March 28, 2024

Economix Blog: What Economists Think About Raising the Minimum Wage

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

As Christina D. Romer wrote in a column on Sunday, there is some disagreement among economists about the prudence of raising the minimum wage. The Initiative on Global Markets at the University of Chicago’s Booth School of Business recently queried a panel of 38 economic experts on the subject, and the responses were mixed, particularly about the effect on low-skilled job seekers. (Nancy Folbre mentioned this survey in passing in her weekly post; here are the fuller findings.)

These were the responses to the first question, which dealt with whether raising the minimum wage would make it more difficult for low-skilled workers to find jobs.

Source: IGM Economic Experts Panel. Source: IGM Economic Experts Panel.

As you can see, of those who responded, about a quarter said they were “uncertain” about the proposition. Exactly zero percent said they either agreed or disagreed “strongly.”

It’s no wonder there’s so much expert uncertainty on this question, given the contentious and tangled literature on the subject. Twenty years ago, a groundbreaking study by Alan Krueger (now chairman of President Obama’s Council of Economic Advisers) and David Card was the first to use empirical data to study an increase in the minimum wage. It found that raising the wage did not reduce employment. Repeat studies since then have had more mixed results, and some have shown negative, though generally small, employment effects.

Ask economists about whether raising the minimum wage is worth the potential risks to low-skilled workers, though, and the responses tend to be much more favorable to a minimum-wage increase:

Source: IGM Economic Experts Panel. Source: IGM Economic Experts Panel.

Nearly half of the panelists agreed or strongly agreed that the benefits of raising the minimum wage and indexing it to inflation outweighed the costs. In the comments section, several of the economists mentioned that other policies, like the earned income tax credit, might be better suited to addressing the needs of low-income workers. Professor Romer had mentioned this in her column, as well.

These responses do not necessarily reflect the beliefs of all economists, the way a traditional poll might aim to be; rather, the panelists are among the more elite members of their profession and were selected to represent some of the better-known conservative, liberal, young and old scholars. They include Nobel laureates, John Bates Clark Medal recipients, Econometric Society fellows, past presidents of both the American Economic Association and American Finance Association, past Democratic and Republican members of the President’s Council of Economic Advisers, and editors of leading economic journals. A full list of the respondents and their comments can be found at the IGM Forum Web site.

Article source: http://economix.blogs.nytimes.com/2013/03/04/what-economists-think-about-raising-the-minimum-wage/?partner=rss&emc=rss

At This Girls’ Camp, Crafts Take a Drill Press

Though the slim, 5-foot-5 teenager dreams of becoming a basketball star, Nautika now has a backup plan after her weeklong immersion course: a career in manufacturing.

Just over a quarter of the 11.7 million workers in manufacturing are women. But Gadget Camp, a workshop for girls in this suburb west of Chicago, is part of an effort to change that.

Although the economy is wobbling and nearly 14 million people are looking for work, some employers are still having a hard time finding skilled workers for certain positions. Manufacturers in particular complain that few applicants can operate computerized equipment, read blueprints and solve production problems. And with the baby boomers starting to retire, these and other employers worry there will be few young workers willing or able to replace them.

Gadget Camp, sponsored in part by a foundation affiliated with the Fabricators and Manufacturers Association, which provided financing to nine other camps this summer, is intended to help over the long haul by exposing girls to an occupation they might previously have considered unappealing, if they considered it at all.

By the last day of camp, Nautika had told her parents that manufacturing was “cool.” Fashioning a lamp shade out of a thin piece of cardboard, she mused, “I have two good careers ahead of me.” Since the fragile recovery began, manufacturing is one of the few sectors that have added jobs. But the image of manufacturing as an occupation of the future has been tarnished by the exodus of factory jobs to foreign sites and the use of machinery to replace workers. Younger people, especially, see more alluring opportunities in digital technology, finance or health care.

“The perception is that there are no jobs in manufacturing,” said Susan H. Palisano, director of education and training at the Connecticut Center for Advanced Technology, a nonprofit group in East Hartford that promotes manufacturing employment and has run summer programs for middle-school students for the last three years. “It seems that everybody had an uncle or grandfather that got laid off.”

Across the country, a handful of companies, nonprofit groups, public educational agencies and even science museums are trying to make manufacturing seem, well, fun. Focusing mainly on children aged 10 to 17, organizations including the Da Vinci Science Center in Allentown, Pa.; and Stihl, a maker of chain saws and other outdoor power equipment in Virginia Beach, Va., run camps that let students operate basic machinery, meet workers and make things.

Nuts, Bolts Thingamajigs, the foundation that helped sponsor the Gadget camp in River Grove, has awarded $2,500 grants to 112 manufacturing-themed camps — most of them for boys and girls — around the country since 2004. “It’s not easy getting people into the career field,” said Marcia Arndt, a board member of the foundation. “I think there’s a myth out there that manufacturing is dirty and undesirable, but it’s really highly technological.”

Impressions also persist that manufacturing is a man’s job. Technical fields in general, and those that require scientific or mathematical backgrounds, are indeed dominated by men. Yet a Commerce Department report released early this month showed that women in such fields earn 33 percent more, on average, than women working outside of scientific and technical fields, a higher premium than men enjoy in similar occupations.

