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Min Wage Increase Doesn't Impact Employement

Washpark

By Washpark
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3 minutes ago, Onboard 2.0 said:

 The bottom of the barrel is visible in the labor market now.  It's going to get worse if the economy stays strong, an unemployment rates remain where they are.

Wouldn't that organically drive wage increases for better workers?

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Onboard 2.0

Onboard 2.0 9083

Posted
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12 minutes ago, slorch said:

Wouldn't that organically drive wage increases for better workers?

You'd think so, and I've seen adverts for $12 plus at fast food places now.  So that does seem to be happening.  At this point the people not working are people who don't wanna work anyway, and any good employees are all employed currently.  

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6 minutes ago, Onboard 2.0 said:

You'd think so, and I've seen adverts for $12 plus at fast food places now.  So that does seem to be happening.  At this point the people not working are people who don't wanna work anyway, and any good employees are all employed currently.  

That's the point.  Minimum wage jobs are not meant to be 'living wage' jobs.  They are  generally entry level/ part time positions.

Employers are already increasing wages to compete for better workers.

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Onboard 2.0

Onboard 2.0 9083

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Just now, slorch said:

That's the point.  Minimum wage jobs are not meant to be 'living wage' jobs.  They are  generally entry level/ part time positions.

Employers are already increasing wages to compete for better workers.

Yeah, you're getting no argument from me on that, but you have to be able to hire people, and today is not 25 years ago, in terms of who will work what jobs.  

Kids won't work those jobs, so you have to get them somewhere, and if it's adults they have to be able to live on that wage they're making flipping burgers. It's fucked up, but it's the new reality in so many places.

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Nice Guy Eddie

Nice Guy Eddie 13742

Posted
Posted

Many are left behind in this economy.  They are refuse to find work: it’s anecdotal but friends of friends are WV coalminers who are adamant that they are coalminers and will not pursue other employment. Or they may have zero idea what to do next.

I believe there are some adults who seriously do not know where to go next from their McDonald’s job. Saying they should become programmers or health care workers might be (to them) on par with me saying I want to become an astronaut at age 42.  

Perhaps some see amazon warehouse workers or Uber driving as a step up.  Of course, it’s relatively easy to see those jobs being greatly reduced in the future.

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Drew

Drew 2932

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One of the "people on the street said " said..."Yes some small businesses will go out of business...others will take their place".  Jesus.  That's kind of the point...why should they have to go out of business in the first place?

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ChickenSandwich

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7 hours ago, American Swindle said:

NSIAP:

 

An interesting irony is the DSA movement usually highlights the Nordic countries by which we should "emulate" to get the right kind of Democratic Socialism, but contrary to the plank of the idea of a "living wage," Sweden has no government mandated minimum wage.  Interdasting. 

The democrats asking half of the population to not only give up their tax return check but actually pay into the system is a total non starter. 

Why anyone mentioning Nordic socialism can be immediately dismissed. 

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Nivek

Nivek 17424

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The democrats asking half of the population to not only give up their tax return check but actually pay into the system is a total non starter. 
Why anyone mentioning Nordic socialism can be immediately dismissed. 

Have you ever not been full of shit?
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tantric superman

tantric superman 4668

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On 7/23/2019 at 5:08 PM, Drew said:

One of the "people on the street said " said..."Yes some small businesses will go out of business...others will take their place".  Jesus.  That's kind of the point...why should they have to go out of business in the first place?

I guess because the public policy is to transfer dollars to lower wage workers, and therefore businesses that can better navigate that change are better for the community as a whole.

Why WOULDN'T you want increased wages if your net profit to small business owners stayed the same or increased. 

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Bullneck

Bullneck 19560

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43 minutes ago, Incredulity said:

Oh, hi.

This necrobump is a veritable "who's who" of Surly Chief Economist.  

And yes, that economic foundation from Obama was too strong for even a moron like Trump to fuck up.  And then the one, single challenge of his presidency showed up and guess what?  He blew it.

Had he not such an aggressively bad job he might have gotten re-elected.  But no, he motivated the biggest winning turnout in American history to throw his ass out, but not before his friends killed a few police officers.

