
Job loss predictions over rising minimum wages haven't come true - JumpCrisscross
https://www.axios.com/minimum-wage-job-loss-predictions-not-true-dcda5eac-996d-4539-a07e-12933eef4bca.html
======
jjoonathan
The inverted funnel plot of Doucouliagos and Stanley is especially useful once
discussions about elasticity at the low end of the labor market reach the
"you're biased -- no you're biased!" stage:

[https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...](https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf)

~~~
scarejunba
Would you mind quickly summarizing what that plot is telling us? I looked at
it but it looks like I've got to read more of the paper before I understand
it.

~~~
pge
The plot is showing that there is a negative selection bias in the reporting
of stories about minimum wage. That is, that stories suggesting that
increasing minimum wage has negative effects (increases unemployment, etc) are
overreported relative to stories showing a positive effect from an increase in
minimum wage.

I am only repeating what the paper says; I don't claim to have validated their
methodology or sources.

~~~
apcragg
That is an incomplete summary. Their conclusion is that despite this larger
than normal selection bias, the minimum wage appears to have no impact on
unemployment. The paper's abstract, discussion, and summary all mention this
as part of the central thesis - why leave it out?

~~~
IanCal
It is an incomplete summary of the paper, however it seems to be a pretty
solid summary of what the plot is telling us.

------
pwthornton
How many of the people arguing for keeping the minimum wage unchanged were
arguing that in good faith?

In general, increasing pay into people at the bottom of the ladder has a much
bigger economic effect than the opposite. Reasonable increases in the minimum
wage, particularly ones that track inflation and cost of living are not going
to harm the economy.

As many have pointed out, the minimum wage in many places has been eroded for
years by inflation, so increasing it is really just making up for a lack of
indexing on it.

The best solution appears to be to raise the minimum wage to a level that can
support a person without government assistance and index it for inflation.

The reality for us every-day workers is that either the minimum wage is
increased or we'll have to make up for it in taxes that support programs to
compensate for the lack of a liveable wage.

We are much more likely to get a better deal via the minimum age than we are
via the tax system; the latter of which is heavily skewed in favor of the
wealthy and corporations. It's not big corporations paying non-liveable wages
who will be paying to cover food stamps.

~~~
BurningFrog
> _In general, increasing pay into people at the bottom of the ladder_

The bottom of the ladder is the unemployed, who make $0/h.

The good faith argument for no minimum wage is that those people would have a
much bigger chance to find jobs and build job skills.

~~~
CoffeeDregs
> The bottom of the ladder is the unemployed, who make $0/h.

If government programs are included, the unemployed definitely don't "make"
$0/hour. As is often pointed out, taxpayers are effectively funding the
underpayment of workers Walmart, McDonalds, etc because of government
subsidies.

I don't have a dog in this hunt but the issue is much too complicated by
government action to say unequivocally that the unemployed "make" $0. I'm not
sure if it's good or bad but I definitely lean toward "we've made it too
complicated".

[Now I'll go back to sorting through baffling health insurance complexity...]

~~~
slavik81
I made $0/hour when I was unemployed at the start of my career. Never had a
job before, and nobody was willing to give me a chance, so I got nothing.

I'm thankful that I will never be in that situation again. It was awful.

~~~
CoffeeDregs
In the US? You should have been able to get heavily subsidized health
insurance (which is a hassle), unemployment, etc. Still crappy but it's not
$0.

But that's exactly my point: it's very difficult to discuss this when policy
is such a swirl.

~~~
slavik81
Canada, but it's the same in the States. Unemployment is for people who have
lost a job. I would not have qualified.

What stuck with me was that everything required that I already had a job.
Maybe it was the economy at the time, but nobody wanted to hire someone
without work experience. When I discovered that even unemployment required I
have work experience, it felt like I was living in Catch-22.

For that reason, I support the government acting as an employer of last
resort. Everyone should be guaranteed a job if they're willing to work.

~~~
Faark
> For that reason, I support the government acting as an employer of last
> resort.

I like that concept as well. But there are problems. Quality of work is one.
Another is the complication of getting something useful out of that manpower.
Would probably be done by lending that workforce to companies... subsidized if
necessary, but with significant bargaining power. Still this could end up
becoming a nightmare with incompetent / corrupt governments. It would be a
great natural minimum wage, though, since you'd be stupid to work for less
than you could get at you gov job.

