Ask the grumpies: minimum wage

Mutant Supermodel asks:

what do economists think about raising the minimum wage? Is there a general consensus either way or is it as mixed up as it is on my Facebook feed?

#1 is not the economist but I’ll say that I support it right now, within reason.  What does #2 say?

Ok, the short of it is:  Economists are still divided on the topic of whether or not, and at what point, raising minimum wages decreases jobs or job growth.

Basic econ 101 theory says that if you raise the minimum wage, creating a wage floor, in a perfectly competitive market, then employment will go down because all the people who would have gotten jobs at lower wages will no longer get jobs.  (This is usually taught in the same chapter as why rent control is bad.)

That’s basic economic theory in a perfectly competitive market.  Market intervention hurts jobs.

HOWEVER, we don’t live in a textbook world.  So this is an empirical question.  And there are literally hundreds of papers exploring the effect of minimum wage increases in a non-experimental framework.  They find mixed results based on functional form.

The first major natural experiment on this topic is one by David Card and Alan Kruger.  They look at the effect of a minimum wage increase on employment of fast food workers at border counties in Pennsylvania and New Jersey.  They find that employment doesn’t change or actually *increases* in the state where the minimum wage goes up.  It doesn’t seem to be decreasing employment at all.

There are a number of potential explanations.  One that I’ve always liked (for its simplicity), but many prominent economists don’t share my like of is the thought that these fast food markets have monopsony power– which is like monopoly power, but what you have when you’re the only employer (or one of the only employers).  When employers have this kind of labor market power, they can keep wages artificially low because they can say either you work for us or you get nothing, because there’s no competitor to say you can work for me and I’ll give you a penny more (thus bidding up wages).  (You don’t need just one employer for there to be some monopsony power– just a small number of employers if they’re willing to collude, or for there to be other frictions in the labor market.)  When this happens, increasing the minimum wage would just reduce profits but wouldn’t negatively affect employment.

David Neumark is the big anti-Card and Kruger guy.  His work with coauthors argues that Card and Kruger’s survey data are inaccurate and that employment goes down based on administrative data.  Card and Kruger disagree.  There was some back and forth.  Cambridge-school economists tend to believe Card and Kruger.  Chicago-school economists tend to believe Neumark and Wascher.

More recently there’s been some work that reconciles all of the findings, suggesting that minimum wage increases don’t actually have a lot of effect in the short run.  People don’t get fired because the minimum wage increases, because firing people is bad for company morale (among other things).  HOWEVER, this newer work suggests that the minimum wage does depress job growth in the long-run.  As people leave (as they often do in minimum wage jobs), they’re not replaced  one-for-one.  There may also be an effect on overall growth by industry (with firms that can only afford minimum wage workers shrinking or going out of business), which would further disguise any negative effect on employment.

What’s the bottom-line?  Economists don’t know.  Most, if not all, economists will agree that there’s some point at which the minimum wage really does decrease employment rates.  (If minimum wage were $100/hr, most of us would stop sending our kids to daycare and fast food workers would be replaced entirely by machines.)  Many economists will also point out that, historically, real minimum wages have been much higher, particularly at times of economic growth (correlation not being causation, but slyly winking and nudging that direction), and some will even note that we’re subsidizing companies that don’t offer a minimum wage with foodstamps and other benefits.  Without those government subsidies, companies might be forced to offer living wages.

Personally, I think the minimum wage should be raised right now.  However, I’m not sure that it should be raised as much as some people are suggesting, particularly in some parts of the country where living costs tend to be lower.  (Just as a sniff test, I’m willing to hire people at $10/hr for standard minimum wage jobs that I’m not willing to hire at $12.50/hr– I’ll just do it myself at that price unless I already know the person is exceptionally competent.)  And then there’s all those exceptions to think about… should teenage wages be lower (and what does that do to adult unemployment?)?  Waitstaff positions?  And so on.  It’s a very complicated question full of many moving parts, and if economists can’t even agree on the direction, it’s hard to know what the magnitude is!