Antigone Sharris, who came up with the idea for the all-girls Gadget camp, had worked extensively in manufacturing before becoming an instructor in electronics, welding and computer-aided machinery at Triton College, a two-year public school here that provided some funding for the camp.

Article source: http://feeds.nytimes.com/click.phdo?i=ab16d2db4569a4464e313a2314bf31be

City Assisting Food Industry With Space and Money

Several of New York’s largest food factories have shut down in the past two years, but city officials are taking steps to preserve the industry.

Rather than conceding what is left of the city’s food-making trade, officials are arranging new spaces for kitchens and processing plants for small companies and securing private financing to help established food makers grow. On Tuesday, Mayor Michael R. Bloomberg and the City Council speaker, Christine C. Quinn, plan to announce that the city will put $1 million into a $10 million loan pool. The rest of the money will come from the Goldman Sachs investment bank.

Food makers have been one of the few sources of growth recently in the city’s industrial sector. While overall employment in manufacturing has shrunk by almost two-thirds since 1990 and continued to slide last year, the number of jobs in food-making businesses rose by about 6 percent last year, according to statistics kept by the city.

Even more important is the steady growth in the number of food companies started before and during the recession, said Seth W. Pinsky, the president of the city’s Economic Development Corporation. Although New York lost some big employers, including the Stella D’oro cookie factory in the Bronx and the Wonder Bread bakery in Queens, the total number of food businesses has been rising, he said.

Of course, some of the new companies were started by people who lost jobs on Wall Street or in other high-paying professions during the financial crisis, and many involve just one or two people baking cupcakes or cookies in their apartments. Still, city officials say they have seen evidence that the trend is sustainable and could create a substantial number of jobs for less-skilled workers and new immigrants.

“There’s a significant chance that a large percentage of these businesses will not be successful at all or will not be able to scale up significantly,” Mr. Pinsky said. “But you don’t need everyone to succeed. You want as high a percentage as possible to continue operating.

“You then need some of the business to go from small to medium sizes, and you want a small percent to really succeed and become large businesses.”

To improve the odds, the Economic Development Corporation is revamping several spaces, including the former Federal Building in Sunset Park, Brooklyn, to suit light manufacturing operations like food making. Next, it will look for a small-business lender to manage the $10 million loan fund established to help finance the growth of some promising small companies.

Alicia Glen, a managing director of the Goldman Sachs Urban Investment Group, said the food industry “struck us as a pretty good bet to make” because it offered opportunities for poor people and immigrants to find well-paying jobs in low- and moderate-income neighborhoods. Ms. Glen said the industry-specific fund would be a first for her group.

Speaker Quinn said these initiatives would provide “the much-needed financial lifeline to not only turn aspiring entrepreneurs into small business owners, but will also strengthen the existing industrial businesses.”

Adam Friedman, the director of the Pratt Center for Community Development, said he thought city officials could be on the right track because “New York is like this great big test kitchen.”

Mr. Friedman said the mix of cultures and steady flow of immigrants in the city created “new ideas for food,” some of which could become popular enough to be exported regionally or nationally.

New York would then have to fight to keep businesses from moving, Mr. Friedman said, because “after they get to a certain size, it may make sense for them to leave.” But that usually does not happen until a business needs more than 30,000 square feet of working space, he said. “That’s the tipping point.”

Article source: http://feeds.nytimes.com/click.phdo?i=afb529da10ae504733d70acd6475045e

Economix: The Return of the Blue-Collar Downturn

For much of 2010, the slumping economy was affecting white-collar, highly educated workers almost as much as it was affecting less educated and blue-collar workers. That’s no longer the case. In recent months, the economy has once again been easier on college graduates than it has on everyone else, much as it was during nearly all of 2008 and 2009.

The overall result is that the recession and its long aftermath have widened the portion of inequality that stems from education.

Last month, the share of four-year college graduates with jobs jumped to 74 percent, from 73.5 percent in April and 73.2 percent in January, according to Friday’s jobs report. That is the only educational group whose employment percentage is higher than it was in January.

Among people who attended college but do not have a four-year degree, 64.1 percent were employed last month, down from 64.6 percent in January. Among high-school graduates who never attended college, 54.6 percent had a job in May, unchanged from January; 38.5 percent of high-school dropouts were employed, down from 38.7 percent in January.

Obviously, the trends aren’t the only interesting part of those numbers. There are also huge differences in the employment levels for different educational groups.

What’s driving the numbers? In part, it’s the information economy’s continued demand for skilled workers whose jobs can’t easily be replaced by technology or cheaper foreign workers. The jobless rate for workers in the so-called information industries has dropped sharply over the last year. The jobless rate for workers making nondurable factory goods has not.

The salary trends have been moving in similar directions, as we have discussed here before. The gap between the pay of college graduates and everyone else is near an all-time high, according to the Bureau of Labor Statistics.

If you know anyone who is trying to decide whether to attend or finish college — and has seen lots of hand-wringing lately about whether college is still worth it in tough economic times — I would encourage you to share these numbers. The economy is tough for almost everyone, and education is not the only solution to our problems. But it is a big part of the solution, because things are a lot tougher for people with less education.

Article source: http://feeds.nytimes.com/click.phdo?i=b44052dbb8c99fd6aeffb8c6fcaccf14