
$15 Minimum Wage Would Leave 1.3M Jobless, Lift as Many Out of Poverty - JumpCrisscross
https://www.wsj.com/articles/15-minimum-wage-would-leave-1-3-million-american-jobless-lift-as-many-out-of-poverty-11562611503?mod=rsswn
======
iscrewyou
"Potential job-loss outcomes range from between about zero and 3.7 million
workers."

Here's the publication:
[https://www.cbo.gov/publication/55410](https://www.cbo.gov/publication/55410)
Here's the report:
[https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWa...](https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWage2019.pdf)

From the report: "In an average week in 2025, the $15 option would boost the
wages of 17 million workers who would otherwise earn less than $15 per hour.
Another 10 million workers otherwise earning slightly more than $15 per hour
might see their wages rise as well. But 1.3 million other workers would become
jobless, according to CBO’s median estimate. There is a two- thirds chance
that the change in employment would be between about zero and a decrease of
3.7 million workers. The number of people with annual income below the poverty
threshold in 2025 would fall by 1.3 million."

By 2025, automation should be way ahead than we have here. I wonder how that
would help or not help these numbers. Maybe the overdue recession will
increase the jobless number. Or the economy will keep trucking on and the
number would be close to zero. So many questions, so little answers.

~~~
mdorazio
Better automation tools would almost certainly increase the chance of large-
scale job loss in the event of a minimum wage hike. From a business
perspective, it's a cost-benefit calculation - when the cost of automating a
job is lower than the cost of paying a human to do it, automation will
eventually win. If automation cost goes down and human labor cost goes up, the
threshold shifts in favor of fewer human workers (although the profits get
redistributed to the remaining workers/owners, so you get a continuation of
today's inequality push).

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frgtpsswrdlame
Doesn't strike me as particularly balanced (from the economic not political
angle), it takes a strictly negative view of the effect of minimum wage on
employment. This is the view the theory would support but is actually in
empirical dispute as dueling studies continue to come out. They don't account
for a single positive effect on employment from raising the minimum wage, even
in just the estimated ranges of the effect, yet just two years ago we had 600
economists sign a letter in support of a $10 min wage which included this
statement:

"Research suggests that a minimum-wage increase could have a small stimulative
effect on the economy as low-wage workers spend their additional earnings,
raising demand and job growth, and providing some help on the jobs front."

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

Even within the document when they talk about the uncertainty of effect the
minimum wage has on employment they're talking about uncertainty of magnitude
(negative) and not uncertainty around the direction of that change.

Take a look at:

"By boosting the income of low-wage workers who keep their jobs, a higher
minimum wage raises their families’ real income, lifting some of those
families out of poverty. However, real income falls for some families because
other workers lose their jobs, business owners lose income, and prices
increase for consumers. For those reasons, the net effect of a minimum-wage
increase is to reduce average real family income."

I think if you read that quote to different economists who study the minimum
wage you would find very, very different opinions on how true it is.

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js2
Link to CBO report:

[https://www.cbo.gov/publication/55410](https://www.cbo.gov/publication/55410)

There's some subtlety worth quoting in contrast to the headline:

"CBO estimates that there is about a two-thirds chance that the change in
employment would lie between about zero and a reduction of 3.7 million
workers."

"There is considerable uncertainty about the responsiveness of employment to
an increase in the minimum wage. If employment is more responsive than CBO
expects, then increases in the minimum wage would lead to larger declines in
employment. By contrast, if employment is less responsive than CBO expects,
then such increases would lead to smaller declines in employment. Findings in
the research literature about how changes in the federal minimum wage affect
employment vary widely. Many studies have found little or no effect of minimum
wages on employment, but many others have found substantial reductions in
employment."

~~~
ptyyy
Direct PDF link:
[https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWa...](https://www.cbo.gov/system/files/2019-07/CBO-55410-MinimumWage2019.pdf)

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betacat
"Potential job-loss outcomes range from between about zero and 3.7 million
workers."

So, between nothing to a small re-training program. Go for it!

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dehrmann
Is there any good economic theory on how to set minimum wages? I thought it's
still a bit of an open question.

~~~
mntmoss
Minimum wages have some power to make an industry favor higher-skilled work
and automation(and therefore, more valuable work). When wages are low, the
whole industry is obliged to use cheap and unskilled labor to stay cost-
competitive. When that floor goes up, the businesses that shift their
investment from labor and towards capital will survive by gaining the benefits
of using automation. The resulting set of products are essentially a new
marketplace: sometimes you produce more at lower cost, or less at higher cost
but higher quality, but the consumer benefits from this introduction of
technology either way.

Therefore the consumer-friendly policy interpretation is to gradually raise
minimum wages as new methods of using capital are introduced, and allow the
labor to transition from the unskilled to the skilled jobs.

However, what's left out is the skills gap in recruiting for the new jobs;
it's hard to find qualified people, and it's hard to find a job right for you
when the field is always changing. The market is not great at coordinating
this transition on its own.

