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Los Angeles Raises Minimum Wage To $15 an Hour
HughPickens.com writes: Jennifer Medina reports at the NY Times that the council of the nation's second-largest city voted by a 14-1 margin to increase its minimum wage to $15 an hour by 2020. Los Angeles and its almost 4 million residents represent one of the biggest victories yet for those pushing wage increases across the country. Proponents hope it will start to reverse the earning gap in the city, where the top 7% of households earn more than the bottom 67%.
Detractors point out the direct cost increase to businesses, which could total as much as a billion dollars per year. If a business can't handle the increased cost, the employees this measure was designed to help will lose their jobs when it folds. An editorial from the LA Times says it's vital for other cities nearby to increase their minimum wage, too, else businesses will gradually migrate to cheaper locations. They add, "While the minimum wage hike will certainly help the lowest-wage workers in the city, it should not be seen as the centerpiece of a meaningful jobs creation strategy. The fact is that far too many jobs in the city are low-wage jobs — some 37% of workers currently earn less than $13.25 an hour, according to the mayor's estimates — and even after the proposed increase, they would still be living on the edge of poverty."
Detractors point out the direct cost increase to businesses, which could total as much as a billion dollars per year. If a business can't handle the increased cost, the employees this measure was designed to help will lose their jobs when it folds. An editorial from the LA Times says it's vital for other cities nearby to increase their minimum wage, too, else businesses will gradually migrate to cheaper locations. They add, "While the minimum wage hike will certainly help the lowest-wage workers in the city, it should not be seen as the centerpiece of a meaningful jobs creation strategy. The fact is that far too many jobs in the city are low-wage jobs — some 37% of workers currently earn less than $13.25 an hour, according to the mayor's estimates — and even after the proposed increase, they would still be living on the edge of poverty."
Is Slashdot TRYING to lose readers? I thought this was a TECH forum.
I love seeing this crap in American articles. "Oh Noes! If we pay people more, it will cost businesses more!"
Lets look at this for a second.... Who are a businesses customers? Hint: It's the people who get paid a wage. These people get more money, more businesses get more customers. More customers mean more sales. More sales means more profits.
Is it really that hard to grasp that concept?
Sendmail is like emacs: A nice operating system, but missing an editor and a MTA.
Minimum wage is a stupid answer to inequality. It raises costs for business, forces those at the margin out of business entirely, and does nothing for the unemployed except increase their number and raise the barrier to them getting a job.
The correct answer is "basic income". But that would mean lower costs to business, but higher taxes, so we can't have that.
So, they want the government to force the minimums up higher to "living wages," but they don't think everything else will just inflate along with it? Everyone's salaries go up, too! Yay! Wait, groceries and gas just went up too! BOO! Whoa, the dollar is now worth 2 pesos? QUICK, CASH IN YOUR MONIES FROM ACAPULCO! Dude, where's my retirement savings?
That's almost like saying, "If consuming water is good then drowning to death in it must be better". In short, improvements are generally on a bell curve: there's an optimum level of any given factor. Too much or too little tends to create problems.
Table-ized A.I.
...until he finds out that it cost him his job: http://redalertpolitics.com/20...
What would we do without California to try stupid things so the rest of us learn good reasons avoid them?
Well, so you're saying that there is an upper limit beyond which a minimum wage becomes harmful. So there must be a mechanism that kicks in that imposes that limit. So, explain what it is.
(While you're at it, also explain why businesses would pay $15/h for a worker who doesn't increase revenue by significantly more than $15 for each hour he works.)
I think it's more *likely* to turn out to be a well-meaning but ultimately meaningless gesture. We're trying to optimize something in a very complex system, and we seem to think if we just make sure all the poor people get $30,000 a year, we've solved the problem. I remain deeply, profoundly skeptical that a legislative solution as simple as "give them more money, then they won't be poor," is going to help very much.
If I'm running a business, and my payroll increases 30% while sales remain flat, I have two options:
1) slow or stop hiring, cut staff, or even go out of business;
2) raise prices to reflect the increase in wage expenses;
I don't see how either of those outcomes is very good for poor people struggling to get by on $15 an hour, even though we can console ourselves that we've "done something" to help them. Now, I am, admittedly, not an economist - perhaps it will work, or at least, it will help. But I really have sincere doubts that this is going to do much to really change the dynamic at the low end of the economic spectrum. I think it will largely end up being a feel-good measure that well-off, well-meaning people can use to congratulate themselves about, while doing nothing to change the fundamental reality of low wages and poverty.
