If you take more water out of a bucket than you put in it, the bucket will become empty; there is no way around that. If you force people to use bigger ladles to scoop water out of the bucket, they have no choice but to scoop less often to maintain the water level if there is no way to get more water in. You can't force people to use your business, if you charge them more they use it less often or not at all. Only the government doesn't understand this because they CAN force us to use their "business" and CAN force us to pay more for it.
As an employer in the fast food industry let me say that most positions in fast food are entry level positions ..the restaurant industry gives those who want to advance and make more money ladders to management positions for those without a college education. There are no fast food restaurants that can afford to hire people at $15.00 per hour when the average check is around $10.00. It's just not economically feasible and will push many small businesses out of business..by the way, that includes franchisees who for the most small business people not large corporations as many would think.
1
Gayle,
So because this business model relies upon low wages for workers, the US Gov. spends over $3.8 billion in subsidies/basic assistance to provide the needs for these workers. $1.2 billion for McDonalds alone.
http://www.nelp.org/content/uploads/2015/03/NELP-Super-Sizing-Public-Cos...
America picks up the tab for fast-food CEO's it would seem.
The median age of fast-food workers is 29. Over 36% of those over 20 have children.
http://www.motherjones.com/politics/2013/12/fast-food-strike-minimum-wage/
Yet New Zealand pays its Min. wage workers $14.25 ( USD $12.35) plus they are unionized. Plus the Big Mac is 5cents cheaper. Hmmm...go figure.
Denmark Mcworkers have unionized and earn $21.hr. usd. There the Big Mac costs .56 cents more than here.
http://www.huffingtonpost.com/2014/05/15/global-mcdonalds-protests_n_532...
It would seem that the US fast-food business model is due for a rework.
Or is the 368% pay raise for McCEO in '16 to $7.91million just a by product of ripping off workers?
http://www.nydailynews.com/news/national/mcdonald-ceo-368-pay-raise-arti...
So because this business model relies upon low wages for workers, the US Gov. spends over $3.8 billion in subsidies/basic assistance to provide the needs for these workers. $1.2 billion for McDonalds alone.
http://www.nelp.org/content/uploads/2015/03/NELP-Super-Sizing-Public-Cos...
America picks up the tab for fast-food CEO's it would seem.
The median age of fast-food workers is 29. Over 36% of those over 20 have children.
http://www.motherjones.com/politics/2013/12/fast-food-strike-minimum-wage/
Yet New Zealand pays its Min. wage workers $14.25 ( USD $12.35) plus they are unionized. Plus the Big Mac is 5cents cheaper. Hmmm...go figure.
Denmark Mcworkers have unionized and earn $21.hr. usd. There the Big Mac costs .56 cents more than here.
http://www.huffingtonpost.com/2014/05/15/global-mcdonalds-protests_n_532...
It would seem that the US fast-food business model is due for a rework.
Or is the 368% pay raise for McCEO in '16 to $7.91million just a by product of ripping off workers?
http://www.nydailynews.com/news/national/mcdonald-ceo-368-pay-raise-arti...
5
I thought I heard on the radio that for this study, they excluded Starbucks and another large company from the findings. That would certainly skew the data, wouldn't it? Those companies would be much more able to handle a wage increase than smaller businesses.
1
What would happen if the minimum wage were reduced to $5 an hour? Probably very few people would work for that amount. Employers would have to pay more than the minimum. The marketplace would determine how much more. If employers don't pay enough, economic activity decreases, which decreases the demand for labor.
What is important is not the minimum wage, but the average wage. What is the average wage of all workers in the U.S.? The closer it is to the minimum wage, the less economic activity there will be. The minimum wage has been raised repeatedly, yet poverty is just as pervasive. There is no way to mandate employers paying higher wages that I am aware of.
Viewing labor as a resource to be exploited is the root of the problem, because that view creates a dichotomy between capital and labor which is artificial. Without labor, capital is useless. Make work unrewarding enough, and labor will withdraw from the market. If you are going to starve anyway, why do it while working for somebody?
The profit margins most capitalists expect these days are unrealistic. In the short term, yes they can be achieved, but usually they are unsustainable, because so much of the wealth ends up in the hands of a few. Sharing with those who actually produce the wealth is the only way to keep the economy moving.
What is important is not the minimum wage, but the average wage. What is the average wage of all workers in the U.S.? The closer it is to the minimum wage, the less economic activity there will be. The minimum wage has been raised repeatedly, yet poverty is just as pervasive. There is no way to mandate employers paying higher wages that I am aware of.
Viewing labor as a resource to be exploited is the root of the problem, because that view creates a dichotomy between capital and labor which is artificial. Without labor, capital is useless. Make work unrewarding enough, and labor will withdraw from the market. If you are going to starve anyway, why do it while working for somebody?
The profit margins most capitalists expect these days are unrealistic. In the short term, yes they can be achieved, but usually they are unsustainable, because so much of the wealth ends up in the hands of a few. Sharing with those who actually produce the wealth is the only way to keep the economy moving.
2
Scott,
Fed. min. wage was last raised in '09, under a Dem. controlled congress in '07.
It went from $6.55 to $7.25 it stands today. 8 years later it hasn't been raised. Republicans want to lower it. Before that raise in '07 that went into effect in '09 it had been 10 years since a raise.
If Fed. min wage had kept up with inflation since '09 the lowest workers would have had over $13+ billion additional dollars to put back into the economy.
If min. wage had kept pace with '68 $$ (the peak of Fed. min. wage) it would be over $532 TRILLION dollars additional added to the economy.
Hmmm.... where did all this extra money in profits go to...?
http://cepr.net/calculators/min_wage_flip_counter/
Yes, I agree with most of your comment on the whole. Thnx.
Fed. min. wage was last raised in '09, under a Dem. controlled congress in '07.
It went from $6.55 to $7.25 it stands today. 8 years later it hasn't been raised. Republicans want to lower it. Before that raise in '07 that went into effect in '09 it had been 10 years since a raise.
If Fed. min wage had kept up with inflation since '09 the lowest workers would have had over $13+ billion additional dollars to put back into the economy.
If min. wage had kept pace with '68 $$ (the peak of Fed. min. wage) it would be over $532 TRILLION dollars additional added to the economy.
Hmmm.... where did all this extra money in profits go to...?
http://cepr.net/calculators/min_wage_flip_counter/
Yes, I agree with most of your comment on the whole. Thnx.
1
With the virtual disappearance of unions, it's essential that government steps in to guarantee a livable wage for workers. Businesses will survive. More money will be pumped into the economy. Workers will pay more in taxes and be less dependent on government "handouts" (food stamps, housing assistance , etc.).
Most businesses want to pay the lowest wages they can get away with. Unions used to bargain for worker rights and benefits, but not anymore.
An unregulated society leads to income inequality, malaise, pollution, bad health, and other ills that are getting worse. We have 40 years of Republican "free-market" propaganda to thank.
Republicans seemed to have missed a basic lesson Democrats learned in pre-school: it's good to share.
Most businesses want to pay the lowest wages they can get away with. Unions used to bargain for worker rights and benefits, but not anymore.
An unregulated society leads to income inequality, malaise, pollution, bad health, and other ills that are getting worse. We have 40 years of Republican "free-market" propaganda to thank.
Republicans seemed to have missed a basic lesson Democrats learned in pre-school: it's good to share.
7
did any of these studies summarize how many of each DOL coded job was actually lost, or gained?
or did the studies simply summarize how many workers were making each hourly wage bracket, no matter what the labor provided was?
are total hours worked by all hourly employees up or down?
or??
in other words:
are burger flippers now earning, say, $20./hour, compared to an $11./hour wage earlier?
and working fewer hours?
has the business thus become more efficient?
or is it delaying maintenance and upkeep;
and avoiding safety issues for the fewer,
net hours, worked?
if applicable?
or??
is total hourly wage employment in the study area up? down? same?
compared to the population base changes over the same time period?
in total? by worker?
regardless:
'Patricia', below, has the correct response - -
ONLY chasing the buck is a sad statement for any society overall - -
a different equilibrium must be found.
1) Seattle instituted a tip credit allowing wages to go up more slowly for restaurant earnings, an obvious clue as to why the Cal study showed restaurant workers affected less.
2) The rapidity of the minimum wage increase here is what most of us business owners worry about and take issue with. 18% in a year is 9 times inflation. When done, the wages will have gone up over 50%. And it makes sense that you would see significantly different results in this scenario than slower minimum wage increases.
2) The rapidity of the minimum wage increase here is what most of us business owners worry about and take issue with. 18% in a year is 9 times inflation. When done, the wages will have gone up over 50%. And it makes sense that you would see significantly different results in this scenario than slower minimum wage increases.
1
It's less than the rate of inflation since the last time minimum wage was raised. And prices, of course, increased during that time without the wage going up.
Remember how those who denied the Holocaust came to be called "deniers", a pejorative term suggesting that they could not understand simple facts?
Must we now label those that cannot (or will not) understand simple economic laws "deniers" as well? Why do people simply refuse to learn from the basic facts in front of them? (The answer is motivated reasoning, confirmation bias, cognitive dissonance, etc., but that's another comment.)
