The inverted funnel plot of Doucouliagos and Stanley is especially useful once discussions about elasticity at the low end of the labor market reach the "you're biased -- no you're biased!" stage:
Would you mind quickly summarizing what that plot is telling us? I looked at it but it looks like I've got to read more of the paper before I understand it.
How many of the people arguing for keeping the minimum wage unchanged were arguing that in good faith?
In general, increasing pay into people at the bottom of the ladder has a much bigger economic effect than the opposite. Reasonable increases in the minimum wage, particularly ones that track inflation and cost of living are not going to harm the economy.
As many have pointed out, the minimum wage in many places has been eroded for years by inflation, so increasing it is really just making up for a lack of indexing on it.
The best solution appears to be to raise the minimum wage to a level that can support a person without government assistance and index it for inflation.
The reality for us every-day workers is that either the minimum wage is increased or we'll have to make up for it in taxes that support programs to compensate for the lack of a liveable wage.
We are much more likely to get a better deal via the minimum age than we are via the tax system; the latter of which is heavily skewed in favor of the wealthy and corporations. It's not big corporations paying non-liveable wages who will be paying to cover food stamps.
> The reality for us every-day workers is that either the minimum wage is increased or we'll have to make up for it in taxes that support programs to compensate for the lack of a liveable wage.
Exactly. Too low a minimum wage actually becomes a subsidy to employers.
> How many of the people arguing for keeping the minimum wage unchanged were arguing that in good faith?
> Reasonable increases in the minimum wage, particularly ones that track inflation and cost of living are not going to harm the economy.
My understanding is that plenty of the arguments against it are from people concerned about the areas of the country still near the federal minimum. It's absolutely a good-faith argument concerning what they see as an unreasonable jump, of ~double the previous amount, instead of a reasonable increase.
>The best solution appears to be to raise the minimum wage to a level that can support a person without government assistance and index it for inflation.
Which person? I contend that the person should be a 4 person family(so that I can throw out the oft proposed $15/hr rate fitting pretty closely with the US federal poverty rate of a similar family after taxes.) Other people say minimum wage is only for teenagers entering the work force.
This is true, but people who argue for it most vocally refuse to acknowledge the fact that it’s not economically feasible to reward the lowest paid people with a MUCH MORE than comfortable lifestyle. The minimum wage is for two things: To prevent the exploitation of workers at a certain level, and to allow workers to support themselves.
Some people also fail to realize that there will always be poor people. The only thing we can do is change the way we treat them. I support raising the minimum wage, but not as much as some. If there are really no other jobs, that’s what government assistance programs are for.
Mind you, I grew up dirt poor in the midwest. I’m now on my way to earning six figures by taking advantage of those aforementioned government programs.
Also: Some people are satisfied being poor. If they really wanted to get out, they would. I did. Those who argue that you can’t raise a family on minimum wage: You shouldn’t keep having kids if you don’t have a decent job. Of course uneducated people from lower socioeconomic backgrounds refuse to follow this rule, and this is why poverty is often generational.
About 2-3% of hourly paid workers earn minimum wage. For the most part, it's not about the masses, but the skills necessary to get onto the bottom rung.
As others have said elsewhere, in most cities, labor is at about $!5/hr already.
> As many have pointed out, the minimum wage in many places has been eroded for years by inflation, so increasing it is really just making up for a lack of indexing on it.
The last minimum wage hike was in 2009, when the minimum wage was increased to $7.25. Inflation adjusted to 2019 dollars, that would be about $8.70.
In 2016, both main Democrat candidates supported a $15 minimum wage, which would be an increase of around 10X the required inflation adjustment.
What is it that you were saying about arguing in good faith?
Who is to say what is the best wage? Should the government decide what people's wages should be? Should the government come to you and tell you specifically that your salary is not what you got from the exchange of labor with your employer and change it unilaterally?
Minimum wage debates in economics aside, there is a core ideological issue where some people really do like the idea of controlling other people, and some people prefer to keep those relationships nimble and organice.
As someone clearly on one side of the ideological debate, I would much prefer that government employees are banned from consuming any product or service produced by workers that earned wages below minimum wage, just to put skin in the game, and let the rest roam free.
Minimum wage isn't just flat for a decade, it's not being adjusted for inflation. This means minimum wage workers have been getting a pay cut over time.
The debate isn't just whether we should raise minimum wage, it's whether we should be cutting it. By allowing it to remain stagnant we're making the default decision to cut.
