Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.
I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions. Obviously the UW study has flaws. Let's give economists a little time to figure out WHY the results are so different from previous studies before we draw any conclusions.
The UW study was actually able to duplicate the results of previous studies, and had an explanation of why the results were different -- previous studies haven't actually known what wages people were getting and what hours they were working. This study did. Much better data gives you the ability to ask better questions. There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance, and is much more worth a read than this WaPo article.
>The UW study was actually able to duplicate the results of previous studies
That's not really true. The negative effect on employment demonstrated in the UW study is much larger than most previous studies have shown.
>There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance
I believe it's much more than "possible" flaws and some of them are really quite damning. I don't think many people that read this criticism by Michael Reich (the author of the Berkeley study) could conclude that the UW study is really worth considering.
Watching the Berkeley people dismiss this study because of how many employees are excluded by not having the multi-site data, when the Berkeley study excludes everyone not working for restaraunts, it's something.
The problem is that the Seattle law sets the minimum wage of multi-site businesses higher than single-site businesses. The expected effect of this is that minimum wage workers of single-site businesses will quit and work at multi-site businesses for the higher wage. A study looking only at single-site employment counts these people as having left the workforce when they've actually received a raise.
Okay, but if you look at the results of the UW study:
> This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
There's a few things going on here.
1) Looking at just the restaurant industry, which is all the Berkeley study looked at, the UW study found an effect of zero. It's all the employment sectors Berkeley didn't look at where the UW study found other results.
2) They found a smaller increase in hourly wages than other studies, because they were able to figure out how many employees were earning more than the previous minimum wage but less than the new minimum wage. This should be agnostic to the multi-site data issue.
3) They found that the number of employees held steady and the number of hours worked dropped. That's not the effect that you speculate the lack of multi-site data would lead to.
Ha,I am actually one of those people who were being studied. I was a minimum wage worker in Seattle through both of these wage hikes. There are a lot of assumptions being made here that don't reflect reality. The biggest though is that every single person is a rational economic played that is looking to maximize their income. The reality is that a huge number of people living on minimum wage here are depressed, and many don't want to maximize their income. They want to do as little work as they can to pay the bills month to month. They are prioritizing time NOT working over whatever pay they get. A susprising number of these people are actually great job candidates with great degrees and intelligence who are in a period of their lives where they are seeking out things other than immediate career goals or money.
So they don't want to maximize their income, rather, they want to minimize the hours needed to work to cover their bills. In both scenarios, the laborer is still chasing a higher wage (assuming hourly work). So not sure you're making sense.
Actually, how many low cognitive load, high paying jobs will allow people to work a casual 20 hour work week, and take days off or call in sick with little repercussions? Most middle class jobs, such as the one I have now will require a full time commitment, along with a higher cognitive load and responsility. Oh, and so those people who want to pay their bills and nothing more? When their wages went up, they had the leisure to work less.(I have no clue where UW got their mere 3% raise claim, I experienced a much larger bump) While cost of living has gone up in Seattle, there are countless ways to navigate that, as those familiar with living on less know.
How was your experience in the study? Do you feel like the UW study missed any important questions or aspects of your life that would potentially alter their conclusions?
As for depression, from what I can tell of skimming the UW paper (hopefully I did not miss anything): they did not segment by education or earnings potential, and provide no insight into This seems fairly flawed, given that you would expect different subpopulations to respond very differently to a reduction in available hours.
1) Looking at other industries doesn't invalidate the multi-site critique.
2) The problem here is they narrowly looked at only a small band; they don't even consider jobs which make more than $19/hr. Consider a hypothetical world where when the minimum wage goes from $12/hr to $13/hr, the people who were already making $13 get raised to $14, those making $14 get a bump to $15 and so on with zero effect on the number of people employed, essentially everyone gets a $1 raise. (Note: I am not saying this is our world.) What would the UW study show? It would show a decrease in labor equal to amount of people previously making between $18.01 and $19.00. All these people have been raised above the $19 boundary and so no longer are counted. So even in a situation with no change in the amount of jobs and only positive wage effects, the UW study will show negative employment effects.
This is actually where the difference between Berkeley's positive effect and UW's zero effect comes in, from the pdf I linked previously:
This pattern of average higher pay and more employment appears also in food services: a decline of about 150 jobs paying under $19 from 2014 to 2016 and a simultaneous increase of about 4,500 jobs in all pay levels at single-site food service establishments.
This actually brings me to one of the biggest problems, also from the pdf above:
The UW report nonetheless finds an unprecedented impact of wage increases on jobs, ten times higher than the average in 942 published minimum wage and non-minimum wage estimates, and triple that of minimum wage critic David Neumark.7 There is no reason why Seattle's low-paid employers should be so much more sensitive to wage increases than employers elsewhere.
Incredible results demand incredible proof and the UW study does not do a good job at all of providing that proof.
EDIT: 3) Whether it's number of jobs or hours of work, both are affected by the $19/hr cap so the difference is inconsequential.
"The UW report nonetheless finds an unprecedented impact of wage increases on jobs, ten times higher than the average in 942 published minimum wage and non-minimum wage estimates, and triple that of minimum wage critic David Neumark. There is no reason why Seattle's low-paid employers should be so much more sensitive to wage increases than employers elsewhere."
Except that's not the claim. Nobody's saying Seattle is more sensitive, just that there's better data there.
So, we start off with talking about the multi-site critique, I respond to that, and you... switch topics to the $19 cut-off? Is this Calvinball?
>So, we start off with talking about the multi-site critique, I respond to that, and you... switch topics to the $19 cut-off? Is this Calvinball?
I'm sorry, is that not kosher? There are multiple things wrong with this study you know... Besides you pointed out something that wouldn't be affected by the multi-site problem so I pointed out that it was affected by the $19/hr problem, that's just a normal back and forth. Really if I'm going to be honest, I think the UW study reaffirms your pre-existing views so you're unlikely to admit that it's a bad study but come on. If people want to make the point that increases in the minimum wage are bad for workers and they want that point to hold up to reasoned critique then I suggest they find something other than this study. It's not good, no matter your political beliefs about the subject.
> Really if I'm going to be honest, I think the UW study reaffirms your pre-existing views so you're unlikely to admit that it's a bad study but come on.
I could say the obverse about about you, but it doesn't really move the discussion forward.
You said you thought it was a bad study because of the multi-site issue. I responded why I didn't believe that to be the case. You responded that it was a bad study because of the $19 cut-off. Do you still think the multi-site issue is a problem, given my response?
Yes. The multi-site issue combined with the $19/hr problem prevent the study from being very useful.
Given this quote:
This pattern of average higher pay and more employment appears also in food services: a decline of about 150 jobs paying under $19 from 2014 to 2016 and a simultaneous increase of about 4,500 jobs in all pay levels at single-site food service establishments.
Would you concede the possibility that in Seattle's restaurant sector a higher minimum wage did not have negative employment effects? (NOTE: I edited this question)
The study doesn’t include large employers, such as fast-food chains, that have locations both inside and outside Seattle. But the researchers say they did account for big employers in a separate survey of more than 500 Seattle businesses. The results showed employers with multiple locations were more likely to cut jobs as a result of the wage increase than those with just one location.
“It’s fair to say that it is a blind spot in our data, but it’s not a blind spot in our survey,” said Jacob Vigdor, a University of Washington public policy professor who worked on the study. “Our best guess as to what we’re missing is we’re missing effects that are even more negative than what we reported.”
The Seattle Minimum Wage Study survey is a dead-end, it's completely qualitative which is why multi-site businesses were excluded from this study.
The authors argue that excluding almost 40 percent of state employment from the analysis will likely have no effect on their findings. They cite results from a survey of 500 business owners before and after the minimum wage went into effect in Seattle. According to the survey, before the increase, multi-site employers were more likely than single-site employers to report that they intended to reduce employment in the wake of the Seattle ordinance and, after the increase, multi-site employers were more likely to report a reduction in employees. These qualitative reports of employer intentions before the increase and the retrospective, qualitative assessments of employer actions one year after the increase, however, are not a substitute for hard data on what these businesses actually did after the ordinance went into effect. And—what is at least as important—these qualitative reports on Seattle businesses tell us nothing about about the employment changes in the rest of Washington, the comparison group for this study’s estimates of the effects of the minimum wage.
It's not clear to me why you can draw conclusions about the impact on employees from the UW study. I read it as "minimum wage increase hurts small employers more than big ones", which is less headline-worthy.
I worked in Seattle at minimum wage through this for a "small employer"(this term isn't very nuanced) who was still a millionaire and making huge profits. More significant than the cost of any wage hikes he was experiencing is the skyrocketing real estate market here. This doesn't even begin the discussion on the concern for the welfare of employers who complain that their large profits are being hurt because they can't squeeze dimes from poor people as easily.
The results the commenter was referring to is the fact that prior studies found good results with minimum wage within the restaurant-worker class, and so did this new study. But the new study found that looking at a larger superset of these workers showed poor results for minimum wage.
I've read the UW study didn't count employees in chains, that had to pay the higher minimum wages, and that was a significant amount of the people subject to the new min wage.
will be curious is this pro article gets flagged off as fast as the previous story which wasn't supportive.
last i checked the UW was requested by the city and journalist and .gov email addressed users all have access to the study, so this claim that its not available is the first indication the WAPO article is nothing more than predisposed piece, meaning they had an outcome and went searching for support of it. the ideology of WAPO is well known so any other result than this could not occur
WaPo posted a descriptive article on the UW study days ago.[0] The OP is an op-ed by a member of a left-leaning think tank in a section called "PostEverything Perspective," described as "Discussion of news topics with a point of view, including narratives by individuals regarding their own experiences."
Let's not make accusations of media bias without any basis at all.
