
Seattle votes for $15 minimum wage - dan_bk
http://www.bbc.com/news/world-us-canada-27674474
======
literalusername
SeaTac raised it to $15 at the beginning of 2014, and they're already seeing
regrettable consequences.

    
    
        “Are you happy with the $15 wage?” I asked the full-time cleaning
        lady.
    
        “It sounds good, but it’s not good,” the woman said.
    
        “Why?” I asked.
    
        “I lost my 401k, health insurance, paid holiday, and vacation,”
        she responded. “No more free food,” she added.
    
        The hotel used to feed her. Now, she has to bring her own food.
        Also, no overtime, she said. She used to work extra hours and
        received overtime pay.
    
        What else? I asked.
    
        “I have to pay for parking,” she said.
    
        I then asked the part-time waitress, who was part of 
        the catering staff.
    
        “Yes, I’ve got $15 an hour, but all my tips are now much less,”
        she said. Before the new wage law was implemented, her hourly
        wage was $7. But her tips added to more than $15 an hour. Yes,
        she used to receive free food and parking. Now, she has to
        bring her own food and pay for parking.
    

[http://www.unitedliberty.org/articles/17751-warning-to-
seatt...](http://www.unitedliberty.org/articles/17751-warning-to-seattle-
seatac-businesses-slashing-benefits-overtime-in-wake-of-wage-hike)

~~~
illumen
This is not a good study. They are a couple of anecdotes, for all we know
cherry picked to promote the views of rich people trying to make more money
off poor people.

Also, I'm not sure a cleaning lady, and a waitress are even qualified to
figure out their financial situation. Especially since functional illiteracy,
and innumeracy in that region is around 40%.

How do we know that the companies didn't use this situation to take away the
benefits and blame it on the minimum wage laws? It sounds like a typical
negotiation tactic pulled on the powerless. Sure, the managers need to come up
with more money to balance the budget. Taking less profit, or increasing
efficiency, or charging more are harder than simply taking away benefits from
easily replaced low skilled workers.

~~~
yummyfajitas
If their workers were powerless, why wait for a minimum wage increase to take
away benefits?

~~~
bakhy
because it gives a good cover. workers sometimes get outraged, go on strikes.
a good excuse is worth gold.

~~~
yummyfajitas
Why would a profit maximizer care about the feelings or actions of a powerless
person?

It's almost as if workers and employers are both consenting adults, capable of
entering into or rejecting a transaction if it isn't mutually agreeable.

~~~
bakhy
that's if you insist on painting it black and white. reality is,
unfortunately, somewhat complex.

anyway, your question is already answered in the post above. you do know what
a strike is?

furthermore, many workers are theoretically capable of exiting such an
agreement at will, but in reality they have little choice. work in one lousy
job or another, or starve. which would you choose?

~~~
yummyfajitas
If the strike is harmful to the employer, then employees are not powerless.
Which is the point I'm making.

 _work in one lousy job or another, or starve._

If we are discussing the US, the choices are enjoy consumption of $20k/year
funded by the government or enjoy consumption of $20k/year funded by earned
income.

ftp://ftp.bls.gov/pub/special.requests/ce/standard/2009/income.txt

~~~
bakhy
there is a big space between powerful and powerless, which is the point i am
making. in your trolling you are grossly oversimplifying things, i can only
presume in order to further some personal goals of yours, but reality is that
life in these situations is not such a walk in the park as your condescending
tone would have us believe. organizing strikes, negotiating some form of
collective bargain, these are hard battles, which in the past have known even
to cost people lives. this is, i suspect, exactly why the new right-wing,
corporate-funded flavor of libertarianism advocates this approach.

------
digitalengineer
A minimum wage would stop companies indirectly sucking the 'welfare-tit',
where their employees are forced to have welfare/food stamps in order to just
survive.
[http://www.theguardian.com/commentisfree/2013/oct/30/mcdonal...](http://www.theguardian.com/commentisfree/2013/oct/30/mcdonalds-
helpline-food-stamps-minimum-wage)

~~~
zo1
Probably would, but it's really just shifting the costs elsewhere. With the
"welfare-tit" as you call it, the taxpayers are paying the cost of the poor
_ish_ via welfare paid for by taxes. But when you increase the minimum wage,
it'd end up just shifting the costs to higher overall prices, which everyone
will bear... _including_ the poor it's meant to help. I suppose you could
argue that this _might_ cut into business owners' profits, but that's a
stretch. As they'd most likely just raise prices to cover the new operating
costs.

~~~
whimsy
• Studies of the impact of minimum wage increases on restaurants’ operating
costs find that an increase of 10 percent in the minimum wage increases
operating costs by about 1 to 2 percent.

• Researchers find small one-time price increases in the restaurant industry
(of about 0.7 percent following a 10 percent minimum wage increase), but not
in other industries.

from "University of California, Berkeley study: Who Would be Affected by an
Increase in Seattle’s Minimum Wage?" which is one of the two pieces of
research commissioned in the development of the Seattle ordinance.[1] The
research explored empirical evidence provided by similar minimum-wage increase
ordinances in other cities. (9 total, I believe, including San Francisco.)

[1] [http://murray.seattle.gov/wp-content/uploads/2014/03/UC-
Berk...](http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berkeley-
IIAC-Report-3-20-2014.pdf)

~~~
zo1
Okay, and? We all know that operating costs will rise if the wages paid to
employees goes up. The question is, how will those cost increases be paid for.
Less profit, higher price of service/product? Not to mention that a 1-2% in
operating cost could be a drastic reduction in profit, or increase in price.
It depends on the business. And the proposed increase is 100%, not 10% as
cited in the article so can we assume that "operating costs will go up by
10-20%? Not sure.