------
mullingitover
Minimum wage isn't just flat for a decade, it's not being adjusted for
inflation. This means minimum wage workers have been getting a pay cut over
time.

The debate isn't just whether we should raise minimum wage, it's whether we
should be cutting it. By allowing it to remain stagnant we're making the
default decision to cut.

~~~
helpPeople
Not sure your area, but unskilled labor goes for 15$/hr in metro Detroit.

You cannot get people to show up for less than that.

Source, wife owns a business and that's going rate to answer phones.

~~~
roflchoppa2
is it difficult for your wifes business to make money, and pay your employees
at $15 (or more)? Serious question.

~~~
xinsight
If it is difficult, then it's not a very good business.

Serious question: Why would you want to run a business that can only survive
by paying people poverty wages?

~~~
ryan_j_naughton
This is a very naive view of economics. Ideally everyone's income should be
derived from the value they generate. So ideally wages continue to rise
because productivity continues to rise.

But there are many cases where it make more sense to pay 4 low skilled workers
to do a job instead of paying the costs of automation plus the cost of the
higher skilled worker to use the automated solution. It's why so many jobs in
India are still entirely manual labor -- it is simply more cost effective than
a more technical, automated solution.

My wife works in international developmental economics, and providing jobs to
the wide swaths of unskilled labor of the world to incrementally lift them out
of poverty is an essential part of economic development. Sure, it would be
nice if those people could just leapfrog in their education and consequently
their levels of development, but that just isn't realistic.

Your comment indicates you are only looking at a very small subsector of the
labor market and economy. Not everyone can be software engineers and highly
skilled labor in the present.

~~~
Sohcahtoa82
> Ideally everyone's income should be derived from the value they generate.

Define "value". Or more specifically, how do you measure "value" for jobs that
don't directly generate revenue?

How much value does the janitorial staff create?

How much value does your IT team create?

What's the dollar value of your cybersecurity team?

What about HR?

None of these teams directly create revenue for the company, but certainly
they created value. Meanwhile, Amazon has workers that pack boxes. They are
directly contributing to revenue by doing the actual work that is core to the
business. If cybersecurity, HR, the janitors, or IT were to disappear for a
week, theoretically packages would still get sent to customers and Amazon
still makes money.

And yet they're having to fight for fair wages? They're the most valuable
labor in the company!

The idea that income should be derived from value is incredibly naive. As I
mentioned in another comment, that mentality is what leads to managers laying
off the entire IT team because they're seen as a money sink.

~~~
ChrisLomont
>How much value does the janitorial staff create?

When the company hires them, the company has decided that the company obtains
enough value for the transaction. So does the janitorial staff.

>And yet they're having to fight for fair wages? They're the most valuable
labor in the company!

Not if someone else is willing to do the job for the same pay - this is market
clearing. They're paid what it takes to fill the position, and they show up
for that wage. Both sides benefit, otherwise the side without getting benefit
would not show up.

~~~
Sohcahtoa82
So then we are in agreement that wages are _not_ a function of value created
by the worker. They pay only what it takes to get the position filled, which
is a completely unrelated number to value.

~~~
ChrisLomont
>So then we are in agreement that wages are not a function of value created by
the worker.

Wages are a function of value created. As a trivial example, wages are capped
by total cost to employ, which is driven by wages and legal requirements.
There is no way around this on a large scale without a business losing money,
i.e., dying.

>which is a completely unrelated number to value

No, this is untrue. Marx had the same thought, but didn't understand that
employers also compete for workers, which is why the poorest workers are
vastly richer than Marx could have understood.

A simple way you can check it empirically is to take a dataset of companies,
compute mean revenue per employee, and correlate to mean wage by company.
You'll certainly find that these numbers are completely related.

You can do the same thing using work sectors using BLS data on pay by job
type, then revenue generated in those jobs. Again, you'll find a strong
correlation between revenue generated per employee and per employee wages.

These empirical tests you can do yourself should convince you wages are tied
to value added.

If you then do proper factor analysis to account for other costs varying
between companies, such as cost for materials or equipment, the correlation
between wages and value becomes stronger.

Edit: here's a dataset to get you started [1]. 1000 companies with # of
employees and median wage. Find revenue per company and you're all set to do
an initial analysis.

