How does an increase in minimum wage affect employment figures?

Economics professor Mark J. Perry explains a discrepancy seen in the debate on how increasing minimum wage affects existing employment figures.

… Most of the minimum wage debate centers on the issue of whether minimum wage increases have any effects on employment levels. Specifically, does the empirical evidence point to any significantly negative effects on employment levels following minimum wage hikes, as clearly predicted by economy theory? Some empirical evidence like the much-cited 1994 study by Card and Krueger found “no indication that the rise in the minimum wage reduced employment” at fast-food restaurants in New Jersey following a minimum wage increase to $5.05 per hour compared to nearby fast-food restaurants in Pennsylvania where the minimum wage remained constant at $4.25.

While then number of workers may not decline, the “number of unskilled work hours demanded by employers” does decrease.

Bottom Line: It’s more accurate to say that the Law of Demand predicts: a) a negative relationship between higher wages and the number of hours of unskilled work demanded by employers, rather than b) a negative relationship between higher wages and the number of unskilled workers employed. Therefore, it’s possible that a minimum wage hike won’t always negatively affect employment levels for entry-level unskilled workers, but will affect the number of hours demanded by employers for unskilled labor. That’s how we can reconcile the apparent inconsistency between economic theory and some of the empirical evidence…..

Other considerations factor into what actually happens when the minimum wage is increased, so results cannot be accurately predicted.  More details can be found by reading a section of Chapter 10 in Microeconomics: Theory Through Applications, v. 1.0 by Russell Cooper and A. Andrew John.

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Mark J. Perry, “The Law of Demand and the minimum wage: It applies to number of hours worked, not the level of employment”, Carpe Diem, September 14, 2014.

Benefits of psychotherapy lack ‘reliable scientific proof’

Professor Bruce W. Davidson outlines the deficiencies of psychotherapy, including this scathing criticism.

Psychotherapism is mostly fraudulent. For more than 80 years, considerable research has been done looking into its effectiveness, and the weight of the evidence indicates that it is ineffectual at best and harmful at worst.

This is not to say that psychotherapists are con artists with evil intentions. No doubt many are well-meaning people who genuinely want to alleviate human suffering, and certainly many people have felt encouraged by their therapists. However, much of this may be simply the relief that comes from unburdening one’s concerns to a sympathetic ear. Indeed, amateur therapists such as teachers have done as well as trained, credentialed therapists in some research studies.

The big problem is that there is little or no reliable scientific proof for believing that talking about one’s problems really leads to solving those problems, or to improved well-being. Long ago the philosopher Karl Popper pointed out that Freudian psychology, like Marxism, was a pseudo-science, since it claimed to explain everything and could not be experimentally proven to be false. That reality has not changed, as many writers like Dawes in his book House of Cards have pointed out.

More ominously, much evidence exists that psychotherapy can sometimes do great harm. For example, counseling the victims of traumatic events like plane crashes often aggravates their suffering and prolongs the time it takes for them to recover emotionally.

If this is true, then we should applaud the “trend of less talk and more medication for patients with mental disorders”.

… The benefits of psychotherapy seem fuzzy to many potential patients, but pharmacological treatment enjoys “clearer, better marketed evidence” of its efficacy. Some of this comes from the failure of psychotherapists to take a scientific approach to patient treatment.

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 Bruce W. Davidson, “The Sins of Psychotherapism”, American Thinker, August 2, 2014.

New York railroad workers will finally contribute to their health insurance

At the last minute a strike by Long Island Rail Road workers was averted when they agreed to begin contributing to their health insurance and pensions.

Travelers on the Long Island Rail Road were spared a debilitating midsummer strike on Thursday, when the railroad and its unions reached an agreement three days before a planned walkout….

The unions received raises of 17 percent over six and a half years. But following a national trend in which workers shoulder an increasing share of their health costs, the railroad employees will, for the first time, contribute a portion of their pay, 2 percent, toward their health coverage.

The union had earlier rejected a proposal requiring “employees to contribute 2 percent of regular pay toward health care costs and pensions”.  This seemed out of touch with the reality of what most of their riders have to deal with.

In the private sector, the average percent of health premium paid by employees is 16% for individual coverage and 27% for family coverage. 

A talk show host who is usually on the side of unions had scornfully remarked that replacement workers could easily be found for these plum jobs that consisted mainly of “punching tickets”.

The New York Post wrote that the average LIRR worker makes $87,182 annually. Moreover, a third of the unionized workers make over $100,000. They get free health care and two pensions, but still, they want more.

Related:  “Quick Links – Public pension problems round-up” (Cost of College)

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Matt Flegenheimer, “L.I.R.R. Strike Is Averted After Cuomo Intervenes in Labor Talks”, New York Times, July 17, 2014.