I have the same question. The WaPo article that described the results of the study (not good for minimum wage progressives) got flagged rapidly. Articles since attempting to counter the story happily remain.
Agreed. The facts borne out by the University of Washington study are what they are. The counterpoints in this article appear weak, and designed to support a specific political point of view held by the Washington Post and many of its readers. They are essentially saying that the Berkley study used a different methodology, and that they like the Berkley methodology better (because it produced results they agree with).
Cherry picking studies that support your own point of view isn't journalism, and it is irresponsible. It's done by both sides, and has helped create the dismal state of political discourse in the US.
True, but it's interesting that the headline doesn't say "Opinion:..." like most publications of this stature do. This author made a statement of fact in his headline, and proceeds to justify it with an incredibly biased opinion.
Again, how many people are doing this? Most people read the article and headline and move on with their day. WaPo allowed this guy to make a statement of fact in his headline with zero indication that it was an opinion.
> WaPo allowed this guy to make a statement of fact in his headline with zero indication that it was an opinion.
No, they didn't. “...actually working just fine.” is inherently a claim about how facts fit into the speakers subjective value framework; it is not a fact claim.
> True, but it's interesting that the headline doesn't say "Opinion:..."
The section header above the headline includes “Perspective”, a common journalistic synonym [0] for opinion.
[0] Well, not quite synonym: “opinion”, “analysis”, and “perspective” are related not-just-the-facts categories, with subtle differences (but frequent overlap) in how they are generally used, but lumping then all together is useful in contexts where the interest is distinguishing from “straight” news reporting.
Apparently WaPo's name for the "Opinion" section is "Perspective" which is somewhat misleading. Also most people reading online won't care to look - I had to go back and look after reading this comment, because it isn't mentioned at all in the headline that this is a biased opinion piece.
Again, you're missing the point. Most publications (newspapers etc. that also publish hard news) indicate that it is an opinion right in the title of the article so that there is no mistaking it.
That is what PostEverything Perspectives is. The description for PostEverything itself on the main page is "The conversation is bigger than you think."
Or as I said above in response to a similar comment:
Mouse over "Perspective" at the top of the page and you will see:
"Perspective: Discussion of news topics with a point of view, including narratives by individuals regarding their own experiences"
Exactly -- economics is a science. I don't pretend that the world is perfectly modeled by classical macroeconomic laws, but the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation (labor market), rather than the other way around.
If you are not familiar with what classical economic laws would suggest about a minimum price control on labor (minimum wage), it would
1. reduce the demand for labor
2. create deadweight loss (net value changing hands decreases)
The politicization and down-voting of ideas that people (particularly liberals, in this case) disagree with has a chilling effect. As Warren Buffett says, the human mind is best at interpreting all information such that prior conclusions remains intact.
It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss. Everyone needs to understand that raising prices of almost anything will reduce the amount of that thing demanded. When price goes up, people buy less. Wages are just price and labor is a thing that people buy.
The more complicated issue, which democrats and republicans both ignore, is the elasticity of demand. Democrats love saying "Minimum wage increases are good, and they've been proven not to affect the demand for low-wage labor!" and republicans say "Minimum wage increases are bad, and they've been proven to increase unemployment!"
The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.
> The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.
That is actually the false dichotomy that leads people to consider minimum wage as a good idea. Just because something might be better than nothing doesn't mean it's better than known alternatives.
Model minimum wage as a tax on employers for the difference between the minimum wage and what they would have paid without it, which is used to fund wage subsidies in the same amount to those employees.
Looked at in that way, minimum wage is obviously ridiculous. There is no reason to ever use that tax structure for anything. Even if you wanted to have the same subsidies for the same employees, it makes more sense to spread out the tax burden across everyone so that you don't have a de facto >=100% tax to hire someone who would have made half the minimum wage or less.
The only issue then is that without the disincentive to hire created by the minimum wage "tax", anyone could offer to do easy work for $.01/hour just to get the subsidy, so you might as well make the subsidy a fixed unconditional amount regardless of wages or hours.
In the minimum-wage literature, the magnitude of the
publication selection bias is as large or larger, on
average, than the underlying reported estimate. Overall,
correcting for publication bias would transform a
modestly negative average elasticity to a small positive
employment elasticity.
Honestly, I haven't looked into your claim. But just off-hand, I'm very skeptical of any evidence that minimum wage increases cause anything but a decrease (even if tiny) in employment. How many goods in the world do price increases cause an increase of demand?
Economists have a term for this type of good, "Giffen Good"[1]. And for obvious reasons, they almost never exist. When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?
You should read the article I linked. : ) It's a very solid meta-analysis including pretty much every peer reviewed article on the subject of the past few decades.
> ... When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?
The article explicitly doesn't go into why, but I can think of a few reasons.
Totally off hand, I'd put my money on the fact that businesses that employ minimum wage earners tend to also be disproportionately patroned by minimum wage earners. Add to that the fact that minimum wage earners tend to pretty much immediately spend their paychecks, you're left with businesses having their customer base with more disposable income.
Why don't employers simply raise wages themselves? Aside from the implicit information asymmetry sort of denoted by this very conversation, it doesn't make sense from a sort of game theory point of view for an individual business to go out on a limb without their competitors doing the same at the same time. In my mind, that makes it a perfect opportunity for government to step in, and add some lower bounds of acceptability. This way both employees and employers can have more success.
(The tone of that explanation does come across as elitist, because it's intentionally exaggerating to demonstrate how people "hear" certain explanations as insensitive when they're not.)
> I don't pretend that the world is perfectly modeled by classical macroeconomic laws
Understatement of the century. Would you tell someone working at CERN "I don't pretend Newton's laws are perfect, but..."?
> the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation
Which previous studies of the minimum wage have consistently done (well, more accurately shown that the deadweight loss is more than offset by increased wages). That's the whole reason this article is interesting.
Even the staunchest free market economist wouldn't claim that a hypothetical minimum wage increase from $.10/hr to $.50/hr in Seattle would increase unemployment. And even the staunchest socialist economist would not claim that a minimum wage increase from $8/hr to $800/hr wouldn't increase unemployment.
Similarly, how can you compare an increase from $5-6 in New jersey in 2005 to one from $11 to $13 in Seattle in 2017? You can't extrapolate this stuff.
The question is not "Are minimum wage increases good in general?" the question is "Given the potential tradeoffs, is this specific minimum wage increase good?"
Why not? I'm not saying it's like physics where we can make nearly exact models, but can't we at least make educated predictions based on previous examples, taking into account the different circumstances?
After all, in your hypothetical you already implicity modeled that a minimum wage a certain percentage of a "reasonable" wage won't hurt employment, while one much higher will.
> The question is not "Are minimum wage increases good in general?" the question is "Given the potential tradeoffs, is this specific minimum wage increase good?"
This only underscores the importance of extrapolation -- lawmakers need to be able to predict these tradeoffs to make good decisions (if extrapolation is possible).
Fair point, I agree that extrapolation could be important here. If the effects of the $13 minimum wage are considered positive in Seattle, that would be good for the Portland government to know.
I guess my issue with your first comment is that it seemed like it was trying to consider minimum wage increases as generally good or bad, which I disagree with. I think it's much more nuanced than that, and it sounds like you agree.
The question I now read your first comment as asking is, "Why have studies shown this minimum wage increase as more harmful than other minimum wage increases? Of course, the answer is just that the elasticity of demand for low-wage labor in this case appear greater than in other cases.
The question is: what does the labor elasticity graph look like? And that's what these studies are really trying to figure out.
> Which previous studies of the minimum wage have consistently done (well, more accurately shown that the deadweight loss is more than offset by increased wages).
No, studies have been mixed and controversial, at best. This is just another study that shows how empirically ambiguous it is (by supporting the anti-minimum wage position), so again, I challenge the left to hold their evidence to a higher standard since it goes against common sense economics.
Regardless, the minimum wage and most other forms of welfare put forward by mostly the Democratic Party are economically foolish and distort incentives (TANF, unemployment benefits, minimum wage, mandatory social security, etc.) A very basic income is much cleaner and simpler -- I have yet to hear an argument for why our current welfare complex is superior.
I agree with your point about burden of proof, but economics is not a science. Setting aside economics and science, common sense demands the burden of proof go to those who say raising wages won't decrease demand.
Maybe, or maybe common sense says the burden of proof go to those who say increased consumer purchasing power won't increase demand.
Maybe common sense demands thats businesses won't pay for more employee hours than they have to in the first place and thus demand only decreases if overall revenue decreases.
I mean just saying "common sense" is as usual a way of pretending that your own biases are obviously correct.
Nope. To anyone who still hasn't gotten the memo: neoclassical econ is mystery religion dressed up in poor mathematics[1]. If we held other sciences to the same norms as economics we'dd still be living in the dark ages.
This is utterly incorrect and not at all what the neoclassical micro/marco economic laws suggest.
For the sake of brevity, you are not making the proper distinction between demand and quantity demanded - a change in the price of labor does not change the DEMAND for labor.
Poor choice of wording -- in the simplest sense, you are correct. However, labor markets are far too complex to be modeled as a single commodity with a supply and demand curve, and contrary to popular belief, both supply and demand can change in the wake of a price control.
This is because there is no single supply and demand curve for labor -- instead, there are dozens of curves for specific labor markets. For instance, the minimum wage does not really affect the SDE labor market in the US, but it can literally wipe out certain markets (farm labor, for example) that typically pay below the new minimum wage, resulting in a complex new supply and demand profile, automation, etc.
They aren't any more "pro-science" as any other party. For instance, it's notable how the science of biology has been excluded from women's and gender studies university programs for many years now.