[1] [https://www.wsj.com/graphics/how-does-your-pay-stack-
up/](https://www.wsj.com/graphics/how-does-your-pay-stack-up/)

------
pg_bot
You might not lose your job, but you may see your hours reduced or you might
not get the opportunity in the first place. Technically the employment numbers
don't change, but you shouldn't think of of minimum wage employees like
salaried employees. Minimum wage earners can lose fractional percentages of
their jobs unlike salaried employees.

Most proponents of raising the minimum wage cite the Card & Krueger paper
which has aged quite poorly. It turns out that chain fast food restaurants are
a poor proxy for the minimum wage labor market. If you want to know the most
up to date data backed perspective on the minimum wage, look to the Seattle
minimum wage study.[0][1] In short, the benefits of raising the minimum wage
go to experienced workers at the expense of inexperienced workers.

We know that price controls don't work. Having a minimum wage limits the
freedom to negotiate the value of your labor at a rate that you'd be willing
to take. Instead of a wage that they are willing to accept you force them to
have a wage of zero. I don't believe there are any situations where people are
better off when a third party eliminates economic opportunities for them.

The national minimum wage should be zero, as is the case in countries like
Iceland, Norway, Sweden, Finland, Denmark, and Singapore. You could also argue
that the minimum wage is unconstitutional considering the history of supreme
court decisions on the issue.[2]

[0]:
[https://evans.uw.edu/sites/default/files/webform/w25812_summ...](https://evans.uw.edu/sites/default/files/webform/w25812_summary_final.pdf)

[1]: [https://www.econtalk.org/jacob-vigdor-on-the-seattle-
minimum...](https://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-
wage/)

[2]:
[https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_...](https://en.wikipedia.org/wiki/The_switch_in_time_that_saved_nine)

~~~
Lavery
The countries you cite are able to have a minimum wage of zero because it's
coupled with a robust social safety net (sometimes along with other backstops
--Norway, for instance, is heavily unionized). This pairing is important, and
is absent in the US.

~~~
akvadrako
They are unrelated; countries need a social safety net regardless of what the
minimum wage is.

You might even argue that the higher you make min wage, the more important
social services are, because you have taken away the ability of low-skilled
workers to support themselves.

~~~
fwip
On the contrary, places with a robust social service net don't need as strong
labor protections, as they're able to decline to sell their labor.

~~~
akvadrako
You’re right - in that direction they are related. Since a safety net is
always needed, there is just no good reason to have minimum wage.

------
atypicality
Axios cherry picked the Bureau of Labor Statistics data for the 12 states that
confirm the writer's bias. They should have analyzed all states with low
minimum wages vs high minimum wages for the overall picture. Reports are out
there showing while many of the minimum wage earners who have not lost jobs
from the hourly increase are reporting weekly scheduled hours being cut back
across the board.

~~~
Pigo
I've read reports of Target, and similar companies, cutting back hours of many
employees. I take such reports as anecdotal, but I didn't catch them talking
about this in the article at all.

~~~
dv_dt
I think the unethical part we get into with Target/Walmart/et al is the
staffing of multiple shifts of part time work when it's obvious by the numbers
that they're avoiding paying benefits for the hiring of fewer full time
workers. The systemic question here is if we should allow it to be a financial
advantage for companies to do that - especially large profitable ones with a
footprint all over our nation.

~~~
UnFleshedOne
Ironically, consolidating the same amount of hours in fewer employees suffers
the same effects people say raising minimum wage does -- reducing the total
number of people involved. Some people get more hours and benefits, others get
fired.

~~~
dv_dt
Yes that's a poor and hopefully temporary side effect - but it would get more
people covered with medical benefits. It may also not be that bad en effect
because unfair scheduling practices for the part time hires. The part-time
scheduling is reported to take up essentially full time commitments to be on
"standby" with poor stability in the scheduled times on/off. So if one wasn't
instantly available to come off standby, one would get penalized - to avoid
that, you couldn't take other part time work.

------
rayiner
> Cities like New York, Seattle, Chicago and San Francisco have raised local
> minimum wages

> Laws in New York, California, Connecticut, Illinois, Maryland,
> Massachusetts, and New Jersey will eventually increase minimum wages to $15
> per hour.

