Tim Worstall

Anti-Minimum Wage Blogger Accidentally Makes the Case for Economic Inclusion

This doesn't happen when you raise the minimum wage.

This doesn’t happen when you raise the minimum wage.

This morning, Tim Worstall wrote a post about Civic Ventures founder Nick Hanauer. It’s not much of a post, really: Worstall just attacks Hanauer’s most recent article for PBS Newshour by block-quoting it and then block-quoting a column Worstall himself wrote back in May. (As we all know, there’s nothing in all of blogdom that’s more thrilling than a battle of the block quotes.)

Anyway, to summarize Worstall’s many paragraphs of quoted text: he’s arguing that a National Employment Law Project (NELP) study Hanauer quoted in his article only looks at the total number of Americans employed, not at the granular levels of unemployment among smaller portions of the population. If you’ll permit me a single block quote from Worstall’s post, I think this gets to the crux of his argument:

A place that more than doubles its population is going to have more jobs at the end of the process than at the beginning. This proves absolutely nothing at all about the minimum wage.

Hmmmmm. Okay. I’d argue that what the NELP article does most effectively is it disproves the claims that the apocalypse will unfold if the minimum wage is raised—the restaurant owners who say they’ll never open another restaurant in their “beloved Seattle” if the minimum wage goes up, say, or the newspaper editorial boards that promise nobody will ever open another hotel near an airport if a higher minimum wage is adopted there. Never—not once since the adoption of the federal minimum wage—has that kind of apocalyptic scenario happened in America.

The NELP report is a call for reasonable discourse when it comes to the minimum wage—a plea for business owners to stop threatening their employees with rampant layoffs if the wage goes up, and a demand that newspaper editorial boards address the topic with a more level head. The minimum wage does not cause an outsize drop in employment numbers. Doesn’t happen. The polling successes of wage increases indicates that the American people agree: we need a more rational discussion about what the minimum wage can and can’t do. Stop with the fear-mongering.

Of course, people like Tim Worstall love the fear-mongering because it doesn’t facilitate discussion. If the top one percent can just blithely threaten the lowest earners in a society with unemployment, that works out much better for the top one percent. But when NELP comes along and indicates that unemployment doesn’t skyrocket when wages increase, that removes one of their most successful arguments.

I do want to point out, though, that what Worstall says in the block quote above is central to the idea of middle-out economics. When more people are involved in an economy, that economy thrives. Add more workers to an economy—workers who spend money as empowered consumers—and you’ll get more jobs. America is exponentially more prosperous now than it was in the times of slavery, say, or when women were largely removed from the workforce. When we allow more immigrants and refugees to take part in the economy, and when we encourage the full participation of LGBTQ citizens, the economy does better. That’s because the top one percent are not the true job creators in this economy—you are. And I am. We all are.

The best way to grow the economy is to ensure that more people are fully engaged as consumers. They buy more goods and services, which increases demand, which means employers have to hire more employees to keep up with that spending. NELP’s study is a major step toward this new and exciting understanding of economics. I’m glad to see Worstall staggering toward embracing a more inclusive economics. Maybe one day he’ll accidentally block quote his way to enlightenment.

If You Think the New Overtime Rule Is “Entirely Trivial,” You Really Should Get Out More

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Our old “friendTim Worstall is back at it on his occasionally almost nearly coherent Forbes blog. This time, he’s talking about the increased overtime threshold. As you may have expected, he thinks paying more overtime is a bad idea. Here Tim is being, if nothing else, consistent; he thinks a minimum wage is a bad idea, after all, so why wouldn’t he be against a policy like overtime that benefits workers?

But the truth about overtime is that Tim just doesn’t care all that much. No, really. He calls the new threshold “entirely trivial.” That’s a direct quote. In fact, he uses the word “trivial” twice to describe the effects of overtime and then he says he’s not even sure the White House estimates of what the overtime raise will pay out—”$1.2 billion a year over the next decade”—are worthy of the word “trivial,” they’re so insignificant. He concludes:

Probably the correct way to think of this is as a nice piece of politics that everyone can have a good shout about rather than a piece of useful economics. Everyone gets to show where they stand with a lot of heat and not much light. Or, of course, that very small tempest in a not very large teapot.

Wow. Tim, here, is a classic example of what happens when someone argues politics on the internet for too long. Everything becomes academic. When you call a policy that will directly improve the lives of 12 and a half million Americans “a nice piece of politics,” you’ve passed a very significant point. When you have your head in the conservative economics bubble for years at a time, apparently, you forget that you’re arguing about real human beings with real lives and you start to think of it as points on a scorecard.

Sure, maybe to our buddy Tim 1.2 billion dollars a year is nothing. But to a retail manager who’s trying to raise two kids on her $470-a-week salary, this threshold means a hell of a lot. It stands for security. With the new overtime rules, our manager will enjoy one of three outcomes: either her boss will keep asking her to work overtime at time-and-a-half so she’ll make more money per paycheck; or her boss will ask her to work only 40 hours per week, giving her the time to look for a second job, start her own business, or spend more time with her children; or her boss will give her a raise above the $47,476 annual threshold and ask her to keep working the same long hours at a much higher rate of pay. Any one of those possibilities results in a better outcome for our retail manager. Now multiply her experience by 12.5 million and spread those people around the country and you start to get a sense of how huge the idea of restoring the overtime threshold really will be for Americans.