------
twelvechairs
In Australia our minimum wage is $16.37 and $20.30 for casual work (no fixed
hours). I think the gap to the usa minimum wages has generally narrowed over
the last decade or so. The other side is that tipping in most forms is rare.
Maybe a little less so now though

------
vixin
Evidently Seattle businesses are very productive and able to readily achieve
profits over and above the $600+ a week (8h/d) cost of employing someone ( "+"
means that I don't know what the overhead costs are). Rather tough on those
whose energy and skills do not warrant employing them at that rate. The
alternative for borderline businesses is to find ways of not employing anyone
at all.

~~~
zo1
> " _Rather tough on those whose energy and skills do not warrant employing
> them at that rate. The alternative for borderline businesses is to find ways
> of not employing anyone at all._ " That's the dirty little secret that no
> one wants to talk about when it comes to the minimum wage. Especially in
> discussions where everyone is compelled to make feel-good arguments in
> support of stuff, without thinking of the long-term consequences.

Sure, we'd all like it if all people could live comfortably, and it is a noble
goal. But the minimum wage is not the way to do it.

~~~
whimsy
It would be an interesting and compelling secret if there was evidence for
this occurring. Research indicates that it's simply untrue.

"A larger body of economic research investigates the effects of state and
federal minimum wage increases. These studies compare employment trends for
states or counties that have different minimum wages. The best studies make
comparisons to nearby states or counties to control for regional economic
trends. _These studies also find no statistically significant negative effects
on employment or hours at an aggregate level or for low-wage industries such
as restaurants and retail stores, or for specific groups of workers such as
teens._ These studies also do not find substitution effects (such as shifts in
hiring away from black and Latino teens)."

...

"In a prospective study of the San Francisco minimum wage, Reich and Laitinen
(2003) carried out a representative survey of establishments. They estimated
that a 25.9 percent increase in the minimum wage from $6.75 to $8.50 would
result in a 1.1 percent increase in the overall wage bill. When viewed from
the perspective of operating costs, a 26 percent increase would result in 82.0
percent of establishments experiencing an increase in operating costs of less
than 1 percent or more, and _95.2 percent experiencing an increase in
operating costs of less than 5 percent._ Breaking down results by industry,
they estimated that 17.9 percent of restaurants would experience an increase
in operating costs of 5 percent or more, as would 8.6 percent of retail
establishments. For manufacturing, entertainment, hotel, and personal service
firms, the estimated increase in operating costs was close to zero.

Pollin (2004) similarly estimated that the average increase in firms’ costs
relative to sales under Santa Fe’s 2003 minimum wage ordinance would be 1
percent; the average cost increase for hotels relative to sales would be 3
percent.

Benner and Jayaraman (2012) analyzed the impact of a proposed increase in the
federal minimum wage from $7.25 to $10.10 (a 39 percent increase, not
accounting for inflation during the phase-in) on the food industry. They
estimated a maximum increase in operating costs for the food service and
drinking establishment industry of 2.25 percent over three years, and 1
percent in the retail food industry. "

from "University of California, Berkeley study: Who Would be Affected by an
Increase in Seattle’s Minimum Wage?"[1], one of the pieces of research
commissioned during the development of the Seattle ordinance. "This research
was based on nine localities in the United States currently have enacted
minimum wage laws: Albuquerque, NM; Bernalillo County, NM; Montgomery County,
MD; Prince George's County, MD; San Francisco, CA; San Jose, CA; Santa Fe, NM;
Santa Fe County, NM; and Washington DC."

[http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf](http://murray.seattle.gov/minimumwage/#sthash.u0fx1kth.dpuf)

------
arm55
At worst, this is a great experiment. This will likely cause a substantial
enough gap in pay between Seattle and another similar city that we can analyze
the benefits and consequences of artificially increasing min wage.

~~~
jeffdavis
I thought the same thing at first.

But to analyze it as an experiment, you really need to determine some
objective criteria for success and failure. Each individual may have different
criteria, but it's important to come up with the criteria _first_ and then
compare them to the results later.

Even then, it's unlikely to change many minds. With the economy, it's too easy
to find some exceptional event that you can blame for the results not matching
your prediction.

I think we just have to accept that science can't answer everything, and the
economy is probably one of those things that can't be answered.

~~~
whimsy
Well, the primary goal is, of course, to raise the income of minimum-wage
earners. Failure criteria probably include things like a) a marked increase in
businesses that rely on minimum-wage earners going out of business relative to
other and/or b) a marked increase in unemployment among minimum-wage earners.
I don't know what thresholds are reasonable. (Possibly confounding: as minimum
wage increases, the available labor pool will also increase.)

In the case of Seattle, they commissioned two pieces of research for this
ordinance:

UW Evans School of Public Affairs study: Local Minimum Wage Laws: Impacts on
Workers, Families and Businesses [1] University of California, Berkeley study:
Who Would be Affected by an Increase in Seattle’s Minimum Wage? [2]

The second paper addresses a lot of the questions I suspect you're interested,
and it addresses them with empirical evidence based on previous such
experiments in other cities.