You might not lose your job, but you may see your hours reduced or you might not get the opportunity in the first place. Technically the employment numbers don't change, but you shouldn't think of of minimum wage employees like salaried employees. Minimum wage earners can lose fractional percentages of their jobs unlike salaried employees.
Most proponents of raising the minimum wage cite the Card & Krueger paper which has aged quite poorly. It turns out that chain fast food restaurants are a poor proxy for the minimum wage labor market. If you want to know the most up to date data backed perspective on the minimum wage, look to the Seattle minimum wage study.[0][1] In short, the benefits of raising the minimum wage go to experienced workers at the expense of inexperienced workers.
We know that price controls don't work. Having a minimum wage limits the freedom to negotiate the value of your labor at a rate that you'd be willing to take. Instead of a wage that they are willing to accept you force them to have a wage of zero. I don't believe there are any situations where people are better off when a third party eliminates economic opportunities for them.
The national minimum wage should be zero, as is the case in countries like Iceland, Norway, Sweden, Finland, Denmark, and Singapore. You could also argue that the minimum wage is unconstitutional considering the history of supreme court decisions on the issue.[2]
Countries with a social-democratic (Sweden, Norway) or conservative-corporatist (Germany) welfare state traditionally do not have minimum wage laws, because relatively strong unions and a somewhat robust social safety net have the same effect - you won't find someone willing to work for less than social security benefits which creates a lower bound.
As soon as these states move towards a more liberal welfare model (USA, UK) , they have been forced to offset the worst excesses of the labor market with mandatory minimum wage laws. I think the last was Germany, which recently introduced mandatory minimum wage in 2017.
The countries you cite are able to have a minimum wage of zero because it's coupled with a robust social safety net (sometimes along with other backstops--Norway, for instance, is heavily unionized). This pairing is important, and is absent in the US.
Your fundamental assumption is that labor economics works like an economics 101 course. It doesn’t, that’s why it has it‘s own field of study. As an example, free markets depend on equal information and workers don’t have the same information as employers, so their ability to negotiate isn’t nearly as robust as you imply. Also, many companies enjoy a monopsony on local labor which distorts the traditional relationship between supply and demand. Those are just two examples.
It isn’t inherently negative if your hourly wage is increased but number of hours decreased. Doesn’t that give you more economic freedom? You can use that extra time for leisure or fill it with other hourly work. You might even make the same on fewer hours, which sounds like a win for low wage workers.
I’m not sure why you are redirecting to another study on minimum wage while also trying to “debunk” the Card & Krueger study instead of commenting on the substance or data in this article. Do you disagree with the headline or any of the analysis presented within?
Those same researchers went back and added a ton more nuance to their findings: They Said Seattle’s Higher Base Pay Would Hurt Workers. Why Did They Flip? https://nyti.ms/2AmgaNr
Broken in to 3 groups, high hour min wage, low hour min wage, and new entrants, both the high and low hour workers were better off and it's inconclusive how new entrants were affected, though there was a flattening of hiring new entrants.
There was also a lot of push back on the original paper which failed to account for a lot of cofounding factors.
To compare the US model with any of those countries is laughable at best. First of all, most,if not all, of them made long term investments in their people in terms of education, which took decades before they could reap the benefits.The economies transformed into service and high end manufacturing. Secondly, they do have very strong welfare systems,that take care of pretty much everything. Public healthcare is free( through taxation) or inexpensive. These factors create society,where people aren't desperate to lose jobs because they won't be able to go to hospital or buy food. That's why they don't and won't work for a fraction of what it costs to at least exist in those countries.
This is false, and it is misusing the language to make your point stronger. A wage is what you get in return for working. A wage of 0 is work with no payment. Minimum wage does not allow that.
Axios cherry picked the Bureau of Labor Statistics data for the 12 states that confirm the writer's bias. They should have analyzed all states with low minimum wages vs high minimum wages for the overall picture. Reports are out there showing while many of the minimum wage earners who have not lost jobs from the hourly increase are reporting weekly scheduled hours being cut back across the board.
> Cities like New York, Seattle, Chicago and San Francisco have raised local minimum wages
> Laws in New York, California, Connecticut, Illinois, Maryland, Massachusetts, and New Jersey will eventually increase minimum wages to $15 per hour.
I don't find this reasoning very convincing. The places that have raised minimum wages are some of the most expensive places in the country already. It may well be that the market wage floor is already pretty close to the raised minimum wage. The minimum wage here in Maryland is $10.10, and you can't get teenagers to work at that rate here.