Like any other political group they will use what they can to advance an agenda with whatever tools are out there. If they need science for one argument they'll use it while conveniently avoiding it for others. If you need "morality" for one you use it when convenient and avoid when not. It's all politics that do this unfortunatly.
The "the science of biology" is also excludes from physics, computer science, languages, classics, English, political science, etc. What's your point? Are you implying that an academic field that studies the gender constructs of society is somehow intrinsically anti-science?
I'm just saying social constructionism isn't science but portrays itself as science. Biology is _specifically_ left out of the conversation on purpose because it conflicts with the theory. The theories found in a women's or gender studies course would be more valuable if they included relevant hard science instead of purposefully avoiding it. Just like how an EE program utilizes relevant sciences. Or linguists for another example.
I'm not a disgruntled person crack-potting here. This is a complaint of many highly regarded people who spend considerable time studying and critiquing these disciplines. Camille Paglia comes to mind.
Paglia mostly seems to argue that the current state of the field is too abstract, which strikes me as being similar to Computer Scientists complaining about the lack of focus on electrical engineering. She also seems to spend a lot of time and words just calling people smug.
I'm not really up on the literature, but I don't see an inherent problem in focusing on abstract and high level ideas. I'm also not sure that biology offers much insight into the way society constructs gender roles. Even Paglia who you cite only seems to use biology to describe a theory for the underlying causes of sexual coercion.
I suggest you pick up and read "Galileo's Middle Finger" [1] by Alice Dreger. In short it points to hypocrisy when dogma and science collide. When your worldview is shattered by actual science and how we can be better people by not politicizing science only when convenient.
I'm familiar with the premise, and don't disagree. I'm just of the opinion that for a social science to ignore biology is probably fine at a certain level of abstraction. I'm not arguing anything else at all.
Again, this is a bit outside of the areas in social science in which I regularly read. So if a particular set of dogmatic ideas run counter to our best scientific understanding, then those ideas deserve criticism. I think we agree on that.
I'm not an expert in these topics either. So I'd agree if used responsibly there's certainly room to abstract something away. So long as the sophisticated theory it is derived from and simplifies does not. And that's my problem.
My only point in my original comment was that the deliberate rejection of empiricism isn't reserved just for the dogma of the rightwing in the USA. The leftwing is just as guilty. And this concerns me a lot.
Seriously, if you find time read the book I recommended. Or at least the NYTimes or NYMag's review of it.
Yeah, I read the review a while back actually. While I agree that science denialism isn't the sole domain of the American right, it is think more broadly embraced in right of center political circles, and I believe the most visible public science deniers in the US are part of the political right. I don't think that's anything inherent in the political ideology per se, but a result recent historical accident, the "southern strategy", and the embrace by the American right of evangelical voters.
That said, the left has anti-vaccine nuts so no political leaning is immune.
I at least am skeptical of their claims mainly because there's a very well established case of publication bias in the space of the effects of minimum wage increases.
>Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.
And the UW study was consistent with the Berkley study--for food service workers. It appears food service workers really weren't hurt by the increase, but non food service workers were.
Maybe if you limit your scope to this single event. There is a large body of prior evidence and theory to suggest that disemployment was likely to occur from such a large increase in the minimum wage, so I don't think it's really proper to act as though two studies represents our entire universe of human knowledge about these sorts of policy changes.
The studies on that are mixed (see Card/Kreuger). But it's worth noting that the UW study was able to explain the results of previous studies that showed no effect on employment: those studies did not have access to info about hourly wages and hours/week.
In 1968, while in graduate school, Reich was a founding member of the Union for Radical Political Economics (URPE).[5] In doing so, as Reich describes in a biographical compilation piece (A Biographical Dictionary of Dissenting Economists),[3] he helped "to organize an influential circle of radical economists." URPE’s agenda, as described by a spokesperson for the group, is to:
"support an American version of socialism, with public ownership of production and a government-planned economy to meet social needs rather than the needs of private profit."
So he's very clearly biased toward proving minimum wage increase's success.
> So he's very clearly biased toward proving minimum wage increase's success.
You may not have meant it this way, but that sentence implies you have already dismissed any point he makes purely based on what he believes in. Without any evidence, you've implied that any conclusions the author makes are automatically devalued because he will be incapable to undertaking objective research.
Would you write a similar sentence about say a medical researcher? 'Researcher is a member of the medical industry and is very clearly biased toward proving vaccines are safe and necessary'.
(Note: I think it's very important to be aware of influences and biases in hearing opinions - an important part of critical evaluation. Your comment does that for the most part ... it's just the last sentence I have an objection to)
This is a very different situation. There is still a huge amount of debate about the actual effects of minimum wage increases. This is not the case for vaccines any more. At this point, the evidence for vaccines is strong enough that pro-vaccine should be the default position. This is not (yet) the case for raising the minimum wage.
As a result, ideological biases are important to flag, and studies possibly affected by bias need to be replicated and cross checked.
>Would you write a similar sentence about say a medical researcher?
How about "Anti-abortion activist doctor releases study showing that abortion in unhealthy." Are you telling me you wouldn't place the study under extreme scrutiny? When someone shows their ideological bias, and it happens to be extreme (yes, socialism is extreme), and then they also do science in the same field, it is absolutely appropriate to make their biases known and subject them to extra scrutiny.
EDIT>> Just saw your note that you agree about raising awareness to biases. It sounds like we agree on that.
Free trade or aspirations to such is/are not an ideology. i.e., "The body of ideas reflecting the social needs and aspirations of an individual, group, class, or culture. or "A set of doctrines or beliefs that form the basis of a political, economic, or other system".
Humans trade don't need theoretical underpinning to trade goods and services with each other. They have done it since the dawn of time. Even monkeys do it. I'll scratch yours if you'll scratch mine. And indeed it percolates down to the personal as well, as Eric Berne noted in Games People Play.
Should we disregard every candy company's study that comes out pro-sugar?
Maybe we should, maybe we shouldn't but the studies for sugar and minimum wage spread wide enough that it's easy to see these convenient conflict-of-interests everywhere.
I think that is a bit of a straw man- a sugar lobby represents economic interests. Why would this man's ideological interests not match his academic interests?
Because they virtue themselves as doing unbiased data-based science, when they're just pushing their agenda. At least, the alt-right folks (Milo, Shapiro) are very clear and honest about their bias.
True. It almost seems that science and research as a whole is increasingly just a channel for pushing an agenda. I don't think we've advanced much in that regard. Anyone can fund a study and twist it to support their agenda or just not publish it. Then the media gets ahold of it and cherry picks what they want and use questionable headlines.
In many cases it results in consumer confusion and serious health issues (sugar vs saturated fat war you noted).
- because they are perhaps not very bright, maybe mentally-disabled (Downs syndrome people for instance), possibly just naturally very slow, inexperienced, very young, very old, physically feeble or otherwise considered to be unlikely to be productive would-be employees who
- are then legally prevented from getting a job unless of course the state wishes to force employers not to hire the most productive staff to be paid the minimum wage. And that's not going to happen in a free society and nor should it. Everyone has their value. But don't let's pretend that value (for a specific job) is the same for all of us.
Why would being a socialist mean that he is biased in favor of minimum wage? In no way is minimum wage a requisite for socialism. Plenty of social democratic countries (not technically socialism, I know) have no minimum wage because they have a system of organized labor that renders it unnecessary.
So, let me get this straight: founding a group 49 years ago means that "he's very clearly biased toward proving minimum wage increase's success".
This seems like a lack of familiarity with the scientific method. First, there's a hypothesis about the world. Then, that hypothesis is tested against evidence. The origins of a seasoned researcher's hypotheses about the world and their ideas of what they would like the world to be are not enough to impugn their ability to evaluate others' study design or the integrity of their own hypothesis-testing.
At best, you've provided evidence for "he may be ideologically more pleased with hypotheses supporting the success of minimum wage increases being successfully supported by evidence".
> This seems like a lack of familiarity with the scientific method. First, there's a hypothesis about the world. Then, that hypothesis is tested against evidence. The origins of a seasoned researcher's hypotheses about the world and motivations they would like the world are not enough to impugn the integrity of their own hypothesis-testing or their ability to evaluate others' study design.
And yet the author of the article seems happy to impugn the motivations of the UW researchers, because his ideology does not agree with their results.
I don't see where the Perspectives contributor is using the UW researchers' motivations as the main thrust of his (not particularly great) arguments -- he seems to be interested in comparing study design at the very least.
People change. I think you need proof of current ideology to make a case. Soviet propaganda pre 1980:s managed to convince a lot of smart people to go ultra left. For instance, one of the most prominent bankers in nordic countries, Bjorn Wahlroos, was originally at far left in his political leanings.[0]
"Controversy
Reich's analyses on the effects of minimum wage increases in his capacity at IRLE have generated controversy and accusations of bias from Los Angeles city legislators. Addressing IRLE's selection to analyze a proposed minimum wage hike in Los Angeles to $15.25, Democratic City Councilman Felipe Fuentes argued that "the selection of U.C. Berkeley, by perception, compromises the possibility of a fair and balanced discussion." Fuentes and fellow Democratic Councilman Mitch O'Farrell asked to reopen the selection process for a research team "so that we can engage in a process that is worthy of our employers, workers and their families, and the well-being of our economy."[14]
In March 2016, the Albany Times Union reported on hundreds of pages of emails from Reich’s research team that showed a close collaboration between the research team and labor union groups that fund the movement to raise the minimum wage. According to the article, “the relationship between academic and funder seemed explicit” with one uncovered email showing that the research team was seeking grant money to support its research "for local groups engaged in work to raise the minimum wage" and “testimony/media work” in California.[15]"
When you are getting accused of bias by Democrats, things are pretty bad.
