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Seattle Minimum Wage Study Has Serious Flaws (washingtonpost.com)
"Remember the story from last week about how the new Seattle minimum wage law was hurting workers?" writes Slashdot reader PopeRatzo. "Well, it turns out that there are some problems with the study's methodology." The Washington Post reports:
First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald's don't. Almost 40 percent of workers in Washington state work at multi-location businesses, and since Seattle's minimum wage increase has been larger at large businesses than at small ones -- right now, a worker at a company with more than 500 employees is guaranteed $13.50 an hour, while a worker at a company with fewer than 500 employees is guaranteed only $11 an hour -- these workers' exclusion from the study's results is an especially germane problem (note that low-wage workers in Seattle have had an incentive to switch from small firms to large firms since the minimum wage started rising).
In earlier work, in fact, the University of Washington team's results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive. Second, the University of Washington team does not present enough data for us to assess the validity of its "synthetic control" in Washington -- that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers' implausible results, it's hard to believe the comparison group they chose is an appropriate one.
Suggesting Seattle's booming labor market may have skewed the study's results, two nonpartisan economists concluded it "suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all." And the Washington Post also notes the researchers' findings are suspiciously "out of step with a large body of research," including another study from U.C. Berkeley researchers [PDF] which determined Seattle's wage increase "is having its intended effect."
In earlier work, in fact, the University of Washington team's results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive. Second, the University of Washington team does not present enough data for us to assess the validity of its "synthetic control" in Washington -- that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers' implausible results, it's hard to believe the comparison group they chose is an appropriate one.
Suggesting Seattle's booming labor market may have skewed the study's results, two nonpartisan economists concluded it "suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all." And the Washington Post also notes the researchers' findings are suspiciously "out of step with a large body of research," including another study from U.C. Berkeley researchers [PDF] which determined Seattle's wage increase "is having its intended effect."
>And the Washington Post also notes the researchers findings are suspiciously "out of step with a large body of research
As in, "the large body of research" where 79% of economists agree that "a minimum wage increases unemployment among young and unskilled workers"? This is undergrad economics at any college worth its salt.
You misunderstand what a free market is.
Free market means that governments or regulatory bodies cannot set the PRICE of goods and services. There's nothing wrong in setting minimum acceptable standards.
Ex: Sure.. mandate $150/Hr. then businesses can choose to either sell at existing price+$150, get rid or replace some employees and sell at same price.
Get it? the final PRICE is what's free to be decided by businesses.
Minimum wage and free markets can co-exist. Imagine if businesses said "Hurr-durr how dare government say I have to keep my premises clean huh? this is a free market dammit!"
As with code "smells", the response to the Seattle study suffers from study "smells."
It seems the people want a certain outcome, namely, that increasing the minimum wage puts more money in the pockets of working persons trying to get by. I mean, who can be against that apart from some mean-spirited Conservatives and clueless Libertarians, no?
But isn't science supposed to be about where the data lead instead about what we want the outcome to be? This study isn't what we want to hear so oh noes, the study has flaws and it doesn't agree with all of those other studies.
I am sure this study has flaws along with every other data-collection and interpretation effort in the social sciences. My concern is with the confirmation-bias-y tone of the parent post, like the Wild West prospector who sees a few yellow sparkles and starts hopping up in down, "There's goooolllld in them thar heels!"
Most businesses pay minimum wage because they can. Not because they have to in order to stay in business.
When Walmart raised their worker's pay to $10/hour, they didn't go out of business and they are still very profitable.
There are a lot of desperate people out there who really want the work and will just about work for any pay. I've seen them wait in line at 5AM with the hopes of being called in and working on the line packing video games. Those bastards took advantage of them. They make a killing on those games and they couldn't pay a decent hourly rate?
Oh, and if there wasn't any work, sorry! Come back tomorrow and see. And they had to wait in security unpaid and wait until the line started - unpaid. So, they were at work for at least an hour and half every day - unpaid. 2 or more hours if they actually worked.
No, the lowest levels of our working people are being shit on because they can be shit on.
Thanks RIght Wing Guy!
No it doesn't make sense. Here's why.
Businesses need to pay people a MODERN working wage regardless of the profitability of the business. YOU DO NOT GET TO REDUCE YOUR WAGES TO BELOW POVERTY LEVELS JUST SO YOU CAN MAKE A PROFIT.
That is all.
You have to explain to journalists at the WaPo that "Maybe hurting some hourly workers", and "Some companies maybe cutting hours" meant that it didn't include all businesses such as McDonalds and Starbucks who play by a special and exclusive set of rules. They are part of that "elite" and "special" group and comparing them to smaller mom and pop businesses is like comparing apples and oranges.