For example, the NYT noted a few year ago that the, "...big tax on sugary drinks in Mexico appears to be driving down sales of soda", and David Leonhardt has praised Seattle's similar tax noting that they "...work as intended...people in those places are...drinking less soda".
This is simple economics: when you drive prices up, you have less demand, and therefore less supply, e.g., tax sody pop, prices rise, consumers buy less, and producers less as they won't make what they cannot sell.
The same is true for labour; when the state mandates a minimum wage (driving the price for labour up), employers use less of it, and provide fewer jobs as a result. In other words, anyone who would have hired to work for $14.99/hr or less simply won't be hired because the "price" is now too high.
We can't ever know what happens in any particular situation (will someone making $12.00 be fired or given a raise) be we DO know that driving costs up will result in less employment overall.
Why is that so hard?
Must we now label those that cannot (or will not) understand simple economic laws "deniers" as well? Why do people simply refuse to learn from the basic facts in front of them? (The answer is motivated reasoning, confirmation bias, cognitive dissonance, etc., but that's another comment.)
For example, the NYT noted a few year ago that the, "...big tax on sugary drinks in Mexico appears to be driving down sales of soda", and David Leonhardt has praised Seattle's similar tax noting that they "...work as intended...people in those places are...drinking less soda".
This is simple economics: when you drive prices up, you have less demand, and therefore less supply, e.g., tax sody pop, prices rise, consumers buy less, and producers less as they won't make what they cannot sell.
The same is true for labour; when the state mandates a minimum wage (driving the price for labour up), employers use less of it, and provide fewer jobs as a result. In other words, anyone who would have hired to work for $14.99/hr or less simply won't be hired because the "price" is now too high.
We can't ever know what happens in any particular situation (will someone making $12.00 be fired or given a raise) be we DO know that driving costs up will result in less employment overall.
Why is that so hard?
4
But you have have to consider that you can't compare soda with labor. No one needs soda, but businesses need a minimum amount of Labor in order to operate, so the two may behave differently on a supply and demand graph. Consider necessary prescriptions whose prices have skyrocketed in recent years. Demand hasn't necessarily changed to warrant such price increases, and yet the increases occur anyway. All products don't behave in exactly the same way in the market. I think it's important, especially given the fact that most other studies have shown little impact from a minimum wage increase, that we don't jump to too many conclusions because of this one study. What you're seeing isn't denial, it's healthy skepticism.
5
More accurately, you can't compare any one situation with any other situation, even between two extraordinarily similar businesses located next door to each other, because human wants, needs, desires, motivations, etc., change from moment to moment. Anyone facing a decision today, may have made a different choice last week, or may chose a third option next week.
That's the point of simple economics. Since you cannot ever predict someone's choice at any given time, you look at economics to find the net results of trillions of decisions made every day.
Here, we're not comparing sody pop vs. labour. They're just examples to illustrate the point: as price goes up, less is demanded and thus less is provided. On a supply and demand graph, labour & sody pop behave no differently than any other commodity. When all else is the same, driving prices up results in less of the item being supplied. As a prescription price skyrockets, demand drops. Insurers stop covering it, doctors seek something else to keep costs down for patients, the uninsured choose something else, etc. Some prices are more elastic than others, especially given substitute goods, but the effect is still the same.
As you note, some businesses have less flexibility than others, but that doesn't change the principle: the higher the cost, the less the demand, That may mean firing people or hiring fewer people or demanding more from the ones you have.
The net result is the same.
That's the point of simple economics. Since you cannot ever predict someone's choice at any given time, you look at economics to find the net results of trillions of decisions made every day.
Here, we're not comparing sody pop vs. labour. They're just examples to illustrate the point: as price goes up, less is demanded and thus less is provided. On a supply and demand graph, labour & sody pop behave no differently than any other commodity. When all else is the same, driving prices up results in less of the item being supplied. As a prescription price skyrockets, demand drops. Insurers stop covering it, doctors seek something else to keep costs down for patients, the uninsured choose something else, etc. Some prices are more elastic than others, especially given substitute goods, but the effect is still the same.
As you note, some businesses have less flexibility than others, but that doesn't change the principle: the higher the cost, the less the demand, That may mean firing people or hiring fewer people or demanding more from the ones you have.
The net result is the same.
3
Rush,
Few in any employers higher more employees than is needed.
If job A requires 2 workers, why would they cut their profit margin with 3?
Yes they may attempt to load the 2 with more work than is possible, but something, quality, performance etc. will suffer. As is currently in fashion.
To fire/not hire the second worker means the business model wasn't/wont work.
Either job A takes 2 or it doesn't. If they hire a 3rd then it must be profitable to do so.
Few in any employers higher more employees than is needed.
If job A requires 2 workers, why would they cut their profit margin with 3?
Yes they may attempt to load the 2 with more work than is possible, but something, quality, performance etc. will suffer. As is currently in fashion.
To fire/not hire the second worker means the business model wasn't/wont work.
Either job A takes 2 or it doesn't. If they hire a 3rd then it must be profitable to do so.
1
Perhaps some of the lowest wage workers are now paid under the table wages below the new legal minimum wage. Perhaps the authors of these studies should try to factor in increases in "informal" employment as employers evade increases in the minimum wage.
2
What makes 'low wage work' low wage? Is it inherent in the work? It can never be more than what it is? Somehow destined to be low wage? Or does it become low wage because it is pursued by numerous with all levels of qualification? All in dire need of a job? All willing to work at any wage? Or is it the consumer who just won't pay more for the service for whatever reason?
And would low wage work seem more fairly paid if the 'bosses' earned less? Should a license for for a business be granted ONLY if the business will pay some minimum wage?
Why then not skip the pesky questions. Why not create a new workforce that has no qualms on minimum wages or working conditions? Why nor systematically replace workers in all low wage sectors with intelligent robots? Why not let then 'fry the potatoes' at McDonald? Fill shelves at Walmart? Why not rid the nation of low wage work? Why a national policy that simply perpetuates minimum wage work?? Why is the nature minimum wage work more humanely redeeming for individuals simply because the wages are $ X higher?
Wolfgang Price
And would low wage work seem more fairly paid if the 'bosses' earned less? Should a license for for a business be granted ONLY if the business will pay some minimum wage?
Why then not skip the pesky questions. Why not create a new workforce that has no qualms on minimum wages or working conditions? Why nor systematically replace workers in all low wage sectors with intelligent robots? Why not let then 'fry the potatoes' at McDonald? Fill shelves at Walmart? Why not rid the nation of low wage work? Why a national policy that simply perpetuates minimum wage work?? Why is the nature minimum wage work more humanely redeeming for individuals simply because the wages are $ X higher?
Wolfgang Price
3
I do believe part of your option is happening. Robots are replacing many low wage workers. And also middle wage workers, look at car manufacturing. But there are certain things robots are not up to snuff with that need low wage human workers. Livestock is one. We need horse handlers at the farm. Wages is our largest chunk of money out the door after taxes and mortgage. We are stuck in a place where the market will not let us raise board to accommodate higher wages. And even at $15 per hour, getting an American from the USA to shovel stalls is unbelievably difficult. The USA person lasts a few weeks but we've got one green card who is there 7 days a week, 50 weeks a year, and doesn't spook horses, doesn't steel, doesn't make a mess. He shows up, does his job and leaves. if we had to replace him with $15 per hour, we would be in trouble.
We don't to this because it's cheaper to hire low-wage labor, especially if subsidized by taxpayers through government benefits they qualify for. If McDonald's french fry workers made $75 an hour, there's be a lot of interest in replacing them with machines. At $10, not so much.
Would not trust this so-called study for a second. For starters does anyone believe that the low wage workers were let go? Like employers didn't need these people anymore? Like they just dropped a lot of people and expected less people to do a lot more work? Maybe to some extent but a great many workers were and are doing all they can.
When Seattle City Council member Kshama Sawant and workers in the Fight for $15 were negotiating an increase in Seattle’s minimum wage back in 2014, opponents of their effort warned — as minimum wage opponents often do — that paying low-wage workers too much too soon would have harmful economic consequences. Two years after Seattle began increasing its minimum wage (for most businesses with 500 or more employees, it’s headed to $15 an hour next year), Seattle’s economy is as strong as ever. The Seattle unemployment rate in April, for example, was 2.6 percent, the lowest it has been in nine years. Yet the release of a new study this week from a group of researchers at the University of Washington has brought opponents of minimum wage increases out of the woodwork again.
For the entire article;
https://www.washingtonpost.com/news/posteverything/wp/2017/06/27/seattle...
When Seattle City Council member Kshama Sawant and workers in the Fight for $15 were negotiating an increase in Seattle’s minimum wage back in 2014, opponents of their effort warned — as minimum wage opponents often do — that paying low-wage workers too much too soon would have harmful economic consequences. Two years after Seattle began increasing its minimum wage (for most businesses with 500 or more employees, it’s headed to $15 an hour next year), Seattle’s economy is as strong as ever. The Seattle unemployment rate in April, for example, was 2.6 percent, the lowest it has been in nine years. Yet the release of a new study this week from a group of researchers at the University of Washington has brought opponents of minimum wage increases out of the woodwork again.
