These Two Studies Turn Wall Street’s Economic Argument On Its Head

Why were these companies doing worse?

In a word, overconfidenceCEOs who get paid huge amounts tend to think less critically about their decisions. “€œThey ignore dis-confirming information and just think that they€’re right,”€ says Cooper. That tends to result in over-investing–€”investing too much and investing in bad projects that don’t yield positive returns for investors.”€

The second came this week from the Center for Economic and Policy Research, which compared employment growth between states and found that those states that raised their minimum wage levels experienced higher growth than those that didn’t.

Of the 13 states where the minimum wage went up on January 1, 2014 (either because of legislative action, referendum, or cost-of-living adjustments), all but one had positive employment growth, and nine of them had growth higher than the median. “The average change in employment for the 13 states that increased their minimum wage is +0.99% while the remaining states have an average employment change of +0.68%,” wrote CEPR.

 

“While this kind of simple exercise can’€™t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases,€” writes Ben Wolcott of CEPR.

In other words, it doesn’t prove raising the minimum wage always creates a certain number of jobs within 6 months, but it does add to the pile of evidence showing that raising the minimum wage doesn’t negatively affect employment.

And CEPR isn’t the only group that reached these conclusions. An analysis by banking giant Goldman Sachs (!) also found the states that raised their minimum wages doing better than those that didn’t.

Taken together, these studies back up what working people already know: higher wages add to a virtuous cycle that benefits both workers and businesses, and that exorbitant CEO pay does nothing for the broader economy other than line the pockets of an increasingly small and powerful group of uber-wealthy individuals.

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This has been reposted from the Daily Kos.

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