Why are you attacking the Berkeley authors' honesty with a phrase like "On The Other Hand"? The WaPo piece only addresses the arguments and evidence, not the credibility of the UW authors.
All scientists are biased. We're human and we're opinionated about our fields. Unless you can show their bias affected their results, it doesn't matter.
This upset me so much I'll have to walk down my publicly schooled ass down the publicly funded street protected by a government police from sole proprietorship street fundraisers.
We need to make the EITC (Earned Income Tax Credit) much more generous, removing the necessity for higher minimum wages to fix our demand issues. The EITC has better knock-on effects in terms of increasing competition for labor and serves as an employment subsidy for many small businesses that would, otherwise, not employ anyone. Plus, it is much, much easier to get a "10,000ft view" of the employment/demand situation at the Federal level, as opposed to a hodge-podge of local initiatives.
The EITC is a great tool for efficient re-distribution of resources to working Americans on the lower rungs of the economic ladder. It's efficient and we can turn the knobs to adjust it as necessary to fit our needs, such as not being as generous to teenagers that live in an existing household (something that minimum wage increases do not account for).
The only downside to the EITC is the once-a-year aspect to the distribution. It would probably be wise for us to develop a more reliable distribution of the money so that it provides a more even boost to the worker's regular paycheck.
EITC has a massive downside that you're ignoring. The ability of municipalities to act as laboratories in social policy is essential to effective governance. Seattle can raise their minimum wage far easier than having Congress change the Federal minimum wage. And then we can see how it works in Seattle. Expanding EITC has a huge affect, and is both harder to enact, and if needed, harder to rollback.
That's absolutely true for most new Federal economic/tax policies that are relatively untested. But, the EITC has been around since the mid-to-late 70s. We've got loads of data on its effects under all sorts of different economic scenarios, some of which are included here:
So Federal Income tax is a relatively old tax policy, weighing in at a hearty 104 years of age. And modifying it and understanding the ramifications of changes to the tax code is easy? We have a congressional shitstorm whenever either party wants to raise or lower taxes. And the old adage about getting three answers when you ask two economists what'll happen is still true, even discounting ideological baggage.
The minimum wage affects both high school students looking for some extra cash, and people desperately trying to support a family. The latter is where an effective policy would concentrate its help.
I agree that federalism has important benefits we shouldn't ignore, but income tax schemes can be (and are) implemented at various levels of government.
The earned income tax credit is essentially a tax credit for low income parents. It isn't billed that way and it isn't technically limited to them, but if you look at the formula, for any tax filer with no children the maximum credit is $506. That's about twenty five cents an hour for a 2000 hour work year, 12.5 for a 4000 hour work year (i.e. for a two earner household). This peak credit is reached at $6,610-$8,270 for a single filer and $6,610-$13,820 for a married couple. It is phased out to zero by $14,880 and $20,430 respectively.
Now maybe when you say we need to make the EITC much more generous you include as part of that fundamentally changing the nature of the program. But it is worth noting what it is and isn't today. And that's a refundable child tax credit, not a general negative income tax program.
> and serves as an employment subsidy for many small businesses that would, otherwise, not employ anyone
It would serve as a generous subsidy to _any_ employer that doesn't want to pay a living wage. It's not clear to me why the federal government should be subsidizing the practices of companies like Walmart, who are already costing the government $6.2 billion in public assistance[1]. But that's effectively what an expanded EITC would do [2].
I'm not happy about providing subsidies to corporations, either, so if there's a way to prevent this, then I'm all for it. I just don't see how you could do it, so you're left with increasing corporate taxes, etc. as a remedy.
I'm in favor of the minimum wage increases, in principle. I just think that increasing the minimum wage in all of the municipalities that need an increase is going to take too long, and that it's too broad in how it supplements incomes (the teenager issue mentioned already).
EITC encourages some negative behavior and should actually be axed or corrected. it is not hard to find stories of people only working part of the year so as not to void their EITC money.
a better incentive is to raise the wages of all those earning below certain wage per hour with the money used to fund EITC. We all win this way, people working know they are going to have enough money, we don't have people sitting around with idle time which is not good for them or others and we have the community investing in others through their taxes directly benefit low wage earners regardless where they work. We also take a load off small shops who might be able to withstand a pricier market.
there are really no negatives to boosting hourly income through taxes compared to just handing them money for earning less than X per year
I'm cool with that, also. My main requirements are:
1) The benefit should revolve around work. Unless you're disabled and unable to work, any adult should be required to work in order to receive benefits.
2) The phase-out should always be structured so that moving on to higher wages is the obvious preferred choice for a recipient. No benefit cliffs that discourage advancement.
3) The benefits need to be enough to actually make a difference. Otherwise, we're just wasting our money and not improving the situation.
EITC should be axed for one simple reason: It allows people to be dishonest when it comes to social spending. EITC is never included, but it's a wealth transfer before any accounting is done so it's never really talked about.
Welfare should be welfare. Taxes should be taxes. This constant cross-subsidization is insane, and at this point absolutely no one has any idea who is paying for what and how much.
> It allows people to be dishonest when it comes to social spending. EITC is never included
“Tax expenditures” are frequently included in analyses of social spending, and often broken out as a separate category. EITC is the headline example of the category. Your basic premise is false.
In professional analyses? Certainly. During election campaigns quoting the numbers spent on budget items? Almost never.
I guess I did a poor job explaining what I meant. If you ask the common citizen what our welfare spending is, they will quote you back the number mentioned by CNN or Fox on the news. Those numbers rarely include anything but the headline budget numbers, and do not delve into items such as tax credits before any transfer payments are made.
> In professional analyses? Certainly. During election campaigns quoting the numbers spent on budget items? Almost never.
Most of the numbers cited in election campaigns (if they aren't just made up and pulled from thin air, which also happens; but,for those, the allocation of real spending doesn't really matter) come directly from professional analyses, which as you acknowledge do include them.
Fair enough, we're not mid-cycle so I don't have any numbers to readily double check easily.
I still cannot recall a single instance of those numbers including EITC when quoted during election cycles, but I'll certainly concede the point and pay closer attention. I've noticed when the numbers do include them in reports and such, because it's so amazing to me someone is actually showing the data honestly in those cases.
I'm absolutely in favor of something like a UBI (it's very similar to the EITC), but I don't think there's any way to get there, both politically and fiscally, without means-testing.
Oh boy. Time to read another page of comments written by people who think that price elasticity is always linear and that markets are always efficient!
"More recently, some researchers (e.g. Dube et al. 2010) exploit differences between counties sitting on each side of a state border where one state raised their minimum wage and another did not. Many, but certainly not all, studies that use these approaches deliver SMALL disemployment effects."
Daniel Aaronson, Eric French, Isaac Sorkin from your article ^^^
Dube et al 2010's ACTUAL result:
"We compare all contiguous county-pairs in the United States that straddle a state border and find NO adverse employment effects"
This a pathetic piece of weasel wording, although not something I'm terribly surprised to see from them specifically.
The paper itself is much more nuanced. Their model predicts the results of Dube, especially in industries where few of the employees receive salaries near min wage. It also predicts the minimal disemployment effects (or non-existent disemployment effects, as in Dube) in the short run.
Where it differs is in the long-run in industries where 1) many employees receive near min wage, and 2) capital can easily replace labor.
So, Aaronson finds disemployment in low cost / fast food restaurants in the long run, but not in expensive sit down restaurants (which can absorb additional labor costs).
How good is the model they are using? They are making all of the conclusions based on a model but data on the model doesn't seem in the scope of the article
"Oh boy. Time to read another page of comments written by people who think that price elasticity is always linear and that markets are always efficient!"
I'll take that over a page of comments from people that are not aware that price elasticity exists.
Prices elasticity doesn't need to be linear, nor do markets need to be perfectly efficient for higher labor costs to lead to lower employment. If you want to make an honest argument for higher minimum wage, you need to address the cost of lower levels of employments for the very poor.
Seems like otherwise objective open minded people find it hard to admit ignorance and humility when the topic is political. Climate change and economics are always so hotly debated by engineers.
I'm in SV and I've never met an engineer here who was a climate science denier. I've met conservatives (not many) but not a full on earth is cooling denier. On the interweb, sure.
I'm more or less sympathetic to the idea that the Seattle minimum wage experiment can be having negative effects. Card/Krueger has to have a limit somewhere, and I suspect certain jurisdictions are approaching or exceeding that limit.
That said, excluding multi-location employers from a minimum wage study just seems to me to be so obviously flawed as to border on pure dishonesty.
I'm truly curious how things like this happen. Did UW publish this as a reasonable study with limited findings only to find the press massively misreported it? Or did the desire for media coverage lead the researchers to overstate the findings just to get in the press? I personally don't think political bias drove this. It looks like researchers at UW made a perfectly reasonable small limited study that added a small amount to our knowledge, but then either the researchers or the university or the press advertised it as an exhaustive answer to a complex question.
It wasn't dishonest - they didn't have the data for those multi-site employers b/c of how Washington state keeps records. The authors are upfront about this and try to address the limitation by adding a a survey component---they talked to these employers to see if their responses to the MW were different.
I agree with that, so maybe my post wasn't as clear as it could be.
I would say that in the transmission between the study and the mainstream press, something happened that is best described as "dishonest", or at the very least a reckless disregard for nuance. As you point out, and I agree, the study itself doesn't have that problem. The study itself is quite clear on its limitations.
So where's the issue? Is it just the general incompetency of the mainstream press (I could absolutely believe that). Is it the authors crossing every 't' in the study, but then overstating the findings and dropping the caveats in their interviews with the media? Is it the UW PR staff overstating the findings in a way PR staffs are wont to do? A combination of all of these.
I could believe any of those things. But when this study came out a few days ago, I had to read the study itself to have even a remote awareness of what it actually said (and remember, I think the findings are probably correct). And yes, I think that process is best described with the word "dishonest".