I don't find this reasoning very convincing. The places that have raised
minimum wages are some of the most expensive places in the country already. It
may well be that the market wage floor is already pretty close to the raised
minimum wage. The minimum wage here in Maryland is $10.10, and you can't get
teenagers to work at that rate here.

But what about Des Moines? That's the basic problem with a _federal_ minimum
wage. The average rent in Des Moines is about a third of what it is in New
York City. What would be the impact of a $15 minimum wage there?

Why should the "living wage" in expensive coastal cities dictate the minimum
wage everywhere?

~~~
clairity
> "> Cities like New York, Seattle, Chicago and San Francisco have raised
> local minimum wages"

> "> Laws in New York, California, Connecticut, Illinois, Maryland,
> Massachusetts, and New Jersey will eventually increase minimum wages to $15
> per hour."

> "I don't find this reasoning very convincing."

those are fact statements--what's to argue?

> "That's the basic problem with a federal minimum wage."

whether a federal minimun wage is good policy or not is certainly debatable.
on one hand, states are the canonical unit of government and the fed should
generally defer to states (other than for national defense and
interstate/international relations). wages and cost of living does vary across
states and even within states.

but trade (including labor, as a distinct market) is a federal concern because
of interstate commerce and the interlinking of economies brought about by
globalization. so it's not unreasonable to argue that the federal government
has a stake here. you might argue that the fed should have differing minimum
wages for different states, but that's fraught with political land mines too.

~~~
tptacek
He's not arguing with Axios facts. He's saying the fact that Illinois is
gradually ramping to a $15 statewide minimum is not evidence that a $15
minimum is nationally appropriate, because the economy of Illinois is not the
same as the economy of Kansas or Wyoming.

It also obviously factual that the prevailing lowest livable wage in NYC is
higher than that of Des Moines; NYC's statutory minimum should be higher than
Des Moines, not the same. It actually doesn't make all that much sense to push
the ball forward on a living wage at a _federal_ level.

~~~
rhino369
>He's saying the fact that Illinois is gradually ramping to a $15 statewide
minimum is not evidence that a $15 minimum is nationally appropriate, because
the economy of Illinois is not the same as the economy of Kansas or Wyoming.

Plus, its not even $15 dollars yet. It's $8.25 right now. You can't even get
illegal immigrants to work for that under the table in rural Illinois.

But I have doubts whether the entire state economy can handle $15 dollars. A
lot of Illinois is poorer than Des Moines.

~~~
microcolonel
> _A lot of Illinois is poorer than Des Moines._

I think they hope _the poors_ and _the rurals_ will move out to seek
employment, at least, that's the impression I get from some Illinoisans.

~~~
tptacek
I don't know what this even means and have never heard anyone in Illinois
refer to "the poors" or "the rurals".

------
nostromo
One reason could be because almost nobody makes minimum wage.

In 2017 just over 2% of workers made the minimum wage. When you only look at
full time employees, it's less than 1%. When you include only people over 25
it's even less.

[https://www.bls.gov/opub/reports/minimum-
wage/2017/home.htm](https://www.bls.gov/opub/reports/minimum-
wage/2017/home.htm)

It's interesting how few people know this. When you ask people to guess what
percent of people make the minimum wage, you'll likely hear estimates that are
10x or 20x higher than they really are.

~~~
quakingaspen
I think the confusion you're talking about when you guess that people will
over-estimate the number of "minimum wage workers" is due to slippage between
the term "minimum wage" and "federal minimum wage". There are 29 states that
have a state minimum wage that is higher than the federal minimum wage [1], so
if we defined "minimum wage worker" as someone worker working at their state's
minimum wage, then we'd be including far more (probably >100% more) people in
the category.

[1] [https://www.epi.org/minimum-wage-tracker/](https://www.epi.org/minimum-
wage-tracker/)

------
jb775
I feel like this is a perfect example of people trying to apply a "one size
fits all" band-aid to a complex issue because it sounds nice on the surface.
Obviously, Johnny French-Fry would be better off making $15/hour, but there's
more to it than that.