But what about Des Moines? That's the basic problem with a federal minimum wage. The average rent in Des Moines is about a third of what it is in New York City. What would be the impact of a $15 minimum wage there?
Why should the "living wage" in expensive coastal cities dictate the minimum wage everywhere?
One reason could be because almost nobody makes minimum wage.
In 2017 just over 2% of workers made the minimum wage. When you only look at full time employees, it's less than 1%. When you include only people over 25 it's even less.
It's interesting how few people know this. When you ask people to guess what percent of people make the minimum wage, you'll likely hear estimates that are 10x or 20x higher than they really are.
I think the confusion you're talking about when you guess that people will over-estimate the number of "minimum wage workers" is due to slippage between the term "minimum wage" and "federal minimum wage". There are 29 states that have a state minimum wage that is higher than the federal minimum wage [1], so if we defined "minimum wage worker" as someone worker working at their state's minimum wage, then we'd be including far more (probably >100% more) people in the category.
Minimum wage affects the pay of people earning close to it. When a business decides it can make more money by hiring better workers, they have to pay more than the competition.
When I started my first job flipping burgers I was paid “over minimum wage” ($6.50/hr at the time). My pay? $6.51/hr.
So yes, I’m sure there are not that many people “on minimum wage”. I think a more relevant metric might be: what % of people saw their pay increase when minimum wage went up.
When I had a burger flipping job, the automatic yearly raise was like a dime an hour. So unless you were a new hire, hardly anyone at burger flipping jobs right now are making minimum wage.
I feel like this is a perfect example of people trying to apply a "one size fits all" band-aid to a complex issue because it sounds nice on the surface. Obviously, Johnny French-Fry would be better off making $15/hour, but there's more to it than that.
I don't believe the salient impact here is "job loss", but rather "wage erosion" at other levels within the organization. There is a zero-sum game at play here, and I think both sides of the argument can probably agree that the trickle-up financial impacts won't make it anywhere close to the executive level. I also don't believe that noticeable impacts will make it back to the consumer in the form of higher prices, or that companies would even consider letting it impact their profit margins. The easy-win here is for execs to restrain or chip away at the wages and benefits of employees currently making ~$30-$65 an hour (these employees are typically paid via "yearly salary", but want to keep everything in context). This issue will likely be compounded by employees currently making ~$16-$30 an hour demanding raises since they feel like they "just missed out" on a pay raise (especially since these individuals are typically in closer physical proximity to minimum-wage earners -- imagine how the fast-food manager will feel when Johnny French-Fry is now only making $1 an hour less). Then the same people arguing for a minimum-wage hike turn around and complain about the wage-gap. I agree that wages should be higher, but simply increasing the MINIMUM wage isn't a viable solution. Need to consider the 2nd, 3rd,...(n)th order effects.
It seems that a lot of economics as it’s used for political decisions is way oversimplified to the point of being useless or just plain wrong. The minimum wage issue is an example where reality is much more subtle and complex than what a lot of economists in the news say. Same for tax cuts for upper incomes that were supposed to spur investments in new technologies but seem to have done more to drive up asset prices. Or the argument that lower health care prices will drive up utilization.
I am sure there are a lot of economists that do great work but economics as it’s used in public discourse is just abysmal.
TV economists are definitely a different breed. Most real labor economists acknowledge that the issue is tricky.
I (not an economist) don’t like the minimum wage since it’s really a poor tool for the job. Society agrees that people should have a minimum standard of living, but then place the burden of providing that standard on a very narrow range of businesses. That burden should just be spread across all of society by way of a negative income tax.
"Asset prices" is kind of a codeword for land titles and artificial scarcities. Inflation in general doesn't occur as a result of tax cuts, but rising prices are confined to those particular areas... which is a clue on where to focus policy.
But aside from that, I would generally agree with the consensus economics positions that, all else being equal, lower taxes on production will unlock more production, and lower prices on healthcare will increase demand for healthcare. And that minimum wage will reduce demand for unskilled labor.
> a lot of economics as it’s used for political decisions is way oversimplified to the point of being useless or just plain wrong.
Absolutely. A point well made by James Kwak in his book Economism: Bad Economics and the Rise of Inequality, where he complains about this caricature of Economics 101 that is often used to justify laissez-faire policies.
I think typical economists like to think of the world as a perfectly rational system. They look at the world from the lens of some bullshit econ 101 nonsense.