And then Biden saved the economy, even without the ability set prices.  So, no, the president of the US doesn't set gas prices or interest rates. Or the price of container shipping or vegetables or hotel rooms.  Corporations do that.  

Anything else you need?

 

 

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Hornius Emeritus

Hornius Emeritus 12808

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31 minutes ago, Incredulity said:

Right, totally not relevant in our current environment. 


Actually, I think it's TOTALLY relevant in our current environment.

Does history provide a single example of wealth being increasingly concentrated in the hands of fewer people that did not result, ultimately, in revolution?

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Nice Guy Eddie

Nice Guy Eddie 13742

Posted
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8 hours ago, Hornius Emeritus said:


Actually, I think it's TOTALLY relevant in our current environment.

Does history provide a single example of wealth being increasingly concentrated in the hands of fewer people that did not result, ultimately, in revolution?

Im not arguing to take/confiscate wealth from the wealthy but there is no chance that wealth inequality will improve on its own.

The recent Silicon Valley bank debacle also demonstrates how some billionaires, like Peter Thiel, were perfectly cool with taking down banks or the banking system as long as he could get his money out. And it wasn’t like he quietly took out his money but rather advocated for his investment companies to do so ASAP, which sharpened the bank run. Thiel didn’t do anything illegal in this but it shows their greed surpassing any effort to support others. Don’t think there is any loyalty to America or Americans from some wealthy people.

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bernorange

bernorange 8386

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Posted

* Necro bump *

For context:

On 1/29/2019 at 10:29 AM, bernorange said:

Last summer, a paper on the effects of Seattle's minimum-wage increase made national headlines with its conclusion: The change made low-income workers worse off, not better, because it forced employers to cut back on hiring and hours to afford paying higher wages.

...Seattle's minimum-wage increase, Vigdor says, was a lot steeper than most other increases have been. Minimum wages at large businesses and franchises rose by $3.53, or more than 37 percent, over just nine months. ...

How will California's experiment compare to Seattle's?

Quote

A new law in California will raise the minimum wage for fast food workers to $20 per hour next year, an acknowledgment from the state's Democratic leaders that most of the often overlooked workforce are the primary earners for their low-income households.

When it takes effect on April 1, fast food workers in California will have the highest guaranteed base salary in the industry. The state’s minimum wage for all other workers — $15.50 per hour — is already among the highest in the United States.
...

https://www.kcra.com/article/california-gov-gavin-newsom-signs-law-raise-minimum-wage-fast-food-workers-20-per-hour/45360718#

That's roughly a 33% increase.

 

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bernorange

bernorange 8386

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Quote

...
"The economic literature on minimum wage increases has become murkier in recent years, but the overwhelming majority of economists agree that large minimum wage increases in excess of productivity gains means that employers will operate at a loss as far as the affected workers go," wrote Michael D. Tanner, a senior fellow at the Cato Institute following the passage of the FAST act. "Given that the average profit margin in the fast food industry is just 6–9 percent, those costs are almost certain to be passed along in terms of higher prices or lost jobs."
...

https://reason.com/2023/10/11/californias-20-minimum-wage-will-hurt-the-fast-food-workers-its-meant-to-help/

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Macanudo

Macanudo 13338

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57 minutes ago, bernorange said:

https://reason.com/2023/10/11/californias-20-minimum-wage-will-hurt-the-fast-food-workers-its-meant-to-help/

Excuse me if I question the source of the article:

Cato advocates for a limited governmental role in domestic and foreign affairs as well as strong protection of civil liberties. This includes support for lowering or abolishing most taxes, opposition to the Federal Reserve system and the Affordable Care Act, the privatization of numerous government agencies and programs including Social Security and the United States Postal Service, demilitarization of the police, open borders and adhering to a non-interventionist foreign policy.

 

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Bozo_Casanova

Bozo_Casanova 26905

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Posted (edited)
1 hour ago, bernorange said:

"The economic literature on minimum wage increases has become murkier in recent years, but the overwhelming majority of economists agree that large minimum wage increases in excess of productivity gains means that employers will operate at a loss as far as the affected workers go," wrote Michael D. Tanner, a senior fellow at the Cato Institute following the passage of the FAST act. "Given that the average profit margin in the fast food industry is just 6–9 percent, those costs are almost certain to be passed along in terms of higher prices or lost jobs."