I *hope* that I'm wrong. I honestly do. But I suspect this will be less helpful and beneficial than all of the celebrants shouting about a victory for the little man seem to think. I have no problem with trying to address wage disparities, but I think the solution is likely going to look a lot more like government- and industry-funded vocational training programs than it will a flat, across-the board, minimum wage increase.
I get your point but there is another point people are missing.
what about those who are making 15 an hour now??? or those making 15.50??? will they get a raise??? or has their job that they worked hard for to get the pay they are getting now be considered a minimum wage job? While this *might* help the poorest of the poor (in reality those jobs will disappear) it hurts those who DID work hard to get above the bottom. That is unless they will be getting the same percentage raise as those making min wage now that is
somehow I think this is going to do nothing but devalue jobs in the 15-20$ range
have you seen my sig? there are many others like it but none that are the same
what about those who are making 15 an hour now??? or those making 15.50??? will they get a raise??? or has their job that they worked hard for to get the pay they are getting now be considered a minimum wage job?
you do realize that the only actual harm done here is to their poor little egos? Their wages have not been reduced at all. Do you want to get reimbursed every time someone makes you feel bad?
Some of us can perform work that is work $100 an hour or more. Some people cannot perform any task worth even $5 an hour. Life is unfair.
Real jobs don't pay minimum wage. Where I live one can survive on twelve dollars an hour. It's not fun but you can get by and even have cable tv. I'm glad to see LA jack up the minimum wage and I hope all those other cities in Cali do the same. It'll help solve the water shortage problem there as jobs migrate away from the state and the people follow. I occasionally watch some of these real estate shows that have people choosing from between different houses in places like LA and San Francisco and am blown away by the real estate prices there. For what you can buy here for less than 100 grand it often will cost half a million or more there. My electric bill here runs about $100 to $300 dollars depending on the season, a months water bill (including trash pickup) is usually around $30. The mortgage on my 3 bedroom 2000 square foot house is $590 including taxes and insurance. A dollar here is not equal to a dollar in LA.
No jobs naturally exist, which cost more in wages than the wealth they generate for the employer.
does that mean we can fire the police and firemen? how about the dogcatcher? the trash men? none of them generate any revenue at all.
I'm normally pretty libertarian when it comes to issues like this, but it doesn't surprise me especially in a state like California where the cost of most things has become overinflated. Wages are typically the last thing to rise...but something is different here...
The government's "basket of goods" used to calculate inflation is blatantly false and misleading, as are its unemployment numbers (look at U3, not the cooked statistics you hear on the news that were called out by Gallup's top guy). Particularly in a state like California where most of the population lives in a few densely-populated areas with horrible traffic and ever-rising rents and house prices, inflation has already greatly impacted individuals. The federal government has already encouraged this by making the FHA loan conforming limit different for high-priced California areas. Between this and speculators buying and sitting on houses as investments, the average slug has zero change of owning a home and struggles even to rent due to the growing techie population.
The difference is that the gap in overinflated places like California has been extended beyond any reasonable means by expansion of debt. It's all about the monthly payment for a good, not the total amount out of your pocket for that good irrespective of repairs and devaluation. Between the large bank failures and the constant pumping of the money supply, it appears that the debtors will win and the savers will lose at the expense of substantial amounts of inflation simply because compensation for productivity has to be based on something somewhat tangible, even if it's intellectual property. That underpinning simply isn't there. This is a giant souffle that will be hardened into place from the top and pull the bottom up with it.
So yes, raise the minimum wage if you will. But those prices will be passed along to consumers. Those in LA and the rest of California and like places should get used to $9-$10 McDonald's meals and $2 cans of soda and $2.50 for a basic pack of gum. Other than austerity and contraction (which may cycle multiple times between inflation before all is said and done), this was the only possible outcome whose chickens appear now to be coming home to roost. Welcome to the new normal, with effectively no consolation for the minimum wage earners.
Hope they manage it as well as illegal immigrate.....err yeah. Hope they manage as well as the electrical grid....oh wait. Hope they manage it as well as the highway system....hmmmmm. Hope they manage it as well as the water supply.......well fuck.
I'm always amazed that Americans are so poorly paid, and have terrible work conditions
And I'm always amazed that people think the condition of one American is the condition of all Americans. I have it on good authority that there is homeless street person in Berlin. I'm amazed that Germans have no homes and live in the street! Right? Right.