Extraordinary economists figure out that reality is super complicated, often uncontrollable at all. All you can do is experiments.
A real example of this is the Bernanke asset inflation. All he could think about is assets and recovery of banking system. He thought like a middle aged man who just has a few more years to live. It never once occurred to him that his policies could eat up childrens future.
Even if it did occur, future monetary policies never went back to "normal" or equitable. As a result, the vast disparity today is just asset holders vs non-asset holders. This has nothing to do with wages.
I lay blame on monetary policies and politicians with zero knowledge relying solely on monetary policies to define a future. The govt needs more educated people.
This has been a long standing argument from a certain "trickle down" group in politics. And like the groups that promote austerity as a cure for economic woes, they have been proven wrong.
The economy grows when people can afford to spend. (If this spending is based on credit as was largely the case during the Bill Clinton years, then there is a later cost to pay - no doubt.) But the fact remains that when people can afford to buy things, the economy grows.
Better paid workers spend more money. People who cannot afford basic necessities actually do not blow their money on luxuries as is commonly promoted. Instead, they spend their money on housing, car gas and insurance (since there's been a perpetual movement against public transportation), and food. They're not out gambling and buying drugs in general.
What is not in doubt is that better paid workers means not quite as well paid executives. If you look at the US history, executive pay is at or near the highest multiple relative to workers compared to any time.
And while this is my speculation as I have not experienced living on 1 million dollars vs 100 million dollars (per year), I am inclined to believe that the difference in quality of life is not really terrible. Therefore, executive pay levels are not really a valid reason to suppress worker pay.
We have not even ventured into the tax avoidance that has occurred in the last 40 years. Somehow corporations and executives (and workers!) managed to survive quite ok in the 1950s and 60s, even while corporate taxes were effectively much higher.
What is the time frame for these claims? The last few years when the new minimum wages are coming in are also times of dropping unemployment. The area I live in has not been raising minimum wages any, and the local "minimum wage" has nevertheless become a de facto 11-12$/hour for zero-skill jobs just due to a tight labor market.
If you happen to time your raising of the minimum wage to when the market was tightening anyhow and the market floor was going above your minimum wage anyhow, you won't see any negative effect, but not because you can just raise minimum wage with no effect, but because the market beat you to your raises. It's useful information, but not politically useful information, in the way that people are looking for. The question we really want answered is whether we can raise the minimum wage significantly above what the market would have done anyhow.
I haven’t read the article. Every discussion about minimum wage seems so murky and confusing I think it is overwhelmingly likely this article won’t increase my knowledge of the topic in a meaningful way.
But chiming in here that the increase in NYC has not had anywhere near enough time for the effects to propagate.
Business owners aren’t perfectly rational AI constructs that respond in real-time to every input. People tend to gradually and iteratively change their employment practices while keeping an eye on their margins and profits.
It’s going to take a long time, if ever, for us to figure out the effects of minimum wage, but it certainly has affected my hiring practices so I’m sure it’s having some effect.
Even in the best markets for job-seekers such policies are not without downsides. In every city in America small long-running mom & pop and ethnic restaurants and shops are closing down in favor of two types of places that can afford to swallow the regulation-imposed economic deadweight loss: 1) Luxury hipster establishments that charge $20 for entrees and $10 for beers; 2) Fast food/fast casual chains dependent on leveraged buyout money.
In the end there's only enough room in town for a handful of Katz's Delis to survive (and become expensive echoes of what they once were in the process).
"The bottom line: Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say."
We can't be treating all changes in minimum wages equally. Those quoted in the sources were very minor changes that may simply reflect what the market price for low-end labor already is.
It is common sense that raises in wages must result in either reduced profits or increased prices. Of course profits can be reduced, but not below zero, at least not indefinitely. Naturally, profit margins in industries employing lots of low-end labor are already low. Of course prices can be raised, but that erodes purchasing power and competitiveness.
Unprofitable companies signal wasteful allocation of resources, and higher prices tend to hit those at the bottom the most.
There is a sweet spot where surplus profits can be transferred to the workers through an optimum fixed wage, but that number would be different for every region and every industry.
Absent a safety net for those workers that may be priced out of the market, I concur with the following assessment[1]:
"One can find plenty of economists on the left and right who think that while $15 an hour may make sense for some companies, a one-size-fits-all approach for businesses big and small around the country is a “risk not worth taking,” as former Obama White House economist Alan Krueger has put it."
