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September 15, 2016 10:20 AM UTC

The Return Of Economic Doomsday Dude Eric Fruits!

  • 22 Comments
  • by: Colorado Pols
Right-wing go-to economics dude Eric Fruits.
Right-wing economist dude Eric Fruits.

The Denver Post’s Aldo Svaldi reported this week on competing studies in favor and opposed to Amendment 70, the proposal to increase Colorado’s minimum wage to $12 an hour by 2020:

Lifting Colorado’s minimum wage from $8.31 an hour to $12 an hour would pump $400 million into the state economy and raise living standards for one in five households — all with minimal impacts on inflation or total employment, according to a study released Tuesday from the University of Denver…

About 400,000 Colorado households will see higher incomes, half of those families with children, if Amendment 70, the higher-minimum-wage measure up for a vote in November, passes, according to the study.

All of which sounds great, but as you can imagine, opponents have their own study forecasting massive job losses for Colorado–and it’s from a name our longtime readers will recognize:

Opponents of Amendment 70 point to a study from Portland State University economist Eric Fruits that estimates Colorado could end up with 90,000 fewer jobs if the minimum wage rises to $12 an hour.

For those who haven’t had the pleasure, Eric Fruits is a right-wing “free market” economist based in Oregon, whose dire predictions of massive reduction in Colorado employment back in 2011 helped the ill-fated Proposition 103 education tax increase proposal go down in flames. Fruits’ already dubious forecast was wildly exaggerated by local opponents of Proposition 103, eventually claiming “over 100,000 jobs would be lost” if that modest tax hike had passed.

This time, however, minimum wage increase proponents aren’t taking Fruits’ doomsaying lying down:

Chris Stiffler, an economist with the Colorado Fiscal Institute, a pro-70 group, back tested Fruit’s model with the bump up in the Colorado minimum wage to $6.85 from $5.15 to that occurred on Jan. 1, 2007.

Colorado gained 71,000 jobs in the two years that followed and didn’t suffer the losses that Fruit’s model projected would happen, given a 33 percent jump in the state minimum wage. [Pols emphasis]

That’s right, folks–applied to real-world experience, Fruits’ gloom and doom “model” doesn’t hold up at all! The hyperbolic hand-wringing over Fruits’ predictions of economic disaster got so bad in 2011 that after awhile, we could only lampoon it–but as the saying goes, “a lie travels the world before the truth can get its pants on.”

The rule today with Eric Fruits, just like then, is don’t believe the hype.

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22 thoughts on “The Return Of Economic Doomsday Dude Eric Fruits!”

    1. Fluffy, Ihave a masters degree in economics.   You have that three page pamphlet you got from the Koch Brothers.

      So, to further your education, Goggle "marginal propensity to consume."   I know, thats two big words,but man up, ok.

      Then read Keynes, J.M., "The general theory of money and interest."

      putting the two together, you learn that wage increases for low-paid workers generate new jobs as they buy things for their families.   These new jobs are called the "multiplier effect" and also generate new demand.

      Since the Bush crash, the economy has been depressed by lack of consumer demand.   A gradual rise to $12 in the minimum wage will increase employment and profits alike.  It's called growing the economic pie.   Giving workers a decent wage ends up making bigger profits for employers.  Socialists and Ayn Rand fantasists both hate that fact.   But hard-headed businessmen like Henry Ford knew it was true.

      That, fluffy one, really is basic economics.   Come back next semester and I'll lecture you on Thorstein Veblen's" Theory of the Leisure Class."

    2. Except that that's never been what happens. Higher wages actually mean higher income (d'uh), there is no evidence that it leads to job loss and it stimulates the whole economy since masses of people with more money spend is great for the economy, great for job creation and great for increased opportunity for upward mobility. That's why the golden age of unions, which turned the masses from low wage earners to good living wage earners was the golden age for middle class expansion, increased middle income earner wealth and upward mobility.

      That's basic economics which conservatives still reject in favor of their discredited beliefs (dignifying anything so evidence free by calling it them "theories" would be silly at this point after so many decades of proof that they don't work as advertised)  which have never actually panned out in the real world. Take Kansas. Pulease.