[1] [http://murray.seattle.gov/wp-
content/uploads/2014/03/Evans-r...](http://murray.seattle.gov/wp-
content/uploads/2014/03/Evans-report-3_21_14-+-appdx.pdf) [2]
[http://murray.seattle.gov/wp-content/uploads/2014/03/UC-
Berk...](http://murray.seattle.gov/wp-content/uploads/2014/03/UC-Berkeley-
IIAC-Report-3-20-2014.pdf)

------
bakhy
the most incredible libertarian assumption is that all companies operate in
such a way that the smallest hike in pay absolutely must result in cutbacks
elsewhere. apparently, no company is making any profit! :D

~~~
glenra
One "libertarian assumption" is that it's worth doing a little math to figure
these sorts of things out. Usually if you do that math you will discover that
neither profits nor high top salaries are anywhere near large enough that
companies could merely absorb the higher cost out of either or both.
(Incidentally, a raise to $15/hour is quite a lot more than "the smallest hike
in pay".)

But hey, just for the sake of argument let's pretend you COULD take it out of
profits. Here's where you run into a related assumption which is one of the
basic rules of economics: _change happens on the margin_. Suppose that the
entirety of the McDonalds chain as a whole is profitable. For simplicity we'll
ignore the fact that the individual stores are mostly franchises and pretend
they're all company-owned. The chain is not _uniformly_ profitable! Some
outlets are _very_ profitable and others are just barely scraping by. When you
increase the cost of labor the outlets that were _very_ profitable are still
worth running even with the new cost of labor, but the outlets that were only
_slightly_ profitable before are now losing money.

Those are the outlets that close.

Restaurants that will lose money every year with the higher wage aren't worth
keeping open. _shifts_ that lose money at the higher wage also aren't worth
keeping open, so hours of work tend to get cut back too. You don't lose jobs
at every store or uniformly, but you do lose _marginal_ jobs that did exist or
that would exist were it not for the new wage.

Overall, the chain will survive, but it has to shrink back in order to do so.
In order to argue that it doesn't, you'd need to believe not just that the
company overall is making (a lot of) profit, but that EVERY individual outlet
is making the same share of that profit, so they're all worth keeping around
post-change.

~~~
bakhy
in my experience with libertarians so far, they are most disinclined to do any
math. i don't see any math here either. there is a study mentioned a lot in
the comments here which refutes this argumentation.

as for the argumentation - it is again the same thing! instead of "whole
company", you moved to topic into "individual branches", but it is still the
same - apparently, a huge number of workers is employed in places with zero
profit, be it whole companies or just branches. this is an incredible claim.
why would we accept that workers in highly successful branches should get
underpaid, just so that a couple of barely profitable branches could remain
open?

everyone needs work. and low-skilled workers come in large numbers. any
manager not aware of this, and how it enables him or her to pay the workers as
little as possible, is a fool! management will pay the least amount possible,
since replacement workers are readily available. this is why an increase in
minimum wage will not produce nowhere near a proportionate response in lost
jobs.

~~~
glenra
> _in my experience with libertarians so far, they are most disinclined to do
> any math. i don 't see any math here either._

Fine. Suppose we want to increase the minimum wage by at least $5/hour. Let's
see if that's possible without "cutting back":

McDonald's has 1,800,000 employees and makes 5.46 billion in profit. Divide
the latter by the former and you'll see that their profit is $3,033/employee.
If they gave ALL the profit to the workers in the form of higher wages and
divided it equally among the workers, that's how much of a raise they could
afford to give without doing any "cutting back": ~$3k/year.

A 40 hour workweek is about 2000 hours per year, so that means if they didn't
save ANY profit to give back to investors or invest in the growth of the
business or set aside against losses in bad years, out of profits they could
afford to give their full-time workers a raise of: $1.50/hour.

Any more than that, and they have to cut back.

But wait, you say! What about bloated CEO salaries?

Huffington post says the incoming CEO of McDonalds recently got paid ~$14
million and the outgoing one got ~$28 million. (source:
[http://www.huffingtonpost.com/2013/04/12/mcdonalds-ceo-
pay_n...](http://www.huffingtonpost.com/2013/04/12/mcdonalds-ceo-
pay_n_3070833.html) ). Let's add those together and round the total WAY up to
$50 million dollars. Let's assume they can save $50 million dollars by not
paying CEOs or ex-CEOs (and a couple other high administrators) anything, and
distribute the savings to the workers as higher salary.

$50 million / 1.8 million = $27.8. So by eliminating those top salaries we
could give every worker an extra 27.8 dollars per YEAR. Divide that by 2000
and you'll see we can afford to give each full-time worker an additional raise
of roughly: 1.4 CENTS per hour.

Conclusion: doubling the minimum wage (or bumping it by $5, or anything in
that ballpark) can't be done out of profits or out of cutting top salaries.
Raising the minimum by more than a dollar or two would render the overall firm
unprofitable.

~~~
bakhy
hm, interesting calculation. however, isn't McDonalds a franchise? where did
these numbers come from?

also, i am not that crazy to think that this would not cause ANY cutbacks. the
money does indeed have to come from somewhere. it's just that there would be
nowhere near a proportionate response in firings compared to the increase in
the life quality of the people affected, and also in the consumption driven by
their new incomes.

ultimately, this is like a collective bargain on a wider scale, supported by
the democratic process in Seattle. it is correcting for the unfavorable effect
of market forces on the pay of uneducated workers. due to their abundance, the
downward pressure on the pay of this category of workers can only be stopped
by minimum wage or social security.