1. Federal minimum wage hasn't been increased. In a handful of liberal, urban locations it has been. How do we know the claim is true if it hasn't been tested in the majority of situations? Perhaps localities should be able to decide minimum wage for themselves! $15/hr might be the bare minimum in NY but in small town USA it is beyond what the market can bare for entry level.
2. The article mentions companies like Amazon are taking matters into their own hands and raising their minimum range. This is evidence the labor market does not need wage regulation when companies are making the decision to raise wages themselves.
3. The article mentions only hospitality related industries were studied. All service industries in the US are growing. What about entry level jobs in other parts of the economy?
4. I am not sure why they are comparing minimum wage to economic growth. Seems like apples and oranges to me, not useful. Of course if one economy is growing it can bare higher minimum wage than one that isn't.
I consider myself a fairly educated fence-squatter on this topic but I think it's too early to tell and any assessment is highly confounded by our central bank's actions. That said, I have talked with SF restaurateurs and they're very concerned (but this, too, is confounded by the "SF Employee Mandate" and by the effect of the tradewar on China's funding of US trade tourism (group reservations at SF restaurants are trending way down))...
Perhaps if they made the minimum wage a function of inflation, these shock changes wouldn't even be a blip on any company's collective minds? Set and forget.
That kinda defeats the purpose of inflation though. Part of why Keynes was in favor of some inflation was to diffuse the effect of sticky wages, if that's the case you don't want to ensure wages stay sticky via law.
To the degree that low value work activity cannot be outsourced to areas where the wage is more closely aligned with value, the “gig economy,” the “shadow economy ,” or firms small enough to be exempt from min wage then it will be supported by systems of cross subsidies best implemented by large corporations. The work will get done at a cost not too different from the value created. Outlawing low wage work is like outlawing drugs—it feels like the right intervention to folks who like interventions and like any barrier is only effective insofar as human ingenuity has limits.
It is a bit fast to claim that rich and full employment cities raising their minimum wage have no adverse effect, while it might have just compensated cost of living raising too.
The article only focuses on the fact that proponents of the status quo are proved wrong so far, but only scratches the other side of the coin that clearly says these results don't mean raising to absurd levels would have no adverse effect.
[+] [-] jjoonathan|6 years ago|reply
https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...
[+] [-] scarejunba|6 years ago|reply
[+] [-] pwthornton|6 years ago|reply
In general, increasing pay into people at the bottom of the ladder has a much bigger economic effect than the opposite. Reasonable increases in the minimum wage, particularly ones that track inflation and cost of living are not going to harm the economy.
As many have pointed out, the minimum wage in many places has been eroded for years by inflation, so increasing it is really just making up for a lack of indexing on it.
The best solution appears to be to raise the minimum wage to a level that can support a person without government assistance and index it for inflation.
The reality for us every-day workers is that either the minimum wage is increased or we'll have to make up for it in taxes that support programs to compensate for the lack of a liveable wage.
We are much more likely to get a better deal via the minimum age than we are via the tax system; the latter of which is heavily skewed in favor of the wealthy and corporations. It's not big corporations paying non-liveable wages who will be paying to cover food stamps.
[+] [-] BurningFrog|6 years ago|reply
The bottom of the ladder is the unemployed, who make $0/h.
The good faith argument for no minimum wage is that those people would have a much bigger chance to find jobs and build job skills.
[+] [-] ScottBurson|6 years ago|reply
Exactly. Too low a minimum wage actually becomes a subsidy to employers.
[+] [-] Izkata|6 years ago|reply
> Reasonable increases in the minimum wage, particularly ones that track inflation and cost of living are not going to harm the economy.
My understanding is that plenty of the arguments against it are from people concerned about the areas of the country still near the federal minimum. It's absolutely a good-faith argument concerning what they see as an unreasonable jump, of ~double the previous amount, instead of a reasonable increase.
[+] [-] undersuit|6 years ago|reply
Which person? I contend that the person should be a 4 person family(so that I can throw out the oft proposed $15/hr rate fitting pretty closely with the US federal poverty rate of a similar family after taxes.) Other people say minimum wage is only for teenagers entering the work force.
[+] [-] qzx_pierri|6 years ago|reply
Some people also fail to realize that there will always be poor people. The only thing we can do is change the way we treat them. I support raising the minimum wage, but not as much as some. If there are really no other jobs, that’s what government assistance programs are for.
Mind you, I grew up dirt poor in the midwest. I’m now on my way to earning six figures by taking advantage of those aforementioned government programs.
