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Minimum Wage to scale up to $15/hr in CA, NY
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trueblue



Joined: 15 Jun 2014
Location: In between the lines

PostPosted: Tue Apr 12, 2016 5:57 am    Post subject: Reply with quote

The ignorant will realize they don't have a hand to play, once prices go up and their hours are cut.

But, they will still be making $15 an hour!

https://mises.org/library/yes-minimum-wages-still-increase-unemployment

Quote:

02/09/2015Andrew Syrios
Raising the minimum wage has become the cause célèbre for many on the progressive left. Most notably, Seattle has passed a $15 per hour minimum wage. In addition, California lawmakers are trying to pass a state-wide $13 per hour minimum wage and President Obama is supporting the increase of the federal minimum wage from $7.25 to $10.10.

The general public has generally been pretty ignorant regarding economics, so it’s understandable that many would fall for hollow populist appeals. However, a series of new studies on the minimum wage purport to show a low or non-existent impact on unemployment. Seventy-five notable economists even signed a petition to President Obama to raise the minimum wage.

This would seem at odds with basic economic theory. After all, demand curves are downward sloping, aren’t they? At some point, an increase in the minimum wage has got to cost jobs. If the minimum wage was increased to $100 per hour, obviously that would cost a lot of jobs. No one would disagree with this. So in that case, why wouldn’t increasing it to $10.10 per hour cost some jobs, right?

Revisionist Studies

Before the latest wave of revisionist studies, the idea that minimum wage hikes don’t cause unemployment received a substantial boost in 1994 from a study of New Jersey-Pennsylvania fast food workers. However, David Neumark and William Wascher re-evaluated the evidence and found that the “New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania group.”

More recently, the old consensus was challenged again. Robert Murphy summarizes these economists approach as follows,

If we include regional-specific trends indexed by time period, the influence of the minimum wage begins to disappear and, in particular, using their preferred control group method (of contiguous county pairs) completely obliterates the textbook finding. The minimum wage may even have a positive impact on employment.
However, as Murphy notes, these adjustments “might mask the policy’s true effect.” As a recent working paper from Jonathan Meer and Jeremy West finds,

Using three separate state panels of administrative employment data, we find that the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.1
In essence, minimum wage increases make it more likely that firms won’t hire new people than that they will fire current employees. For example, movie theaters have stopped employing ushers almost entirely. And many companies are moving toward more automation, at least partly because of minimum wage increases.

Furthermore, there is another major problem as Robert Murphy’s points out,

… careful analysts will often summarize the new research in a nuanced way, saying “modest” increases in the minimum wage appear to have little impact on employment. But the proposed increase from $7.25 to $10.10 an hour is a 39-percent increase, which can hardly be characterized as “modest.” Such an increase, therefore, could well destroy teenagers’ jobs, notwithstanding the revisionist studies.
It should also be noted that according to the Bureau of Labor Statistics, only “4.3 percent of all hourly paid workers” work at or below the minimum wage and “… workers under the age of 25 … made up about half of those paid the federal minimum wage or less.”2 Studies focusing on modest increases in the minimum wage are of course not going to show much of a difference. However, even with only modest increases in the minimum wage, effects can be found. As a review of the literature by David Neumark and William Wascher describes,

Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.3
Indeed, even the Congressional Budget Office estimates that increasing the minimum wage to $10.10 per hour will cost 500,000 jobs.

Hurting Those It’s Meant to Help

The minimum wage is constantly sold as good for workers, or minorities or women. In truth, it hurts the most vulnerable and those its well-intentioned sponsors intend to help.

A study by Jeffrey Clemens and Michael Wither evaluated the effect of minimum wage increases on low-skilled workers during the recession and found that minimum wage increases between December 2006 and December 2012 “… reduced the national employment-population ratio by 0.7 percentage points.”4 That amounts to about 1.4 million jobs. And more noteworthy, that “… binding minimum wage increases significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings.”

Yes, it’s hard to make ends meet with a minimum wage job and such jobs certainly aren’t enviable. That being said, cutting out the bottom rung from people just makes it all the harder to get by. A bad job is better than no job and it is often the first step to something better. This is further shown by an illustrative chart provided by economist Mark Perry comparing the minimum wage with teenage unemployment. The two are almost perfectly correlated.

