
Seattle's minimum wage may actually cost restaurant workers - Godel_unicode
http://www.marketwatch.com/story/seattles-15-minimum-wage-may-actually-cost-restaurant-workers-study-finds-2017-06-26
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alkonaut
First - If workers hours can be cut arbitrarily by employers in a response to
an increased minimum wage, then FIX that. Even peoplel paid by the hour
obviously need contracts that ensure them an amount of work - ideally a
guaranteed full time (40/h week) and any less than that should be the choice
of the employee.

I think increased minimum wages are a good thing but it seems like an attempt
to cure the symptoms rather than the cause.

~~~
qeternity
Then employers will simply wholesale fire other employees. The point is that
when costs go up, the demand curve shifts. Forcing businesses to do otherwise
would wreak havoc.

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alkonaut
Having employers that can't provide decent workplaces and decent pay go under
is a good thing. That's the _goal_ of these regulations. It's sometimes
incorrectly seen as an unwanted side effect of more labor friendly regulations
- but it's not. Employers that can't pay a living wage should simply go under.

Having fewer employees work better hours (full time) is also a desired effect.

~~~
edanm
Well your theory kind of flies in the face of most economist's views, which
should be a red flag.

I don't think forcing companies to go out of business because they can't
"provide wages" for employees makes sense. For one thing, that's not remotely
the goal of the business. For another, nothing guarantees that these companies
will go under, rather than (as most are doing) simply cutting back on some
hours and some jobs.

You seem to suggest that the natural state of the world is a bunch of
businesses paying a high wage, and that if we just get rid of all these
businesses that are paying lower than that, we'd find jobs for everyone in
higher-paying places. The truth is that some people simply _can 't_ provide
more than $15 an hour in value to any business, for whatever reason, and _no_
business will _ever_ pay them more. These people will simply remain
unemployed.

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alkonaut
I think that it's more or less if not an explicit goal then at least an
accepted reality of unions worldwide that businesses should pay reasonable
wages or not be in business at all.

As you point out, this has a number of consequences, all of which are
acceptable from the perspective of unions:

\- Low wage unqualified jobs, beneath some lowest threshold of skill simply
cannot exist. This level varies between markets, but e.g there are no shoe
polishers or elevator attendants in Scandinavia.

\- The natural rate of unemployment is higher than it otherwise would be.
Basically instead of having 10% doing low paying jobs, you have 10% on
generous unemployment benefits.

So essentially - and in accordance to all economic theory I know - having high
wages and few unqualified jobs is certainly possible IF you

\- spend lots of tax money on having an educated workforce

\- have generous unemployment benefits

\- Accept that society basically provides for anyone that doesn't provide
value enough - either by training or just supporting them financially. Labor
collectives prefer the state to pay these people instead of them driving wages
down (because as you point out they don't provide that value)

Basically the scheme is possible if you tax the top N% of earners so much that
you can let the bottom M% not have to work crap jobs.

Whether this is an appetizing solution depends on your political preferences
of course, I'd say it's a pretty progressive version of social democracy, and
it's found for example in the Nordic countries.

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x0137294744532
If one can not afford to pay a living wage for these jobs, then these jobs
should not have existed in the first place.

~~~
grondilu
Minimal wage is nothing but an instance of price control[1] and "Although
price controls are sometimes used by governments, economists usually agree
that price controls don't accomplish what they are intended to do and are
generally to be avoided."

1\.
[https://en.wikipedia.org/wiki/Price_controls](https://en.wikipedia.org/wiki/Price_controls)

~~~
bryanlarsen
Would you rather have price controls or a subsidy? People that support
themselves on jobs that pay less than minimum wage generally need support from
the state to live. So a minimum wage is basically a refusal by the state to
subsidize business.

~~~
edanm
Well, you could also look at it as a minimum wage being the government (trying
to) force one group of people to subsidize poor people, namely, business
owners. I'd much rather the government helps poor people directly, both so
that it's on everyone and not only business owners, but also because it
doesn't tamper with the market price, which causes all sorts of problems.

~~~
bryanlarsen
That's the point, it certainly does tamper with the market price. If somebody
is receiving EITC & food stamps, they may be willing to accept a job paying $2
an hour because that $2 an hour will allow them to buy a little bit of meat to
go with their rice & beans.

Without EITC & food stamps and other assistance $2/hour wouldn't cover food &
rent even working 2 jobs, so they'd be forced to turn those jobs and look
elsewhere, most likely to crime.

EITC & food stamps to the employed are a subsidy for the employer and distort
the true market price for labour. Perhaps less than a minimum wage does.

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ubernostrum
Genuinely curious: if employers are simply cutting back hours to save paying
the extra wages, what's happening with those hours that aren't staffed
anymore?

One possibility is that the businesses were already overpaying for labor by
staffing more employees for more hours than were needed. But that just turns a
minimum-wage hike into a convenient excuse to roll back hours/staff (much as
economic downturns tend to be used as a cover for companies to lay off people
they no longer needed anyway).

Another possibility is that more hours are being assigned to salaried
employees since it doesn't cost extra to have them work more. But that would
actually be a good thing -- it would increase the demand for salaried full-
time employees, and being a salaried full-time employee is much better than
being a minimum-wage hourly employee.

Another possibility is that businesses are just closing down more often rather
than pay people to keep things operating. But that seems unlikely.

So what's actually happening?

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Aron
Restaurant workers did fine (under both this NBER study and a prior Berkley
one). It was a superset of low-wage employees including those restaurant
workers that did poorly overall. This is one of the more interesting results
since minimum wage studies in the past have favored studying restaurant
workers (for reasons I don't know).

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Steko
Buried lead: study is hugely problematic.

[http://irle.berkeley.edu/files/2017/Reich-letter-to-
Robert-F...](http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-
Feldstein.pdf)

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tasuki
Working 9.4% less time for 6.6% less income seems like a good trade.

Consuming less is the way to sustainability. Consuming less can be aided by
earning less.

~~~
pindab0ter
Consuming smarter can also go a long way, but that often requires earning more
and is the route most people would like to take.

I'd rather have an organic steak than no steak.

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kristopolous
Increasing your wages decreases your wages! I think this propaganda can be
found on cuneiform tablets. What an old old, completely bogus argument.

These hypothesis always get flipped when talking about the rich. For them,
more money creates an incentive for them to work more!

Yes it makes the poor lazy and the rich hard working...right.

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IcePenguino
From what I heard, this report only focuses on stores with a single location -
so chains are not represented.

[http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-
wa...](http://www.wbur.org/hereandnow/2017/06/26/seattle-minimum-wage-
earnings)

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Avshalom
>>The report “is problematic” and its conclusions “unwarranted,” he said.
Reich co-authored a recent study that argued Seattle’s higher minimum wage did
not hurt employment.

so of course it may actually not have.

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masterleep
Since basic economic theory predicts the result, the "actually" in the title
is unnecessary and shows the bias of the headline author.

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cjg
Economic theory predicts that demand for those employees will fall and that
businesses will reduce their hours, but doesn't necessarily predict that each
employee will end up with less money overall.