Yeah - I think this is just inherent in the transmission of academic work to a broader audience. Nuance and caveats get stripped away, in part because the journalists themselves aren't capable of assessing these features.
>>That said, excluding multi-location employers from a minimum wage study just seems to me to be so obviously flawed as to border on pure dishonesty.
Please elaborate why. Generally, it is believed larger employers benefit from minimum wage laws because they can afford to pay more while small mom and pop employers can't. This reduces the pool of available employers for workers to choose from.
"You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation." - Henry Hazlitt
"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people." – Adam Smith
"Quotes are not arguments. Quotes don't begin to convey the real cost and toll of working for a wage that can't support basic needs and services, let alone an indulgence, which all lives occasionally need. Quotes in no way capture the totality of a human life, its compassion, its motivations, its missteps, its passions, its reasons a person might work a certain job, market forces be damned. Quotes takes take the words and works of people who dedicated their lives to a search for the truth and reduces them to ammunition by people who have plenty, and want to keep it that way. Quotes are intellectually bankrupt. Quotes mirror the bankruptcy of those who wield them to keep a broken status quo. Quotes think you should go talk to a person hustlin' to sell Adidas shoes to get by, rather than post quotes on the internet." -- Quotey McQuoteface
This supposes a level of knowledge and efficiency which labor markets don't have. Even the boss in most cases doesn't know what the employees are worth per hour, let alone what the employees know. Millions of people, including me, have never negotiated for higher pay; I worked for minimum wage in college despite being obviously worth more. Naturally, a lot of these meek souls wind up as low-wage labor. Is it better that they should rely on food stamps while their employers reap the surplus, or that the government should set a minimum wage? It is likely that some workers really aren't worth $15/hour, and it's even within possibility that some bosses might realize that and fire them. But the net effect on low-wage workers still stands to be much more positive than a crude efficient-market model would show.
>I worked for minimum wage in college despite being obviously worth more.
The market didn't think so. If you think you're worth more, you have to push for it, since the market can't read your mind argue on your behalf.
>Naturally, a lot of these meek souls wind up as low-wage labor.
That's really the crux of it. People who can't/don't/won't negotiate expect the same income from people who do negotiate and make themselves appealing to employers. Since they don't get it, they're upset, so they try to make laws to mandate everyone gets X. The problem is, they still can't negotiate and sell themselves, so they still make less than the people who do, while the economy adjusts to the new baseline income of X.
>The market didn't think so. If you think you're worth more, you have to push for it, since the market can't read your mind argue on your behalf.
The biggest issue is price discovery and knowledge of wages. There's not a stock ticker that everyone follows for "X-language Developers" getting hired at a particular price.
Such a stock ticker would be dumb because too much goes into pricing people's work, but it highlights that there is more going on than you are able to discover, and some feel that's an unfair market because the businesses employing most people hold the cards in their favor. If it's a private company, you can't see their financials to see if they're telling the truth when they can only afford $X.
It's only with time and effort that the cards start going to your hand, but to get there, the market might have already taken advantage of your underpaid work (that you agreed to, ignorantly or not). The market has the power to lie and collude to lower your price if you don't hold these cards. I, too, have the power to lie and collude to increase my price.
And while most of us should just simply strive to be indispensable, discovering indispensable skills is also a lot of work.
If I wanted to truly maximize my price, I would have to apply to every job available to me (time-consuming because we don't have a product for this) at every single company I could legally work at world-wide. Then I just pick the highest paying one that would hire me. That's a pretty easy concept, but no mechanism like that exists in the job market, and for that reason, it's a pretty terrible market to find your price.
>Since they don't get it, they're upset, so they try to make laws to mandate everyone gets X
That is a form of negotiation and that's what they did in Seattle. Just because I won't play my boss's game doesn't mean there isn't another game I could play. This shouldn't be surprising, but even political lobbying has risks of not winning.
Now, if businesses want to come back and try to argue that this is hurting them, then that's part of negotiations as well, and it's entirely possible that businesses can convince Seattle's population.
"The market" is not a helpful model for this interaction. My boss paid me the lowest legal wage, and I didn't ask for any more. Imagine a driver pointing to a bridge on a map when in reality the bridge is gone. The map is helpful in many situations, but it will not help in getting over that bridge.
> you have to push for it, since the market can't read your mind argue on your behalf.
OK. What if I can't? In my case, it was anxiety, which affects at least 18% of the US population. In other cases, it's the risk of alienating a contact or going too long between jobs. If I can't argue, then by your own argument the market wage-setting mechanism must necessarily fail. At the lowest pay levels, I could become a burden to the public despite being employed, which doesn't do anyone any good.
> People who can't/don't/won't negotiate expect the same income from people who do negotiate
Obviously, a lack of salary negotiation decreases one's salary. Minimum wage laws don't repeal that fact, but they set a limit on how low salaries can go, reducing the number of charity cases among the working poor. It doesn't give bad negotiators the same income as effective negotiators except at the very bottom of the labor market.
> My boss paid me the lowest legal wage, and I didn't ask for any more.
> What if I can't? In my case, it was anxiety
I'm sorry you have anxiety, but if you don't even try to participate in the negotiation process, you can't expect a lot of sympathy for you when you complain that you're not paid what you think you're worth. Negotiating inherently makes most people anxious (myself included), but you learn to do it because it's a invaluable skillset to furthering all aspects of your life. Frankly, I can't think of a single line of work that doesn't benefit from good negotiation skills. I hope you don't take this as confrontational.
You're asking people with broken legs to walk it off. Clinical anxiety is not easy to treat, and minimum-wage workers don't generally have the time or resources to go about it. In non-psychological issues, the risk of going an extra few months without a job can be hard for minimum-wage workers. They might not be in a position to accept the tail risk even if the average outcome of negotiating the extra couple of dollars would leave them better off.
I don't mean to ask sympathy for myself; I'm doing fine now, and I think you're right that I could use some negotiation training (I do read self-help books about it from time to time). I bring up myself just to make clear that this kind of issue can affect anyone. For people stuck in that situation (especially with kids), I feel a great deal of sympathy, and I'm interested in anything (minimum wage, training, Earned Income Tax Credit) which can help them.
My comment was explaining that negotiation is a stand-in for knowledge and efficiency. The comment I was replying to implies that bosses should just know exactly how valuable a specific employee potentially is. It's impossible, which is why you have to stand up for yourself.
This was actually my point. Wages have a large random component (negotiation might help the randomness but doesn't fix it). We need a decent lower limit, or else the lower tail of the random distribution leaves too many people as working poor.
Raising the artificial lower limit just shifts and compresses the lower tail and those just above it (see: wage compression), until the rest of the economy adjusts and pushes the rest of the wage distribution back to its original relative position. In the meantime, while that adjustment is happening, you've temporarily helped wages but hurt employment opportunities for people who need it most (the low wage people who can't sell themselves).
Interesting point about wage compression is how demoralizing it is. I've talked to employees who have first hand been subject to it. The general sentiment is "Why do I suddenly make the same amount as people who are less skilled and less experienced than me? I worked hard to get ahead. How is this fair?" And this sentiment was from very left progressive individuals.
On the other hand, you can make a man worth much more than any given amount by making it legal to create new bank balances out of thin air (central banking). This, too, deprives him of the right to earn the amount that his abilities and situation would permit him to earn, while forcing his community to continue to be subject to the services he did not earn on his own. In brief, for a high wage you substitute over-employment. You do harm all around, with no comparable compensation (though it will be pitched otherwise). Interesting disparities we have at opposite ends of the income scale.
I think you'd find that many people who would agree with the quote at the top of this thread will also agree that this is a bad idea as well (at the least, when used as you describe); your comment is an accurate description of an additional problem to be addressed.
1. Aren't the ones we're talking about here on Hacker News at the moment.
2. Don't nearly hurt the poor as much as the minimum wage does (after all, many people like it when we create money out of thin air, until it goes bust every few years).
Well, be specific about what you are complaining about, rather than vague and dramatic. "Vast income disparity" is not the same as "creating money out of thin air."
The government and the banking system effectively do create money out of thin air, through fractional reserve banking and encouraging the purchase of real estate with mortgages. Lots of people like that, even though there are lots of bad things about it. It's especially popular with people who would otherwise not be able to afford a home and who think that disparity of wealth is a problem.
"The Market is a perfect construct that certainly has never employed unscrupulous tactics in order to undercut the masses and pad the pockets of the privileged few" - people who make arguments like this
The community is not deprived. Seattle has determined that even the most moderate of services are worth $15/hour. And for all your fancy words, you haven’t addressed anything in the article that disagrees with you.
And finally, it is considered in poor taste to quote someone (in this case, Henry Hazlitt) without attribution. Hell, you couldn’t even be bothered to wrap it in quotations, implying that these are your own words. (This was the case before parent edited it.)
Correct. Raising minimum wage disenfranchises disabled and less productive workers from finding jobs and deprives them of the social engagement that accompanies work.
Outlawing slavery takes away a valuable cash infusion from folks who should be allowed to sell themselves and tap into their unrealized labor equity and potential future gains.
We should also allow the freedom to sell organs. Let's make America free again.
What do the models say? I'm not an economist but I always feel like decisions and debates like this are based mostly on people's limited ability to reason about a very complex system (and probably more so, their biases and personal interests).
A minimum wage is likely to have a complex and unexpected impact. So what can be modelled? What experiments have been done where we can simply observe the impact?
Also what are the goals and how are they prioritized? Do the rights of wealthy individuals to keep every penny of their earnings outweigh (I hate that I can't use 'trump' anymore) a societal goal of eliminating poverty or making sure the poor have a decent standard of living (health care, education, safety, etc)? Obviously everyone wants both these things (right?) but how are the weighted?
