Smug Word Games

Now here’s a stunningly dishonest piece of opinion from Forbes, a supposedly legitimate economic journal. It is, at least, presented as the opinion of one Tim Wortstall, a “Fellow at the Adam Smith Institute in London” and apparently a complete idiot.

The headline, “As We've Been Saying, California's Minimum Wage Rises Increase Unemployment,” doesn’t define who “We” is, so one has to assume that it means the staff at Forbes, since writers don’t write their own headlines. Please note the implication of consensus as the piece begins.

This is an interesting little tale which illustrates the other side of the minimum wage story. Around here at least the standard side is that when you raise the price of something people buy less of it. Increase the minimum wage and employers will economise on minimum wage labour. This is a terribly simple point and yet people will twist themselves into ever more improbable positions to try to deny it.

Actually, of course, it’s not a “terribly simple point” at all, because it has been proven repeatedly that employers have not reduced the number of such jobs when the minimum wage was increased. The current increase is larger than past ones, and such a reduction may happen this time, but it’s unlikely, and it certainly has never happened in the past.

The piece babbles some nonsense about “seasonal adjustments,” which has nothing to do with the subject at hand, and then admits that “seasonal factors” are not pertinent to the issue, which makes you wonder why the idiot brought them up in the first place and makes you question his economic bona fides. As if you hadn’t done that already when you read the “Fellow at the Adam Smith Institute” thing.

He then goes on to discuss the way that unemployment is reported, namely that only people who are actively looking for work are counted as unemployed. He tells us that the increase in minimum wage has caused people to resume looking for work, and that since more people are looking for work the unemployment number reported as a percentage of the workforce has increased.

He makes the claim that even though thousands more people are employed rather than fewer, the fact that 27,000 more people are looking for work means that, “higher wages have called more labour supply into the market,” which is true enough. He then concludes that, “unemployment is defined those looking for a job but cannot find one. Thus an increased labour supply at this higher labour rate leads to more unemployment.”

In reality, of course, we know that those not previously looking for work were actually unemployed before they were drawn back into the workforce, and that this smug bastard’s word games prove nothing.