Daily Archives: 02/26/2013

Great sentences on the minimum wage

This from a blog focusing on monetary economics!

From Bill Woolsey. I’m not sure about the end of this one way or the other but its an interesting thought:

“My vision of the real world is that it is rife with monopoly, monopsony, and all sorts of price and wage discrimination. But, this is in the context of lots of competition. Competition is “imperfect,” but the gains and losses in efficiency are small and fleeting in world of creative destruction.
Still, I wouldn’t be surprised if the monopsony effect resulted in some firms hiring more workers due to a higher minimum wage. Unfortunately, that same increase in the minimum wage will push the wage above the marginal revenue product of labor for other firms so that they hire fewer workers.
The notion that government operates like an omniscient benevolent despot and could and would set a wage in each and every market so that competitive equilibrium is approximated is completely unrealistic. I think a more plausible starting place would be politicians trading off the loss of employment versus the increase in wage income. That would suggest that minimum wages would be set above the marginal revenue product of the current level of employment. Of course, reduced profits to firms, very significant politically relevant short run, and even higher prices to those purchasing the products might relevant.”

Our estimates are pooled across labor markets and firms. A zero effect really just means we’ve got about as many going one way as the other.
The wage discrimination point in the post is important to consider too, although its relative prevalence is obviously an empirical question (I’m guessing these places for the minimum wage discussion have take-it-or-leave it wage structures).

Great sentences on the minimum wage
dkuehn
Sun, 24 Feb 2013 18:40:00 GMT

Even better though I think in the Woolsey piece is this:

With perfect wage discrimination, or just sufficient wage discrimination to exhaust all the gains from trade, a minimum wage will not increase employment.   On the other hand, as long as it is no higher than the marginal revenue product of labor, it would raise the wages of all of the workers being paid wages less than the marginal revenue product of labor without there being any decrease in employment.

A minimum wage (or a union) could increase the wage and not reduce the quantity of labor employed.    The only effect would be increase the wage of the least paid workers.  I think it’s a revelation.   Also, I tinink wage discrimination is more the norm than the exception.  Otherwise, why are employees encouraged to not tell others what they are paid?

The Resurgence in U.S. Manufacturing

 

Data recently released by the Bureau of Labor Statistics indicate that the U.S. ranked 7th among 19 countries in the increase in manufacturing output between 2009 and 2011.  Manufacturing output grew 16% in the past two years.  The highest growth in manufacturing occurred in Singapore and Taiwan.  Among European countries Sweden and the Czech Republic had the fastest growth in manufacturing.  Manufacturing output actually fell in the past two years in Australia and grew at the slowest rate in Denmark, Norway and France.

MFG1

The U.S. ranked 6th in worker productivity gains in the manufacturing sector between 2009 and 2011.   The five countries with the fastest productivity growth were the countries with the biggest growth in manufacturing output.  Australia was the only country where worker productivity fell.  Worker productivity grew at the smallest rate in Belgium, Canada and Norway.

MFG3

Manufacturing employment (measured by total worker hours) fell in 8 of the 19 countries reported by the BLS.  Manufacturing employment grew by 2.2% in the U.S. between 2009 and 2011 and that was enough to rank 6th.  The fastest growth in total employment in manufacturing occurred in Taiwan, Germany and South Korea.

MFG2

In summary, the U.S. has ranked near the top of developed countries in manufacturing growth between 2009 and 2011.  The growth in manufacturing since 2009 in the developed world has been fueled primarily by productivity gains rather than by increases in manufacturing employment.  Output, employment and productivity in manufacturing has grown more rapidly in Asian countries such as Taiwan and South Korea than in Europe.  Australia has lagged other developed countries in terms of manufacturing growth since 2009.

The Resurgence in U.S. Manufacturing
Stephen Bronars
Fri, 07 Dec 2012 12:51:16 GMT