Greg Mankiw asks a useful question:
Consider this useful link from the US Bureau of Labor Statistics, which provides the following tables, showing metropolitan and non-metropolitan data for cashiers:
Metropolitan areas with the highest employment level in this occupation:
Notice how none of these metropolitan areas have an hourly mean wage below $9.
Now let's take a look at the same data as applied to non-metropolitan areas:
Interesting. Only one region shows a mean hourly wage above $9, and that is a the non-metropolitan region of Michigan that is nearest to Detroit, Ann Arbor, and Toledo.
A deeper dive into the BLS data reveals that California's mean hourly wage for cashiers is $9.81, while that of South Carolina is $8.67. The mean hourly wage for cashiers in New Jersey is $9.16; in Nebraska it is $8.79. In Massachusetts it is $9.57, while in Missouri it is $8.86.
There certainly does seem to be something magical about $9 per hour. It seems that highly populated, metropolitan, left-leaning regions of the country - those with existing "living wage" laws, for example, will be unaffected by the impending unemployment that comes with a rise in minimum wage.
On the other hand, sparsely populated, rural, right-leaning regions of the country will suffer greater unemployment as a result of this law and will be, cruelly, politically impotent against it.
There is one question I would like to see some reporter ask Alan Krueger, the president's chief economist: How did they decide that $9 per hour is the right level? Why not $10 or $12 or $15 or $20? Presumably, the president's economic team must believe that the adverse employment effects become sufficiently large at some point that further increases are undesirable. But what calculations led them to decide that $9 strikes the right balance?From his chair in Boston, Massachusetts, it is probably difficult for him to understand the political genius behind a $9 minimum wage. It is incumbent on someone who lives in Utah, or Montana, or Oklahoma, or... Texas... to point out why Obama would like to set the minimum wage at $9 instead of >$10. So let's get to it.
Consider this useful link from the US Bureau of Labor Statistics, which provides the following tables, showing metropolitan and non-metropolitan data for cashiers:
Metropolitan areas with the highest employment level in this occupation:
| Metropolitan area | Employment (1) | Employment per thousand jobs | Location quotient (9) | Hourly mean wage | Annual mean wage (2) |
|---|---|---|---|---|---|
| New York-White Plains-Wayne, NY-NJ Metropolitan Division | 106,250 | 20.99 | 0.81 | $10.28 | $21,370 |
| Chicago-Joliet-Naperville, IL Metropolitan Division | 89,400 | 24.95 | 0.97 | $9.93 | $20,660 |
| Los Angeles-Long Beach-Glendale, CA Metropolitan Division | 85,340 | 22.32 | 0.86 | $10.84 | $22,540 |
| Houston-Sugar Land-Baytown, TX | 57,660 | 22.60 | 0.87 | $9.44 | $19,640 |
| Atlanta-Sandy Springs-Marietta, GA | 54,480 | 24.45 | 0.95 | $9.39 | $19,520 |
| Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Division | 47,290 | 20.47 | 0.79 | $10.39 | $21,620 |
| Philadelphia, PA Metropolitan Division | 43,950 | 24.21 | 0.94 | $9.97 | $20,750 |
| Dallas-Plano-Irving, TX Metropolitan Division | 42,220 | 20.65 | 0.80 | $9.39 | $19,520 |
| Phoenix-Mesa-Glendale, AZ | 35,120 | 20.68 | 0.80 | $10.97 | $22,820 |
| Minneapolis-St. Paul-Bloomington, MN-WI | 34,290 | 20.04 | 0.78 | $9.82 | $20,430 |
Notice how none of these metropolitan areas have an hourly mean wage below $9.
Now let's take a look at the same data as applied to non-metropolitan areas:
| Nonmetropolitan area | Employment (1) | Employment per thousand jobs | Location quotient (9) | Hourly mean wage | Annual mean wage (2) |
|---|---|---|---|---|---|
| Kansas nonmetropolitan area | 11,450 | 30.08 | 1.16 | $8.56 | $17,800 |
| Other North Carolina nonmetropolitan area | 9,990 | 34.20 | 1.32 | $8.78 | $18,250 |
| Eastern Texas nonmetropolitan area | 8,600 | 31.04 | 1.20 | $8.73 | $18,160 |
| Balance of Lower Peninsula of Michigan nonmetropolitan area | 8,210 | 29.77 | 1.15 | $9.62 | $20,020 |
| Western Central North Carolina nonmetropolitan area | 8,170 | 33.73 | 1.31 | $8.88 | $18,460 |
Interesting. Only one region shows a mean hourly wage above $9, and that is a the non-metropolitan region of Michigan that is nearest to Detroit, Ann Arbor, and Toledo.
A deeper dive into the BLS data reveals that California's mean hourly wage for cashiers is $9.81, while that of South Carolina is $8.67. The mean hourly wage for cashiers in New Jersey is $9.16; in Nebraska it is $8.79. In Massachusetts it is $9.57, while in Missouri it is $8.86.
There certainly does seem to be something magical about $9 per hour. It seems that highly populated, metropolitan, left-leaning regions of the country - those with existing "living wage" laws, for example, will be unaffected by the impending unemployment that comes with a rise in minimum wage.
On the other hand, sparsely populated, rural, right-leaning regions of the country will suffer greater unemployment as a result of this law and will be, cruelly, politically impotent against it.
I come down on the side of the M/W debate that believes U/E will be minimally impacted by an increase in M/W, but you do highlight something interesting about how the M/W increase will impact areas different.
ReplyDeleteTake a look at this data from BLS, which looks at the percentage of hourly workers making M/W or less (table 3):
http://www.bls.gov/cps/minwage2011tbls.htm#2
For instance, Georgia and Alaska had M/W rates at 7.25 in 2011, and so an increase to 9.00 would impact both states equally it would appear. However, as a % of hourly workers making at or below M/W, Georgia stands at 9.6% while Alaska is at 1.9%. So, an increase would appear to impact Alaska less than Georgia.
Of course, this does not take into consideration those workers making in the 7.25 to 9.00 range, and what % of the work force earns in that range. But I think you have hit on something rather interesting.
Cheers