Also: Some people are satisfied being poor. If they really wanted to get out, they would. I did. Those who argue that you can’t raise a family on minimum wage: You shouldn’t keep having kids if you don’t have a decent job. Of course uneducated people from lower socioeconomic backgrounds refuse to follow this rule, and this is why poverty is often generational.
[+] [-] Digory|6 years ago|reply
As others have said elsewhere, in most cities, labor is at about $!5/hr already.
[+] [-] frogpelt|6 years ago|reply
Why isn't there a minimum wage for computer engineers?
[+] [-] buboard|6 years ago|reply
[+] [-] marcusverus|6 years ago|reply
The last minimum wage hike was in 2009, when the minimum wage was increased to $7.25. Inflation adjusted to 2019 dollars, that would be about $8.70.
In 2016, both main Democrat candidates supported a $15 minimum wage, which would be an increase of around 10X the required inflation adjustment.
What is it that you were saying about arguing in good faith?
[+] [-] conanbatt|6 years ago|reply
Minimum wage debates in economics aside, there is a core ideological issue where some people really do like the idea of controlling other people, and some people prefer to keep those relationships nimble and organice.
As someone clearly on one side of the ideological debate, I would much prefer that government employees are banned from consuming any product or service produced by workers that earned wages below minimum wage, just to put skin in the game, and let the rest roam free.
[+] [-] mullingitover|6 years ago|reply
The debate isn't just whether we should raise minimum wage, it's whether we should be cutting it. By allowing it to remain stagnant we're making the default decision to cut.
[+] [-] pg_bot|6 years ago|reply
Most proponents of raising the minimum wage cite the Card & Krueger paper which has aged quite poorly. It turns out that chain fast food restaurants are a poor proxy for the minimum wage labor market. If you want to know the most up to date data backed perspective on the minimum wage, look to the Seattle minimum wage study.[0][1] In short, the benefits of raising the minimum wage go to experienced workers at the expense of inexperienced workers.
We know that price controls don't work. Having a minimum wage limits the freedom to negotiate the value of your labor at a rate that you'd be willing to take. Instead of a wage that they are willing to accept you force them to have a wage of zero. I don't believe there are any situations where people are better off when a third party eliminates economic opportunities for them.
The national minimum wage should be zero, as is the case in countries like Iceland, Norway, Sweden, Finland, Denmark, and Singapore. You could also argue that the minimum wage is unconstitutional considering the history of supreme court decisions on the issue.[2]
[0]: https://evans.uw.edu/sites/default/files/webform/w25812_summ...
[1]: https://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum...
[2]: https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_...
[+] [-] thomasz|6 years ago|reply
As soon as these states move towards a more liberal welfare model (USA, UK) , they have been forced to offset the worst excesses of the labor market with mandatory minimum wage laws. I think the last was Germany, which recently introduced mandatory minimum wage in 2017.
[+] [-] Lavery|6 years ago|reply
[+] [-] jayd16|6 years ago|reply
This is just hyperbolic. This would throw out all labor laws, safety laws, worker protections, unemployment benefits, and child labor laws.
[+] [-] take_a_breath|6 years ago|reply
It isn’t inherently negative if your hourly wage is increased but number of hours decreased. Doesn’t that give you more economic freedom? You can use that extra time for leisure or fill it with other hourly work. You might even make the same on fewer hours, which sounds like a win for low wage workers.
I’m not sure why you are redirecting to another study on minimum wage while also trying to “debunk” the Card & Krueger study instead of commenting on the substance or data in this article. Do you disagree with the headline or any of the analysis presented within?
[+] [-] dlp211|6 years ago|reply
Broken in to 3 groups, high hour min wage, low hour min wage, and new entrants, both the high and low hour workers were better off and it's inconclusive how new entrants were affected, though there was a flattening of hiring new entrants.
There was also a lot of push back on the original paper which failed to account for a lot of cofounding factors.
[+] [-] cosmodisk|6 years ago|reply
[+] [-] lazyasciiart|6 years ago|reply
This is false, and it is misusing the language to make your point stronger. A wage is what you get in return for working. A wage of 0 is work with no payment. Minimum wage does not allow that.
[+] [-] atypicality|6 years ago|reply
[+] [-] rayiner|6 years ago|reply
> Laws in New York, California, Connecticut, Illinois, Maryland, Massachusetts, and New Jersey will eventually increase minimum wages to $15 per hour.