EDIT - i've been googling around, and found a much lower number of employees,
440k employees (source: [http://www.macroaxis.com/invest/market/MCD--
McDonalds-Corp](http://www.macroaxis.com/invest/market/MCD--McDonalds-Corp) \-
don't know how reliable..) which, following your calculation through, gives ~
$6 net income per employee hour. also, another point is flat out ignored -
prices can be increased, shifting part of this burden to the end consumer,
which in the end only seems just. any business that is already giving a fair
wage to it's workers is being driven out of business by competition exploiting
lack of minimum wage rules and abundance of low skilled labor.

EDIT 2 - Also, the crucial problem with executive pay is not so much that
people think that from their pay some huge increases in workers' pay could be
given, it's in the purely subjective feeling of injustice, when on one side
managers are showered with millions (and I presume McDonalds has more than
just 1), while workers are given advice on how to get food stamps. this quite
understandably pisses people off.

EDIT 3 - Sorry for all the edits :D Another thing worth noting is that it
seems very unlikely that ALL McDonalds employees are working on a minimum
wage. This would also reduce the effect of minimum wage hike on their profits.

~~~
glenra
I initially got the numbers from the right-side box here:
[https://en.wikipedia.org/wiki/McDonald's](https://en.wikipedia.org/wiki/McDonald's)

The larger number I used includes as "employees" people who work for non-
company-owned franchises and licensees; I believe your smaller number is only
counting workers at the _company-owned_ outlets (not franchises or licensees),
so your number should be about 19% of mine, give or take (source for that 19%
number is the last line on this page:
[http://www.aboutmcdonalds.com/mcd/investors/company_profile....](http://www.aboutmcdonalds.com/mcd/investors/company_profile.html)
)

(Incidentally McDonald's suggests it has 761,000 "employees" here - I suspect
that's a US-only number:
[http://www.mcdonalds.com/us/en/careers.html](http://www.mcdonalds.com/us/en/careers.html)
)

> _another point is flat out ignored - prices can be increased_

Actually they can't. I assume prices currently are set at levels that roughly
maximize the firm's profits. If McDonalds could earn significantly more money
by charging more they would have _already_ raised the price to do that. They
serve a price-sensitive customer base; raising prices would indeed earn more
per meal served but would sell fewer meals for overall less profit.

(If you think McDonald's could make billions more by raising prices, you have
to explain why they've been voluntarily charging less than they could all
these years. Are they just being magnanimous, charging less out of the
goodness of their hearts? :-) )

If you really want to nitpick, though: if McDonalds spent their entire
_worldwide_ profit margin raising salaries _just in the US_ they could do a
bit better than my calculation, but that would involve "exploiting" their
foreign licensees and helping the relatively-rich US employees entirely at the
expense of relatively-poor foreign ones. Whereas if anything, it would be more
ethically just to only raise wages abroad and not do so here.)

~~~
bakhy
you cannot, in one calculation, use the number of employees in all non-McD
owned restaurants plus the number of employees in McD, and the profit of only
McD itself. i hope i don't need to explain why that is wrong. as for the
number of 761,000, you seem to be right to put "employees" in quotes, even the
site you link to does not call them employees. the site i linked to provides
both figures.

"I assume prices currently are set at levels that roughly maximize the firm's
profits." \-- again, you simply assume. and you forget to consider an
important factor in determining where the point of maximum profits is - the
costs of production. which have now, with the hiking of minimum wage, changed.
so, even if they were in this theoretically perfect point of maximum profit
(which is an ideal, and thus incredible to be achieved to say the least), they
would automatically be out of it after the min wage is introduced, and would
be forced to change prices to return to it. but this is all idealized talk,
for such a point to exist we must assume a perfectly linearly elastic market.
i would like to see proof of that.

------
DanBC
Things to watch for:

1) businesses making employees clock in when it's busy, and clock out but stay
on the premises when it's not busy. Thus, the business has workers available
but only has to pay them for some of the time those workers are there.

2) "zero hour contracts".
[http://acas.org.uk/index.aspx?articleid=4468](http://acas.org.uk/index.aspx?articleid=4468)

Other things the UK has done is increase the amount someone needs to earn
before they start paying income tax; reduce the lower rates of income tax;
provide "working tax credit" to some people, etc.

I have no idea how the US tax system works so I don't know if that could be
done or would work with voters. ("Supporting business to employ people on fair
wages" maybe?)

------
bmm6o
For anyone who thinks that $15 minimum wage is a bad idea, what do you think
is the "correct" value for a legislated minimum wage? Is the current value
also too high? Should there be such a thing as a minimum wage?

~~~
glenra
The current value is also too high. There should be no such thing as a minimum
wage.