Maria Vultaggio, “LIRR Strike 2014: Long Island Commuters And Conductors React To Possible Walkout”, International Business Times, July 14 2014.

Economic ‘mobility has not changed appreciably since the 1970s’

Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago ….

That’s the conclusion of The Equality of Opportunity Project, led by Harvard’s Raj Chetty.

Even though social movements have delivered better career opportunities for women and minorities and government grants have made college more accessible, one thing has stayed constant: If you are growing up poor today, you appear to have the same odds of staying poor in adulthood that your grandparents did….

Incorporating results from a previous study dating back to the 1950s, the authors concluded that “measures of social mobility have remained remarkably stable over the second half of the twentieth century in the United States.”…

INCOME MOBILITY OVER TIME

This figure plots the difference in average income percentiles for children born to low vs. high-income parents in each year from 1971-1993. On average, children from the poorest families grow up to be 30 percentiles lower in the income distribution than children from the richest families, a gap that has been stable over time. For children born after 1986, estimates are predictions based on college attendance rates.

The effects of government intervention remain a subject for debate.

David Autor, an MIT economist who writes frequently about issues related to inequality, called the findings “a sort of Rorschach” test that will support many economists’ preconceived notions about the effectiveness of government programs in providing opportunity.

Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, “you can view this as: Social policies have fought market forces to a draw.”

Fathers seem to matter.

 “The fraction of children living in single-parent households is the strongest correlate of upward income mobility” among all the variables the research team explored.

Cognitive skills also seem very important.

87 percent of poor smart kids escape poverty

… 87% of children with the highest level of cognitive skills who grow up in the lowest income quintile move out of that quintile by adulthood.

Although income mobility has not changed much, in many ways living standards for poor people have improved.

Bill Gates:  ‘Poor people far better off today than they were in the past.’

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Jim Tankersley, “Economic mobility hasn’t changed in a half-century in America”, Washington Post, January 22, 2014.

Measuring the political slant of U.S. newspapers

In most cases, a newspaper’s political slant is determined by the market it serves.

If a paper serves a liberal community, it is likely to lean left, and if it serves a conservative community, it is likely to lean right. In addition, once its political slant is set, a paper is more likely to be read by households who share its perspective.

Perhaps this conclusion is obvious to most people, but it does run counter to the idea that media owners “try to mold the population to their own brand of politics”.  In fact, most owners run their newspapers like a business, attempting to “maximize profit by giving customers what they want”.

This was the finding of University of Chicago business professors Mathew Gentzkow and Jesse Shapiro, who studied over 400 daily newspapers to learn more about what drives media slant.  This conclusion was based only “on regional papers, ignoring the few with national scope, like The Times”.

The first part of their analysis measured the political slant of each paper in two ways.

1.  Language-based objective measurement:

Mr. Gentzkow and Mr. Shapiro went to the Congressional Record and used a computer algorithm to find phrases that were particularly associated with the rhetoric of politicians of the two major political parties. They found that Democrats were more likely than Republicans to use phrases like “minimum wage,” “oil and gas companies” and “wildlife refuge.” Republicans more often referred to “tax relief,” “private property rights” and “economic growth.” While Democrats were more likely to mention Rosa Parks, Republicans were more likely to mention the Grand Ole Opry.

With specific phrases associated with political stands, the researchers then analyzed newspaper articles from 2005 to determine which papers leaned left and which leaned right. (They looked only at news articles and excluded opinion columns.) That is, they computed an objective, if imperfect, measure of political slant based on the choice of language.

2.  Reader-submitted subjective measurement:

The authors also used reader surveys of the newspapers’ political orientations, collected from media website Mondo Times.

A plot of this data shows how various newspapers align along the spectrum of political orientation.
…

LANGUAGE-BASED AND READER-SUBMITTED RATINGS OF NEWSPAPER SLANT

FIGURE 1.—Language-based and reader-submitted ratings of slant. The slant index (y axis) is shown against the average Mondo Times user rating of newspaper conservativeness (x axis), which ranges from 1 (liberal) to 5 (conservative). Included are all papers rated by at least two users onMondo Times, with at least 25,000 mentions of our 1000 phrases in 2005. The line is predicted slant from an OLS regression of slant on Mondo Times rating. The correlation coefficient is 0.40 (p = 0_0114).

The few checkpoints for newspapers with which I’m familiar lead me to have confidence in the general accuracy of this chart.  A full-size copy of the chart is on page 47 of the research article linked below.

According to a recent survey, 28% of  journalists identify as Democrats, while 7% call themselves Republicans.

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N. Gregory Mankiw, “Media Slant: A Question of Cause and Effect”, The New York Times, May 3, 2014.