 

Ask the grumpies: political polarization

Cloud asks:

Are we or are we not living in an age of unusual political polarization?

So there’s two ask the grumpies questions left in our queue of unanswered ask the grumpies and they’re both hard.  The other one is on the minimum wage and I actually know the answer to it (because it’s standard labor economics) but it’s gonna take a while to answer well because it’s a complex issue.  (All to get to the bottom line of “economists still disagree on this one.”)

This one is out of my wheelhouse, so I’m going to punt it.

My colleagues say yes and they point to gerrymandering and that easy filibuster rule.

Bogart actually brought up two blog posts in the comments when this was asked saying:

If you are talking about Congress, here are two blog posts by scholars who are widely published on this issue: http://voteview.com/blog/?p=726 , http://voteview.com/blog/?p=953 . The short answer is yes, and that most of the recent ideological motion has been a rightward move by Republicans. If you’re talking about the electorate, I’ll need to pull up different information and my sense is the story is somewhat murkier. Gerrymandering is clearly an issue (but nothing new), and it seems we (individuals) are self-sorting in ways that involve ideological clustering more than we used to, but I’d have to dig out sources.

To which I replied:

My sense is that every time the census districts are redrawn, gerrymandering is bad. But the essence of gerrymandering is such that it only takes a little bit to tip districts over on average (the way that gerrymandering works is you’re trying to get the biggest partisan bang for the buck, so there’s a lot of fragile districts), so as time goes on the effects of gerrymandering diminish until the next redistricting.

There’s also a lot of talk lately about how republicans are doing a good job of taking over state legislatures and state governments, which can have national effects through things like redistricting or setting educational curricula.

To which she responded:

I’d have to look this up to confirm/quantify, but my sense is that a noticeable Republican takeover of state legislatures and governorships coincided with the recent round of redistricting, leading to gerrymandering more obvious to many of us because it benefits those “other” guys. The development of majority minority districts has arguably also exacerbated this, as drawing district lines to concentrate African-American voters obviously concentrates a large and probably the most predictably Democratic constituency in one place and, by extension, makes it unavailable to others.

On the other hand, prior to the 1960s many Southern states (at least) simply didn’t redistrict (much), giving a pronouncedly amplified voice to rural (white) voters at the expense of urban (black) voters. So how bad things are is partly a function of what you’re comparing them to, as ever.

Finally, if we’re talking *historically* in terms of political polarization, say, pre-Carter, or pre-Roosevelt, or pre-Hoover… that I can’t say.  We’re certainly less polarized than we were in say, the 1860s.  (In that we’re not having a civil war.)

Are any of our readers (in addition to Bogart) more knowledgeable on this subject than the grumpies?  Chime in in the comments!

Ask the grumpies: Best school environments for gifted children?

Sarah asks:

What does the research say about the best school environment for gifted children?  We are looking at kindergarten options for the 2015-2016 school year for our child and I cannot find any conclusive research about what would be best for him – we feel paralyzed.

Back story: At 4.5 our child tested at a highly gifted level in math (~4th grade level) and simply above average in reading kindergarten-1st grade level).  He responds the best in the classroom setting when there is structure and order, but needs to be constantly challenged, otherwise there are some minor behavioral issues.   We have the ability and time to supplement at home, but our preference is to minimize that in order to allow him as much time to be a kid. The three options are all public schools and within the same district:

1. Skip kindergarten and send him directly into 1st grade at a solid school.  This school also has a system of individual differentiation that allows children to “walk” up grade levels for specific subjects; up to two grade levels ahead, I believe.  This is the only chance we have within the district to skip a grade, so it is now or never.

2. Attend the excellent “gifted” school.  This school doesn’t cater to gifted children specifically, but rather works at an advanced pace, ~ 1.5 years ahead.  The class moves together as a cohort, with some differentiation within that specific class, mostly in reading.  My impression is that  the school benefits bright children, but that outliers get left behind – my child being an outlier in both reading (low end) and math (high end).

