner.

We also know that more than 30% of working families are poor. Note the operative word there is ‘working’. They are not going to be poor if they are making significantly more money than the minimum wage. Even if the wage-earner is married and both spouses make $ 10 an hour, the family income would come to $ 40,000. That makes the family about 200% over the poverty level. But, they are still poor, by our standard definitions for a family of 3 or 4.

Neumark went on to say these folks may not be working full time. That’s true- because many employers do not want to be ‘burdened’ with the need to pay for vacations, health care, and other benefits that accure to full-time workers. Whose choice is that, then? The employee desperate for a job- any job- or the employer looking to save money?

Oh, he then claimed that “about half of the poor people have no workers [ed: in their families], in which case a higher minimum wage does no good”. If that basic premise were true, he would be right- because if one is not working, it makes no difference what the prevailing wage rate might be. But, only 30% of the poor have no jobs (US Census). And, of those, 3% of the total poor are retired and 30%  more are disabled. Hmm. Not exactly the caricature Neumark tried to paint- since none of these are “about 1/2”.

He also claimed that using the Current Population Survey (US Census, US Bureau of Labor Statistics), only 18% of those who may potentially earn the higher wages would be the poor, with almost 30% (29, to be precise) would go to those with 3X the poverty level or higher. I am not saying he is wrong- but I could find no such data in the surveys.

Neumark also dismissed the CBO (Congressional Budget Office) studies by saying “most surveys fail to find any solid evidence that higher minimum wages reduce poverty”. Oh- by citing the sum total of ZERO studies that support his assertion that the CBO reached the wrong conclusion.

Yes, Neumark manages to invent straw men (this is the common type of argument that misrepresents the opponent’s position; it’s successful, because the reader is typically ignorant of the facts or the position of the other) that he can destroy. But he provides little, if any, facts to support the conclusions he clearly drew before he developed any of his “facts”.

Kind of like those creationists who dispute the fact that the world is billions of years old because their beliefs have to be right.

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4 thoughts on “There he goes again…”

  1. Roy, I am curious about your position about employer obligations to their employees. Does it vary depending on the industry a business is in? Because, some businesses run on tighter margins than others. Also, some industries have mostly entry level jobs such as retail. Since every business is different how do we regulate their obligations?

    1. It certainly varies by the size of a firm. A nascent firm, one that is small, one with few employees- they are different from the larger firms.
      A company with a few 100K in sales and an employee or two is very different from one with $2.5KK in sales and 50 employees and one with $ 900KK in sales and 4000 employees.
      Retail or wholesale doesn’t make much difference, nor does a professional service firm or a manufacturer. It’s the ability to pay a reasonable wage that sets up the social contract.
      The larger firms have no right to pay their employees peanuts, claim they make big profits, and leave the welfare of their employees to the US taxpayer.

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