~~~
bmm6o
How do you see this work in practice? Would you still have government
assistance programs to subsidize workers at the low end? I mean, you would
expect wages for a lot of people to drop drastically, right?

~~~
glenra
> _Would you still have government assistance programs to subsidize workers at
> the low end?_

Those are separable concerns; I see no strong reason to immediately change the
status quo in that regard.

> _I mean, you would expect wages for a lot of people to drop drastically,
> right?_

No, I would actually expect wages for a lot of people to _increase_ and the
overall need for assistance to decline. But there's an important trick here
that renders things a bit counterintuitive, which is that _average_ wages
would indeed decline - even though nearly everybody in the economy is being
paid as much or more than they were before. This happens because you're adding
_new_ workers into the pool of people with jobs, and you're adding them at the
low end.

If you just look at people at the low end who are currently unemployed,
underemployed or illegally employed: without a minimum wage law they would
find it much easier to get a legal first job, some transitional employment
which gives them experience and references and training that makes it easier
for them to get higher-paying later jobs. So THEIR reported income goes UP,
both in the short run and in the longer run. But since they weren't employed
before, their wage of $0/hour wasn't part of the "average wage" computation
BEFORE, and their new wage of, say, $5/hour _is_ part of the "average wage"
computation after the change, so their improved salary drags the computed
"average" down.

Now consider the rest of the economy: The existence of more people in the
labor force who were previously unemployed makes the economy more productive,
which enables even people earning far above the minimum to also get higher
wages. When someone who is highly productive can hire other people to mow the
lawn, empty the trash, do the filing or paperwork, that person can focus more
of their own time and effort on what they're best at - more workers means more
gains can be had from specialization of labor. Also, the fact that fewer
people are _entirely unemployed_ and more are rapidly entering the workforce
means we need _less_ government assistance which means tax rates could
decline, again making the economy more productive and increasing standard of
living.

(The case for getting rid of the minimum wage is actually quite similar to the
case for open borders. Fully opening the borders to let people work wherever
they want would by some estimates DOUBLE world GDP. Getting rid of minimum
wage laws everywhere wouldn't have nearly THAT large an effect, but it would
be quite positive.)

------
holograham
I think most people on HN agree that employees _should_ be paid proportional
to the value they create. In fact that is an underlying reason many folks
choose to work for (or start) a startup for equity rather than a big company
for a salary. With equity, the more value you produce the more you make.

For the rest of America, you typically work for an agreed upon sum (salary or
hourly wage) with your employer. We call this a mutually agreeable contract
since no one is forced to work for an employer in our modern society (we have
valid laws to prevent this scenario). If an employee does not like a given
wage, they can shop their skills around for another employer (or start their
own company) in order to gain a higher wage. We call this the free market.

I am a libertarian all about math. But even putting math aside, with the logic
above why is there a need for a minimum wage?

~~~
bakhy
supply and demand have an important quality called elasticity, which is not
taken into account in libertarian discourse.

unlike a simple commodity market, like coffee for example, where a buyer can
say "these prices are too high, i'm not going to buy any", a worker cannot
simply say, "these wages are too low, i'm not going to work". (unless the
government plans to give them all sufficient social security so that they can
live comfortably without any work, which is unlikely and probably
undesirable.)

likewise, when a coffee producer sells a lot due to good prices, he will
increase his production, and thus the supply. in the labor market, a company
that seeks workers and offers them a great wage will easily find workers, but
i find it incredible that it's managers will then think "hey, we had such a
great demand for work, let's hire more people just because of that!" it will
not increase demand, limiting the effect a single positive agent can have.

not every market is exactly the same, and considering the dynamics of various
markets will enable you to understand why so many countries have minimum wage,
why they subsidize food production and are very interested in influencing the
prices of basic commodities, and why they often meddle in real estate. these
are things people simply cannot do without, and the stability of governments
and regimes depends on somehow ensuring them for as many people as possible.

~~~
glenra
If workers are so desperate that they can't _not_ work, then putting them out
of a job by making it illegal to work for low wages is _especially_ cruel.

If you doubt that the minimum wage causes unemployment, how do you explain
that the countries in Europe _with_ a national minimum wage law have such
consistently higher unemployment rates than the countries in Europe without
one?

~~~
bakhy
"If workers are so desperate that they can't not work" \- did you really put
an "if" there? :D i presume you come from privileged background?

"then putting them out of a job by making it illegal to work for low wages is
especially cruel." \- assuming they will all lose work. which they will not.
not even a large minority will. despite the libertarian scaremongering,
companies always somehow find the money to keep the workers, and their
business running. go figure.

as for the other claim, do you have proof of this? in any case, it is
ingrateful to draw such conclusions, due to large cultural and economic
differences between these countries, and (the part which annoys me personally
the most) the ever varying methodology of determining the unemployment rate.

P.S. No reference to the market dynamics? I believe it nicely explains where
the extra money to cover for the minimum wage hike is going to come from, and
why the hike will not result in a proportionate loss in jobs. I will take your
silence as a sign of agreement ;)

~~~
glenra
> did you really put an "if" there?

Yes, I put it there because a large fraction of minimum wage workers are teens
who live with their parents or are otherwise in a living situation where they
aren't the only breadwinner. Hence, they _aren 't_ so desperate that they
can't not work. Since choice exists (yet again, on the margin), labor
employment is a normal good that responds to supply and demand.

> do you have proof of this?

Quoting from
[http://www.themoneyillusion.com/?p=24759](http://www.themoneyillusion.com/?p=24759)
:

 _Regarding the minimum wage, here is some data for Western Europe:

There are nine countries with a minimum wage (Belgium, Netherlands, Britain,
Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment
rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is
France with 11.1% unemployment.

There are nine countries with no minimum wage (Iceland, Norway, Sweden,
Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have
a lower unemployment rate than Luxembourg, the best of the other group. The
median country is Iceland, with a 5.5% unemployment rate. The biggest country
in Europe is Germany. No minimum wage and 5.2% unemployment.

Still want to raise our minimum wage to $10? Germany used to have really high
unemployment. Then they did labor reforms to allow more low wage jobs,
combined with subsidies for low wage workers. Now they don’t have high
unemployment.

Still want to raise our minimum wage to $10?"_

> No reference to the market dynamics?

Your "market dynamics" claim doesn't make sense. I'm familiar the concept of
elasticity, but it doesn't have any obvious relevance. I suspect you don't
have the economic background to paraphrase the argument you're trying to make
- could you perhaps point me to a link where somebody _else_ makes it? One
problem is that you're making an "argument from personal incredulity" \- you
just say "I find it incredible that..." rather than giving any actual, you
know, _evidence_ or even argument - but the other problem is that the claim
you "find incredible" is so weirdly phrased that I can't really tell what it
is.

AFAIK, the best story labor economists have come up with in defense of their
own claims involves theorizing that the employers have excess "monopsony
power", but it's not actually a _plausible_ story.

Anyway, we're probably well past the point of diminishing returns here.