And while the large majority of those pushing for an increase in the minimum wage have good intentions, this has certainly not always been the case. Much like rent controls, increasing the minimum wage reduces the price of discrimination by creating a surplus of laborers for employers to choose from. Whereas many have noted the odd alliance of “Bootleggers and Baptists” when it came to Prohibition, another odd alliance of “Populists and the Prejudiced” could just as easily be applied to the minimum wage.

When Apartheid was collapsing in South Africa, the economist Walter Williams did a study of South African labor markets and found that many white unions were seeking to increase the minimum wage. He quotes one such union leader as saying “… I support the rate for the job (minimum wages) as the second best way of protecting white artisans.” By pricing out less educated black laborers with a minimum wage, white unions were able to insulate themselves from competition.

Indeed, the Davis-Bacon Act, which demands that private employers pay “prevailing wages” for any government contracts, was explicitly passed as a Jim Crow law in order to protect white jobs from cheaper black competitors. And while the minimum wage is supported with much more pleasant rhetoric these days, the effects on black employment, particularly black teenage employment, have been devastating. As Thomas Sowell observes,

In 1948 … the unemployment rate among black 16-year-olds and 17-year-olds was 9.4 percent, slightly lower than that for white kids the same ages, which was 10.2 percent. Over the decades since then, we have gotten used to unemployment rates among black teenagers being over 30 percent, 40 percent or in some years even 50 percent.
It’s hard to imagine that black unemployment was actually less than that of whites. But that is the effect minimum wage laws can have.5

Ending poverty and giving people additional income are praiseworthy goals, but there are no free lunches in this world. And trying to force prosperity through a minimum wage simply creates a whole host of negative and unintended consequences especially for those who are the most vulnerable.
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GENO123



Joined: 28 Jan 2010

PostPosted: Sun Apr 24, 2016 1:45 am    Post subject: Reply with quote

Automation will increase and at a faster pace. But that was going to happen anyway.
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Titus2



Joined: 06 Sep 2015

PostPosted: Wed May 04, 2016 6:12 pm    Post subject: Reply with quote

Leon wrote:
trueblue wrote:
Quote:
in reality it will just give rise to inflation in both goods and services and housing.



Why do people not understand this?


This can be true, but have you lived in a place with high minimum wages? Australia has them and things are more expensive, but not so much that the high wages do not offset them. The 'just' above is wrong, and in reality we subsidize low wage companies with benefits with the working poor, so changing this is not the economic dom and gloom some would have you believe.


There will be some automation. People who are not worth 15 will not find work. Labor as a % of total costs heavily fluctuates from industry to industry. Also, if a market is competitive the prices won't rise but instead the gains to capitalists will decrease as the demand is relatively elastic. It isn't much money, it is spread over many years (so inflation will negate some of it) and it won't impact that many people. It's not a big deal. I'd support far, far higher.

We're going to need a citizens dividend or guaranteed income in the very near future.
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Plain Meaning



Joined: 18 Oct 2014

PostPosted: Fri May 20, 2016 11:23 pm    Post subject: Reply with quote

Portland Maine's Minimum Wage Hike

Quote:
When Portland first proposed a municipal minimum wage in January 2014, it was seen as an outlier. Today, as New York and California roll out mandatory hikes that will take low-paid workers to $15 an hour over several years, calls to raise the minimum wage in order to tackle income inequality have become deafening, even as conservatives dispute its efficacy. Cities are joining the charge, from Seattle to Chicago to Los Angeles.

. . .

Researchers have found that paying a minimum wage below 60 percent of the median wage has little or no effect on employment – but it’s impossible to be certain at a local level. “There’s no definitive answer as to what works and what doesn’t. But it’s a truism that there’s a point at which the minimum wage could hurt the economy,” says Mr. Hinck, a Democrat.

So far, Portland’s $10.10 wage hasn’t killed jobs, though some restaurants have cut hours. Many workers already earned above the minimum; tipped servers and bar staff make much more during the summer. Portland’s economy is booming and unemployment is below 3 percent. Even Greg Dugal, a prominent lobbyist for restaurant and hotel owners, admits that “the sky has not fallen.” Hinck calls it a “stunning silence” after the heated arguments over its adoption.