For the entire article;
https://www.washingtonpost.com/news/posteverything/wp/2017/06/27/seattle...
5
"The University of Washington study excluded workers at companies with multiple locations."
Means the study is bogus, completely bogus!
Means the study is bogus, completely bogus!
5
Pardon me if I chuckle at this from The Atlantic:
"The University of Washington study excluded workers at companies with multiple locations—meaning McDonald’s, Starbucks, and the other big and small chains that account for about 40 percent of the overall workforce and a huge number of minimum-wage jobs"
https://www.theatlantic.com/business/archive/2017/06/seattle-minimum-wag...
How important is that omission? Well, I don't know, but it seems pretty damn significant, larger employers have less flexibility in the short run to reduce employee hours, countering the major finding of the study. It's notable the Berkeley study, which included large multiple location employers, found small upticks in worker pay.
The other point I find important but omitted is the impact of minimum wage rises on local gdp, and therefore overall employment. There is little dispute that the best approach to economic stimulus is to put more money in low income hands, they have the highest propensity to consume and thus have the highest positive impact for boosting local gdp, thereby creating more jobs and more pressure on labor markets, the result of which is higher overall wages.
Could it be that the large increases in Seattle gdp and worker wages since the beginning of the rise in minimum wages are correlated? If I was a Keynesian who believed in the paradox of thrift and it's opposite, or someone interested in virtuous circles, I'd certainly give that a look-see.
"The University of Washington study excluded workers at companies with multiple locations—meaning McDonald’s, Starbucks, and the other big and small chains that account for about 40 percent of the overall workforce and a huge number of minimum-wage jobs"
https://www.theatlantic.com/business/archive/2017/06/seattle-minimum-wag...
How important is that omission? Well, I don't know, but it seems pretty damn significant, larger employers have less flexibility in the short run to reduce employee hours, countering the major finding of the study. It's notable the Berkeley study, which included large multiple location employers, found small upticks in worker pay.
The other point I find important but omitted is the impact of minimum wage rises on local gdp, and therefore overall employment. There is little dispute that the best approach to economic stimulus is to put more money in low income hands, they have the highest propensity to consume and thus have the highest positive impact for boosting local gdp, thereby creating more jobs and more pressure on labor markets, the result of which is higher overall wages.
Could it be that the large increases in Seattle gdp and worker wages since the beginning of the rise in minimum wages are correlated? If I was a Keynesian who believed in the paradox of thrift and it's opposite, or someone interested in virtuous circles, I'd certainly give that a look-see.
7
To pay a living wage, people at the top are going to have to give up income. The income collected by those at the top over the years is like wage theft. The resistance to adjust the imbalanced reward of profit from effort and ownership is the only reason wage increases struggle.
10
I love how liberals are able to pick and choose the studies they want to follow while simultaneously accusing conservatives of ignoring facts every time a conservative disagrees with studies that support their opinions.
5
I love how conservatives ignore every study since it involves certain facts and scientific conclusions.
7
Do you have anything to bring to the conversation except a punch at liberals? Btw the university of Washington is pretty liberal and we see this study so I'm going with they explained their data without pandering. It may not be data people agree with but it's data, they explained their methods, their analysis, their conclusion, and included another study that refutes. All bases covered.
1
According to The Atlantic the UW study has a major flaw:
"The University of Washington study excluded workers at companies with multiple locations—meaning McDonald’s, Starbucks, and the other big and small chains that account for about 40 percent of the overall workforce and a huge number of minimum-wage jobs"
https://www.theatlantic.com/business/archive/2017/06/seattle-minimum-wag...
How important is that omission? Well, I don't know, but it seems significant, larger employers have less flexibility in the short run to reduce employee hours, countering the major finding of the study. It's notable the Berkeley study, which included large multiple location employers, found upticks in worker pay.
Also omitted is the impact of minimum wage raises on local gdp, and therefore overall employment. There is little dispute the best approach to economic stimulus is to put more money in low income hands, they have the highest propensity to consume and thus have the highest potential impact to boost local gdp, thereby
creating more jobs and more pressure on labor markets, the result of which is higher overall wages.
Could it be that the large increases in Seattle gdp and worker wages since the early raises in minimum wage are correlated? If I was a Keynesian who believed in the reverse paradox of thrift, or someone interested in virtuous circles, I'd certainly give that a look.
"The University of Washington study excluded workers at companies with multiple locations—meaning McDonald’s, Starbucks, and the other big and small chains that account for about 40 percent of the overall workforce and a huge number of minimum-wage jobs"
https://www.theatlantic.com/business/archive/2017/06/seattle-minimum-wag...
How important is that omission? Well, I don't know, but it seems significant, larger employers have less flexibility in the short run to reduce employee hours, countering the major finding of the study. It's notable the Berkeley study, which included large multiple location employers, found upticks in worker pay.
Also omitted is the impact of minimum wage raises on local gdp, and therefore overall employment. There is little dispute the best approach to economic stimulus is to put more money in low income hands, they have the highest propensity to consume and thus have the highest potential impact to boost local gdp, thereby
creating more jobs and more pressure on labor markets, the result of which is higher overall wages.
Could it be that the large increases in Seattle gdp and worker wages since the early raises in minimum wage are correlated? If I was a Keynesian who believed in the reverse paradox of thrift, or someone interested in virtuous circles, I'd certainly give that a look.
2
A few thoughts:
1. I don't feel that minimum wage and livable wage should be the same thing.
2. However, in some places, like New York City and San Francisco - a minimum wage of $15/hr is probably sensical and realistic.
3. In Texas, a minimum wage of $15 is too high and will have negative consequences as up the ladder adjustments won't be possible.
4. Any federal minimum wage law should take into account local cost of living as a "one number fits all" is not valid or reasonable.
5. Local free market conditions do actually have an impact on hourly wage offers; it really isn't all about an oligarch making a decision, as one person posted.
6. I am guessing one effect here would be more valuable workers getting more hours at the expense of less valuable workers getting cut to compensate. Perhaps not a bad thing. I am guessing clearly. Overall, less people will qualify for benefits and a new subculture of desired minimum wage workers will benefit while a number of less desirable minimum wage workers will still have work, but less of it and without benefits. Again - a guess only.
1. I don't feel that minimum wage and livable wage should be the same thing.
2. However, in some places, like New York City and San Francisco - a minimum wage of $15/hr is probably sensical and realistic.
3. In Texas, a minimum wage of $15 is too high and will have negative consequences as up the ladder adjustments won't be possible.
4. Any federal minimum wage law should take into account local cost of living as a "one number fits all" is not valid or reasonable.
5. Local free market conditions do actually have an impact on hourly wage offers; it really isn't all about an oligarch making a decision, as one person posted.
6. I am guessing one effect here would be more valuable workers getting more hours at the expense of less valuable workers getting cut to compensate. Perhaps not a bad thing. I am guessing clearly. Overall, less people will qualify for benefits and a new subculture of desired minimum wage workers will benefit while a number of less desirable minimum wage workers will still have work, but less of it and without benefits. Again - a guess only.
1
Wherever you have zoning laws or any labor laws or anti-discrimination laws, you don't have a local free market. The same is true if brand names are prevalent, or if large firms dominate the market. There may be a market, but it's not a free one as Adam Smith used the term.
I'm with you, though, that should wages reflecting the local cost of living and not be "one size fits all" throughout the country. As a temp agency manager in San Francisco put it, "With what it costs to live here maybe we should have a $50,000 a year minimum wage." Studies, by the way, show that someone paying currently asked rents in that city couldn't raise a family on that much.
I'm with you, though, that should wages reflecting the local cost of living and not be "one size fits all" throughout the country. As a temp agency manager in San Francisco put it, "With what it costs to live here maybe we should have a $50,000 a year minimum wage." Studies, by the way, show that someone paying currently asked rents in that city couldn't raise a family on that much.
I agree with Patricia -- having a minimum living wage is a moral issue more than an economic one. The federal minimum wage is half what it used to be in real terms; but the work people are doing is not worth less. Standing in front of a vat of hot oil all day making french fries is of the same value as it used to be in the 70s. So, the so-called "free market" is not properly valuing work, the most important building block of a healthy society. We must step in as a society. All this hemming and hawing and bobbing and weaving and study after study which in total are mixed reflects the enormous political power of the low-wage employers like Walmart and Yum brands, for whom the stagnation of minimum wage has resulted in extremely disproportionate income, executive salaries and shareholder wealth. Enough already! If a job is worth doing it is worth a living wage. And if an employer can't afford to pay what employers used to pay in the 1970s they ought to find another line of work.
10
If land lording went the way of slave owning and everyone became a home owner then the root cause of poverty would be eliminated. No one would be allowed to own more living space (or any other natural resource) than they personally needed and everyone would share in the natural resources of their nation as a birthright.
At the same time a permanent truce would be called in the class war and the futile attempts to alleviate poverty by confiscating earned income and created wealth would come to an end.
At the same time a permanent truce would be called in the class war and the futile attempts to alleviate poverty by confiscating earned income and created wealth would come to an end.
1
Gee, didn't have to be an economist to see that coming.
Many people are NOT worth the new minimum wage.