~~~
bakhy
"a large fraction of minimum wage workers are teens" \-- how large? source? in
the end, it does not matter - if they don't need to work, where is the
problem? why should we even encourage them to work, to bring down the price of
labor of those who already earn the least?

the data on minimum wage you quote is incorrect. i happen to know that Austria
does have minimum wage, just not a single global one. i was offered work
there, and then found out that they have minimum wages defined per occupation
(country-wide collective bargain), and there exists a minimum wage for
programmers in Austria. i actually found that unnecessary :D i believe in
Sweden there is a similar situation, the unions are very politically strong
there. as for Germany, when exactly did it have high unemployment, and how
high? this is very sketchy. also, a factor for Germany is that a lot of people
work part-time, which has reduced reported unemployment here.

but i must admit, even if unemployment is slightly greater, i don't care.
because i believe that removing minimum wages in those countries that have it,
even if it would hire some people, would cause a big drop in the pay and
quality of life of many, many more people who would have been employed anyway.
this is something that ultimately needs empiric check (Germany is also soon
about to introduce minimum wage so there's another opportunity), but you
already waved that off - what was it you said, we should not be fooled by lack
of evidence to support your claim? :D

lastly, yes, i do not have economic background so i cannot phrase things in
expert terms, but i would appreciate hearing some reason why it does not make
sense. the point is, since demand is always equally present, and the supply is
limited and independent of the demand (that is what i found incredible in the
comment above - a company that offers great pay will easily find employees,
but it will not choose to hire more simply because a lot of people applied,
which is specific for labor markets), then the price of low-educated labor
simply goes down until it hits some bottom, i.e. it becomes too low to earn a
living, or it becomes comparable to social security payments. is it really so
hard to grasp? or are you simply trying to discredit me and avoid the whole
argument?

~~~
glenra
> _(that is what i found incredible in the comment above - a company that
> offers great pay will easily find employees, but it will not choose to hire
> more simply because a lot of people applied, which is specific for labor
> markets)_

How is this feature specific to labor markets? Suppose a company is buying
laptop computers to accomplish some task. If the company is willing to offer
great pay - a high price - in exchange for laptop computers, they will easily
find laptops, but they won't choose to buy more laptops simply because a lot
of vendors submitted bids. Right?

Going back a bit, it's not true about either workers or laptops that "demand
is always equally present". And it is true about both workers and laptops that
"the supply is [somewhat, in the short term] limited and independent of the
demand".

I honestly don't get the point you're trying to make. People respond to
incentives. If companies can hire people for less than the value of their
labor product, companies will expand and try to hire _more_ people. If they
can't, companies will contract and hire fewer. In the extreme cases supply
fluctuates via emigration/immigration. People have a reserve price - they
generally aren't willing to work unless offered enough to make it worth their
while, just as they aren't willing to sell a bicycle unless offered enough on
eBay to make it worthwhile. Sometimes that price is less than the minimum, and
sometimes it's more, in which case the minimum becomes irrelevant because it's
less than the market rate.

I think I'm done looking up specific numbers for you; it never makes any
difference to your views. Yes, collective bargaining exists in some sectors in
Europe - it exists in some sectors in the US too! But there's no national
minimum in those countries, which is what matters most for general employment.
(And yes, these things are always in flux. Switzerland just last month voted
on whether to have a $25/hour minimum, but 75% of the electorate voted against
it - common sense prevailed for once!)

~~~
bakhy
first of all, we are looking at it from different sides :) i was talking about
the demand for jobs, not workers, and the supply of jobs. perhaps that created
some of the misunderstanding.

the laptop example also illustrates the difference quite well. majority of the
people need work, and they have to work, whether they like the price they will
get or not. in the end they must eat. so, the demand for jobs (or, the supply
of workers) cannot fall below a certain level, particularly the low skilled
ones.

laptops are not such a necessity, so people may choose, if conditions become
too unfavorable, to simply not buy them. this is why producers, who of course
want to get the highest price possible, cannot raise prices as they wish. with
low-skilled labor, however, companies can lower wages as much as they like. if
they reach the point where people can no longer feed themselves, people don't
simply decide not to work (really?!) - we then have a revolution.

your comparisons actually demonstrate this quite clearly, it really amazes me
that you can compare a low skill workers quest for jobs with selling a bike on
eBay without noticing any difference.