Matthew Gentzkow and Jesse M. Shapiro, “What Drives Media Slant? Evidence from U.S Daily Newspapers”, Econometrica, Vol. 78, No. 1 (January, 2010), 35–71.

The trend of less talk and more medication for patients with mental disorders

Clinical psychologist Brandon A. Gaudiano wrote in the New York Times that psychotherapy is in decline while the use of medication is on the rise for the treatment of mental disorders.

…  In the United States, from 1998 to 2007, the number of patients in outpatient mental health facilities receiving psychotherapy alone fell by 34 percent, while the number receiving medication alone increased by 23 percent. This is not necessarily for a lack of interest. A recent analysis of 33 studies found that patients expressed a three-times-greater preference for psychotherapy over medications.

Yet psychotherapy for the most common conditions is considered the best treatment “of first choice”.  What is going on? The benefits of psychotherapy seem fuzzy to many potential patients, but pharmacological treatment enjoys “clearer, better marketed evidence” of its efficacy.  Some of this comes from the failure of psychotherapists to take a scientific approach to patient treatment.

But psychotherapy’s problems come as much from within as from without. Many therapists are contributing to the problem by failing to recognize and use evidence-based psychotherapies (and by sometimes proffering patently outlandish ideas). There has been a disappointing reluctance among psychotherapists to make the hard choices about which therapies are effective and which — like some old-fashioned Freudian therapies — should be abandoned.

Psychologists need better, well-defined treatment guidelines.

There is a lot of organizational catching up to do. Groups like the American Psychiatric Association, which typically promote medications as treatments of first choice, have been publishing practice guidelines for more than two decades, providing recommendations for which treatments to use under what circumstances. The American Psychological Association, which promotes psychotherapeutic approaches, only recently formed a committee to begin developing treatment guidelines.

Lack of clarity is also a problem in diagnosis. Gary Greenberg, a practicing psychotherapist and author of of The Book of Woe: The Making of the DSM-5 and the Unmaking of Psychiatry, argues that another problem is the method used to diagnose mental disorders, which “is not scientific, but political and bureaucratic”.

Psychiatry and psychology just seems fuzzy all around, more art than science.

Related:  ‘Every 20-something I know is in therapy for something’ (Cost of College)

Text is not dead yet on the Internet

Most of the time I’d rather read about it than watch a video when I’m consuming Internet content.  Here’s a commenter at Metafilter who seems to agree with me.

You want me to watch a 4:30 video of something i could read in like 45 to 60 seconds even if it was towards the thick end of content these videos ever have?…

More from this guy, who sounds quite worked up:

 … i don’t want to look at your fucking video to consume your content. I have no problem with videos, i just think they’re the wrong medium for a lot of things. Video of something specifically happening, or some visual/multimedia art? Cool. Video documentary of a situation or about a person? fine. Stupid video of someone talking about something with a couple still photos overlaid a few times? Fuck. OFF.

… People need to be asking themselves “What would be missing from this if it was simply written out, maybe with a couple inline images?”  …

… Text isn’t dead. Yea, videos get a lot of views, but some of the biggest currently popular sites on the web like reddit or tumblr are FULL of text.

His criticism is specifically aimed at Upworthy, a website for progressive viral video content.  From their “About” section:

Who’s your audience?

Basically, “The Daily Show” generation. People who care about what’s going on in the world but don’t want to be boring about it.

Yeah, that’s not me.  I’m sure part of it is a generational issue.

Related:  History instruction by video is ‘incoherent torrent of factoids’ (Cost of College)

Charles Dickens on the benefits of punctuality, diligence, and focus

Multitasking has its limits.

I never could have done what I have done without the habits of punctuality, order, and diligence, without the determination to concentrate myself on one subject at a time.  –Charles Dickens,  David Copperfield (1850)

Good advice

I came across this quote in a BuzzFeed piece called 37 Things You’ll Regret When You’re Old.  It speaks to the importance of “old-fashioned” virtues, and the value of focusing one’s attention on a single activity instead of trying to multitask as a way to get more things done.  It’s related to the current interest in mindfulness as a way to be more productive and to develop a “‘happier outlook’ on life”.

Here is the quote within a fuller context:

… I will only add, to what I have already written of my perseverance at this time of my life, and of a patient and continuous energy which then began to be matured within me, and which I know to be the strong part of my character, if it have any strength at all, that there, on looking back, I find the source of my success. I have been very fortunate in worldly matters; many men have worked much harder, and not succeeded half so well; but I never could have done what I have done, without the habits of punctuality, order, and diligence, without the determination to concentrate myself on one object at a time, no matter how quickly its successor should come upon its heels, which I then formed….