... adults with very poor prospects.
... yeah, it doesn't go well. So, Mr. Foreigner Who Comes From A Place Without Any Such Problems, what do you propose? Criminalize crappy parenting and toxic social influences?
What you should be amazed by is that there are subcultures in the US that still haven't figured out that treating school like a chore to be avoided, and one's own children like an annoying stray dog to be left outside do its own devices results in
Entry-level, minimum wage jobs aren't supposed to be careers. It's the sort of thing a high school kid or college freshman should be holding while getting ready for a real life. When some poor kid is born into an uneducated household with only one parent sticking around, and attends (for a little while) a school where the kids all agree that learning to do things like communicate clearly and think critically is for chumps, and the real local power structure is a spectrum of street gangs and thugs
Don't disappoint your bird dog. Go to the range.
You thought you were avoiding the trap of his question, but the reality is all answers lead you to a trap, because raising the minimum wage is dumb policy. Your bell curve comment makes no sense and I think a bell curve is not what you mean. What you mean, I think, is that raising the min wage improves the lives of everyone or at least a subset of socioeconomic strata, then at some point you get diminishing returns for that subset, and then at some point you actually have negative consequences for that subset. So assuming that is what you mean, that isn't a bell curve concept, but I get why you said that. Let's assume that's what you mean.
Unfortunately, that does not make sense. You seem to have ignored the very valid point my friend made at the end of his post, which is unfortunate because that was the KEY point. Most policies like this only sound good if you assume an otherwise static economy. But that's silly. In this case, if Sally's work output is worth $13 per hour to the company, so long as her wage is less than $13 per hour, she is likely to have a job available (gross oversimplification, but true enough for the purposes of this discussion). Now suppose Sally's city imposes a $14/hr min wage. Sally is ecstatic about getting a raise until she instead gets a pink slip. This is because the company will produce less output. The company will not produce incremental output from Sally, because every hour Sally works means a loss of $1 in profit. An actual loss of $1 per hour; don't get confused and think I am referring to a loss relative to a lower wage. I am speaking about Sally being a net negative on the company's financial viability because every hour of her work costs $14 but her output is only worth $13. The company will let Sally go. Further, this is what should happen to keep the economy healthy; otherwise you are pumping $14 into a machine and getting $13 out of it, when an economy is supposed to do the opposite.
So the mistake your side makes is misunderstanding that at every incremental raise of the min wage, jobs are lost. It doesn't matter that workers have more money to spend, unless that increase in volume leads to inflation of prices, this resulting in Sally's output being worth $14+ from inflation. But your side insists min wage increases do not cause inflation and only lead to higher demand (volume). If volume demanded increases without inflation, that actually has no impact because Sally's company will not produce more units at negative margin. In fact Sally's company will produce less than before the increase in demand.
And if it does lead to inflation, Sally may not get canned, but that is a regressive cost that will hurt many lower wage workers and definitely the unemployed, whose benefits are not indexed to local inflation.
Texas.
You're right, let's get ahead of the game now and make the minimum wage in LA $1,000/hr. Better yet, do it at the Federal level.
That should solve all the problems, right? Everyone will be rich!
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
One item not discussed is how this is a benefit for tax collectors and a much larger hit on employers than just the hourly wage difference. Wages account for about 70% of employers labor costs (http://www.bls.gov/news.release/ecec.nr0.htm).
Consider just payroll taxes. A person making $8/hour working costs their employer $8.61 after the 7.65% FICA taxes ($0.61 goes to the taxman). Raise that wage to $15 and the cost to the employer is $16.15 ($1.15 goes to the taxman).
Then there's additional costs pegged to wages, such as UI insurance "premiums" and workers comp. In California UI insurance has a maximum cost, but runs up to 6.2% on first $7000 of wages before maxing out. In California, employers spend $3.48 in workers comp cost per $100 in wages paid.
Benefits employers paid (vacation, sick days) account for about $2.16 per hour worked on average (about 6.9% of average hourly wage).
Raising the minimum wage entails all those additional costs too, so jumping someone from $8/hr to $15/hr changes the costs to the employer from about $10.40 to about $19.50 (assuming 30% of labor costs are non-wage). It's not a $7 additional cost, but a $9.10 additional cost (of which the majority of the difference goes into the state tax coffers *before* the wages are subjected to the income tax and sales taxes).