      Refusing to accept all the evidence that proves that living wages for the masses create healthy prosperous vibrant economies and middle class majorities is of a piece with refusing to believe in science in general.

      By now, conservatism has long been less an economic/social/political ideology than a purely faith based religion. 

          1. Boo hoo!  You all have crushed Fluffy's dream of restoring the Feudal economy where Royalty commands by decree, surrounded by their supplicants in the royal court, where serfs toil all day, every day in the fields, for a mere pittance!

    3. which liberals have never heard of.

      It is simple English, Fluffy. How can you pontificate on math when you can't even speak English? Have you ever heard of a preposition? It does not go at the end of a sentence. Please do not lecture us on intellectual matters until you actually possess an intellect.

      Thank you, Fluffy.

      1. ummm…. Duke … I hear that it is now considered permissible to end a sentence with a preposition rather than resorting to now antiquated sounding phrasing such as  "… of which liberals have never heard".  Even for Fluffy.wink

            1. However, it may still be worth revising your sentences to avoid ending them with a preposition whenever possible if you wish to reduce the risk of controversy. Since there are still a number of people who believe ending a sentence with a preposition is incorrect, considering your audience’s thoughts on the issue is a wise idea 

              Particularly when you dealing with an aging pedant who will not participate in the dumbing of America.

              For example, “Which department is she in?” could simply be rewritten to read as “She is in which department?” without influencing clarity or comprehension. 

              Those ready to toss the English language upon the trash heap as a result of the ever increasing laziness of the human tongue (not to mention the brain to which it is attached) are free to do so, as is their wont.

              As for me and my house, we will, to the extent possible, continue to comply with tradition and celebrate our Latin roots by eschewing the stranded preposition and scourging transgressors when the sin seems particularly egregious, or the sinner extraordinarily hapless….ahem.. (So in this case I feel perfectly justified..) laugh

              Furthermore, m'lady, pistols at dawn seems so traditional…I say, pancakes at 4 AM….

              en garde…!

               

               

               

               

               

               

               

              1. Pancakes…. OK… but 4 AM? As it happens we'll be up earlier than that tomorrow to catch a 6:50 AM flight to my niece's wedding. I don't plan to do it again for another several decades if ever.

                And I do, especially in writing, try to avoid ending sentences with prepositions. Old habits die hard and I don't think I ever got less than an A on an essay back in the dark ages when teachers were sticklers for that sort of thing. But sometimes exceptions must be made. 

  3. To make it even simpler: the less people earn, the higher the percentage they spend of what they do earn. No stocks, bonds or even savings accounts for most of those folks. If they can't afford it, they do without it. When they earn more, they have a long list of things to spend the pay raise on so they can live a little better.  

    1. Exactly, Cookie.  That's what the rather pompous term "marginal propensity to consume" means in practice.   If I give someone earning $1 million a year an extra $100,000 by a tax cut. he will probably invest the money rather than spend it.  That would normally be great since business investment also creates new jobs.   But right now, businesses are sitting on Trillions of dollars of idle capital because they don't see enough demand to justify expansion.   So instead of $100,000 to one rich guy, let's give $1,000 to 100 single moms on minimum wage.   They spend it, fixing the transmission on that 06 Ford or buying shoes for their kids.   That creates jobs for auto mechanics and shoe salesmen, who in turn buy new suits and homes, creating jobs for tailors and carpenters, etc.

      Obviously a higher minimum wage does cost some jobs.   No one would seriously argue for a $50 an hour minimum wage now.  But if McDonalds lays off a burger chef , that loss is offset by the many minimum wage workers who spend their higher wages, prompting McDonalds and Burger King to add a shift.   At a reasonable level, the increase in consumer demand more than offsets the loss of a few marginal jobs.  The current minimum wage has been static so long that a gradual rise to $12 should produce considerably more jobs than it costs.  And, by definition, the jobs gained will be more productive than the jobs lost, raising medium income levels.   Does that mean some rich businesspeople will be even richer with a higher minimum wage?   Let's hope so — this is a case of a rising tide truly raising all (or at least most) boats.

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