3. Start kindergarten at a solid school that specializes in math and science. This school has one of the better math programs in the district and does a decent job allowing for differentiation within the classroom.

The district makes it incredibly difficult for children to change schools once they commit in kindergarten, so the pressure is on to make the right decision the first time

This one is easy… from a research perspective.  A Nation Deceived (soon to be updated with A Nation Empowered!) talks about the research base for the different options.  Also the Iowa Acceleration Scale that you can take discusses things that make acceleration a better or worse option (parents caring about sports being a big negative, for example).  (This post talks about my favorite books from the endless # I read when we were originally facing these problems: https://nicoleandmaggie.wordpress.com/2011/03/04/reading-books-on-giftedness/ )

From a practical perspective, not as simple.

IIRC, research would say that a gifted school with like-ability peers is best for the average gifted kid, followed by acceleration and/or single-subject acceleration, followed by I think differentiation and then pull-out.  But that’s on average.  Individual situations are rarely average.

What we’ve been doing is we’ve been looking at all of our options and making decisions on things like teacher quality, how well the schools understand basic concepts of gifted education/are willing to work with people, etc.  Teacher quality and administration with a positive attitude can be far more important than school type.

If you haven’t visited these three schools, visit them.  Ask them what they would do for your son in his situation.  Ask them what they do when children have already mastered the material.  Ask them how they handle squiggly kids.  Ask them any and all of your concerns and listen to not just their specific answers, but how they deal with the questions.  Do you feel that these are people you could work with if you needed to?

Also, as you’ve done, think about ability to make changes if you decide your decision was the wrong one.  Even if you can’t change schools easily, you can undo acceleration if necessary.

Honestly, all your choices sound like promising choices on the surface.  One full skip plus individual subject skipping is great.  Gifted schools can be great (and a gifted public boarding school could be a really great choice a decade from now, or one of the fantastic magnets in your city).  Math and science schools can also be good targets for gifted kids both because of their focus and because they often attract like-minded kids.

But the devil is in the details– how good are the teachers, how accommodating is the administration?  For example, our local math and science charter has enormous K-3 classes… it does not give a good education for those years.  Some gifted schools really just function to be white oases in minority-majority cities and thus get heavily watered down and end up not serving gifted kids at all; others are. as you note, more inflexible with outliers than non-gifted options.  Being accelerated has benefits (academically and socially), but there’s something amazing about being able to be with other gifted kids your own age if your city has a large enough population to support that.

I will note that a lot of kids will not be reading at all in kindergarten and will not be at quite 1st grade level in first.  Unless you suspect a learning disability (which I wouldn’t at this point, but I’m not an expert), then I would guess that that reading ability is going to shoot up over the course of the next year.  I strongly recommending getting a pile of Cam Jansens (possibly a few Nate the Greats and similar books– the librarian can help you) and as many Magic Treehouse books as you can get your hands on soon after.  Non-fiction books are also really popular at this age (Magic School bus is a good series, but really anything by Scholastic at this reading level is fascinating depending on the kids’ interest.  Dinosaurs?  Planets?).  Reading for fun is still being a kid!  So I wouldn’t be too worried at this point about the difference between math and reading skills– the reading will really just skyrocket once your kid finds something worth reading.

With luck, all of these will be as wonderful choices in reality as they sound and it will be impossible to make a bad decision.  If it were my kid (or if your kid were my kid…), I wouldn’t be able to decide based on these descriptions and DH and I would visit and go with our gut instinct.

Good luck!

Grumpy Nation:  What are your thoughts?  For those of you with choices, how did you make schooling decisions for your kids?

Ask the grumpies: Why did they stop taking social security taxes out?

High earner asks:

I just noticed that for the last few months of 2014, there was no social security tax deducted from my salary, and then in January, it went back up to where it was before that. Does that make any sense???

then a follow-up:

I think I just figured it out. Do they deduct the standard percent each month of the calendar year until you reach the maximum based on the annual taxable limit of $117,000, and then they stop deducting?