Because the manager knows that if he fires that worker, he shrinks his own little empire by one worker?
Spoken like who has NEVER actually had an employee. Every small business owner I know hates having employees.
Employees add stress. The only reason a business hires people is because they either can't do it all on their own or
because employees make them more money than they cost. That spread doesn't have to be much. If you have 20
employees and each employee makes you $1/hour more than you pay them then assuming you are working yourself
you are doing pretty good. Now, if minimum wage jumps by $5 per hour then that $1 per hour profit is gone and you
either charge more or you fire that employee and figure out how to do it without. I've met many a small business
owners who have talked about getting rid of their employees and turning away work just because the amount of extra
money an employee brings in is barely worth the headache of having ermployees. A massive wage hike would
make that a lot easier. One such company that did just that was Churchill Trucklines from a town near me. The
workers went on strike and demanded more money and the owner said screw it I don't need this headache and
layed off all 2000 employees.
When minimum labor costs get too high for valuable or popular work, we end up with a lot of "volunteers." This happens all the time in science and medicine. In general, minimum wage hasn't had an impact on this (yet). Young scientists understand that working on a high profile project or in a "real world" clinic is good for your career. There's already enough downward pressure on scientific wages to prevent even the most jaded PI from offering a minimum wage position to paid technical staff. That all said, the average (non-graduate, but paid) student lab worker at UCLA makes $14/hr, with a $9/hr minimum. $15/hr is above the minimum salary for graduate researchers on campus. (Not picking on UCLA, their salary info is public and easy to search.)
So, we're getting into territory where minimum wage laws are putting cost pressure on scientific work. Interesting and a bit sad.
Will this even apply to schools? The federal and state governments usually don't apply all labor laws to universities.
I suppose University of Washington has the same issues. It would be nice to think that some of the more bloated administrative budgets would take a haircut to pay the student workers a bit more. It would be very sad if it simply became normal for young scientists to "work" for free their first few years.
Ok, since you have such a great understanding of economics, please explain to me how it's a good thing that the Walton family has more wealth than 40% of Americans (that's 129 Million Americans) combined, yet pays their full-time workers so little that they can't afford food or a place to live without welfare and foodstamps? How does it help me that my tax dollars have to subsidize Walmart employees (we're not talking about lazy drug addicts, we're talking about hardworking fulltime employees) when the company makes such huge profits? How does it help the economy when those employees can't afford to buy products that other companies manufacture and sell?
Or does it just benefit the 6 Waltons that are on Forbe's list of billionaires?
I'm saying it's crazy to pay someone 15 dollars an hour to ask someone if they want fries with their Big Mac. Kids hold most minimum wage jobs. People start at the bottom. If you're 50 years old and you're still slinging fries and soda pop then you're just not trying. The fucking deboners at the local chicken processing plant down the road where I live make 4 dollars over minimum wage. The guy changing tires at walmart does too. Minimum wage jobs are not meant for kids or people that have zero motivation. Hell, my lawn guy makes more fucking money than I do and most of it's tax free. My daughter straight out of high school got a job at Lowes making 50 cents over minimum wage. After two months they gave here a 2 dollar raise. She left there after 6 months more and got a job at Frito Lay putting chips in a box. Stuffing boxes with chips now for nearly 15 dollars an hour and that was back in 2002. I made almost twice that but I was in my 40's then and she had much better benefits. I don't really care if they jack the minimum wage up though as I've seen it done so many times over the years. Neither side's predictions come true. The people that say it'll make things better are wrong and the people screaming it'll destroy the economy are wrong. It always balances out after a little while.
Is where they indicated that neighboring cities must do the same or businesses will migrate away.
That, in a nutshell, just described democratic federal policy. It only works if there's no escape.
Bullshit article...
The minimum wage for Seattle isn't $15, it's $10 or $11.
It won't be $15 for several more years (between 2017 to 2021 depending on various thing like size of the company, type of compensation, medical benefits, etc.).
Source: http://murray.seattle.gov/minimumwage/
Instead of blaming it on the "subcultures", blame the greater society in which these subcultures were born.
Why? The "greater society" regularly produces clear-thinking, educated, hard working people for whom minimum wage is a distant memory by the time they're still young but on to their second, better job. The problem actually is constrained to sub-sections of the society. Places where the government spends more per student on education, positions endless arrays of social services, and heaps money in program after program designed to provide the entitled equal outcomes you think should occur. But it doesn't work. Why? Because it's not about how much money is thrown into such programs, or whether the mom and pop store on the corner is suddenly force by the government to pay $15/hour to the kid who comes by for a couple hours a day after school to unload a truck or whatever.