The free market, not the government, should dictate wages. Any other attempt to control it will fail.
Have fun Seattle.
Many people are NOT worth the new minimum wage.
The free market, not the government, should dictate wages. Any other attempt to control it will fail.
Have fun Seattle.
8
In much of the world, and increasingly in the US, the "free market" doesn't dictate wages, oligarchs do. Workers are unable to organize so as to negotiate from a position of strength. The one recourse is government, where it is democratic. The alternative is the plantation economy that currently reins in America.
17
Crossing Overhead,
But there is no true "free market" is there.
The labour market is rigged and dysfunctional.
The wages being paid are not in accordance to the wealth being created and the profits going to the lucky few.
The lack of controls upon the market and the will to enforce existing ones has created the largest inequality wealth gap since the depression. It has failed.
By the by, Seattle is fun and a great place to live and work.
But there is no true "free market" is there.
The labour market is rigged and dysfunctional.
The wages being paid are not in accordance to the wealth being created and the profits going to the lucky few.
The lack of controls upon the market and the will to enforce existing ones has created the largest inequality wealth gap since the depression. It has failed.
By the by, Seattle is fun and a great place to live and work.
7
The idea that the profits are going to the "lucky few" in Seattle is preposterous. Tech companies are throwing money at software developers. Burger flippers not so much. This is because the burger flippers are easily replaced. That is the free market in action.
3
I'm surprised, and a little disappointed, that neither mentions the outcomes from past federal minimum wage increases, or the effects from individual state minimum wage increases. Both seem relevant, and both could help explain any trends, seen or unseen.
Also, there is no mention of any employment tracking for individuals-- whether they moved from Seattle, or moved to a better job, or whether earners moved from multiple jobs to a single, higher paying job, or if the same number of workers simply worked fewer hours.
I could be wrong, but the metric for employment (total hours of work) seems highly vulnerable to misinterpretation. The implication that this study may be flawed seems justified.
Also, there is no mention of any employment tracking for individuals-- whether they moved from Seattle, or moved to a better job, or whether earners moved from multiple jobs to a single, higher paying job, or if the same number of workers simply worked fewer hours.
I could be wrong, but the metric for employment (total hours of work) seems highly vulnerable to misinterpretation. The implication that this study may be flawed seems justified.
7
Have there been mass layoffs throughout the economy on the past occasions when the federal minimum wage has gone up by a substantial amount all at once? I certainly don't remember any.
This study is an embarrassment. In research, scientists are often encouraged to include "sanity checks." The statistics sometimes get so complicated you need some concrete thing you can look at to see if your results make sense. The sanity checks in this case would be low-wage unemployment, and availability of low-wage job postings. Unemployment is at historic lows (2.6%), and employers are struggling to fill low-wage jobs here in Seattle. Does this sound like there has been huge low-wage job loss? This clearly points to an issue with their math, and an inappropriately constructed control. Rather than acknowledge that their research fails the most basic of sanity checks the researchers are hanging their hats on the completely confounded variable of timing.
11
Raising the minimum wage certainly adds risk since it is an employment policy not based on supply and demand. Worrying about potential job losses is a legitimate concern and should be thoroughly measured and examined as these policies get rolled out across the country. Some people flippantly remark that so what if a few jobs disappear. If one of those jobs is yours, one of your relatives, or one of your friends, does that change your opinion?
Many of the jobs at this level are subject to accelerating automation and are going to disappear in the future. The 'minimum wage=living wage' approach is, at best, a stopgap measure that doesn't solve real issues.
Any reasonable person should support someone working full-time being able to support their family. But forcing an employer to overpay for temporary jobs isn't going to do it in the long run.
Many of the jobs at this level are subject to accelerating automation and are going to disappear in the future. The 'minimum wage=living wage' approach is, at best, a stopgap measure that doesn't solve real issues.
Any reasonable person should support someone working full-time being able to support their family. But forcing an employer to overpay for temporary jobs isn't going to do it in the long run.
3
What "temporary jobs"? People work fast-food jobs for the foreseeable future and they attempt to raise families on the little they're paid -- along with government aid from the taxpayers. "Supply and demand" only works in its textbook form if there are textbook conditions (the perfect competition model), and the markets we have, with very few exceptions, don't do that in the real world of the United States.
The more basic question: if people are producing a useful good that other people are willing to buy, shouldn't they be paid a wage that allows them to live somewhere near where they work? Anything else is using economic mumbo-jumbo to obscure and mystify that issue.
The more basic question: if people are producing a useful good that other people are willing to buy, shouldn't they be paid a wage that allows them to live somewhere near where they work? Anything else is using economic mumbo-jumbo to obscure and mystify that issue.
Those opposed to raising the minimum wage -- or, ensuring a livable wage -- only seem to care about low wage earners and their employment when the topic of increasing wages comes up! Otherwise, they are silent, ignoring the plight of millions of underpaid workers, or blame the victims themselves of a highly unequal, tumultuous economic system!
So what if unemployment even did go up some?! We should be combining policies that increase the minimum wage with policies that promote economic growth and job creation -- including infrastructure rebuilding and expanding renewable energy and conservation -- while also providing job retraining and relocation funds, education grants, aggressive action against discrimination, and health care for all.
Any minor negative impact on employment of raising the minimum wage would be more than countered!
It's mindless to treat minimum wage policy as a single, stand alone policy and tear it down based upon a couple of flawed studies, especially as most of the well-designed studies show few negative effects.
When will the critics of raising the minimum wage show they really care about workers and join the fight for full employment and meaningful work at living wages?
When will they aggressively work to raise standards of living and end economic insecurity? When will they decry an economy where millions of full-time workers live in poverty and are thrown into it repeatedly? Only then can we take their armchair criticisms seriously!
So what if unemployment even did go up some?! We should be combining policies that increase the minimum wage with policies that promote economic growth and job creation -- including infrastructure rebuilding and expanding renewable energy and conservation -- while also providing job retraining and relocation funds, education grants, aggressive action against discrimination, and health care for all.
Any minor negative impact on employment of raising the minimum wage would be more than countered!
It's mindless to treat minimum wage policy as a single, stand alone policy and tear it down based upon a couple of flawed studies, especially as most of the well-designed studies show few negative effects.
When will the critics of raising the minimum wage show they really care about workers and join the fight for full employment and meaningful work at living wages?
When will they aggressively work to raise standards of living and end economic insecurity? When will they decry an economy where millions of full-time workers live in poverty and are thrown into it repeatedly? Only then can we take their armchair criticisms seriously!
9
So, what if unemployment did go up? Really?
I bet you would care if you were one of the group that lost their jobs.
Some people are concerned about raising minimum wages too high too fast because of these job losses, the acceleration of automation that will take place, and making people believe that taking orders at a fast food restaurant is a viable long-term career option.
I bet you would care if you were one of the group that lost their jobs.
Some people are concerned about raising minimum wages too high too fast because of these job losses, the acceleration of automation that will take place, and making people believe that taking orders at a fast food restaurant is a viable long-term career option.
2
Automation is going to continue regardless of whether cities and states institute living wage policies or not because companies are driven by profits. They award high salaries and raises to the executive suites regardless of profits, bonuses after mass layoffs, and when profits soar, investors may reap the benefit but nothing for the low-wage workers. If employers cannot pay a living wage, regardless of the individuals "worth" (and what does that even mean?) then perhaps they should not be in business. I my only way to purchase a service or consumer good is through the maintenance of wages too low to meet the basic needs of workers, then there is something wrong. We just purchased a set of tires at Costco where the CEO priorities taking care of his employees more than hoarding the riches for himself. The service crew member could praise his company more, having been there for 18 years, able to own a home, support his family, and take vacations. The tires were competitively priced. The difference is that employer pays well above competitive wages and accepts less compensation for himself.
3
Being a liberal who believes everyone who has a job should have an income that can be lived on. For those in need, and especially in such a wealthy society as is America, no one working should be unable to live a decent life, with food, housing, healthcare, education, etc. While the minimum wage serves to bolster the income of the lowest paid workers, society as a whole should be picking up the costs and not a private employer. The same is true for things such as rent control. If society wants to support low income earners, it should do so as a whole and if it wants to make sure that there is affordable housing, it should help pay for it. The workers getting paid the minimum wage are those who have no bargaining power with employers because there are many workers out there without jobs with equal skills. I think there's a strong consensus in this country that the most productive economic organization is free market capitalism. But at the same time, the free market for low skilled workers leads to wages too low for a normal life with all the necessities enjoyed in a rich society such as ours. The way to fix this dilemma is to expand the earned income credits. That way, although there would be no minimum wages, the workers at the lowest rung would still get paid for their work at the minimum wage or even higher but the wages they are paid would be supplemented not by the private employer but by society as a whole, as represented by the taxpayer funded earned income credits.
8
"Free Market Capitalism"? There has never been such a thing; those who own the means of production also own the markets. They also own the government, because they comprise the largest donors to campaigns, Federal, State and local. This myth needs to die so that real definitions of markets, jobs, et al can apply. How many dead wood economists are still writing about "free markets"? Those who really exist in a "free market" are those who are among the poorest street vendors, sidewalk sellers of loose cigarettes, subject to local laws and policing. An example of a "free market" vendor is the man who set himself on fire after local constabulary harassed him to the point of poverty and insanity.