Aaagghhh!! (Our world is so far away from anything sane I just can't stand it this morning.)
The models say that a rising minimum wage would decrease demand for labour. Of course, how much it affects actual unemployment depends on how much labour was previously demanded and supplied. The thinking of course is that aggregate income among low earners makes up for the increased unemployment, and the extra spending power they have improves the economy as a whole, leading to less unemployment than a linear relationship between minimum wage and unemployment would suggest.
Edit - at the very end I should add, "assuming the demand for labour actually increases aggregate income for those workers affected". If a min wage hike is too severe or unemployment already too high, you might not be better off in the end.
More fundamentally, I wonder if this just boils down to an oversupply of inexpensive labor (or shortage of low skill work depending on your perspective)? Would be interesting to see what the models predicted if we removed a huge portion of cheap latino laborers that currently occupy almost all minimum wage jobs in every state I've lived in (CA and WA) in service and agriculture.
BTW, for people who are economists, are there models out there that are freely available where people can tweak variables like that? Would be fun as hell to play around with.
(Just to be clear, I am not a Trump supporter in general. Heh.)
Short version. A member of the San Jose teacher's association thinks one of two academic studies is wrong, because... we already have a consensus.
The one point raised in the article about multi-site employers is acknowledged by the article's favored Berkeley study: "some multi-site businesses report payroll and head counts separately for each of their locations, while others consolidate their data and provide information as if their business operated only at a single location."
Oh and by the way:
"This report was prepared at the request of the Office of the Mayor of Seattle."
If you'd like some real criticism of the UW study, the author of the Berkeley one has published a letter which goes over a lot of the methodological problems.
Here's the best points, I'd say the UW study is quite problematic.
The UW report excludes multi-site businesses from its dataset, which removes 48 percent of Seattle’s low-paid workforce out of their study.3 This major exclusion raises a big red caution flag about the representativeness of their sample and therefore about the interpretation of their findings. Yet the UW report provides essentially no evidence that their sample is representative of all jobs in Seattle and Washington.
In the UW data set, workers who leave a single-site business for a multi-site business to benefit from the higher wage mandate or because they received a better offer are not counted in the wage gains, but are counted in jobs lost. Seattle's policy essentially sets a higher minimum wage for all multi-site businesses, counting them as large employers.4 The exclusion of multi-site businesses, which is not standard in studies that use these data, may therefore create major biases in their results. Of course, some employees may move from multi-site businesses to single site businesses, but this mobility direction is likely to be smaller. It is not possible to estimate the size of this bias without access to the underlying data.
The UW report focuses only on jobs that had paid less than $19, which surprisingly is much too low. Table 3 of the UW report indicates that the number of jobs paying under $19 in all single-site businesses fell by about 6000 between 2014 and 2016. Yet the number of single-site jobs at all pay levels in Seattle increased by about 44,000 in the same period. This pattern of average higher pay and more employment appears also in food services: a decline of about 150 jobs paying under $19 from 20014 to 2016 and a simultaneous increase of about 4,500 jobs in all pay levels at single-site food service establishments.
These numbers represents very good news: Seattle’s pay levels and job numbers both went up, at least among single-site businesses. We want to know, though, how much of this upgrading in overall pay and employment at all pay levels can be attributed just to the minimum wage policy.
The UW report nonetheless finds an unprecedented impact of wage increases on jobs, ten times higher than the average in 942 published minimum wage and non-minimum wage estimates, and triple that of minimum wage critic David Neumark
I just want to point out something that I heard on NPR/Public Radio on my drive home the other night. Essentially the studies that have been done around Seattle show that $15 was probably too high, but when it was raised to $11 it had no noticeable effect.
Now of course, confidence in the studies matter, and I am going to assume the worst and that these studies weren't conducted in the same manner. But if the above holds true, the implications are immense.
It hasn't hit $15 yet. The current studies are on the increase to $13.
The studies when it was $11 didn't show no noticeable effect, they showed mixed effects. Basically, at $11, the studies suggested that it produced losers and winners, and the winners slightly outweighed the losers.
My thought as well. There needs to be experimentation for us to learn anything. That goes especially for economics, where you often get ideology instead of evidence.
It is incredibly difficult to experiment in economics because you can't control for a single variable. If I like minimum wage, I'll look for employment data during a boom to mask the negative effects. If I dislike it, I'll look for data during a bust. That's over simplifying, but it is why we have multiple studies both showing minimum wage helped and hurt.
Dube, Lester, Reich did a study that accounted for booms and busts by looking at a series of minimum wage increases across state borders between 1990 and the present.
> It’s not entirely clear why the University of Washington team gets such a weird result — since their data isn’t public, we can’t check it — but it’s worth noting at least two important issues with their study.
I cannot understand how economic studies are supposed to be credible when the data they use is not provided along with their methodology.
Is this for privacy reasons? If so, surely we can come up with obfuscation standards?
words missing from this article: 'delivery', 'outsource', 'manufacturing', 'offshore', 'manual labor'.
Seattle is the headquarters of starbucks (low-wage high-labor coffee shipped from overseas) and amazon (manufactured goods shipped from wherever). They can raise the minimum wage because a big piece of their economy is already happening elsewhere.
That's true of almost all extremely large companies, so I'm not sure I understand your point. Those two companies still only represent a small portion of the entire Seattle workforce.
I'm not talking about the people who work at sbux/amzn, I'm talking about the people who don't work in seattle because of import/export activity: factory workers and coffee growers.
Agreed. And that's the reason Seattle was able to raise their minimum wage without major disruption -- not because their economy doesn't rely on cheaper labor, but because they've outsourced it.
I'm not assigning a moral value to outsourcing, though I agree with intel founder Andy Grove that outsourcing high tech like chip fabs can backfire after a generation. Just making the point that raising wages is easy if cost of living / labor deltas has already offshored part of your economy.
But the point is moot because whether or not minimum wage is $8.00 or $15.00 we've offshored the major aspect or our labor to other countries. You aren't wrong, but it's moot. You're literally making an argument that we could have a $15.00/hr minimum wage everywhere in this country because most labor exists in China or other less developed nations.
You're right, but that's not exclusive to Seattle.
If I'm not mistaken the new minimum wage is not yet fully implemented and small businesses got a temporary reprieve.
As to WaPo: the new release of Google News finally lets you ban the news sources you don't like. After removing WaPo, HuffPo, CNN and NY Times, my news feed is borderline useful again. Thank you, Google!
So what's the difference now between getting your news from there or from Facebook? It sounds like Google News is going to be the same kind of echo chamber that other news sources become :(
Please don't take this as a criticism of your chosen (or dischosen) news sources, as I'm sure I can find someone replying to this thread who is removing the sources you like as well.
I don't use Facebook, so I wouldn't know. I've come to the conclusion that the function of the media has shifted over time from reporting news to just peddling narratives, all while also showing me irrelevant ads. So I shut off those news sources for which narrative peddling is the primary function. I would shut off Fox, but Google seems to not show anything from them even if they're not in block list. My news feed now mostly consists of science/tech and local news. I like it that way.
My take away has been that it is not clear beyond doubt that higher minimum wage is better in the long run. If both the studies had agreed that it is better, yes, it makes sense to enthusiastically adopt it. However if studies have results that dont match, then I think there is a reason for caution.
As far as what I understand, only Seattle adopted higher minimum wage, now many people with that minimum wage can get services (may be not directly, but in the supply chain) from other states which don't have the minimum wage which can give the impression that their life has improved. However, if the whole country adopts it, the parameters of that might be different.
I hope somebody sheds a light on wage dilution as well. If somebody was incentivized to learn a skill that pays them 20$ an hour, will that incentive still be there?
There's a complicated issue where theoretical predictions go one way and empirical evidence is mixed. Result: everyone looks at the studies that suggest they're right, and claims that they "debunk" the studies that suggest they're wrong. You get to look at all the weaknesses of the studies you don't like, and ignore the weaknesses of the studies you do like.
In this case of course the UW study was commissioned several years ago by the city of Seattle. Then, apparently, in mid-June, after seeing the results of the UW study (but before they were publicly released), the mayor of Seattle commissioned this second study, this time from UC Berkeley's IRLE.
(Why the IRLE? It certainly couldn't be because their previous work suggests that they very strongly believe the minimum wage has no disemployment effect.)
The IRLE's study said the minimum wage increase had no disemployment effect. Whew. Debunked and well refuted!
Just for fun, you can use this handy guide to see which study has been refuted:
- if you want the minimum wage to increase, then excluding multi-location businesses from their analysis obviously damns the UW study, and proves that their results can be ignored.
- if you don't want the minimum wage to increase, then including only food-service jobs in their analysis obviously damns the Berkeley study, and proves that their results can be ignored.
> In this case of course the UW study was commissioned several years ago by the city of Seattle. Then, apparently, in mid-June, after seeing the results of the UW study (but before they were publicly released), the mayor of Seattle commissioned this second study, this time from UC Berkeley's IRLE.
That's what really bugs me. They commission the UW study, they see the results, and then they commission this other study hurriedly to release six days before the UW study. If you keep asking the question until you get the results you want, you're going to get the results you want.
> There are many “questions” that are pretty much settled – evolution, global warming, homeopathy. But taking these as representative closes your mind and gives you a skewed picture of academia. On many issues, academics are just as divided as anyone else, and their arguments can be just as acrimonious as anyone else’s. The arguments usually take the form of one side publishing a study, the other side ripping the study apart and publishing their own study which they say is better, and the first side ripping the second study apart and arguing that their study was better all along.
This is a hack job, an out-and-out piece of propaganda trying to dismiss a study the author doesn't like the conclusions of.