What it's about is what happens when that kid goes home. Do his parents speak English? Do they get involved in his homework? Do they stay away from street crime and other influences that wreck households? Are they giving the kid the huge, proven advantage of having given birth to him in a family that will actually bother to have two parents pooling their time and resources to give the kid a decent start in life?
Should "the greater society" step in and force uninterested, absent parents to spend the 18 years of daily hours needed to raise a productive human being?
Don't disappoint your bird dog. Go to the range.
Poverty cannot be legislated away. Poverty can only be produced away. Did anybody here ask themselves a simple question, why is the government raising minimum wage to 15USD/hour BY 2020 AND NOT TOMORROW?
Because they KNOW it will hurt the economy, but it is a populous move (designed specifically for the economically illiterates, just like you), to make it look like the government does something, while the horrible economic effects of the actual increase will be disguised by being stretched in time over the next 5 years.
"Trickle down" economics means economics of savings and investment and "job creator theory" means that investments and businesses create jobs. That is how money is made, by creating it by production and production is business. Consumption is a trivial consequence of production, nothing else and without something being produced first it can never be consumed at all.
You can't handle the truth.
Hmm sounds like Hostess. They kept paying the demanding wages of the union workers but never raised prices (God bless them for that) but eventually the workers demanded too much and so Hostess decided to close up shop instead (the assets were eventually purchased). That's one of 2 scenarios that happens when workers demand raises. The other is prices go up. Now, on a single company scale that isn't much of an issue but if businesses across the board raise prices due to hikes like a federal, state or city minimum wage increase then we're talking about adversely affecting a lot more people when those prices go up because now more people have to pay more than they did before for goods and services. How many of those people are minimum wage workers? Probably most of them. So now those people are back in the same boat they were in before.
this nation, under God, shall have a new birth of freedom. -- Lincoln, Gettysburg Address
Ok, since you have such a great understanding of economics, please explain to me how it's a good thing that the Walton family has more wealth than 40% of Americans (that's 129 Million Americans) combined, yet pays their full-time workers so little that they can't afford food or a place to live without welfare and foodstamps?
The Waltons wealth did not come from their employees payroll. The Waltons wealth is in shares of the company. The company is worth a lot of money and because the Waltons own a lot of the company that makes them very wealthy.
Your argument seems to be: Owners of a valuable company should sell the company and give the money to the employees. Except who is going to buy the company if they too must then sell it and give the money to the employees?
The reason you made this argument is because you are an ignorant fuck that doesnt understand the difference between wealth and income.
"His name was James Damore."
If your business requires paying wages that are so low that your workers can't make a living and to survive are still welfare and foodstamps (that my tax dollars pay for) despite working full time then your business plan is broken.
You assume those are the only two options...
Lets say the min wage was raised to $30/hr tomorrow...
Does this mean McDonald's is screwed? Does this mean that all current McDonald's workers get a GREAT PAY RAISE?
No, of course not... It suddenly would make sense to completely automate a McDonald's restaurant, you'd have one or two $30/hr managers and the rest would be robots.
Yes, yes, you say that people would be needed to service and maintain the robots. Yes, but most of the people losing their jobs aren't remotely qualified for that job and you won't need a million of them.
---
I challenge you to look up the number of people who work in fast food in this country, imagine if half of them lost their jobs to robots tomorrow.
What would they all do?
No wonder they are small business owners:
1) they hate employees!
2) The key to growing your two bit operation is hiring people smarter than you and let them do their thing.
3) Given that they are not willing to pay a decent wage, is it any wonder that the only thing they manage t hire are headaches?
I am an employer and I actually like my employees a lot. They are smart, they work hard, coming to the office every day is basically a joy. I try to make their life as easy and as productive as possible, and I pay them as much as I can. They know this, and this works pretty well.
I believe that if every employer actually saw their employees as human beings who are doing the best they can, and treat them accordingly, the world would be a much better place.
Because any change in the minimum wage requires preparation by people it affects. You ignoring that fact and instantly leaping to the conclusion it's because "they" "know" it will hurt the economy only serves to make you look like a paranoid nutcase. Seriously. Tricke-down economics has been shown to not work. It's as if you are just saying what you've heard others claim. Tragic.