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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?
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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.
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Australia has a minimum wage of around $17USD/hour (around $20AUD) which increases 20% if you are a casual. Our poor people do well.
You know how everyone whines about big corporates making too much money; well this is the best way to redistribute that wealth.
Paying your poor people well, helps lift them out of poverty.
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Except that there's other factors in play as well. A minimum wage increase will give the bottom 60+% of workers more spending power, this increased spending will boost the income of local shops which will help to improve the local economy.
This is economics 101, for an economy to work people have to spend money, the more money that people spend the better the economy works. Increasing the spending power of the vast majority of local residents is a very good thing for the local economy.
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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 $15 for each hour he works.)
And the poor are more likely to put pretty much all their income back into the economy in their day-to-day living, whereas the rich don't.
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I get your point but there is another point people are missing.
what about those who are making 15 an hour now??? or those making 15.50??? will they get a raise??? or has their job that they worked hard for to get the pay they are getting now be considered a minimum wage job? While this *might* help the poorest of the poor (in reality those jobs will disappear) it hurts those who DID work hard to get above the bottom. That is unless they will be getting the same percentage raise as those making min wage now that is
somehow I think this is going to do nothing but devalue jobs in the 15-20$ range
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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.
It can be, but it doesn't necessarily have to. Probably the key aspect is whether it's merely a supplement, or something that is enough to live on by itself. As things currently are, people need to work to survive (at least in the USA). For the sake of argument, let's say there was a program that gave everyone enough to pay for essentials (basic food, basic housing, minor entertainment) - in that scenario, no one has to work, so they can easily tell businesses that don't want to pay them enough for their time to shove it. In such a scenario, you could freely do away with minimum wage laws, because everyone would be free to set the value of their time, in ways they can't possibly do now.
There have historically been two problems for achieving this, that are somewhat intertwined. One, where does the money come from, and two, what happens if too many people decide not to work. As technology advances though, both of these are going to become increasingly solvable as we replace human labor with automation/robotics as the primary source of production. Put another way, if robots do all the work, we're not worried that any number of humans aren't working, because the small number we need will be easily found in those who find it rewarding. As for how you pay for it, you take a portion of the money that each robot's activity earns, and use that to pay everyone, since we'll need people who can buy what the robots make. Market economies require demand as well as supply, after all.
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What happens to those who were making $15/hr or $16/hr? They're likely frequenting places full of minimum wage workers and their costs will now rise - inevitably - to at least some degree because of this. Further, they've all now been reduced to minimum wage (or close thereto) by the stroke of a pen.
Beyond that, how many jobs will now cost enough that automating them starts to make good financial sense? How many people with little to no skills - especially those without a good education who are most in need of steady legal employment - will find that their lack of marketable skills make them not worth hiring at this higher price point?
This is the kind of feel-good thing that bring down the middle class, raises some in the lower class (those lucky enough to ride the wave), and leaves behind large swaths of the most vulnerable people. What's going to happen is that people with little to no marketable skills in surrounding areas will get hired at the state or Federal minimum wage, gain some valuable experience, become more valuable employees, and then move or commute into LA to take jobs from poor, undereducated residents. This is an anti-poor measure masquerading as a hand-up. It will drive the middle class further down the chain (by negatively impacting their purchasing power), reduce the number of available jobs for everyone (and especially for residents), and drive many of the poor right into the ground.
Mark my words, within 5 years of this taking effect, all or nearly all indicators of poverty will worsen in LA.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
You know, when that story aired on Fox News, some people have actually went and asked the owners of those closing restaurants whether it's due to the minimum wage. And they have only found one place where that was a factor - and even that one has, ironically, not been in the original report.
At the same time, several new restaurants have opened, or are still planning to open, in the same timeframe.
http://www.forbes.com/sites/ri...
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.
(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.)
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.