How is this not “useful economics,” Tim? My God, what else is economics for, if not broadly improving the lives of more people? Maybe a blogger for Forbes might think of economics as something you blab about on the sidelines while things happen in the real world, but most of us out here understand that economics is about making a difference for everyone. That’s why we’re winning across the country on the $15 minimum wage and overtime while you keep pontificating about how many digits a number can have before it becomes worthy of your attention.

But you know what? Enjoy your dumb little bubble, Tim. You can keep talking on your blog about how 1.2 billion dollars is basically nothing, and how a real economist wouldn’t even bother with that kind of pocket change. In the meantime, real Americans will be earning more money, getting more of their own time back, and enjoying some of the security that Americans used to enjoy. To me, that sounds like the exact opposite of “trivial,” but I guess we can’t all have the high-minded  macro-vision of a Forbes blogger, now can we? And if you keep ceding topics like overtime as unworthy of your haughty attentions, that means progressives can keep winning the battles that matter to real human beings out here in the real world. So by all means, keep wallowing in your ignorance, Tim. It makes things easier for us.

Seattle’s Booming Economy Is, Apparently, A Mirage

seattle minimum wage unemploymment

Seattle: A fever dream we’re all trapped in?

Hot takes! Get your hot takes! Forbes contributor Tim Worstall has one cooling on the windowsill and you’d better grab it while it’s steaming.

Actually, even if you don’t read it today, it’ll still steam because, like warm garbage on a summer day, his consistent beat regarding the economic calamity of a higher minimum wage is only getting more ripe as time goes on.

Today, Worstall has chosen to launch an attack (kind of?) on a new paper about a year-old study. But does he refute it with evidence? Or data? Or, dare I ask, economic reasoning?

Nope! He just disagrees with it.

First let’s read the initial article that Worstall has decided to launch in on. It’s a really solid, illuminating paper by Jeannette Wicks-Lim about a study she co-authored in January of last year about the minimum wage’s impacts on the economy, and how raising the minimum wage changes consumer and employer behavior.

The current state of research on this employment question, however, finds that minimum-wage increases do not produce significant job losses. This then raises an important policy question: Why haven’t there been significant job losses when minimum wages have increased?

First, the basic law of demand actually says something quite different and more specific than just “if the price of something goes up, the quantity demanded of that thing goes down.” It actually says that if the price of something goes up—and nothing else changes—the quantity demanded of that something goes down. In the real world, however, other things are changing all the time. Moreover, raising the minimum wage itself causes businesses to change how they operate (more on this below). As a result, the minimum wage’s actual impact on jobs depends on what other factors are changing at the same time.

Well now, that sounds like a reasonable understanding of the economy. And so nuanced! But of course, Tim Worstall does not deal in nuance—and he swiftly rejected this paper in its entirety. He writes:

That’s not in fact the current finding. Which is, rather, that modest minimum wage increases seem to have modest effects. Which isn’t all that surprising; most modest things do have modest effects. But we can indeed see the effects of past minimum wage increases. We see them in the unemployment rates of teens and other disadvantaged in the American economy.

It’s not? Are you sure? It’s hard to say, as Worstall doesn’t actually cite any “current findings,” but we know of a few. Like this one and this one and also the entire history of the United States or even Tim Worstall himself. But let’s not trouble ourselves with data or facts, because Wortstall doesn’t. Let’s look at his other compelling arguments.

When Wicks-Lim uses our favorite PSBJ piece of the last year—the one that quoted business owners in their own words—to demonstrate that Seattle businesses are doing fine, Worstall pulls out the big guns.

“Actually, no” he disagrees, “we don’t quite have the detailed information yet that we would like, but we do have something indicative.”

Something indicative like all the new businesses we’ve added? Or perhaps he’s referencing this recent study from the University of Washington which found that the data “show no significant impact” on price levels and thus, no increased economic hardship being passed on to workers?

No, it’s likely (we know from past experience) that Worstall will point to the flawed economic findings of AEI, wherein economist Mark Perry attempted to demonstrate that Seattle has seen slowed growth since the beginning of the city’s march to $15. Of course, there’s one huge problem with Perry and AEI’s assertions—they notably used the Seattle region (where minimum wage is still below $10), and not Seattle proper. The region’s population is about 3.6 million; only around 650,000 can expect to be paid a higher minimum wage due to the city ordinance.

Again, there’s no way to know, as Worstall provides no data aside from his opinion that this simply cannot be true. Meanwhile, here on the ground in Seattle, it seems that our increased minimum wage has failed to result in fire and brimstone and the collapse of the local economy. And yet, somehow, Worstall comes to the conclusion that “in each area that has that higher minimum wage, we are seeing slower restaurant wage growth than in areas without that higher minimum wage.”

Which means there’s only one real possibility here: All of us here in Seattle are simply dreaming. We have fabricated this mythical city wherein a moderate, gradual increase of the minimum wage does not, in fact, completely level the city and lead to a giant spike in unemployment. We are all imaging Seattle and only Tim Worstall and his omnipotent, data-resistant feelings about the situation can possibly indicate the truth.