I don't believe the salient impact here is "job loss", but rather "wage
erosion" at other levels within the organization. There is a zero-sum game at
play here, and I think both sides of the argument can probably agree that the
trickle-up financial impacts won't make it anywhere close to the executive
level. I also don't believe that noticeable impacts will make it back to the
consumer in the form of higher prices, or that companies would even consider
letting it impact their profit margins. The easy-win here is for execs to
restrain or chip away at the wages and benefits of employees currently making
~$30-$65 an hour (these employees are typically paid via "yearly salary", but
want to keep everything in context). This issue will likely be compounded by
employees currently making ~$16-$30 an hour demanding raises since they feel
like they "just missed out" on a pay raise (especially since these individuals
are typically in closer physical proximity to minimum-wage earners -- imagine
how the fast-food manager will feel when Johnny French-Fry is now only making
$1 an hour less). Then the same people arguing for a minimum-wage hike turn
around and complain about the wage-gap. I agree that wages should be higher,
but simply increasing the MINIMUM wage isn't a viable solution. Need to
consider the 2nd, 3rd,...(n)th order effects.

~~~
dmix
People (including researchers) _always_ use data from mega corp retail shops
to measure the effectiveness of minimum wage while ignoring the thousands of
other industries and lower end of the market of small companies who are not
hiring at all and can’t be easily recorded.

I’ve seen a number of studies justifying minimum wage that only looked at
major chain restaurants then used that to justify the hammer being justified
on every company size, industry, full time/part time/temporary workers.

These are easy things to lie with statistics and cherry picked data.

------
Ididntdothis
It seems that a lot of economics as it’s used for political decisions is way
oversimplified to the point of being useless or just plain wrong. The minimum
wage issue is an example where reality is much more subtle and complex than
what a lot of economists in the news say. Same for tax cuts for upper incomes
that were supposed to spur investments in new technologies but seem to have
done more to drive up asset prices. Or the argument that lower health care
prices will drive up utilization.

I am sure there are a lot of economists that do great work but economics as
it’s used in public discourse is just abysmal.

~~~
baron816
> what a lot of economists _in the news_ say

TV economists are definitely a different breed. Most real labor economists
acknowledge that the issue is tricky.

I (not an economist) don’t like the minimum wage since it’s really a poor tool
for the job. Society agrees that people should have a minimum standard of
living, but then place the burden of providing that standard on a very narrow
range of businesses. That burden should just be spread across all of society
by way of a negative income tax.

~~~
petra
There are plenty of ways to view the role of businesses in society.

One particular way is "the triple bottom line": part of running a business is
a responsibility for taking care of your employees, your community and the
environment.

And minimum wage laws are a part of that.

~~~
baron816
Ok. I’m not a corporatists.

------
blunte
This has been a long standing argument from a certain "trickle down" group in
politics. And like the groups that promote austerity as a cure for economic
woes, they have been proven wrong.

The economy grows when people can afford to spend. (If this spending is based
on credit as was largely the case during the Bill Clinton years, then there is
a later cost to pay - no doubt.) But the fact remains that when people can
afford to buy things, the economy grows.

Better paid workers spend more money. People who cannot afford basic
necessities actually do not blow their money on luxuries as is commonly
promoted. Instead, they spend their money on housing, car gas and insurance
(since there's been a perpetual movement against public transportation), and
food. They're not out gambling and buying drugs in general.

What is not in doubt is that better paid workers means not quite as well paid
executives. If you look at the US history, executive pay is at or near the
highest multiple relative to workers compared to any time.

And while this is my speculation as I have not experienced living on 1 million
dollars vs 100 million dollars (per year), I am inclined to believe that the
difference in quality of life is not really terrible. Therefore, executive pay
levels are not really a valid reason to suppress worker pay.

We have not even ventured into the tax avoidance that has occurred in the last
40 years. Somehow corporations and executives (and workers!) managed to
survive quite ok in the 1950s and 60s, even while corporate taxes were
effectively much higher.

~~~
bassman9000
_What is not in doubt is that better paid workers means not quite as well paid
executives._

Something to back this, other than personal experience/opinion, would be nice.

A = better paid workers

B = better paid executives

Your point seems to be that A => ¬B. Which, even if statistically accurate,
seems a bit weird as a causation.