We at grumpy rumblings thank high earner for answering hir own question.  (Note:  In 2015, the maximum amount of taxable earnings is $118,500.)  When policy makers talk about eliminating the tax cap on Social Security, this is what they’re talking about.

We are pro- this tax cap elimination because it comes as a surprise to most people the first time they hit it!  (And it’s a lot more progressive than cutting Social Security benefits for people who need them, though some cuts make sense given longer working lives.) In the mean time, though, we wish we earned more money so we could take advantage of it…

Ask the grumpies: Advice for moving institutions

Mimi asks

I am an Assistant Professor at a directional state school, where I have taught for 4.5 years. I am moving after this semester to a much better, highly ranked private institution (in a much better location! with a job for my husband!) and I am beyond excited about it.

At my current institution, I did way too much service (sitting on university wide committees, directing a program) partially because I didn’t say no, partially because the institution is full of men who think that female professors should be on all committees relating to teaching and do all service, partially because I was thrown under the bus by my chair and dean. Needless to say, I am delighted to be moving. And that I am better at saying no now than I was 5 years ago.

My big question is this: what advice would you give someone who was moving about adapting to the new place? Are there things that faculty who have come to your departments / former departments did that drove you nuts? That you saw as particularly savvy or smart? I am bringing lots of credit on the tenure clock to the new place, so I have one year there before I go through the tenure process, if that matters. 

Oh gee, once again we’re pretty useless on this one.  Congratulations on the new job and fixing all sorts of problems!

Most likely you’ll be able to dodge excess service this year because you’re new and you’re doing that last-minute tenure push.  As a tenured person if you’re in a good place, you’ll take on more service than pre-tenure people do because you’ll be protecting pre-tenure people.  Unless, of course, they’re hiring you because they don’t have enough people to do service(!), in which case your load might be a bit higher than expected.  Do ask around what the normal load is for pre-tenure folk, and not just for women.

I don’t think there’s been anything off-the-wall with people we’ve had move from other institutions in either positive or negative directions.  One of my colleagues delayed going up for tenure for too long (negotiated a really long clock upon coming) which meant ze sailed through tenure, but hir letters read things like, “I thought this request would be for promotion to full,” but that doesn’t sound like your situation since you’ve only negotiated a one year clock.  (Granted, ze was able to take advantage of pre-tenure perks like leave and a post-doc.)

People hired without tenure have tended to be a bit more tentative as a group than people hired with.  They’re quieter at meetings, and don’t tend to provide opinions unless directly asked.  People hired with tenure have come in and changed things up (for the better!) or come in just as quietly as the pre-tenure.  It depends on their personality.  Who is to say what is right, though?  We’ve had first year hires every bit as opinionated and active as people hired with tenure.  As long as the goals are good and the environment is supportive and non-toxic, it’s ok to speak up.  If everyone has the same goals of moving the department forward, supporting the students, and doing good work, then disagreements become discussions rather than problems.  Still, if you’re pushing for tenure right away, there are benefits to keeping your head down.

We do think that the really important thing is to remember that academia is just a job and that there are a lot of other jobs out there.  As such, you don’t really need to try to game the system.  Do what you need to do to be a good researcher (and good teacher and good citizen) and, more importantly, to enjoy that research and teaching and service.  Focus on what gives you meaning.  Maybe stepping lightly that first year as you get your bearing, but if anything is too horrible, remember, you can always leave again.

So… not really that great advice above, but we’re hoping our readers can give better advice!  Maybe we’ll jump over and ask Historiann if she can signal boost for us so you can truly get some good advice from a variety of people in academia.

Ask the grumpies: Party food

Debbie M. asks

What’s your favorite food to bring to parties? To see at parties?

 

We’ve already discussed potlucks specifically, so we’ll assume you’re not talking about pot-lucks, but about parties for which you are not expected to bring anything.