The sizzling local economy is reflected in its housing market, with prime rentals approaching levels seen in Boston. The soaring cost of housing since the recession meant Portland (pop. 67,000) had become unaffordable relative to average incomes, says Michael Brennan, who was mayor from 2011 to 2015.


There is some support for everyone's contentions in this thread in the above article.

I agree with Titus and Fox as to guaranteed minimum income. I also suggest a maximum wage. CEOs do not need to earn 300 times the median income when 50 times (i.e. still as much in a week as the average worker does in a year) would more than do.
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trueblue



Joined: 15 Jun 2014
Location: In between the lines

PostPosted: Sat May 21, 2016 5:07 pm    Post subject: Reply with quote

Titus2 wrote:
Leon wrote:
trueblue wrote:
Quote:
in reality it will just give rise to inflation in both goods and services and housing.



Why do people not understand this?


This can be true, but have you lived in a place with high minimum wages? Australia has them and things are more expensive, but not so much that the high wages do not offset them. The 'just' above is wrong, and in reality we subsidize low wage companies with benefits with the working poor, so changing this is not the economic dom and gloom some would have you believe.


There will be some automation. People who are not worth 15 will not find work. Labor as a % of total costs heavily fluctuates from industry to industry. Also, if a market is competitive the prices won't rise but instead the gains to capitalists will decrease as the demand is relatively elastic. It isn't much money, it is spread over many years (so inflation will negate some of it) and it won't impact that many people. It's not a big deal. I'd support far, far higher.

We're going to need a citizens dividend or guaranteed income in the very near future.


The thing is, prices will go up...and, those making that illustrious $15 at the minimum wage level, will have their hours cut. That may be fine by them, though.

OR...illegal aliens could be shipped off home, opening more jobs for those legal American citizens who truly are in a spot of bother in life and need a job..any job (that pays enough to support themselves with the basics...it used to work, ya know).

It is all shit show, anyway. Would any of you pay $12 for a value meal at McD's or KFC'? I would certainly choose the automated option over those prices...should I feel the desire to put that crap in my body (sometimes).

That being said, if anyone deserves a raise, it would be those working as servers, still making $2.13 an hour, in many parts of the country. In fact the entire service industry in the U.S. is pathetic and U.S. customers are are the worst.
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Kuros



Joined: 27 Apr 2004

PostPosted: Thu Jun 01, 2017 12:16 am    Post subject: Reply with quote

trueblue wrote:
Titus2 wrote:
Leon wrote:
trueblue wrote:
Quote:
in reality it will just give rise to inflation in both goods and services and housing.



Why do people not understand this?


This can be true, but have you lived in a place with high minimum wages? Australia has them and things are more expensive, but not so much that the high wages do not offset them. The 'just' above is wrong, and in reality we subsidize low wage companies with benefits with the working poor, so changing this is not the economic dom and gloom some would have you believe.


There will be some automation. People who are not worth 15 will not find work. Labor as a % of total costs heavily fluctuates from industry to industry. Also, if a market is competitive the prices won't rise but instead the gains to capitalists will decrease as the demand is relatively elastic. It isn't much money, it is spread over many years (so inflation will negate some of it) and it won't impact that many people. It's not a big deal. I'd support far, far higher.

We're going to need a citizens dividend or guaranteed income in the very near future.


The thing is, prices will go up...and, those making that illustrious $15 at the minimum wage level, will have their hours cut. That may be fine by them, though.

OR...illegal aliens could be shipped off home, opening more jobs for those legal American citizens who truly are in a spot of bother in life and need a job..any job (that pays enough to support themselves with the basics...it used to work, ya know).

It is all shit show, anyway. Would any of you pay $12 for a value meal at McD's or KFC'? I would certainly choose the automated option over those prices...should I feel the desire to put that crap in my body (sometimes).

That being said, if anyone deserves a raise, it would be those working as servers, still making $2.13 an hour, in many parts of the country. In fact the entire service industry in the U.S. is pathetic and U.S. customers are are the worst.


http://uk.businessinsider.com/minimum-wage-effect-on-jobs-2016-5

Quote:
In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making "simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase."