~~~
mdszy
What possible reason could you have for writing it this way and not just
saying "Your point seems to be that better paid workers leads to worse paid
executives..."

~~~
bassman9000
Not being a native speaker, probably not being as fluent as you in English,
and not wanting to misunderstand that the OP made more complicated than
needed, IMHO.

------
jerf
What is the time frame for these claims? The last few years when the new
minimum wages are coming in are also times of dropping unemployment. The area
I live in has not been raising minimum wages any, and the local "minimum wage"
has nevertheless become a _de facto_ 11-12$/hour for zero-skill jobs just due
to a tight labor market.

If you happen to time your raising of the minimum wage to when the market was
tightening anyhow and the market floor was going above your minimum wage
anyhow, you won't see any negative effect, but not because you can just raise
minimum wage with no effect, but because the market beat you to your raises.
It's useful information, but not _politically_ useful information, in the way
that people are looking for. The question we really want answered is whether
we can raise the minimum wage significantly above what the market would have
done anyhow.

~~~
jonhendry18
The point I think is that the anti-increase people would have predicted that
raising the minimum wage would be such a dire threat to business that it would
decrease employment regardless of the wider economy.

~~~
poke111
Not exactly. If the market-clearing price for low-skill labor is already above
the minimum wage, it will have no effect. If the market price is far below the
minimum wage, it will have a large effect - positive for the workers with
jobs, negative for the ones who are priced out or have their hours cut.

~~~
ben509
But there is an effect. We're telling people "you both want to enter into this
contract, and there's nothing illegal or fraudulent about it, but if you do
it, at least one of you is going to jail." That's morally indefensible.

Grand schemes to fix society by making an income distribution curve on a
spreadsheet look pretty don't mean squat compared to your neighbors' rights.

------
whiddershins
I haven’t read the article. Every discussion about minimum wage seems so murky
and confusing I think it is overwhelmingly likely this article won’t increase
my knowledge of the topic in a meaningful way.

But chiming in here that the increase in NYC has not had anywhere near enough
time for the effects to propagate.

Business owners aren’t perfectly rational AI constructs that respond in real-
time to every input. People tend to gradually and iteratively change their
employment practices while keeping an eye on their margins and profits.

It’s going to take a long time, if ever, for us to figure out the effects of
minimum wage, but it certainly has affected my hiring practices so I’m sure
it’s having some effect.

------
drak0n1c
Even in the best markets for job-seekers such policies are not without
downsides. In every city in America small long-running mom & pop and ethnic
restaurants and shops are closing down in favor of two types of places that
can afford to swallow the regulation-imposed economic deadweight loss: 1)
Luxury hipster establishments that charge $20 for entrees and $10 for beers;
2) Fast food/fast casual chains dependent on leveraged buyout money.

In the end there's only enough room in town for a handful of Katz's Delis to
survive (and become expensive echoes of what they once were in the process).

------
gridlockd
_" The bottom line: Opposition to higher minimum wage laws is increasingly
based in ideology and orthodoxy rather than real-world evidence, economists
say."_

We can't be treating all changes in minimum wages equally. Those quoted in the
sources were very minor changes that may simply reflect what the market price
for low-end labor already is.

It is common sense that raises in wages must result in either reduced profits
or increased prices. Of course profits can be reduced, but not below zero, at
least not indefinitely. Naturally, profit margins in industries employing lots
of low-end labor are already low. Of course prices can be raised, but that
erodes purchasing power and competitiveness.

Unprofitable companies signal wasteful allocation of resources, and higher
prices tend to hit those at the bottom the most.

There is a sweet spot where surplus profits can be transferred to the workers
through an optimum fixed wage, but that number would be different for every
region and every industry.

Absent a safety net for those workers that may be priced out of the market, I
concur with the following assessment[1]:

 _" One can find plenty of economists on the left and right who think that
while $15 an hour may make sense for some companies, a one-size-fits-all
approach for businesses big and small around the country is a “risk not worth
taking,” as former Obama White House economist Alan Krueger has put it."_

[1] [https://www.aei.org/articles/a-15-minimum-wage-is-great-
for-...](https://www.aei.org/articles/a-15-minimum-wage-is-great-for-amazon-
it-is-not-great-for-america/)

------
macinjosh
This article is self disproving.

1\. Federal minimum wage hasn't been increased. In a handful of liberal, urban
locations it has been. How do we know the claim is true if it hasn't been
tested in the majority of situations? Perhaps localities should be able to
decide minimum wage for themselves! $15/hr might be the bare minimum in NY but
in small town USA it is beyond what the market can bare for entry level.