"I think I'm done looking up specific numbers for you; it never makes any
difference to your views." \-- that's a cheap shot. i gave some arguments, you
ignored them, and you're now just weaseling out. the effects of a nation-wide
collective bargain, which defines a mandatory minimum wage for all sorts of
professions, are pretty much the same. in fact, since many professions have
pretty healthy situations in the job market, i would say that that actually is
harmful in the way you described.

but ultimately, i explained that i actually accept that a minimum wage may
mildly increase unemployment. did you just skip that part?

~~~
glenra
The problem is that you demand support even for claims of mine that are easy
for you to verify for yourself and that you have no reason to doubt. While on
the flip side you never provide any numbers of your own, so it's unbalanced.
But what the heck, I'll do it one last time.

>"a large fraction of minimum wage workers are teens" \-- how large? source?

Half of all minimum wage workers are under age 25; 62% are still enrolled in
school, and the average family income of people earning minimum wage is in
excess of $60,000/year. I found this out just now by googling the string "what
percent of minimum wage workers are teen", which led me to these links:

[http://www.bls.gov/cps/minwage2011.htm](http://www.bls.gov/cps/minwage2011.htm)

[http://www.heritage.org/research/reports/2013/02/who-
earns-t...](http://www.heritage.org/research/reports/2013/02/who-earns-the-
minimum-wage-suburban-teenagers-not-single-parents)

It is true that SOME minimum-wage workers desperately need a job. But it is
also true that SOME people desperately need a laptop computer! The overall
characteristics of a market - whether a market for labor or a market for
laptops - aren't driven by just the few who have the most inelastic demand.
Employers have to offer wages high enough that _on the margin_ , those people
who are indifferent between employers or willing to wait a little longer for
"the right job offer" are inclined to accept the one being offered. This means
the average job pays a lot MORE than the bare minimum that the most desperate
people would be willing to accept. Even if there were no minimum wage, wages
would not drop to starvation levels for that reason.

In short, Malthus and Keynes were wrong to predict a "race to the bottom". We
don't need a minimum wage to have high average wages, high entry-level wages
or a high standard of living. (In fact, the minimum wage does far more harm
than good to the lowest-skilled workers - it reduces job _quality_ and
_availability_ , cutting off some of the bottom rungs of the economic ladder.)

~~~
bakhy
ok, interesting statistics. i did not expect such a large number of teens. the
average income part, the key is that it counts "families" or "households", i
have seen it in another source where it stated that many of the poorest
families actually earn 2-3 wages in order to reach that level, so i would not
immediately jump to the conclusion that they are all that well off.

"It is true that SOME minimum-wage workers desperately need a job. But it is
also true that SOME people desperately need a laptop computer!" \-- again,
these crazy comparisons... these situations are not equal. period. such
reductionism is unproductive.

"Employers have to offer wages high enough that on the margin, those people
who are indifferent between employers or willing to wait a little longer for
"the right job offer" are inclined to accept the one being offered." \-- this
seems unrealistic. middle-class or up may afford that, but we're not talking
about them here. and it's worth noting that the middle-class is growing
smaller lately.

as for the race to the bottom, it is a demonstrated reality of history, one
that we have experienced, but which is easy to forget now that the problem had
been solved. it drove people to revolutions, simple fact. we have progressed
far since then. this neo-libertarianism seems to be an initiative to take us
back, and by many indicators, since the 80s, that plan is working out.

------
conroe64
Now, if only the workers did $15 per hour worth of work, everything would be
set...

------
dan_bk
> A councillor who supported the push said the vote "sends a message heard
> around the world".

Probably the most important aspect here. Don't get ripped off.

------
todd8
For years, I've been frustrated by the debate over the minimum wage. Like many
economic arguments, lots of ideas are mixed together and argued without very
clear analysis. Seattle will offer us an opportunity to see what really
happens when we establish minimum wages at levels comparable to some other
developed countries.

I happen to be a libertarian, and I note that there are often philosophical
and economic arguments to be made for policy decisions. I'd like to see
policies that are both just and economically efficient. So, for example, an
argument (clearly specious) that women staying out of the workplace would
produce overall economic gains doesn't matter to me. I don't care if it would
or it wouldn't be more economically efficient for women (or minorities or red-
heads) to be restricted from certain jobs. It's wrong to have laws restricting
the freedom of women or minorities or red-heads and that trumps economic
arguments.

In Seattle, they have decided that restrictions on their citizens fundamental
freedoms, will on balance be worth instituting, but the freedom to work,
entering into an agreement to sell one's labor, is an important freedom that
is being abrogated. What if Seattle decided that it wanted to encourage more
high tech workers to move to Seattle, because it would increase the tax base,
and they instituted a minimum wage for programmers, say $160 per hour. What
would happen? Would you like being told that you were not allowed to program
in Seattle unless you could find a job that paid $320,000 per year? It would
ruin things. Like $160 per hour programmers, many $16 per hour low-skilled
teenage kids will be priced right out of the job market.

I got my start working in my first full-time job working for under $3 per
hour. I lived at home with my parents, and my income made only a modest dent
on the family's overall income, but it gave me a start. I learned to get up
every morning, get to work, and do my job. Low wage jobs are a way to get into
the job market, even if they don't immediately provide wealth and comfort.

Ignoring the restrictions on our freedom of contract, some argue that this
development is a good thing nevertheless, that the $16 per hour will help
those living in poverty. Well, if $16 per hour is a good thing why wouldn't
$25 per hour be even better? Clearly there is a level that will have negative
impacts. Those supporting $16 per hour seem to recognize that there will be
negative impacts, but the argument goes that these negative impacts are not so
bad because they affect a group that the minimum wage supporters don't like or
don't care about (for example, business owners).