> First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald’s don’t.
The UW report actually discusses this:
> Multi-location firms may respond differently to local minimum wage laws. On the one hand, firms with establishments inside and outside of the affected jurisdiction could more easily absorb the added labor costs from their affected locations, and thus would have less incentive to respond by changing their labor demand. On the other hand, such firms would have an easier time relocating work to their existing sites outside of the affected jurisdiction, and thus might reduce labor demand more than single-location businesses. Survey evidence collected in Seattle at the time of the first minimum wage increase, and again one year later, increase suggests that multi-location firms were in fact more likely to plan and implement staff reductions. Our employment results may therefore be biased towards zero.
It's irresponsible to criticize the report for not including multi-site employees without mentioning the conclusions of this survey data.
> Second, the University of Washington team does not present enough data for us to assess the validity of its “synthetic control” in Washington — that is, the set of areas to which they compare the results they observe in Seattle.
The synthetic controls are probably the most complicated part of the report, and the part that seems the most open to criticism. But the UW report used two different controls for for changes in employment, and both of them lead to similar conclusions about the effects of the minimum wage. It's possible that there are other synthetic controls that yield different results. The WaPo article says that the "Berkely researchers take a better approach" to synthetic controls, but doesn't note that the UW study can't use that approach because the data that enabled the UW study isn't collected nationally.
Also, saying "the new studys' findings are out of step with a large body of research" ignores that the UW paper duplicated the findings of that large body of research, and discussed how the more expressive dataset they had (being able to actually identify low-income workers instead of using a proxy like "restaraunt workers" or "teenagers" is the biggest difference between this and other studies) leads them to different conclusions. And saying the UW study has "important limitations," but not saying the same thing about the Berkely study, which was only able to look at workers in one sector (restaraunts), is a pretty clear indicator of where the author's sympathies lie.
1) The higher it gets the more likely and quicker the minimum wage jobs will be replaced by AI/robots/automation.
2) The cost gets passed on to the consumer. So if everything costs more and everyone is paying more in taxes, that's not good either. Some companies may keep prices the same and take from profits, but the lower the margins, the less attractive creating and running a business becomes.
3) What works in one area like Seattle won't necessarily work across the country. There has to be a sweet spot in each area and we have to be honest with ourselves to say that the feel-goodness of a higher minimum wage does have its limits. And that limit is what we are debating. We don't need to do a study to know that a $50/hr minimum wage is unreasonable.
In any given city, what minimum wage provides fairness for individuals, businesses AND the local economy as a whole? And how can we develop a model framework for cities across the country to use?
Except it's already like that. If we don't pay workers a living wage they have to use our social safety net programs, such as food stamps. Those programs are funded by the tax payer. So basically the tax payers are already subsidizing companies like Walmart so they don't have to pay a full living wage to their employees. If those companies paid them a full wage the taxpayers would pay less for social welfare programs. I'm also not that sympathetic to the plight of companies like McDonald's when it is earning in excess of $4B in profit in a year.
Obviously, what counts as a fair wage will depend on the local cost of living.
That's a good insight. I agree with that point and think every city should propose laws that support a living wage. We just need to understand what that living wage should be in any given city and consider a variety of factors, some short term and some long term.
> If those companies paid them a full wage the taxpayers would pay less for social welfare programs.
Maybe. That assumes the poverty line stays the same and nothing happens with the price of other goods those minimum wage earners need to buy. It also assumes there's no impact on 1) number of jobs and 2) number of hours and thus total income as the UW study discusses.
As long as part time employee is allowed you cannot guarantee an income for any given job. So a min. hourly wage doesn't definitively solve the problem of mandating a fair wage as we are discussing.
> I'm also not that sympathetic to the plight of companies like McDonald's when it is earning in excess of $4B in profit in a year.
Me either. But McDonalds has already shown a long time ago that they can eliminate min. wage jobs and/or hours by getting consumers to throw away their trash and fill up their own drinks. This is part of the consideration #1 I mentioned.
> The cost gets passed on to the consumer. So if everything costs more
What you are describing is a mythical concept that in economics is called the "price/wage spiral." This is not what actually happens (indeed one of Friedman's central theses was that inflation is driven by monetary policy and not by wage increases or increases in the price of natural resources). There are a bunch of factors that come into play - in a competitive market the salary increases would not be passed on to the consumer but would come from the profit of the business owners, increased automation, product and service substitution, etc.
I mentioned it could come from the profit too. If you're a business owner you can forego your margins to account for added costs and run it the exact same. Some businesses like cosmetics have a lot of room to play with. Some don't and it becomes less attractive to be a business owner, having employees, legal risks, lines of credit, etc.
However, many businesses simply respond by upping the price on their menu or adding a surcharge. The price the consumer pays for the same good they received before is now higher. How is that mythical?
The myth is the relationship between the price increase and wage increase. There are more cost inputs than just labor and of course the consideration of profits.
It's true the price of goods may rise, but relative to the increase in wages to workers, it will be a net win for redistributing wealth to the lowest earners, with the cost born by the variety of cost inputs (and profit) for the business.
The second argument is that shifting money towards the lowest earning group will stimulate economic activity and unlock more wealth potential for the local market, thereby in some ways compensating for the increased prices by bringing more prosperity for all.
That's not to argue that increasing wages always results this way, just like one would not argue that you can boost the economy by simply reducing or abolishing the min. wage.
Labor is usually the #1 cost for most businesses. Many businesses have slim margins already.
The average net profit margin for privately held companies across all industries was 8.6%, manufacturing was 6% and retail trade was 3.9%. [1]. Grocery stores are 2.5% and gas stations are 2.4%. [2]
Not everyone can keep prices the same and forego profit to pay for more costs, especially when other costs have risen dramatically like healthcare. Many businesses and employers of minimum wage people are already in slim margin territory as evidenced above.
> It's true the price of goods may rise, but relative to the increase in wages to workers, it will be a net win for redistributing wealth to the lowest earners, with the cost born by the variety of cost inputs (and profit) for the business.
I agree and think $15/hr is a reasonable step, esp. in an expensive city like Seattle. But my point is that every city is different, there's a lot to consider, and there's a lot we don't yet know.
> The second argument is that shifting money towards the lowest earning group will stimulate economic activity and unlock more wealth potential for the local market, thereby in some ways compensating for the increased prices by bringing more prosperity for all.
Perhaps. But it could also result in pushing workers outside the city to suburbs where they have lower costs. They'll make their money in the city and spend it outside where goods are already cheaper. Or maybe they'll pay their debt instead (student/auto/etc).
> many businesses simply respond by upping the price
Which should be "some" businesses for "some" products. The price/wage spiral is mythical because it does not occur in reality - not "everything costs more," only certain products and services will increase in price. Inflation of the kind you are talking about is caused by monetary policy. Your second argument is a common logical fallacy that is trotted out by many opponents to minimum wage increases.
Oh yes I see now. I shouldn't have written everything as I mentioned that foregoing profit is an option too. Thanks for clarifying.
> in a competitive market the salary increases would not be passed on to the consumer but would come from the profit of the business owners
I still don't agree here. Very few people run a business to break even and it's hard to make even 10% net after taxes these days. The huge profits you see for public companies do not translate to the bulk of employers. If a business owner can pass it on to the customer by raising the prices or adding a surcharge they will. As an example, I've seen health care surcharges for waiters on San Fran restaurant bills before.
If they can't pass the added cost onto the consumer and they have low margins, it's unattractive to keep the business running with all the headaches and liability. Or they'll outsource in response or possibly cut hours of hourly employees and demand more from salaried. Or move to another state or country.
I do think a min wage hike of a reasonable amount will do no harm and will improve a lot of people's lives. The levels we are currently talking about probably won't affect most businesses or economies and that the opposition is probably overblown. I support Seattle's move. But I think it's silly to suggest that you can hike it to whatever you want and the theories from economists will align and the consumer won't pay more; that it just comes from profits and that won't affect anything.
It's not as simple as "everything will be fine, businesses will just take it from profits". And it's not as simple as "it seems to work in Seattle; we know exactly how it will play out even though we're doing it during a boom and only have a few studies to go off".
> But I think it's silly to suggest that you can hike it to whatever you want and the theories from economists will align and the consumer won't pay more; that it just comes from profits and that won't affect anything.
Well neither me nor the economists suggest that. For a given money supply, a marginal increase in minimum wage will act as wealth redistribution as long as there are profits to redistribute. On average a single worker can only do a fixed amount of workW, so a business that needs a minimum amount of work Z done to be viable needs to employ at least N = Z / W people. At some point on the increasing wage scale the profits run out and you cannot employ the minimum number of workers and the business is forced to close. At that point the only alternative is to increase the money supply, which is where inflation and general price increases will come from.
Note that the wealth redistribution is aggregate: the minimum wage increases are intended to redistribute wealth to the lower-middle class. There will be less jobs (I am surprised there was not more job loss found in these studies), but the total amount of money going to minimum-wage employees will increase.
Businesses that rely on exploiting workers to be viable should go bankrupt. Suppressing wages to prop up otherwise unviable businesses is a slippery slope that ends up at "well, at least we feed the slaves."
Unpaid interns effectively pay transportation and other associated costs. I've always insisted on paying a little bit to kids who come in to shadow us, and something a bit more substantial for kids who actually sit and do useful work.
Publishing analysis/perspective/opinion pieces with different spin on the same underlying news isn't uncommon in publications that aren't simple ideological propaganda mills.
I feel one of the real issues is incentivizing publicly traded companies to beat pressure from Wall street to keep cutting costs and workers be damned attitude. It might be worthwhile to experiment $30 per hour wages for all publicly listed and big companies, including temp workers.
Overall it is better for someone to work 4h at $30 instead of 8h at $15.