2\. The article mentions companies like Amazon are taking matters into their
own hands and raising their minimum range. This is evidence the labor market
does not need wage regulation when companies are making the decision to raise
wages themselves.

3\. The article mentions only hospitality related industries were studied. All
service industries in the US are growing. What about entry level jobs in other
parts of the economy?

4\. I am not sure why they are comparing minimum wage to economic growth.
Seems like apples and oranges to me, not useful. Of course if one economy is
growing it can bare higher minimum wage than one that isn't.

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CoffeeDregs
I consider myself a fairly educated fence-squatter on this topic but I think
it's too early to tell and any assessment is highly confounded by our central
bank's actions. That said, I have talked with SF restaurateurs and they're
very concerned (but this, too, is confounded by the "SF Employee Mandate" and
by the effect of the tradewar on China's funding of US trade tourism (group
reservations at SF restaurants are trending way down))...

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rhacker
Perhaps if they made the minimum wage a function of inflation, these shock
changes wouldn't even be a blip on any company's collective minds? Set and
forget.

~~~
dark567
That kinda defeats the purpose of inflation though. Part of why Keynes was in
favor of some inflation was to diffuse the effect of sticky wages, if that's
the case you don't want to ensure wages stay sticky via law.

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adolph
To the degree that low value work activity cannot be outsourced to areas where
the wage is more closely aligned with value, the “gig economy,” the “shadow
economy ,” or firms small enough to be exempt from min wage then it will be
supported by systems of cross subsidies best implemented by large
corporations. The work will get done at a cost not too different from the
value created. Outlawing low wage work is like outlawing drugs—it feels like
the right intervention to folks who like interventions and like any barrier is
only effective insofar as human ingenuity has limits.

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jeandejean
It is a bit fast to claim that rich and full employment cities raising their
minimum wage have no adverse effect, while it might have just compensated cost
of living raising too.

The article only focuses on the fact that proponents of the status quo are
proved wrong so far, but only scratches the other side of the coin that
clearly says these results don't mean raising to absurd levels would have no
adverse effect.

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vpmpaul
Real minimum wage was already $12-$14 pretty much anywhere. It basically just
removed the 7.25 training wage for the first 3 months.

~~~
rb808
[http://www.ncsl.org/research/labor-and-employment/state-
mini...](http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-
chart.aspx)

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maerF0x0
One reason to have minimum wage as a lagging value is during deflationary
periods.

During a deflationary period people need to have the legal right to work for
less when it's in their best interest.

Additionally, if companies are find paying a higher minimum wage, this article
implies that workers should just negotiate higher wages.

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wayoutthere
We should peg minimum wage to some multiple of the 5 year rolling average of
per-capita GDP.

~~~
asdff
Peg it so full time hours is 3x the local 1br apartment rent, then it would
make a difference for so many people currently working 60-80 weeks to live
paycheck to paycheck, unable to save enough to even afford the proportionally
massive upfront cost of moving to a cheaper area.

~~~
0xffff2
Ha. 3x the local 1br apartment rent would put minimum wage higher than my
current salary as a software engineer in the bay area (granted, I'm a
government software engineer, not a FAANG software engineer). I don't know how
many localities this would work for, but given the comically high wage
(~$55/hr) you would get in many bay area cities, I'm guessing it's not many.

~~~
asdff
Yikes. LA area those numbers look more like $24 an hour on average. Perhaps in
exceptional places like the SF bay area it would make more sense to invest in
large scale public housing projects, with rents capped to 1/3 full time at
minimum wage.

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elamje
I am not educated enough about the topic to pick a side about if higher wages
will lead to less jobs, but from my perspective I would imagine the evidence
to reveal itself in a recession, not the current economy.

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kp98
I think part of this is linked to not being at market equilibrium in low skill
jobs. For example there are over 6 million jobs not filled in America most of
which are low skill, some of which are due to structural unemployment like
server staff turnover after the busy season.

The minimum wage right now is lower than it needs to be, which artificially
create more businesses on the low end of the spectrum. If the minimum wage
went up I think you’d see fewer small businesses with fewer openings, but the
remaining workers would get a pay raise and the market could handle it.

For example perhaps instead of 6.5mm open jobs and $10 min wage on average and
3% unemployment you’d see 2mm open jobs and $15 min wage with marginal change
in unemployment.

Just an illustration to explain my thought

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microcolonel
The jurisdictions selected for study already had market labour rates near or
above the new minimums, so the expected effect should be something
approximating zero.

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buboard
That doesn't prove the wage rises were needed, though.