That's a hell of a disclaimer. If only that number was knowable. Oh wait, it is and we're nowhere close to it at high scale businessness, and the way we know that is ALMOST NOBODY MAKES MINIMUM WAGE. People go Galt at minimum wage. But oh sure- lost jobs! oooga booga!

Jesus Christ, Cato Institutde. Buncha pointy headed academics who don't know shit about fuck. 

Edited by Bozo_Casanova
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Js1

Js1 87281

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11 minutes ago, Macanudo said:

Excuse me if I question the source of the article:

Cato advocates for a limited governmental role in domestic and foreign affairs as well as strong protection of civil liberties. This includes support for lowering or abolishing most taxes, opposition to the Federal Reserve system and the Affordable Care Act, the privatization of numerous government agencies and programs including Social Security and the United States Postal Service, demilitarization of the police, open borders and adhering to a non-interventionist foreign policy.

 

Agents Of Shield Marvel GIF by ABC Network

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bernorange

bernorange 8386

Posted
Posted (edited)
21 minutes ago, Bozo_Casanova said:

That's a hell of a disclaimer. If only that number was knowable. Oh wait, it is and we're nowhere close to it at high scale businessness, ...

California's FAST act and the comment you quoted are targeted to the fast food industry.  Unless I missed something, your link provides commentary on the broader labor market.

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Bozo_Casanova

Bozo_Casanova 26905

Posted
Posted (edited)
2 hours ago, bernorange said:

California's FAST act and the comment you quoted are targeted to the fast food industry.  Unless I missed something, your link provides commentary on the broader labor market.

Bern, I'm obviously not conflating a smart person like you with the blinkered Soviet-Science Randism of Cato, so thank you for not taking it that way. My link does provide commentary in the broader labor market, but the point is true either way - Cato is making a leap from "if the minimum wage increase is in excess of productivity gain" to the conclusion that "costs are almost certain to be passed along in terms of higher prices or lost jobs" by way of margin compression, without any evidence that it would in this particular place and time.

BTW - that's a pretty lousy version of the consensus about increases. Here's about the truest statement you can make about the minimum wage on unemployment via margins: at any given time, the economy cannot maintain or support full employment if the minimum wage is past an upper limit, which will vary at the local level and within industries. Duh. 

So when Cato and Reason and all the other bullshit-industrial complex libertarian hand wavers come out against proposed minimum wage increases: I wait for that analysis, and get slippery slopes instead.  

Here's the other and frankly more obvious problem. Let's pretend that Cato and Reason magazine are right about something in the fashion of broken clocks. The minimum wage and minimum wage workers are such a small part of the workforce, even in California, that's it's hard to frame this in terms of unemployment rates, and framing it in terms of prices is wrong too.
As a matter of policy why would we want to subsidize fast food? If a cost burden is imposed on the state in order to maintain a minimum living standard, is that the trade off for cheap burgers? Who picks up and that cost? And who pays for their healthcare when they live in food deserts and have no choice but to consume the food they make?

I have the same opinion about a raising minimum wages to something closer to the all-in cost floor of unskilled labor that I do about a return to normal interest rates: if the business model can't support that, the business model doesn't work. 

 

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bernorange

bernorange 8386

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Posted

It took roughly a year after the Seattle experiment for the NBER study to have sufficient data.  I suppose we might see some studies on the effects of California's FAST act by early 2025.  I'm not clear on how fast the min wage is supposed to rise, but the ~33% increase seems close enough to to the Seattle's 37% jump to be analogous (compared to the average increase of 10% in the later composite study mentioned in post #13) .  It will be interesting to see if Jacob Vigdor's analysis (which, worded differently, appears to be in line with what the Cato dude was saying) holds true.