So where are all the studies picking apart what happens when you cut tax rates for the wealthy?
In most parts of the country, the minimum wage is so low that workers at that level qualify for Medicaid benefits. Countless studies have shown a panoply of adverse consequences on our society of low-end wage stagnation. And yet, whether or not wages should be raised to a level that would amount to having kept pace with inflation over the last 30 years, is hotly debated, and the potential harms discussed and studied ad nauseam. The implication is that our society can't afford to pay all workers a living wage. And yet, other countries do it.
In most parts of the country, the minimum wage is so low that workers at that level qualify for Medicaid benefits. Countless studies have shown a panoply of adverse consequences on our society of low-end wage stagnation. And yet, whether or not wages should be raised to a level that would amount to having kept pace with inflation over the last 30 years, is hotly debated, and the potential harms discussed and studied ad nauseam. The implication is that our society can't afford to pay all workers a living wage. And yet, other countries do it.
11
Most other countries do not force a living wage as suggested. The goal is achieved more often with a larger social safety net as 'lester ostroy' suggests above.
Forcing employers to pay $15/hour or more for jobs that are obviously going to be replaced with automation is a temporary, feel-good approach at best.
Forcing employers to pay $15/hour or more for jobs that are obviously going to be replaced with automation is a temporary, feel-good approach at best.
2
Walmart is famous for paying below the minimum wage so that its employees will qualify for medical benefits paid for by the local community tax dollars.
The time frame is important. The negative effects with companies firing workers rather than raise their wage will come first. That's the short run. In the medium run, higher wages at the bottom should cause more income to go to the bottom workers, who spend the largest portion of their income, and usually closest to home. More income means more demand, which means growing businesses and more hiring.
Why don't any of the articles about the minimum wage even mention this effect?
It called demand side economics and it makes a lot more sense than supply side economics, the idea that cutting taxes on the richest people and their corporations will stimulate investment. The problem is that there is no reason to invest in a company that sees flat demand, so the tax cuts get invested in far away places, or go into creating asset bubbles that destabilize the economy.
Making life better for local workers is good for business, or at least that is what I expect the studies to show in five to ten years.
Why don't any of the articles about the minimum wage even mention this effect?
It called demand side economics and it makes a lot more sense than supply side economics, the idea that cutting taxes on the richest people and their corporations will stimulate investment. The problem is that there is no reason to invest in a company that sees flat demand, so the tax cuts get invested in far away places, or go into creating asset bubbles that destabilize the economy.
Making life better for local workers is good for business, or at least that is what I expect the studies to show in five to ten years.
5
what this article shows is people will believe what they want.
A few years back Krueger at Princeton, an economist widely known to have a liberal bent, released his study showing that when the minimum wage went up employment did not drop. This seemed to contradict simple economic models of how demand curves work, but his work was promptly endorsed by those who wanted to see min wages rise and just as quickly dismissed by those who did not.
This study is just the flip side of the coin. Studies have just become litmus tests for underlying beliefs. Those who think rising min wages lead to unemployment will cite this, those who don't will nitpick it to death
A few years back Krueger at Princeton, an economist widely known to have a liberal bent, released his study showing that when the minimum wage went up employment did not drop. This seemed to contradict simple economic models of how demand curves work, but his work was promptly endorsed by those who wanted to see min wages rise and just as quickly dismissed by those who did not.
This study is just the flip side of the coin. Studies have just become litmus tests for underlying beliefs. Those who think rising min wages lead to unemployment will cite this, those who don't will nitpick it to death
12
That is why you have to wait for multiple studies, that are peer reviewed, and make a decision based on a preponderance of the evidence, not the first thumb nail sketch that comes out.
8
I worry for my home state of Oregon where we will also be undergoing this total debacle of raising minimum wage over the next few years. It's really just simple economics, and anyone who refutes this is simply buying the populist line. If the government really wanted people to make gains in employment and wages then they would lower the tax liability of small business owners so that they can expend resources to grow the local economy, instead of funding disastrous over-seas military ventures in the name of, well, does anyone even remember why we're over there anymore?
8
If you are a small business person that has the same people coming to your store every day spending the same amount of money, why would a tax break induce you to grow your expenses, if it does not increase demand for your product? If you sell pizza to a half empty pizza parlor every day, are you going to buy more ovens and expand into the store next to you? Tax cuts to owners does not increase demand, especially when the tax cuts are targeted to global corporations and global billionaires, as tax cuts proposed by Republicans usually are.
But what if everyone in the town increased the pay of their cheapest workers? Now these workers, who live dollar to dollar are spending more dollars in the neighborhood, meaning they can afford your pizza more often. Now you need a new oven and an expansion, and when you go to the bank for a loan, they see your increased business and take the risk.
That is economics 901.
Economics 101 is overly simplified. But at least they should teach you that the workers are also the consumers, and if you keep cutting the post inflation pay of your workforce, you are cutting demand.
I do agree that our military is far too big and aggressive.
But what if everyone in the town increased the pay of their cheapest workers? Now these workers, who live dollar to dollar are spending more dollars in the neighborhood, meaning they can afford your pizza more often. Now you need a new oven and an expansion, and when you go to the bank for a loan, they see your increased business and take the risk.
That is economics 901.
Economics 101 is overly simplified. But at least they should teach you that the workers are also the consumers, and if you keep cutting the post inflation pay of your workforce, you are cutting demand.
I do agree that our military is far too big and aggressive.
11
You wont have to worry about paying your cheapest worker a dollar more an hour, if you never hire them in the first place because their labour isn't worth $15 an hour. What leads a person to have more money in their pocket? Someone making some amount of money for their labour, or none at all because the value of their labour has been artificially inflated to meet some arbitrary number like $15 an hour- which a business cannot afford to pay. Worse more is that perhaps in Seattle where the wages are naturally above the federal minimum wage there is a decrease in employment hours, but imagine what would happen if you introduced this artificial rate to the oklahoma panhandle where $15 an hour is perhaps 1.5x-2x the actual market rate of unskilled labour.
3
Funny how a policy that improves wages for low income workers comes under such intense empirical scrutiny - ostensibly to help us decide whether it helps or hurts low income workers - while both parties push for wars on terror and drugs which seem to be producing nothing but counter-productive results - but I can't recall not seeing any research on these policies in the media.
There's actually quite a bit of research and inquiry on both topics which document the failures of both wars:
https://www.globalpolicy.org/war-on-terrorism.html
http://www.bmj.com/content/355/bmj.i6067
There's actually quite a bit of research and inquiry on both topics which document the failures of both wars:
https://www.globalpolicy.org/war-on-terrorism.html
http://www.bmj.com/content/355/bmj.i6067
9
The potential for forced wage increases not based on economic supply and demand causing job losses should be a real concern for everyone.
This is not heartlessness in the slightest. I can't imagine anyone wanting people who are struggling to also be faced with a job loss and all that can result from that.
This is not heartlessness in the slightest. I can't imagine anyone wanting people who are struggling to also be faced with a job loss and all that can result from that.
3
The economic waste of war has been long documented. If a lot of money is spent on producing those things used in wars, there is no real return. War destroys much of what is used in fighting; it is very expensive. If there are some good things built, such as bridges, fine. However, the over all of war production are temporary jobs and equipment meant to be used, and subject to destruction. How much did it cost to rebuild Europe and Japan after WWII? And, how many wars were started by those two regions after WWII? The two regions where there appear to be enough money and support for war are the U.S. and parts of the ME. And, who is profiting? Joe Smith who lost his factory job is not getting any of that money.
Seattle is anything but a representative model of the nation. I clearly remember the rapid growth period of the 1990's as the Dot-Com bubble expanded. Wages soared, movement was high, lower qualified people got hired for jobs above their ability, and I was a hiring manager in a rapidly growing company. Everyone postulated that this was the new-normal and then the bubble burst.
This is an interesting study but it misses the fact that the American economy is made up of both high and low economic zones and wages are different in all these places. There simply cannot be any absolute conclusions made from this study alone.
This is an interesting study but it misses the fact that the American economy is made up of both high and low economic zones and wages are different in all these places. There simply cannot be any absolute conclusions made from this study alone.
4
To add context to this discussion consider:
In the University of Washington study: Total worker income below $19 per hour fell. Wages (W) below $19 per hour rose by about +3% while the hours worked (Q) fell by about -9%. Since workers' income can be defined as (Wages x Hours) or (W x Q), then consider: Wages have risen to 1.03 of their starting amount, and hours have fallen to 0.91 of their initial amount. Thus, for workers earning below $19 per hour, and with their Total Income = (W x Q), then since Total Income = (1.03)(0.91) = 0.9373; or about 94% of their starting income. Thus, 6% of their income is gone. And, the wage elasticity in this case equals: [(% change in Q)/(% change in wages)] = (-9/+3) = -3.0, indicating a very elastic elasticity coefficient, and very responsive labor market to price or wage increases. In comparison, for Dr. Dube's studies: the change in wages was +3% while hours worked or Q fell by at most -1.5%. Thus, in his study: Total Income = 1.03(0.985)= 1.01455; or income grows by about +1.5%. But, in Dr. Dube's case the demand for labor was more inelastic:
(% change in Q)/(% change in wages) = (-1.5/+3.0) = -0.5, which is an inelastic wage elasticity coefficient that indicates an inelastic or less wage responsive demand for labor.