I don't find this reasoning very convincing. The places that have raised minimum wages are some of the most expensive places in the country already. It may well be that the market wage floor is already pretty close to the raised minimum wage. The minimum wage here in Maryland is $10.10, and you can't get teenagers to work at that rate here.
But what about Des Moines? That's the basic problem with a federal minimum wage. The average rent in Des Moines is about a third of what it is in New York City. What would be the impact of a $15 minimum wage there?
Why should the "living wage" in expensive coastal cities dictate the minimum wage everywhere?
[+] [-] nostromo|6 years ago|reply
In 2017 just over 2% of workers made the minimum wage. When you only look at full time employees, it's less than 1%. When you include only people over 25 it's even less.
https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm
It's interesting how few people know this. When you ask people to guess what percent of people make the minimum wage, you'll likely hear estimates that are 10x or 20x higher than they really are.
[+] [-] quakingaspen|6 years ago|reply
[1] https://www.epi.org/minimum-wage-tracker/
[+] [-] cheriot|6 years ago|reply
[+] [-] drjesusphd|6 years ago|reply
[+] [-] AlexandrB|6 years ago|reply
So yes, I’m sure there are not that many people “on minimum wage”. I think a more relevant metric might be: what % of people saw their pay increase when minimum wage went up.
[+] [-] asdff|6 years ago|reply
[+] [-] jb775|6 years ago|reply
I don't believe the salient impact here is "job loss", but rather "wage erosion" at other levels within the organization. There is a zero-sum game at play here, and I think both sides of the argument can probably agree that the trickle-up financial impacts won't make it anywhere close to the executive level. I also don't believe that noticeable impacts will make it back to the consumer in the form of higher prices, or that companies would even consider letting it impact their profit margins. The easy-win here is for execs to restrain or chip away at the wages and benefits of employees currently making ~$30-$65 an hour (these employees are typically paid via "yearly salary", but want to keep everything in context). This issue will likely be compounded by employees currently making ~$16-$30 an hour demanding raises since they feel like they "just missed out" on a pay raise (especially since these individuals are typically in closer physical proximity to minimum-wage earners -- imagine how the fast-food manager will feel when Johnny French-Fry is now only making $1 an hour less). Then the same people arguing for a minimum-wage hike turn around and complain about the wage-gap. I agree that wages should be higher, but simply increasing the MINIMUM wage isn't a viable solution. Need to consider the 2nd, 3rd,...(n)th order effects.
[+] [-] Ididntdothis|6 years ago|reply
I am sure there are a lot of economists that do great work but economics as it’s used in public discourse is just abysmal.
[+] [-] baron816|6 years ago|reply
TV economists are definitely a different breed. Most real labor economists acknowledge that the issue is tricky.
I (not an economist) don’t like the minimum wage since it’s really a poor tool for the job. Society agrees that people should have a minimum standard of living, but then place the burden of providing that standard on a very narrow range of businesses. That burden should just be spread across all of society by way of a negative income tax.
[+] [-] nwah1|6 years ago|reply
But aside from that, I would generally agree with the consensus economics positions that, all else being equal, lower taxes on production will unlock more production, and lower prices on healthcare will increase demand for healthcare. And that minimum wage will reduce demand for unskilled labor.
[+] [-] davidw|6 years ago|reply
"A number of peer-reviewed academic studies have found little to no impact on hiring as states and municipalities have raised the minimum wage."
Those are economists doing that research.
[+] [-] FabHK|6 years ago|reply
Absolutely. A point well made by James Kwak in his book Economism: Bad Economics and the Rise of Inequality, where he complains about this caricature of Economics 101 that is often used to justify laissez-faire policies.
https://economism.net
[+] [-] nine_zeros|6 years ago|reply
Extraordinary economists figure out that reality is super complicated, often uncontrollable at all. All you can do is experiments.
A real example of this is the Bernanke asset inflation. All he could think about is assets and recovery of banking system. He thought like a middle aged man who just has a few more years to live. It never once occurred to him that his policies could eat up childrens future.
Even if it did occur, future monetary policies never went back to "normal" or equitable. As a result, the vast disparity today is just asset holders vs non-asset holders. This has nothing to do with wages.
I lay blame on monetary policies and politicians with zero knowledge relying solely on monetary policies to define a future. The govt needs more educated people.
[+] [-] blunte|6 years ago|reply
The economy grows when people can afford to spend. (If this spending is based on credit as was largely the case during the Bill Clinton years, then there is a later cost to pay - no doubt.) But the fact remains that when people can afford to buy things, the economy grows.