Related:  Successful media multitasking teens are a myth (Cost of College)

Economists don’t think money is the best holiday gift

Most “economists in the University of Chicago’s IGM poll said it’s absurd to give cash to loved ones for the holidays”.  Here is how David Autor of MIT put it.

Presents serve multiple interpersonal purposes. Revealed preference indicates that income transfer is not the primary one.

Lovely thought.  And here’s a Christmas card with the University of Chicago’s Steven Kaplan’s views on the matter.

…
All comments can be viewed at the IGM website.  Even with economists, it’s not all about the money.

Have a merry Christmas!

‘Get your kicks on Route 66’

The costofcollege family on a Route 66 stop

On a road trip, the journey is the destination.

Since I’ve long been a fan of road trips, I was thrilled when my family agreed to try a Route 66 vacation this summer.  Although I was a little concerned how we would manage, as it turned out a good time was had by all.

Logistics & planning:

We mapped out a thirteen-day adventure, starting in Santa Monica and ending in Chicago.  Since a westward route seems to be the more common choice, most of the guide books we found are primarily oriented that way.  However, a set of reverse guidelines are usually provided as well.

After researching a bit, we picked out some priority stops.  There is lots to see and do on Route 66, so we had to narrow our choices to those that matched our interests.  This helped flesh out our itinerary, although significant parts were not planned in much detail as we made on-the-road decisions about stops and motels.

We used Google maps to determine driving times.  Sometimes we took the faster highway options, not always sticking to the old Route 66 roads.  Most of our driving days maxed out at four to seven hours of driving, but we had a couple of nine-hour days.  We mostly avoided night driving.  Our trip included two major detours:  Las Vegas and the Grand Canyon.  In total, we drove about 2500 miles over 13 days.

Places we stopped:

Hollywood Walk of Fame; Route 66 Mother Road Museum; Southern California Logistics Airport; Las Vegas; Hoover Dam; Grand Canyon; Standin’ on a Corner Park; Santa Fe; Petrified Forest; Devil’s Rope Barbed Wire Museum;  Cadillac Ranch‘ The Big Texan; Oklahoma City National Memorial & Museum;  Tulsa Air and Space Museum & Planetarium; Meramec Caverns; Abraham Lincoln Presidential Library and Museum

Many more stops are not listed, and we also made time to visit relatives and friends.  These visits ranged from a day and a half tooling around Los Angeles with my brother to a 30-minute meet-up with a friend at a Panera in Normal, IL.

Technology:

As a veteran of the old days using AAA Triptiks, I regained immense appreciation for Google Maps and for the Internet’s ability to deliver all sorts of information to our fingertips.  For the inquisitive mind, it was heavenly to cruise down the highway instantly able to retrieve facts about a wind farm on the horizon, those acres of crops in between small towns, geology exposed by road-cuts, or countless other scenarios along the way.  On the other hand, sometimes it was equally satisfying just to sit mesmerized by the passing scenery.

Observations and insights:

Too much togetherness?
Sitting with their family in a car for hours on end is an inconceivable prospect for many people, but overall we enjoyed each others’ company in spite of a few squabbles along the way.  In our case, the driver/navigator relationship seemed most vulnerable to tense moments.

Ten and ten
About ten days is the minimum time needed to do Route 66, although with our detours and family visits two weeks seemed about right.  For this road trip, I would not bring along a child younger than about ten years old, but obviously this can vary.

Is a road trip very different from other types of vacations?
My husband compared our trip to a cruise — moving along and sampling a little along each stop.  That’s not a bad comparison, and in some ways it can leave a traveler feeling dissatisfied.  For example, a few hours in Santa Fe left me wishing we could spend a few days there.  On the other hand, our Route 66 trip gave us many discrete experiences compressed into a few days, providing unusual insight into the diversity across our country.

For me, Route 66 created many random memories that combined to paint a big, colorful image of our trip.  A few days after we encountered a surfer dude serving fish tacos on Venice Beach, it was priceless to see my daughter’s wide-eyed expression when we found ourselves sitting next to a couple of “cowboys” in a Kingman, Arizona diner.  When we arrived in Springfield, Missouri, I couldn’t help but notice a difference between the boisterous friendliness of Texans compared to the more restrained warmth of Midwesterners.  And when my son started to entertain us by mimicking the subtle but distinctive Southwestern/Native American accent he heard in New Mexico, I realized it sounded so familiar because it was what I had heard growing up in Texas.

Useful resources:

• Books/maps:  Route 66: EZ66 GUIDE For Travelers; Here It Is! The Route 66 Map Series
• Online:  Google Maps; Historic Route 66; Route 66 Map; Route 66 News; Route 66 Attractions (extensive list with links);
• Apps:  AroundMe; Hotels.com

For a different perspective on our trip, you can read what my son wrote on his blog.