Perhaps supporters of the new minimum wage really do care about everyone and
my last paragraph is too harsh. In that case what I see is a kind of first-
order effect rationale being given that ignores the indirect, but possibly
quite significant, consequences of the new minimum wage policy. Each side in
this debate has studies that they can cite, but money doesn't grow on trees.
It has to come from somewhere. Businesses will have to cover the costs by
doing either (1) lowering the dividends to the owners/shareholders, (2)
decreasing the salaries of higher paid employees or employing fewer people, or
(3) increasing the costs imposed on the business's consumers. All of these
actions have negative consequences. (1), lowering the benefits of owning the
business means that over time, there will be less of them in Seattle; (2),
lowers employment, often of the people this policy is purported to help; and
(3), increases costs to everyone (or lowers the quality of the goods
provided).

If my simple breakdown in the previous paragraph is correct, why are
politicians in Seattle supporting this new minimum wage? Politicians want to
stay in office and they can use the minimum wage to appeal to large groups.
One group is those that want to help others but don't understand economics or
freedom well enough to understand what this policy means. The other group is
comprised of those whose jobs might be threatened by workers willing to do the
same job for less than $16 per hour. (This is the reason that unions are big
supporters of raising the minimum wage even though their workers have wages
far above minimum wage. It protects their high wages from low cost
competition.)

~~~
bakhy
the ease with which you compare the minimum programmer wage of $160 and the
general minimum wage of $16 is astounding. (not to mention the ease of waving
off empirical data, wow!) these things are not exactly equal, some
consideration should be given to differences in these markets if you want to
be serious. programmers are not so abundant, and for us the market really
works. for a non-educated worker, on the other hand, the market is
problematic, with an abundance of workers creating downward pressure on pay
that is, de facto, only stopped by social security!

freedom is important, but to most people on the lower end of the income graph,
just making a living is a more pressing issue.

the money must come from somewhere, and it will come from profits, yes. sadly,
individual employers have no reason to pay these workers more, on the
contrary. so, look at this like a collective bargain, but achieved on a wider
level.

this brings me to the last, but greatest problem with your post - the ease
with which you completely dismiss the democratic will of the people who voted
for this policy (though indirectly). they are either in an evil conspiracy, or
merely stupid. this is quite an anti-democratic, condescending attitude.

~~~
todd8
You make a good point. Making a living is a pressing issue, and I feel that we
do have a responsibility to aid those that can't take care of themselves.
Further, you point out _correctly_ , that I was harsh in my dismissal of those
supporting Seattle's policy. Most people that support Seattle's policy
probably do it in the belief that it will help the people that need help.
Nevertheless, I believe that there are likely to be unanticipated negative
consequences and a further eroding of our freedoms.

I must disagree with you that simply because the people of Seattle have had a
democratic vote for a particular policy that we must respect it and refrain
from criticizing it. The majority isn't always right and there is a long
tradition in my country (the USA) of speaking out against policies that are
either morally wrong (in some way) or wasteful despite the positions taken by
majorities. I'm old enough to have demonstrated for civil rights at a time
when there were states still refusing civil rights to their racial minority
populations. While I was in college, there was a minority in this country
demonstrating against a war being waged by conscripts that didn't want to
fight. Today, there are states that don't allow gays the rights that the rest
of us have. Do you dismiss criticism of these (sometimes majority held)
positions as condescending and anti-democratic? Our cherished Bill of Rights
is fundamentally anti-democratic, protecting us from simple democratic
majorities.

I'm curious, although not hopeful, about the outcome of Seattle's experiment.
I share your wish that it will help (the difference is I believe it won't).
You can say to me "I told you so" if it really does help the people of
Seattle, that would be a good thing.

~~~
bakhy
> I must disagree with you that simply because the people of Seattle have had
> a democratic vote for a particular policy that we must respect it and
> refrain from criticizing it.

Now, if only I had ever said that... I did not call your attitude undemocratic
simply because you disagree. I called it undemocratic, because you declared
everyone who disagrees with you to be either retards or morally bankrupt. All
this condescending preaching was not really necessary.

------
trhway
why Bay Area cities wouldn't do that? How much pricier our coffee/burritos
would get here so that we stop buying them thus making the minimum wage
increase a "job killer"? I think even making it $30/hour people here would
hardly notice it.

~~~
whimsy
Actually, San Francisco and San Jose both have laws increasing the minimum
wage. Richmond also just passed an ordinance in March to raise it to $12.30 by
2017, which will be the highest minimum wage in CA.

------
omarforgotpwd
"Seattle votes to fire everyone worth less than $15 / hour"

~~~
dan_bk
That argument doesn't work, b/c: You can always "create jobs" by lowering the
salary.

As others have noted, it simply results in people becoming dependent on social
benefits (and this bill ends up being footed by the tax payer).

So: You are right if you think that the tax payer should subsidize business
owners.

~~~
fdr234rd22
That is a trite and misleading argument. 89% of minimum wage workers don't
live in poor households. To say that they are being subsidized because they
are poor is simply dishonest. See my link above.

~~~
KJasper
Those 11% isn't worth helping? And should be subsidized by the government?

~~~
dfa333377777
Who said that? Why attack the minimum wage and not the EITC (which directly
helps the poor)?

------
homakov
How exactly will it help? Employers are not stupid, they will pay the same
money eventually, destroying the perks.