Better paid workers spend more money. People who cannot afford basic necessities actually do not blow their money on luxuries as is commonly promoted. Instead, they spend their money on housing, car gas and insurance (since there's been a perpetual movement against public transportation), and food. They're not out gambling and buying drugs in general.
What is not in doubt is that better paid workers means not quite as well paid executives. If you look at the US history, executive pay is at or near the highest multiple relative to workers compared to any time.
And while this is my speculation as I have not experienced living on 1 million dollars vs 100 million dollars (per year), I am inclined to believe that the difference in quality of life is not really terrible. Therefore, executive pay levels are not really a valid reason to suppress worker pay.
We have not even ventured into the tax avoidance that has occurred in the last 40 years. Somehow corporations and executives (and workers!) managed to survive quite ok in the 1950s and 60s, even while corporate taxes were effectively much higher.
[+] [-] jerf|6 years ago|reply
If you happen to time your raising of the minimum wage to when the market was tightening anyhow and the market floor was going above your minimum wage anyhow, you won't see any negative effect, but not because you can just raise minimum wage with no effect, but because the market beat you to your raises. It's useful information, but not politically useful information, in the way that people are looking for. The question we really want answered is whether we can raise the minimum wage significantly above what the market would have done anyhow.
[+] [-] whiddershins|6 years ago|reply
But chiming in here that the increase in NYC has not had anywhere near enough time for the effects to propagate.
Business owners aren’t perfectly rational AI constructs that respond in real-time to every input. People tend to gradually and iteratively change their employment practices while keeping an eye on their margins and profits.
It’s going to take a long time, if ever, for us to figure out the effects of minimum wage, but it certainly has affected my hiring practices so I’m sure it’s having some effect.
[+] [-] drak0n1c|6 years ago|reply
In the end there's only enough room in town for a handful of Katz's Delis to survive (and become expensive echoes of what they once were in the process).
[+] [-] gridlockd|6 years ago|reply
We can't be treating all changes in minimum wages equally. Those quoted in the sources were very minor changes that may simply reflect what the market price for low-end labor already is.
It is common sense that raises in wages must result in either reduced profits or increased prices. Of course profits can be reduced, but not below zero, at least not indefinitely. Naturally, profit margins in industries employing lots of low-end labor are already low. Of course prices can be raised, but that erodes purchasing power and competitiveness.
Unprofitable companies signal wasteful allocation of resources, and higher prices tend to hit those at the bottom the most.
There is a sweet spot where surplus profits can be transferred to the workers through an optimum fixed wage, but that number would be different for every region and every industry.
Absent a safety net for those workers that may be priced out of the market, I concur with the following assessment[1]:
"One can find plenty of economists on the left and right who think that while $15 an hour may make sense for some companies, a one-size-fits-all approach for businesses big and small around the country is a “risk not worth taking,” as former Obama White House economist Alan Krueger has put it."
[1] https://www.aei.org/articles/a-15-minimum-wage-is-great-for-...
[+] [-] macinjosh|6 years ago|reply
1. Federal minimum wage hasn't been increased. In a handful of liberal, urban locations it has been. How do we know the claim is true if it hasn't been tested in the majority of situations? Perhaps localities should be able to decide minimum wage for themselves! $15/hr might be the bare minimum in NY but in small town USA it is beyond what the market can bare for entry level.
2. The article mentions companies like Amazon are taking matters into their own hands and raising their minimum range. This is evidence the labor market does not need wage regulation when companies are making the decision to raise wages themselves.
3. The article mentions only hospitality related industries were studied. All service industries in the US are growing. What about entry level jobs in other parts of the economy?
4. I am not sure why they are comparing minimum wage to economic growth. Seems like apples and oranges to me, not useful. Of course if one economy is growing it can bare higher minimum wage than one that isn't.
[+] [-] CoffeeDregs|6 years ago|reply
[+] [-] rhacker|6 years ago|reply
[+] [-] dark567|6 years ago|reply
[+] [-] adolph|6 years ago|reply
[+] [-] jeandejean|6 years ago|reply
The article only focuses on the fact that proponents of the status quo are proved wrong so far, but only scratches the other side of the coin that clearly says these results don't mean raising to absurd levels would have no adverse effect.
[+] [-] vpmpaul|6 years ago|reply
[+] [-] rb808|6 years ago|reply