JJL Th 07/20/2017 2:37p Greenville NC
In the University of Washington study: Total worker income below $19 per hour fell. Wages (W) below $19 per hour rose by about +3% while the hours worked (Q) fell by about -9%. Since workers' income can be defined as (Wages x Hours) or (W x Q), then consider: Wages have risen to 1.03 of their starting amount, and hours have fallen to 0.91 of their initial amount. Thus, for workers earning below $19 per hour, and with their Total Income = (W x Q), then since Total Income = (1.03)(0.91) = 0.9373; or about 94% of their starting income. Thus, 6% of their income is gone. And, the wage elasticity in this case equals: [(% change in Q)/(% change in wages)] = (-9/+3) = -3.0, indicating a very elastic elasticity coefficient, and very responsive labor market to price or wage increases. In comparison, for Dr. Dube's studies: the change in wages was +3% while hours worked or Q fell by at most -1.5%. Thus, in his study: Total Income = 1.03(0.985)= 1.01455; or income grows by about +1.5%. But, in Dr. Dube's case the demand for labor was more inelastic:
(% change in Q)/(% change in wages) = (-1.5/+3.0) = -0.5, which is an inelastic wage elasticity coefficient that indicates an inelastic or less wage responsive demand for labor.
JJL Th 07/20/2017 2:37p Greenville NC
4
Nice analysis. I like that it backs the idea that in the short run income goes down, but in the long run it goes up.
1
It’s about finding the right minimum wage—employees want it higher; employers want it lower.
1
No, this is not a puzzle. It is Economics 101, or perhaps Jr. High Economics. Supply and demand. If you make something more expensive, you will get less of it.
Why do any of you find this complicated?
Why do any of you find this complicated?
20
What your saying isn't complicated, it's overly simplistic. Economic systems are far more complex than that. A higher minimum wage means more money for low wage workers to spend.
25
It is misleading to look at the number of jobs, but not who holds them. If you can only do $10 worth of work an hour, and the minimum wage is $15, it is likely that you won't be able to find a job. Instead, employers will hire workers with more skills who can do more work. The overall number of jobs might not change, but a fair number of potential workers will be shut out of the job market.
8
The more the "progressives" push for a higher minimum wage, the greater the incentive for employers to replace increasingly more expensive no-skill / low-skill minimum wage workers with increasingly less expensive and more efficient automation. The end result will be more unemployed ex-minimum wage workers.
8
You would have to have, I think they call it 'longitudinal' data on individuals to answer that question. It's pretty rare to collect data like that. Much more expensive than the data collected by this study, which is actually unusually detailed as well because Washington State collects more info than most, and allowed the researchers to use it.
It would certainly be informative.
A fundamental question here is "what is really happening to those pre-increase <$13 an hour workers?" Are they just getting fewer hours and less money as the authors suggest? Are they switching to higher paid jobs, perhaps quite different jobs? Are they switching to still low paid jobs outside of Seattle? If the last, dos it typically worsen their commutes, etc?
It's plausible, in a white hot economy like Seattle, that the simplest explanation isn't correct. Certainly the feeling of a super-hot low end labor market is in the air. I lived in Seattle during .com boom, and right now I again get the feeling that low end retail jobs are very much being filled by the marginally employable. People who sometimes can't get a job can get one right now.
It would certainly be informative.
A fundamental question here is "what is really happening to those pre-increase <$13 an hour workers?" Are they just getting fewer hours and less money as the authors suggest? Are they switching to higher paid jobs, perhaps quite different jobs? Are they switching to still low paid jobs outside of Seattle? If the last, dos it typically worsen their commutes, etc?
It's plausible, in a white hot economy like Seattle, that the simplest explanation isn't correct. Certainly the feeling of a super-hot low end labor market is in the air. I lived in Seattle during .com boom, and right now I again get the feeling that low end retail jobs are very much being filled by the marginally employable. People who sometimes can't get a job can get one right now.
4
The end result of that will be abandoned small towns, schools, hospitals et al. Low skilled workers migrating to urban areas where there are jobs, but fewer jobs for low skills. How many unemployed can be housed and fed? What about job re-training, education benefits and funding to move to areas where jobs do exist? You appear to discount the social cost of wide spread unemployment.
This study doesn't account for minimum wage jobs remaining open, and many other factors like the loss of small businesses due to skyrocketing lease costs as well as cost of materials.
If you look around Seattle and environs there are for hire signs everywhere. This is not to mention the burgeoning market for nannies, drivers, etc. that come with the city's amazing growth.
Unemployment is extremely low to the point that even teenagers I know are getting multiple job offers and chain restaurants are all hiring.
And then there is the issue of Seattle's exodus of the poor because the rent is too darn high. Fewer people to work minimum wage means fewer hours worked. Nobody is going to drive an hour from Tukwila to pay $5/hr for parking for $15/hr for a 4 hour shift. The minimum wage is still not profitable so businesses pay even more.
GlennFleischman wrote "Likewise, the study counts anyone at a higher wage finding an even higher one, such as leaving the $19 an hour cohort for $20 an hour as a loss." Indeed, this is the biggest flaw. If you get a raise because $15 is the minimum so you need to raise your experienced workers beyond that, it counts as worse for workers. This is absurd.
I think that this study is not only not the end: it is not even the beginning.
If you look around Seattle and environs there are for hire signs everywhere. This is not to mention the burgeoning market for nannies, drivers, etc. that come with the city's amazing growth.
Unemployment is extremely low to the point that even teenagers I know are getting multiple job offers and chain restaurants are all hiring.
And then there is the issue of Seattle's exodus of the poor because the rent is too darn high. Fewer people to work minimum wage means fewer hours worked. Nobody is going to drive an hour from Tukwila to pay $5/hr for parking for $15/hr for a 4 hour shift. The minimum wage is still not profitable so businesses pay even more.
GlennFleischman wrote "Likewise, the study counts anyone at a higher wage finding an even higher one, such as leaving the $19 an hour cohort for $20 an hour as a loss." Indeed, this is the biggest flaw. If you get a raise because $15 is the minimum so you need to raise your experienced workers beyond that, it counts as worse for workers. This is absurd.
I think that this study is not only not the end: it is not even the beginning.
16
The argument over minimum wage increases and effects on employment have been constant since Henry Ford began paying workers $5 a day. Studies have been inconclusive for nearly a century, leading me to suspect that, nationally, there is no negative effect, although there might be localized down turns.
Let's consider another facet of the wage increase I don't read much about. We've seen the effect on family incomes and local economies as manufacturing jobs continue to spiral downward. These jobs were the steps up the ladder for families across the country. Here in the South, we saw positive effects from year round employment in shoe factories, textile mills, and the like - even though the wages were low. But those are gone, now, and there have been too few replacements. This holds true in the Rust Belt, Coal Country, and Michigan's Auto Circle. I see that many pin their hopes on technology. But how many Silicon Valleys will be built? Do we really believe that Youngstown, OH or Greenville, MS will be the future homes of Apple-like companies?
I suggest that we should consider service jobs as the next and future ladder steps for economic security. Being from a career in restaurants, I recognize that such wage increases will mean higher costs for the consumer - but, and this is important, I also believe in the Econ 1 concept of the multiplier effect. Consequently, that care-giver in the nursing home just might be worth more than is now being paid.
Let's consider another facet of the wage increase I don't read much about. We've seen the effect on family incomes and local economies as manufacturing jobs continue to spiral downward. These jobs were the steps up the ladder for families across the country. Here in the South, we saw positive effects from year round employment in shoe factories, textile mills, and the like - even though the wages were low. But those are gone, now, and there have been too few replacements. This holds true in the Rust Belt, Coal Country, and Michigan's Auto Circle. I see that many pin their hopes on technology. But how many Silicon Valleys will be built? Do we really believe that Youngstown, OH or Greenville, MS will be the future homes of Apple-like companies?
I suggest that we should consider service jobs as the next and future ladder steps for economic security. Being from a career in restaurants, I recognize that such wage increases will mean higher costs for the consumer - but, and this is important, I also believe in the Econ 1 concept of the multiplier effect. Consequently, that care-giver in the nursing home just might be worth more than is now being paid.
4
Reasonable analysis, but I wish you’d mentioned at the very top the key methodological flaws that largely invalidate a serious discussion of this study as a look at the broader economic picture instead of a very specific slice.
This study is really, "Employment and hourly changes within single-site businesses, excluding those whose wages rise above $19 during the studied period." If the study had been promoted by its researchers that way, no one would be discussing it.
It excludes multi-site businesses, such as McDonald's, many of which have a total number of employees above the large business threshold that requires them to pay a higher minimum wage. It's about 40% of all jobs.
Thus, if someone leaves Chuck's Sandwich shop at $13 an hour for McDonald's at $14 an hour, the study counts that as lost hours instead of a sensible economic choice.