~~~
dehrmann
So raising the minimum wage without worker training is similarly bad to low-
skill jobs lost from free trade? Are free trade and raising the minimum wage
almost complementary?

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everybodyknows
An organic farmer friend of mine, who works a leased plot single-handed, told
me he figures he's making $12/hour at it. The plot is big enough to scale up,
but at $15/hour here in California, he doesn't see a way to make it work.

Highly-automated agribusinesses, especially those located elsewhere, don't
have this problem. Neither do farmers willing to break the employment law. But
my friend for some reason doesn't seem to want to become a professional
criminal.

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wmil
It'd be very interesting to see if people on the fight for 15 campaign would
support starting off by setting a $15/h floor for temporary labour (H2 class)
visas.

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nostromo
If the government wants someone to have something (more money, healthcare,
etc.) then the government should provide that something to someone.

All of these programs that shift costs onto employers are fundamentally flawed
for many reasons. The most obvious reason is that lots of people aren't
employed.

~~~
timbuckley
This is also why universal basic income is a fantastic policy.

~~~
wj
I still haven't seen that math work but am intrigued by the idea as too many
people are being left behind today let alone as automation continues to
proliferate.

~~~
super-serial
Watch some videos of Andrew Yang explain his plan for UBI and how it could
work in America.

He's the only Presidential candidate that is providing pragmatic solutions to
handle a rapidly changing economy.

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justaguyhere
_That was a reversal from an earlier comment he made in a debate, saying the
current wage level was too high_

That line is about the president. Current wage level is "too high"??!! How out
of touch are the people running for (and holding) office?

~~~
krapp
> How out of touch are the people running for (and holding) office?

"I started off in Brooklyn, my father gave me a small loan of a million
dollars..."

~~~
dragonwriter
> "I started off in Brooklyn, my father gave me a small loan of a million
> dollars..."

To be fair, that loan was small compared to the $400+ million his father
funneled to him later in tax-evading fake business.

But, yeah, thinking that getting a “small” million-dollar loan would make him
look like a everyman turned self-made success is pretty out-of-touch.

~~~
krapp
>But, yeah, thinking that getting a “small” million-dollar loan would make him
look like a everyman turned self-made success is pretty out-of-touch.

The weird thing is, it still worked. And you could probably fill a book with
things he's said that would have killed anyone else's political career. He
should get out of real estate and politics altogether and sell DuPont whatever
it is that keeps shit from ever sticking to him.

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obenn
I'm just wondering why we seem so fixated on 15$. Have we considered if 9$,
12$ or any other value might be more optimal from a utilitarian perspective?

~~~
dstaley
I don't understand why the federal minimum wage isn't pegged to regional costs
of living. I'm sure a $15 minimum makes sense in San Francisco, but should we
force small, rural towns to also pay $15?

~~~
dehrmann
It really should be, and policies like this make progressives come across as
coastal elites to people making $20 per hour in small towns.

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blacksqr
"There is considerable uncertainty about how the employment of either teens or
adults responds to changes in the federal minimum wage."

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rwoodley
Very predictable article from the WSJ.

They hammer these 2 points relentlessly year after year: Tax cuts for the rich
are good for the economy. A minimum wage for the poor is bad for the economy.

Of course they are only interested in what's good for all, and not what is
good for their wealthy readership.

Please.

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lostmymind66
Raising the minimum wage is only a band-aid. Within a few short years,
inflation picks up and your $15/hour won't really go as far anymore.

Australia and Scandinavian countries are good examples of this in action: high
minimum age, but everything is ridiculously expensive.

It's much better if we provide education, so people better themselves and
increase their value in the workplace.

I feel like this is only used by the politicians, who don't really care about
people getting out of poverty, and want people to not only vote for them (for
getting a government-enforced raise), but be dependent on them for life.

~~~
NeedMoreTea
UK's experience since introducing a minimum wage doesn't bear this out. All
the warnings of inflation, fewer jobs and so on were given. They haven't come
to pass.

Even those you might expect to stand against a minimum wage, like some of
those bodies and the Tory party who argued hard against its introduction, have
called for increases beyond inflation.

~~~
lostmymind66
The minimum wage was set only to $4.71/hour in 1999. The reason there was no
inflation is because most companies were probably paying somewhere around this
wage already. Just because there was no minimum wage set, doesn't mean there
wasn't a minimum wage dictated by the free market.

Let's try doubling it, like having a $15 minimum wage and see what the actual
changes would be.