Or in many cases, the worker does increase the company's revenue by by more than $15 for each hour he/she works but they pay them less and pocket the difference (e.g. Walmart and other big box stores) and by paying lower wages and making other taxpayers make up the difference the owners of the company just get richer. That's why the Walton family has more wealth than 40% of Americans combined (that's 129 MILLION Americans). We're talking about a company whose executives take separate private jets to the same meeting just for fun to see who can get there faster. A company whose chairman (Sam Walton's oldest son) is only in the office a few times a month, and spends the rest of his time taking his private jet from his home in the Colorado mountains to go cycling in France, or hunting geese in Canada, or bio-safaris in South America, yet pays his workers so little that even though they work full time they can't afford rent and food. Are you still going to tell me that company can't afford to pay its workers a wage they can live off of?
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.
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.
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In a sense, minimum wage is just a best effort to re-balance the market distortion introduced by the social safety net. Were there no net, people being paid less than it costs to live would be forced to quit either because their health would decline from the privation or because they would be too busy dealing drugs and robbing people to show up for work. Then wages would go up to bring people in who won't quit, go to jail, or die or the business would fold up and go away.
Since we find high crime, shanty towns, and riots undesirable, we introduced the social safety net. A side effect is that it becomes possible to capture people in a situation where they are paid less than it costs to live and the taxpayers get stuck for the rest. The minimum wage seeks to patch that up to the extent possible.
The sad reality is that people were forced to accept minimum wage jobs in the big crash and many are still stuck there because Wall Street recovered a hell of a lot faster than Main Street.
the government collects 30 times as much in taxes in CONSTANT DOLLARS as they did in 1940
Bullshit the inflation from 1940 is already ~15 times. In fact looking at your next sentences:
Now, they ran a deficit in 1940 as well, but let's think about this for a minute. If $135 Billion in 1940 would have been enough to make ends meet, then how come with three times the population now, it takes $3.2 trillion?
Because 135 billion alone in 1940 is 2.2 trillion to 2.3 trillion of today in constant dollar. Any CPI calculator will confirm that baring a few % +/-. The delta of 900 million is from federal programs which did NOT exists in 1940. From environmental protection, drug enforcement, NASA, EPA, etc...etc...
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The ignorance of this one is strong.
Sorry bud, but the Unions had literally zero to do with Hostess problems.
1) Hostess had been on the verge of bankruptcy multiple times prior to them going under.
2) More importantly, the Unions had already taken multiple paycuts to keep the company afloat.
It wasn't till the management asked for another paycut and got it only to vote themselves a 300% pay RAISE that the Unions refused another paycut as the management had shown their hand and their intentions of just bleeding the company dry instead of working to keep it going.
Hostess Unions actually helped that company, it was systemic failure of management over the course of years over years that killed Hostess.
I am an employer and I actually like my employees a lot. They are smart, they work hard, coming to the office every day is basically a joy. I try to make their life as easy and as productive as possible, and I pay them as much as I can. They know this, and this works pretty well.
I believe that if every employer actually saw their employees as human beings who are doing the best they can, and treat them accordingly, the world would be a much better place.
There aren't that many high paying wage or wage that pay above 15$ an hour and there is already a fierce competition for them.
Companies cannot find enough people with even modest intellectual skills to hire (and retain) for even modestly skilled jobs with much better than minimum wages paid. Hell, there are landscaping companies around here who will pay $20/hour for anyone that will consistently show up to shovel. Costco hires even the most basic, unskilled shelf-stackers for well above minimum wage (closer to $19).
Are you one of those which think the poor are lazy ?
Actually, in many cases that's exactly the problem. But kids born in to families where doing the work needed to become a decent high school graduate is considered unimportant or too much trouble have lazy parents to thank for that - the kids themselves usually don't know better until it's already too late to form decent habits.
You need money for a proper education
No, no you don't. The taxpayers around you will pay for your education through high school. And if you've don't anything even close to working hard, you'll have the academic background needed to get anything from substantial subsidies to full scholarships in higher education. I worked while in college, to have money. Did you?
Frankly your kind of thought are so short sighted , you should get glasses for your brain.
You have no idea where prosperity comes from, apparently.
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