Likewise, the study counts anyone at a higher wage finding an even higher one, such as leaving the $19 an hour cohort for $20 an hour as a loss.
There are other flaws described in depth elsewhere, but the key methodological errors should be up front and discussed before you get into the lesser, but equally baffling errors.
This study is being used to political ends, whatever the intent of the researchers. Some local businesses and politicians want to present Seattle's transition into more equitable wages as a failure. Statistics and anecdotes alike prove it isn't.
This study is really, "Employment and hourly changes within single-site businesses, excluding those whose wages rise above $19 during the studied period." If the study had been promoted by its researchers that way, no one would be discussing it.
It excludes multi-site businesses, such as McDonald's, many of which have a total number of employees above the large business threshold that requires them to pay a higher minimum wage. It's about 40% of all jobs.
Thus, if someone leaves Chuck's Sandwich shop at $13 an hour for McDonald's at $14 an hour, the study counts that as lost hours instead of a sensible economic choice.
Likewise, the study counts anyone at a higher wage finding an even higher one, such as leaving the $19 an hour cohort for $20 an hour as a loss.
There are other flaws described in depth elsewhere, but the key methodological errors should be up front and discussed before you get into the lesser, but equally baffling errors.
This study is being used to political ends, whatever the intent of the researchers. Some local businesses and politicians want to present Seattle's transition into more equitable wages as a failure. Statistics and anecdotes alike prove it isn't.
6
Anything is possible in the absence of concrete data. But there is no reason to believe that the minimum wage employment at McDonalds or Starbucks suddenly went up in Q1 2016 to make up for the deficit at Chuck's. It's just an over-reach.
I believe the authors said that the partial data they had on big employers suggested that there were also fewer <$19 jobs there. The data quality wasn't up to the standard of the rest of the study, so this is more of a suggestion than a proof.
Seems to me that any effects on jobs at significantly above the minimum wage, positive or negative, have little to do with a sharp rise in the minimum wage but are owing to other economic influences. Our economy is expanding, but due primarily to greater demand for workers in knowledge-based areas, which has little to do with the marginal jobs that the minimum wage affects. That suggests to me that any conflation of experience across the job classifications serves only to distort what is happening at the margins in the categories that ARE affected by a sharp rise in the minimum wage.
Prof. Dube's analysis seems to bear out that a significant net loss of jobs is experienced, at least in Seattle, at the lower-paying levels when a significant boost to the minimum wage is introduced, and this bears out the U-W study.
The argument is that reducing the available jobs at lower levels in turn reduces first-rung opportunities for our young, which get them established in their lives earning and give them the stability required to obtain the knowledge and experience required to vie for better-paying jobs and thus spur upward mobility. It remains that the author's analysis doesn't dispel the concerns that jobs at lower-paying levels are destroyed by making them more dear to employers -- he merely masks that effect by looking at the ENTIRE jobs picture, much of which bears little or no relation to the effects analyzed.
Prof. Dube's analysis seems to bear out that a significant net loss of jobs is experienced, at least in Seattle, at the lower-paying levels when a significant boost to the minimum wage is introduced, and this bears out the U-W study.
The argument is that reducing the available jobs at lower levels in turn reduces first-rung opportunities for our young, which get them established in their lives earning and give them the stability required to obtain the knowledge and experience required to vie for better-paying jobs and thus spur upward mobility. It remains that the author's analysis doesn't dispel the concerns that jobs at lower-paying levels are destroyed by making them more dear to employers -- he merely masks that effect by looking at the ENTIRE jobs picture, much of which bears little or no relation to the effects analyzed.
1
Making adults with children compete with teens who need extra spending money is probably going to drive down wages for people that need it most. There must be a better way to get teens work experience.
2
McGloin:
The major problem with your argument is "open borders". Those minimum wage jobs weren't invented to sustain adults with children but precisely those young people who need a start and work experience.
The major problem with your argument is "open borders". Those minimum wage jobs weren't invented to sustain adults with children but precisely those young people who need a start and work experience.
2
Minimum wage jobs weren't "invented" to serve the interests of any particular age group. They exist simply because burgers have to be flipped and fries have to be fried.
I know next to nothing about economics, so there's a good chance I'm missing something, but maybe someone can explain. Here's what I have always wondered: If you are being paid so little that you can't possibly live on that amount, why does it really matter if you have a job or not? Either way, you need help from somewhere (family, government, charity) to survive.
Anyone who works full time should not be in poverty, and that is a moral statement, not an economic one.
Anyone who works full time should not be in poverty, and that is a moral statement, not an economic one.
50
One of the zillions of "research studies" in the soft sciences posits that in major cities, NOT working can generate $38,000 in government benefits -- $19/hour. That is: why work? Why not just party, instead? It is called a "notch effect."
Also often left out of this debate: one side loves to state "Australia has a much higher minimum wage." Of course, they leave out that there is a sub-minimum wage for high school students, so they can find work.
Seattle is NOT NYC, or CHIC, or anywhere else. They've got MSFT and AMZN. Get real, please.
Also often left out of this debate: one side loves to state "Australia has a much higher minimum wage." Of course, they leave out that there is a sub-minimum wage for high school students, so they can find work.
Seattle is NOT NYC, or CHIC, or anywhere else. They've got MSFT and AMZN. Get real, please.
3
Ok Patricia. I will try.
Lets say that in a given hour, someone can produce enough goods that can be sold for $10. Should they be paid more than $10 for that hour of work?
It has nothing to do with morality - it has to do with what is turned out with that labor.
Now $10 an hour may not be enough to live on - is it better that the person earns $10 and receives say an additional $5 in tax-funded benefits, or is it better that person earns nothing, and then we pay them $15 in tax-funded benefits.
That is the real trade-off. The trade off is not between a $10 an hour pay or $15 an hour pay if the job only produces $10 of something that can be sold. The trade-off is between $10 an hour pay or nothing, because no one is going to pay an employee more than they produce.
Lets say that in a given hour, someone can produce enough goods that can be sold for $10. Should they be paid more than $10 for that hour of work?
It has nothing to do with morality - it has to do with what is turned out with that labor.
Now $10 an hour may not be enough to live on - is it better that the person earns $10 and receives say an additional $5 in tax-funded benefits, or is it better that person earns nothing, and then we pay them $15 in tax-funded benefits.
That is the real trade-off. The trade off is not between a $10 an hour pay or $15 an hour pay if the job only produces $10 of something that can be sold. The trade-off is between $10 an hour pay or nothing, because no one is going to pay an employee more than they produce.
More studies are needed and should be forthcoming soon. The study had severe limitations since Seattle and the rest of Washington state are on different planets. PS I live outside Seattle and four of my kids in high school and college work at $11/hour minimum wage jobs (their first ever). Washington has highest in the country tied with Mass. My first job in 1969 paid a sub minimum wage of $0.80 from the City of Bellevue (exempt from FLSA back then). Indexed for inflation they probably have almost the same purchasing power.
3
Wow, I was in MI at its very first Taco Bell scrapping burnt on refried beans from the bottom of huge pressure cookers for a buck twenty five or five dollars per four hour shift after school. My two kids only worked summers. They now make more than me. Hope you have a similar outcome. Life is good but sometimes hard.
Who can be against hard working Americans making a little more.
If you want to expand and increase your profits then pony up.
Not like we're asking you to provide 401s and health care. He he.
Who can be against hard working Americans making a little more.
If you want to expand and increase your profits then pony up.
Not like we're asking you to provide 401s and health care. He he.
I've been listening to the endless debate about the minimum wage my entire adult life, 6 decades. Invariably the economic interests opposed to paying more for labor trot out the same argument - it's supposedly bad for the people who get a wage increase. After all these decades debating the issue why don't we know the answer? Is economic research so difficult? Why should we listen to economists if they can't objectively answer simple, persistent questions about fundamental policy?
10
Yes. Economic research is that difficult. The problem is coming up with valid control groups. You can't just compare the before and after of an economic policy because there are so many confounding, external variables.
The problem with this study is it uses the rest of Washington State as a control group for Seattle, but comparing the city to the rest of the state is problematic at best.
The problem with this study is it uses the rest of Washington State as a control group for Seattle, but comparing the city to the rest of the state is problematic at best.
1
The best study I've heard of compared neighboring counties on the border between New Jersey and Pennsylvania. New Jersey raised its minimum wage and Pennsylvania did not. Over time, the NJ economy grew faster.
Poor people have to spend the money the get right away, close to home. Tax cuts to the rich end up in far away asset bubbles. Under QEII, the Fed gave global banks a net of about $1.5 trillion in free money. When asked why they didn't invest in US businesses they said there was no demand too justify investment.
Supply side economics is a theory designed (by Laffer while eating dinner with Dick Cheney and Donald Rumsfeld) to make an excuse to cut taxes for rich people, despite the fact that it does not grow the economy.
Poor people have to spend the money the get right away, close to home. Tax cuts to the rich end up in far away asset bubbles. Under QEII, the Fed gave global banks a net of about $1.5 trillion in free money. When asked why they didn't invest in US businesses they said there was no demand too justify investment.