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Bozo_Casanova

Bozo_Casanova 26905

Posted
Posted (edited)
1 hour ago, Incredulity said:

Businesses will or in some combination 

1.) raise prices to cover costs

2.) increase efficiency 

3.) modify operations/close

 

there is no free lunch. Pun kinda intended.

 

 

1) if they raise above the market price, they will lose revenue. If they are operating well below it, they are already leaving money on the table

2) always a good idea 

3) if their business model can only exist by lowering the standard of living, is that bad?

but there’s a fourth option (maybe a sub option of the third) - lower prices to gain a competitive advantage and use the event to scale revenue. 

Edited by Bozo_Casanova
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fattyflattie

fattyflattie 4640

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53 minutes ago, Bozo_Casanova said:

1) if they raise above the market price, they will lose revenue. If they are operating well below it, they are already leaving money on the table

2) always a good idea 

3) if their business model can only exist by lowering the standard of living, is that bad?

but there’s a fourth option (maybe a sub option of the third) - lower prices to gain a competitive advantage and use the event to scale revenue. 

2 - I read that as cut people and keep the ones who stay much, much busier.  
 

3 - no

 

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Incredulity

Incredulity 11880

Posted
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52 minutes ago, Bozo_Casanova said:

3) if their business model can only exist by lowering the standard of living, is that bad?

Chicken/egg problem.

Could Wal-Mart exist without the current social safety net subsidizing both their employees and customers???

You ever see a sales chart by week from a Wal-Mart store?  It spikes the first of ever Month like clockwork.

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Bozo_Casanova

Bozo_Casanova 26905

Posted
Posted
10 minutes ago, fattyflattie said:

2 - I read that as cut people and keep the ones who stay much, much busier.  
 

3 - no

 

Then you don’t understand number 2. Anything at minimum wage is already cut to the bone. You’ll have to find operational improvement- your operational efficiency is almost certainly elsewhere. 

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fattyflattie

fattyflattie 4640

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5 minutes ago, Bozo_Casanova said:

Then you don’t understand number 2. Anything at minimum wage is already cut to the bone. You’ll have to find operational improvement- your operational efficiency is almost certainly elsewhere. 

Operational improvement = cutting 8 teenagers that do 45 mins of work and 3 hours of Instagram surfing for 4 teenagers that do 4 straight hours of work.  

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Bozo_Casanova

Bozo_Casanova 26905

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Posted
1 minute ago, fattyflattie said:

Operational improvement = cutting 8 teenagers that do 45 mins of work and 3 hours of Instagram surfing for 4 teenagers that do 4 straight hours of work.  

Go watch a living wage fast food kitchen line like P Terry’s or In-n-out in at any time of day and location, and then go watch a minimum wage fast food kitchen line at any time of day and location. 
Who do you think gets higher margin out of the same revenue profile and why? 

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Bozo_Casanova

Bozo_Casanova 26905

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Posted
2 hours ago, BeardIP said:

This conversation feels similar to the one that was had about the $2.15 cent waiters getting a raise to $15/hour but doing away with tipping, in the sense of a business having carrying costs instead of pushing it on the consumer. It seems like the business will always bake the extra costs to the consumer, to the extent that they can without losing money, right?

That’s like saying a business will bake all the extra margin into their prices they can without losing money. Of course, right? Luckily as consumers we are the buyer, so we decide what we want to pay for things, unless we can’t live without them (like insulin, for example). So for products with a high price elasticity of demand, like fast food, business have limited pricing power, because as they raise prices demand drops. 

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Incredulity

Incredulity 11880

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25 minutes ago, BeardIP said:

when firms move prices together like a cartel,

jesus fucking christ

Fortunately in America, at least so far, there is the free market.

Any Tom, Dick or Harry can start up a burger joint and bust up the lock step cartel like pricing and, "obscene corporate profits" of Big Burger.  

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Incredulity

Incredulity 11880

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15 minutes ago, BeardIP said:

But I think the operational efficiencies discussed, that could be used to drive down costs, only work at scale. So you opening a boutique burger joint is a pipe dream myth of being able to undercut Wendy's 4 for $4.

Which is it?

Gigantic operational efficiencies so effective no one can compete

or

Cartel price gougers with monopolistic control of the market

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