What did the researchers find? The paper's title says it all: "Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels."

The results were clear. Of the nearly two dozen federal minimum-wage hikes since 1938, total year-over-year employment actually increased 68% of the time.
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Coltronator



Joined: 04 Dec 2013

PostPosted: Thu Jun 01, 2017 5:48 am    Post subject: Reply with quote

Hey Fox, I am going to steal you explanation and use it elswhere because it was very good. Is that okay?
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Fox



Joined: 04 Mar 2009

PostPosted: Thu Jun 01, 2017 10:44 pm    Post subject: Reply with quote

Coltronator wrote:
Hey Fox, I am going to steal you explanation and use it elswhere because it was very good. Is that okay?


The one I posted on Wednesday, April 6th? Sure.
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bucheon bum



Joined: 16 Jan 2003

PostPosted: Sat Jun 03, 2017 11:19 am    Post subject: Reply with quote

Kuros wrote:
trueblue wrote:
Titus2 wrote:
Leon wrote:
trueblue wrote:
Quote:
in reality it will just give rise to inflation in both goods and services and housing.



Why do people not understand this?


This can be true, but have you lived in a place with high minimum wages? Australia has them and things are more expensive, but not so much that the high wages do not offset them. The 'just' above is wrong, and in reality we subsidize low wage companies with benefits with the working poor, so changing this is not the economic dom and gloom some would have you believe.


There will be some automation. People who are not worth 15 will not find work. Labor as a % of total costs heavily fluctuates from industry to industry. Also, if a market is competitive the prices won't rise but instead the gains to capitalists will decrease as the demand is relatively elastic. It isn't much money, it is spread over many years (so inflation will negate some of it) and it won't impact that many people. It's not a big deal. I'd support far, far higher.

We're going to need a citizens dividend or guaranteed income in the very near future.


The thing is, prices will go up...and, those making that illustrious $15 at the minimum wage level, will have their hours cut. That may be fine by them, though.

OR...illegal aliens could be shipped off home, opening more jobs for those legal American citizens who truly are in a spot of bother in life and need a job..any job (that pays enough to support themselves with the basics...it used to work, ya know).

It is all shit show, anyway. Would any of you pay $12 for a value meal at McD's or KFC'? I would certainly choose the automated option over those prices...should I feel the desire to put that crap in my body (sometimes).

That being said, if anyone deserves a raise, it would be those working as servers, still making $2.13 an hour, in many parts of the country. In fact the entire service industry in the U.S. is pathetic and U.S. customers are are the worst.


http://uk.businessinsider.com/minimum-wage-effect-on-jobs-2016-5

Quote:
In a first-of-its-kind report, researchers at the National Employment Law Project pore over employment data from every federal increase since the minimum wage was first established, making "simple before-and-after comparisons of job-growth trends 12 months after each minimum-wage increase."

What did the researchers find? The paper's title says it all: "Raise Wages, Kill Jobs? Seven Decades of Historical Data Find No Correlation Between Minimum Wage Increases and Employment Levels."

The results were clear. Of the nearly two dozen federal minimum-wage hikes since 1938, total year-over-year employment actually increased 68% of the time.


This is timely for me. I got into an argument with someone last weekend on minimum wage. He gave me the econ 101 argument (increase the minimum wage you increase unemployment and/or prices of goods and services). This is another example of theory not matching the real world.
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tophatcat



Joined: 09 Aug 2006
Location: under the hat

PostPosted: Sat Jun 03, 2017 11:07 pm    Post subject: Reply with quote

Forced wage increases cut into the profits of business owners.

Less chocolate chips in the chocolate chip cookies.
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bucheon bum



Joined: 16 Jan 2003

PostPosted: Sun Jun 04, 2017 10:12 am    Post subject: Reply with quote

Plain Meaning wrote:
northway wrote:
Leon wrote:
trueblue wrote:
Quote:
in reality it will just give rise to inflation in both goods and services and housing.



Why do people not understand this?


This can be true, but have you lived in a place with high minimum wages? Australia has them and things are more expensive, but not so much that the high wages do not offset them. The 'just' above is wrong, and in reality we subsidize low wage companies with benefits with the working poor, so changing this is not the economic dom and gloom some would have you believe.