Supply side economics is a theory designed (by Laffer while eating dinner with Dick Cheney and Donald Rumsfeld) to make an excuse to cut taxes for rich people, despite the fact that it does not grow the economy.
4
I thought Henry Ford settled that argument when he raised wages so that his employees could afford to buy his cars.
I'll admit, I have not read the original journal article via the link (I'm not going to pay to read likely flawed research). However, what is reported here makes me wonder how such poor quality research - by UW staff apparently - ever gets commissioned or published. If you're going to choose a quasi-experimental cohort design, the "experimental" (Seattle) and "control" groups have to be equally matched on pretty much every variable you can think of. When I was in grad school, this design would've been kicked back for me to rethink. When I was working at a Fortune 250, a test-market design like this ... well, since they commissioned the work, Seattle officials should ask for their money back.
1
Oh, please, look at the obvious. Seattle has MSFT and AMZN. Most the USA is still in a "Great Recession." Really. Not kidding. Take a look, for yourself.
4
So I'd guess you were in the hard sciences and not a social science, otherwise you'd know that what you're asking is largely impossible and how economists are constantly on the search for "natural experiments".
It would be great if we could test minimum wage hikes in a controlled study, but we can't.
It would be great if we could test minimum wage hikes in a controlled study, but we can't.
1
You guessed wrong. I'm trained as a social psychologist and was not referring to a randomized, well-controlled experimental design as idealized in logical-positivistic, "hard" sciences. That's why I placed "experimental" & "control" groups in quotations. BTW, quasi-experimental test market research of potential new products are conducted around the globe every day - much of it driven by statistical modeling.
I come from no money. I dropped out of high school. I came within an inch of going to being drafted to go to Vietnam.
However, my mother always told me to read, and I loved to. I always have. I am street smart, and very fast doing math calculations in my head. It was always my favorite subject. However, I lived in the Bible Belt in NW Louisiana.
In 1988, I moved from NW Louisiana to Soho in Manhattan. I co-founded a small but quite successful niche business (in Manhattan in 1991 with $10,000. My dad co-signed the loan. Over 25 years, we grew into a company grossing about $3 million/year. I did very well in the 1st decade of this century. A landscaping company, based in Manhattan and excelled there. We designed, installed and maintained rooftop gardens, penthouse terraces, Co-op courtyards and gardens, even Wall Street companies like Goldman Sachs. Many celebrities and several billionaires.
I paid workers well. It is a policy I came up with, but much larger companies, most notably Wegmans used; a regional grocery chain founded in Buffalo, NY and grown into many more stores. 1 year Forbes listed them as the 7th best company to work for, and the next year they were 1st! All shoppers are aware of the key to their success (same I mentioned). It is quite simple and works: The employee comes 1st, the customer 2nd.
I always paid workers very well, took care of them. As a rule, they take extra special care of all their work. We never advertised; all word of mouth (the best).
However, my mother always told me to read, and I loved to. I always have. I am street smart, and very fast doing math calculations in my head. It was always my favorite subject. However, I lived in the Bible Belt in NW Louisiana.
In 1988, I moved from NW Louisiana to Soho in Manhattan. I co-founded a small but quite successful niche business (in Manhattan in 1991 with $10,000. My dad co-signed the loan. Over 25 years, we grew into a company grossing about $3 million/year. I did very well in the 1st decade of this century. A landscaping company, based in Manhattan and excelled there. We designed, installed and maintained rooftop gardens, penthouse terraces, Co-op courtyards and gardens, even Wall Street companies like Goldman Sachs. Many celebrities and several billionaires.
I paid workers well. It is a policy I came up with, but much larger companies, most notably Wegmans used; a regional grocery chain founded in Buffalo, NY and grown into many more stores. 1 year Forbes listed them as the 7th best company to work for, and the next year they were 1st! All shoppers are aware of the key to their success (same I mentioned). It is quite simple and works: The employee comes 1st, the customer 2nd.
I always paid workers very well, took care of them. As a rule, they take extra special care of all their work. We never advertised; all word of mouth (the best).
38
E, you're from the real world. Looking forward to academia, WashDC, Hollywood, and the MSM to actually open small businesses that try to function with their theories. It could be a new type of "reality comedy." Or, more likely, "tragic-comedy."
2
Wegmans was founded in Rochester, NY, (sixty miles east of Buffalo) in 1916. In 2017, it has 92 store locations.
https://en.wikipedia.org/wiki/Wegmans
https://en.wikipedia.org/wiki/Wegmans
1
Wegmans is a Rochester company not Buffalo
You have one graph showing changes over 2 years, and the other over 37 years. Since larger samples mean that much larger standard deviations are normal I don't believe they can be compared against each other.
Right after Christmas is a normal time for job numbers to dip and that is not mentioned - less shopping, fewer parties, etc, etc. IT automation has also been taking out a lot of relatively low-level and mid-level jobs, so the "ripple effect" on increasing wages, and also of less household income on spending could also be playing a significant role.
I simply don't think there is adequate data from what is presented here to draw conclusions, much less call them "alarming".
Right after Christmas is a normal time for job numbers to dip and that is not mentioned - less shopping, fewer parties, etc, etc. IT automation has also been taking out a lot of relatively low-level and mid-level jobs, so the "ripple effect" on increasing wages, and also of less household income on spending could also be playing a significant role.
I simply don't think there is adequate data from what is presented here to draw conclusions, much less call them "alarming".
3
Healthy skepticism is a good thing. But you have to wonder if it isn't politically motivated when it all comes from the far left trying to find a hole, any hole, to discredit this study -- there were no such outcry when studies showed no effect on the employment. As for the "temporal control" that Mr. Dube is objecting, I don't see anything unusual in 2016 Q1 jump. There were similar one in 2015 Q1, and even bigger one in Q2.
It is fair to say that this is just one study. But we shouldn't ignore it in our march toward the national $15 minimum because there is a distinct possibility that minimum increase at the higher end may effect the employment of people that we are trying to help. And this study may well be the beginning of wave of studies that confirms it.
It is fair to say that this is just one study. But we shouldn't ignore it in our march toward the national $15 minimum because there is a distinct possibility that minimum increase at the higher end may effect the employment of people that we are trying to help. And this study may well be the beginning of wave of studies that confirms it.
1
Two points: first, criticism of the U.W. study doesn't 'discredit' it. Even if the conclusion are questionable it adds to our understanding of how to study the question. Second, when studies found no effect on employment there was voluminous criticism from economists who thought the methodology was flawed.
I suppose your point is that when somebody criticizes something you agree with they are politically motivated and from the far left. I am afraid that reveals more about your own political motivation than anyone else's.
I suppose your point is that when somebody criticizes something you agree with they are politically motivated and from the far left. I am afraid that reveals more about your own political motivation than anyone else's.
13
This study was actually really badly done. I read it. They looked at total hours worked not including at the primary source of minimum wage jobs. They did not consider the timing of the study (months from start of policy implementation or seasonality). They excluded rising wages from positive impacts when everyone in Seattle knows that as the minimum has been rising, experienced workers have demanded higher wages as well.
In addition, there has been push back agaianst other studies. Maybe not on Internet message boards or blogs that you read, but there is substantial debate about minimum wage studies so there is no need to frame this as far left bias.
Put out an ad for minimum wage jobs in Seattle. See how many applicants you get and you will find the answer as to why fewer hours are being worked.
In addition, there has been push back agaianst other studies. Maybe not on Internet message boards or blogs that you read, but there is substantial debate about minimum wage studies so there is no need to frame this as far left bias.
Put out an ad for minimum wage jobs in Seattle. See how many applicants you get and you will find the answer as to why fewer hours are being worked.
2
And exactly where did those criticisms came from? You are just proving my point about the political bias in academia, and the left is as guilty as the right. As for discrediting, just read huff post etc on this topic. (yes, I'm an occasional huff reading SF liberal, thank you). Even the recent NYT editoral was reaching too far suggesting all kinds of possibilities why the study may be wrong. For now tho, it'll be more constructive if someone can defend the writer's assertion than Q1 2016 was an anomaly, which seems to me a kitchen sink.
A little to esoteric for me.
Bottom line, ever since the minimum wage was created yrs ago, conservatives have been singing the death knell of the American economy, which has not happened.
When done in a fair, rational way it will work.
In the current increase, mgt. should foot 1/3 of the bill, workers (increased productivity) the other third and gov't the last third (tax breaks to the corp.)
Bottom line, ever since the minimum wage was created yrs ago, conservatives have been singing the death knell of the American economy, which has not happened.
When done in a fair, rational way it will work.
In the current increase, mgt. should foot 1/3 of the bill, workers (increased productivity) the other third and gov't the last third (tax breaks to the corp.)
1
Apologies for my earlier post's typos and grammatical errors; also repeating sentences. The Times needs an "edit" selection in Comments; badly.
Almost never asked in these articles: how much money is the owner making, even with a $15 minimum wage?
Also left out in these articles is that prices rise over time; why shouldn't the minimum wage rise at the same rate as the price of the products it produces?
I suggest we follow Robert Reich's proposal for a minimum wage we can all plan around as time goes on, workers and business owners alike. It would be half of the median wage, adjusted for inflation annually.