~~~
commandlinefan
All it seems to prove is that the hikes haven't caused problems yet. And we'd
better all hope that they don't, because it actually is impossible to lower
the minimum wage, no matter what.

~~~
asdff
I really wonder if this narrative existed the last probably 30 times minimum
wage was raised with (presumably) no adverse effects that I or anyone else can
parse out. Yet the 31st time minumum wage is raised comes around, and an
ominous cloudy fear falls over neoliberal news outlets. Funny how that works.

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AzzieElbab
hmm this was the case Ontario, Canada. I am curious if they are counting
people exiting job market or simply looking at unemployment rates. Personally
I can certainly see how a small business can become unprofitable when forced
to raise wages with it's employees simply disappearing off the market and
stats due to skills/opportunities mismatch.

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otakucode
Of course not. Workers generate profit for companies. When a company needs
more profit, they hire more workers, not less.

------
the-dude
But are workers better off?

------
turc1656
I think there's another explanation than the one given in the source article.
And that's assuming the base claim is true (that the expected unemployment
hasn't taken place). And that's a big assumption because I don't know much
about this site but I see that its founders come from Politico so they might
very well have a bias and want to agree with this result.

That being said, let's assume the claim is true. I think there's a bit more to
the outcome. A quick thought experiment should illustrate closely enough. If
it didn't result in unemployment increasing overall, then why not just raise
it more? $25, hell, $50 an hour? You intuitively know the answer - most
businesses can't afford that, especially when you consider that everyone above
those levels currently will also have to be scaled up as well.

So if we know there is a limit to where the minimum can be raised, what does
this mean then? It means the underlying claim being made is really "government
is smart enough to determine the acceptable mandatory raise in minimum wages
that will not harm the economy."

Taking it a bit further, let's take a rational business person who is looking
at hiring someone. What's the mental math they do, roughly? They look at how
much monetary value the person could generate for the company and then they
look at what they will need to pay that person (including benefits, payroll
taxes, and all other fringe costs). If the costs are greater than the value,
it's a hard no. If they are roughly equal, then it's a maybe since you still
have more paperwork and general nuisance stuff to worry about when managing
someone so it's a "is the juice worth the squeeze" scenario". And anything
solidly in the green is a go.

So, for example, if you own a janitorial service where corporations hire you
to come clean at night and you pay your cleaning staff $12 an hour, benefits
are $3 an hour and you bill the companies that hire you $18 an hour, you have
about $3 per person per hour to account for any fixed overhead for the
business and profit. If your state suddenly says you have to pay them $15 an
hour, you have to raise your prices. There's no other option unless you let
people go and force the remaining to work harder, faster, or do a worse job
and rush through.

If, however, your profit margins were much higher and you were charging
$20-$25 an hour to the companies, you could simply absorb that difference and
you will just be eating the added cost in the form of lower profits if you
have a competitive business.

And I think that is where we're really at with this currently. Many of the big
companies paying low wages have revenue per employee numbers that far exceed
the cost of the employee and as such the increase can be absorbed for those
companies. Or, their business is so large and the volume per employee is so
much that the increase is negligible. Think Walmart - how much per item would
the prices have to be to meet such raises? 3% maybe? I saw a study done in the
farming industry that said they could _double_ the low wages of field workers
by increasing the cost only 7% because the labor cost of food is about 7%.

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Wh1skey
This is leftist propaganda. Increasing minimum wage pushes more people into
poverty. The majority of people in poverty vote left.

Why does increasing minimum wage push more people in poverty?

Because an increase in expenses does not guarantee an increase in revenue. If
your expenses increase while your revenues remain stagnant, you have to
decrease your expenses in order to stay cash flow positive. To compensate, you
decrease the number of hours employees receive. Less hours translate into less
employees required. When the people who are earning minimum wage can't find a
job because of the lack of hours available or can't receive enough hours from
their employer, they are falling into poverty.