Wine is a good choice for these.  I am partial to bringing a bottle of Ferrari-Carano Fume Blanc, as it is a light tasty wine that is unpretentious but also classy.  It’s not out of place anywhere, at least not anywhere that wine is served.  (I know this because several people whose opinion on wine we value far higher than our own have served this or purchased it at restaurants.)  Sometimes though, we’ll bring a six-pack of whatever DH’s favorite hard cider of the moment is.  #2 agrees and says she likes to bring wine or a beer that she likes so she knows there will be at least one beer she likes.

If we’re not sure that alcohol will be welcome, we usually whip up a dessert because you can never have too many of those.  Sometimes a pie, sometimes cookies, sometimes a quick bread or cupcakes.  Whatever we feel like will fit.

My favorite foods to see at parties:  little sausages in modified bbq sauce in a warmer (because we would never make these at home and I love them) and cucumber sandwiches (because I love them but never seem to be able to make them right… though I suspect the people who make them right are dying off :( ).  I also like cocktail shrimp.  And sometimes people make really good cake, but it’s hard to tell if cake is going to be good without trying it… I suppose that’s a reason to have children, so you can make them try the cake.

#2 can get behind some tasty dips– she likes things that are salty and flavorful.  Most people’s sweets are too sweet.

#1 kind of likes raw veggie trays with dips.  #2 agrees, citing cucumbers and carrots specifically.

Ask the grumpies: favorite recipes

Debbie M asks

What’s your favorite recipe and why?

 

Oh gee, one doesn’t have a favorite recipe, I don’t think.  And the things I make over and over again I don’t use recipes for.  So me saying spaghetti with meat sauce … well, that doesn’t really come with a recipe.  (Slice an onion, saute it.  Add garlic.  Add ground beef.  Stir.  Throw in a jar of spaghetti sauce if there’s any in the pantry.  If not, throw in whatever canned tomato product you have and some amount of basil/oregano/garlic salt/italian seasoning/etc.  Add tomato paste if it needs thickening.  Cook until the right consistency.  Serve over spaghetti.)  Why spaghetti?  Because it’s delicious and easy to make on a weeknight and has all the necessary food groups– meat, tomato sauce, onions, and pasta.

Now, DH has a favorite recipe– his grandmother’s rolls.  These come with a long history, but basically his grandma made them for every family function and nobody else makes them the same way.  DH’s aunt finally videotaped and measured every step to get a recipe for the family so the rolls would still be around even after DH’s grandma left.  The resulting recipe is close but still not quite the same.  DH made many batches of rolls trying to figure out what small changes needed to be made to get it just right.  And he finally succeeded.

DH’s grandma’s rolls:

1 1/4 cup warm water
1 cup scalded cooled milk (no longer need to scald)
2 tsp salt
2 Tbs sugar
2 Tbs vegetable oil
1 package yeast
5 1/2 cups flour or enough so it won’t be sticky.

Beat yeast in warm water. Add salt, sugar, and oil. Add milk. Stir in flour. Knead. Place in greased container. Let rise 1-2 hours. Knead again. Make into buns. If sticky, roll in flour. Dunk buns individually in oil and place in greased pan. Let rise one hour. Bake 30 min at 350 F. When done, rub with oleo.

DH’s notes: Second knead is light. Skimp on oil for dunking. Makes 12 buns.

Of course, now we make our own hybrid with whole-wheat flour (which doesn’t rise as high if you substitute more than one cup) and butter instead of “oleo”. And he often makes 16 small buns instead of 12 ginormous ones.

Why is this is favorite recipe?  Because it tastes like love, but doesn’t quite have the sugar load of her cinnamon rolls or her strawberry jam (which are also great, but very sweet).  And they’re longer lasting than her noodles which really have to be eaten fresh.

#2 also doesn’t have a favorite recipe, but when pressed admits to anything over pasta.  Why?  Because it is delicious.

Grumpy Nation, share your favorite recipes and reasonings!

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