I'm speaking specifically to the big city context where wages aren't the issue, housing - and to a lesser degree transportation - is. There are already tons of people in the New York Tristate who are making upwards of $15/hour and can't find affordable housing. The movement to increase the minimum wage isn't doing anything to fix the city's most pressing problems.


This is a tepid criticism of the minimum wage movement.

The cost of housing is a global problem. You should say what you propose to fix it. I am anxious to hear what you would think New York State or New York City could do to fix it.


As you know, I'm not exactly a libertarian, free market ideologue, but I do think that in this case making it easier to build housing in NYC (and other pricey areas) would help reduce (or slow down the rise) the cost of housing. Increasing the supply would definitely help. It did while I was living in DC, which saw a residential construction boom in the few years I lived there. Housing density could definitely be increased where I am now- the SF Bay Area. Alas, homeowners think that increased density will lead to a decrease in their own home values, so they fight it as much as they can.
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Kuros



Joined: 27 Apr 2004

PostPosted: Sun Jun 04, 2017 10:45 pm    Post subject: Reply with quote

I think DC and San Fran may be the worst markets for zoning (and other legal) suppression of housing density. I have lived in Korea and China so I am sympathetic.
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jaykimf2



Joined: 09 Apr 2017

PostPosted: Tue Jun 06, 2017 5:34 pm    Post subject: Reply with quote

bucheon bum wrote:


This is timely for me. I got into an argument with someone last weekend on minimum wage. He gave me the econ 101 argument (increase the minimum wage you increase unemployment and/or prices of goods and services). This is another example of theory not matching the real world.


I would say rather, it is a case of shallow misunderstood economic theory that does not match reality. It is true that if a business faced a forced increases in labor cost ( a shift in the supply curve for labor), ceteris paribus, (all other things being equal), there should be decline in employment. However when the forced increase in labor cost applies across an economy, all other things will not be equal. Workers across the economy will have increased income, increased disposable income and increased spending. Increased consumer spending should result in increased demand for labor by businesses. In a question of supply and demand, you can't just ignore one side of the equation. So we have a shift in the supply curve for labor, but all other things are not equal. We also have a shift in the demand curve for labor. Individual businesses will likely face varying effects, but the over all result cannot be determined a priori.
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chellovek



Joined: 29 Feb 2008

PostPosted: Mon Jun 12, 2017 8:45 am    Post subject: Reply with quote

Whether one supports increasing the minimum wage or not, the campaign is symptomatic of a more general problem; there's not enough money at the poorer end of society, less than is good for society as a whole. Much of the post-recession growth has gone to the already wealthy, the % is something ridiculous, in the 90s IIRC. The proportion of economic gains going to Capital instead of Labour over the past 30-40 years is also skewed heavily to the former.

You don't need to be a die-hard Marxist to see that if you have an increasing section of the population that basically has little economic stake in the success of society then that is problematic moving toward potentially dangerous. There needs to be more money at the bottom, not from any Social Justice or bleeding heart "won't somebody please think of the children?!" reason, but simply because you need people to feel like they have something in the game, and them having more money is likely to do just that. It is better to have them inside the tent pissing out rather than outside the tent pissing in. From the perspective of the rich and powerful this should be obvious simply as good management so that they can keep their place at the top of the pile. They should take a hit and pay people at the bottom more regardless of minimum wage laws, it is in their own enlightened self-interest to do so.
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Kuros



Joined: 27 Apr 2004

PostPosted: Wed Jun 14, 2017 3:49 am    Post subject: Reply with quote

https://theintercept.com/2017/06/13/theres-a-new-way-to-make-walmart-pay-for-the-food-stamps-employees-rely-on/


Quote:
In 2013, Walmart alone cost taxpayers $6.2 billion for expenses such as food stamps, Medicaid, and housing assistance. One study released earlier this year estimated that taxpayers spent $152.8 billion in 2015 as a result of low wages.



$152.8 billion is 152,800 $1 million lake houses. That's the annual cost to taxpayers of low wages. Walmart's take is 6,200 $1 million houses.

Raising the minimum wage forbids Walmart's low-wage providing but also welfare-recipient double-dipping. The article details a more aggressive policy than the traditional minimum wage push.
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