Next week there will be a study refuting the MIT study, then another refuting that study, back and forth. It seems no matter the study academia publishes, and how much it is lauded for its clarity, breadth, and quality, another study will come along ripping it to shreds that another group will heap praise upon.
You're saying that like it's a bad thing, but so long as each new study is honest criticism of the previous study or brings new information to the table, that sounds like exactly how big questions like this should be handled.
Fair point. I don't mean it to sound like a bad thing, but I understand and accept that research and science can be bought. For every study supporting something, another study could be done that refutes it. Especially in such a politically charged atmosphere and issue, it gets hard to trust one source over the other. I trust the MIT study more than the UW study, but someone else probably has the completely opposite viewpoint.
The average home price in Seattle is over $670,000.[1] This requires a salary of $182,000 per year [2] or $87.50 dollars per hour. At $15 per hour, a full-time worker cannot afford a house in Seattle. Therefore, to avoid the injustice of a homeless, full-time worker, the minimum wage should raised to at least $87.50 per hour.
$670,000 is the average home price, not the minimum home price, so you're chasing the wrong goal.
I would also argue that chasing home ownership for everyone, in a city, is the wrong goal. I don't care about owning a home, I care about saving for retirement, and living in a home that's adequate for my family. Home ownership is great for some, I encourage it, but let's not pretend that it's the only way to live.
Until you start seeing low-income people in Seattle and around the country taking to the streets to demand lower minimum wages, don’t listen to anyone who tries to tell you otherwise.
The article ending on this note kind of soured the whole thing. The average person will be perfectly okay with higher wages so long as they don't take into account things like inflation and other knock-on effects - and most won't, because those effects are subtle over time.
The money's gotta come from somewhere at the end of the day. And if the company doesn't want to or can't raise prices (franchises are especially hit by this, since a lot of their pricing flexibility is dictated by a corporate office), the next thing to be cut will always be labor.
It's not just a matter of having less people, it's also a matter of having less full timers (which saves on various costs as well as lessens the likelihood of unintentional overtime). Great flexibility for the business, sucks for the employee.
I don't think you understood what OP said. He said franchisees do not have the luxury of raising their prices by 10% as their prices are usually out of their control.
It's within a few percentage points. I recall as a teen that McD's corporate came down on my store for running some kind of insane loss leader promotion like selling burgers for 50c one day a week. Apparently they made the money back on volume and addon purchases, but they had to stop it anyways.
Corporate doesn't like you undercutting and essentially openly competing with the other franchisees in the same general area, but they adjust prices based on local cost of living.
The whole idea is if there are two McDonald's near eachother, and one is known locally as "the good McDonald's", the other is therefore "the bad McDonald's". They don't want any "bad Mcdonald's".
> you can make up the difference by increasing prices by 10%
LOL. Beautiful. Just beautiful. With no insight what so ever into the profit margins for a business, you've managed to solve all the Corporate world's problems. LMAO!
Its obviously an oversimplification. In fact 20% of gross costs being minimum wage labor is arbitrary and high as is an increase in minimum wage by 50%.
The point was to demonstrate that even in the case of a massive sudden increase in the minimum wage in an industry where unskilled labor makes up a pretty damn big portion of costs that the price increase that would pay for 100% of that pay increase was comparatively quite modest.
For example McDonald's is almost the quintessential low skill job and a McDs franchise can easily pay 20% of its costs to labor. In fact the average mcdonalds employee is paid $10 an hour.
Raising rates is one option, accepting lower margins is another if your margins are such that you can keep the doors open. Slashing labor as you have suggested is an unreasonable suggestion because the relationship as stated above isn't linear. In order to make up for labor going up by 50% you would have to slash your labor hours by 33% which is unsustainable.
Basically the gist of the matter is that I don't possess nor claim specific insight into a particular business in this post.
I'm saying that elementary school math can show that slashing labor is an unreasonable reaction that nobody will do because they when faced with the same scenario will be fully capable of doing the math.
I'm not here to solve all the corporate worlds problems I'm here specifically to refute your post.
Remember reading an article in Forbes back in the '80s that cited a study comparing the profitability of McDonalds franchises that paid minimum wage, and those that paid somewhat higher. Guess which were more profitable? The ones who paid higher wages.
Did the study consider the possibility of confounding factors? For example, I'd expect McDonald's locations in wealthier areas to pay higher wages because labor is in higher demand, and be more profitable because their client base is larger.
Did the study determine which way the relationship went though? Only McDonalds that are making a profit will be able to afford to pay more than minimum wage, a struggling one will obviously not be able to do that very easily.
I like to think this is because the workers are more inspired to work harder to "earn their keep". I'd say it's more likely the boss is keeping a closer eye on the workers' productivity and insists upon a bit more effort. I think it's a win-win but my lack of faith in humanity (read: cynicism) causes me to worry about those not interested in putting that much effort into a "minimum wage job".
I understand the perceived need for something like a $15 minimum wage but as a guy who has always considered himself quite benevolent when paying subcontractors their actual value, I have a hard time swallowing the whole deal. Again, probably my own shortcomings but it would be interesting to understand how this might affect the attitudes of your typical "minimum wage worker".
At what point does the law of diminishing returns kick in, though? McDonalds fries are good, but not THAT good, so at some point it's just not worth going there any more.
A lot of people are getting fired due to increased minimum wage. The employers will take their money and pay it to you and me to build automated solutions that do what the now-too-expensive people once did. That's what McDonalds is finally doing with self-order kiosks.
Whether any government mandated minimum wage boost "works", depends upon who you are. Who benefits from it?
If you are currently in a minimum wage job, you may benefit. You're making more money, because the government says so! (But your employer might just decide wage costs are too high and lay you off...)
If you are unemployed and looking for a minimum wage job, the bar just got raised. The higher the minimum wage is set, the harder employers look at how badly they need the work done. The job they might be willing to pay $10/hour for might not be worth $15/hour to them. Your quest to get a minimum wage job just got harder.
And if you are willing to accept less money, because some money is better than none, it doesn't help you, because employers aren't legally permitted to pay you less, even if you would be happy to accept it. So you likely get a substantial underground economy of "off the books" employees, getting paid in cash that doesn't get reported to the government. And those folks may actually take home more than minimum wage employees because taxes don't get deducted from their wages.
(I live in the NY metropolitan area. I see a lot of that. And there are employers who would pay the higher minimum wage, but the employees don't want to be on the books. Many are undocumented aliens, and being on the books leaves a trail pointing to them and possible deportation.)
If you are the government that mandated the higher minimum wage, you might not benefit financially, because the amount of taxes you see is less than what you might see if minimum wage was lower and more people had minimum wage jobs. (Of course, for government who do this, it's about getting votes, and impact on tax revenue isn't a consideration.)
And bear in mind that what the employee gets in a minimum wage job is rather less than what the employer has to spend. The employer must deduct and remit taxes, and must maintain the appropriate records for legal purposes, and that costs money.
Ultimately, "it takes two to tango". There must be workers looking for minimum wage jobs, and employers offering them. The government can't require employers to hire workers they don't need, and increases in minimum wage will tend to decrease the number of minimum wage jobs available.
Ultimately, minimum wage increases have the effect of decreasing total employment, but this seems to get missed in such discussions.
The goal of minimum wage increases is to insure workers can make a survivable income. But value is relative - something is worth what someone else is willing to pay for it, and that includes the worker's labor. Minimum wage jobs are minimum wage for a reason. They are low skilled/unskilled labor, and what the worker does simply isn't worth that much to those who need it done. What the minimum wage folks need is to be able to acquire the knowledge and skills that are worth more to employers and be able to get better jobs. Increases in minimum wage by themselves don't aid that.
We are seeing all sorts of commentary elsewhere about job losses to automation. The only reason many minimum wage jobs still exist is because it's more expensive up front to automate them than employers want to spend. At some point, minimum wage boosts might just make it worth the employer's while to spend the money needed to automate those jobs. Then what do the job seekers do?
The existence of this Washington Post article was determined yesterday by the existence of an article critical of Seattle's minimum wage in the Wall Street Journal. Andrey Markov is sleeping soundly in his grave.
Conspiracy theories aside, WaPo published the initial release of the working paper yesterday (June 26) with a favorable headline:
A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals [1]
Welcome to the modern news cycle, where alternative realities are only a click away! Sit back and enjoy your daily deluge into the fantasies of some revenue-pressured writer seeking to capitalize on the latest zeitgeists us citizens consume each day as if they are fact.
"Using a variety of methods to analyze employment in
all sectors paying below a specified real hourly rate, we conclude that the second wage increase
to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such
jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that
the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per
month in 2016"
WaPo is being contradicted by a recent report from the National Bureau of Economic Research...
I typically avoid this, as the HN guidelines specifically say not to, but you didn’t read the article, did you? I say this only because the WaPo article, by my reading, is a direct response TO THE VERY ARTICLE YOU REFERENCE.
Sadly no... The Washington Post is explicitly writing about and refers directly to the paper you mentioned in the First paragraph, Last sentence:
Yet the release of a new study this week from a group of researchers at the University of Washington has brought opponents of minimum wage increases out of the woodwork again.
or noticing that all of the NBER writers are from UW, or that their data set is a confidential data set from the Washington Employment Security Department etc, etc...
I have a contractor for one of my companies that I pay $20/hr for doing mostly CMS edits. She's been pressuring me for more hours. We asked her to get more acquainted with Snapchat and other things to get more hours but she pushed back.
We gave her a way to get more hours but she only wanted the easy ones that she already knew. If her rate was less, I'd have her do more things. Time to part ways unfortunately.
I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions. Obviously the UW study has flaws. Let's give economists a little time to figure out WHY the results are so different from previous studies before we draw any conclusions.