Disappointing discourse

In the current New Yorker, James Surowiecki cites research that finds minimum wages hikes are really good for everyone.  This is counter-intuitive for at least two reasons.  First, it is hard to deny the law of demand; we buy less at higher prices.  Second, its hard to believe that it has never dawned on many millions of business people that they could do themselves a big favor by unilaterally raising the wages of their lowest paid workers. "Better-paid workers tend to work harder ..." Surowiecki notes.  There is always a finding the "sweet spot" problem that we expect all owners to discover if they plan to stay in business.

To be sure, there are spontaneous salary hikes all around -- when employers find that the market is telling them that to retain the services of key people, they have to cover that worker's opportunity cost -- as it is signaled by the relevant labor market.

The Surowiecki piece disappoints for other reasons. He and the people he cites use "fair" as if waving that flag solves all problems.  Call that the "unfair" reliance on rhetoric.

He cites stagnating wages in recent years but we cannot know any of this by comparing snapshots; the fortunes of real people must be tracked.  This is hard.  So an uncountable number of lazy commentators fall back on comparing snapshots of different people in different years who may be in the same bracket or fit the same profile.

The writer also cites the fact that many companies are making a lot of money.  But they also compete on capital and many other markets; it is unlikely that they can easily dip into deep packets. More "sweet spot" problems.

Finally, the NY Times recently posted data on the shrinking middle class.  Where had these people gone?  Most had moved up. Have a look.