The real story on this should be about how USA Today failed to make the bias known to readers. But then we wouldn't be feeding those snarky know-it-alls at the Washington Post now would we?
If it's better when you include min wage at $13 than if you just have min wage at $11, that proves that the $13 min wage is better than $11 for the health of the economy. Maybe they need to make the min wage $13 for small businesses and $15 for large businesses, so they can see if $15 is better still. And if it is, move them both up until it looks like there's no difference in outcomes. Then you'll know the best level to have the min wage at, right?
Since large businesses have more reason to avoid taxes via shady means, the difference between the min wage for small businesses and large businesses should remain, as this is one way to level the playing field of unvoidable costs.
Remember, a mom-and-pop business may be able to use the same tax loopholes, but paying an accountant to use it may not pay back enough to pay the accountant for the time taken to do it, but while the benefit to using the loophole increases with increasing taxed income, the cost of using that loophole remains the same.
Just because you can find an intuitive justification doesn't mean your intuition is correct either. And the fact that the study is flawed and the *other* studies on the same issue that don't have known major flaws point in the opposite direction are pretty good evidence. Time will tell, of course.
A more advanced economics course would explain that a distribution of wealth amongst the poorer increases monetary velocity (simply put: more people can afford to buy simple luxuries), which increases demand for products, which increases demand for employment, thus counterbalancing the depressing effect of higher wages in a virtuous cycle.
The above sometimes happens, empirically. But it doesn't always happen. Your introductory scenario also doesn't always happen. It turns out that economics is very complicated and you can't just top at what was taught in the first week of high school economics, you need to study the actual effects.
There are other factors. Industries sometimes choose low-wages and high turnover instead of higher wages and lower turnover, when the actual cost difference to the business is minimal. A higher minimum wage forces the business to choose something closer to the higher-wages lower-turnover end of the spectrum, to minimal effect on the business. It's also known that, to a point well in excess of any minimum wage anybody is considering, higher paid people tend to be more effective at their jobs -- it's not just that more effective people are more highly paid, it's actually a virtuous cycle. They've done studies where people test 13 points higher on IQ tests overnight when they go from having no money to having about a year's worth of money.
Obviously at the extreme of a $10k / minute minimum wage, nobody would hire anybody (unless hyperinflation happened), so there are limits. But if you're unconvinced of the possibility, I invite you to also consider something less politically fraught: https://en.wikipedia.org/wiki/.... Paradoxically, one can sometimes improve traffic by removing roads, and make traffic worse by adding roads. There are classes of problem for which the optimal form of the "Invisible Hand" gives suboptimal results. Optimizing the economy by optimizing each employment contract is a greedy algorithm, which is not always going to be globally optimal.
And he should be dropped out of a helicopter.
Looks like there are a lot more of them in the comment section. This should result in a major boom in helicopter fuel companies.
Even if the study has flaws, it makes sense in economic theory. .
But showing that the study has flaws gives a large swath of people reason to dismiss it. Those same people will readily accept similarly flawed studies claiming the benefits of min wage.
News for all you idiots; there are pros AND cons to min wage. If you can't see both you are not very intelligent.
...This is taught in introductory economics courses...
...and makes intuitive sense...
... to some people it makes intuitive sense that the earth is flat but gut feelings are not a scientific method.
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Since forever.
A person can't simply decide not to work and die instead.
Labor isn't a supply & demand market; it's supply (laborers) is fixed, giving the demand (employers) limitless bargaining power.
That is why there are things such as social wellfare and minimum wages.
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Ok: replace "workers" with "local business" or "local business workers"
Better now?
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
Do Starbucks baristas make $150K/year in San Francisco? Is minimum wage like $70/hour in California? Just curious how we've magically solved the minimum wage problem elsewhere, especially as we hear of all those poor developers practically living in poverty making six figures in the bay area.
Guess I didn't realize we moved all of the minimum wage jobs in America to Seattle.
So reading between the lines, the study's results were largely correct when talking about small businesses, higher minimum wage hurts small business. But it doesn't matter, according to these idiots because McDonalds isn't affected by it as much as true small businesses. Since when are we vouching for McDonalds and Wal-Mart as good corporate citizens?
You can't lump in McD and Starbucks because even though they do employ minimum wage, they will employ minimum wage regardless of the cost. They are large enough enterprises with high enough profit margins to absorb these costs and in the process drive out any competition from small business, which is exactly what McD and Walmart do when they're coming to a new market anyway, they operate at a loss until all the competition has starved out.
I'm surprised actually that McD, Starbucks and Walmart don't actively drive minimum wages up just so they can completely drive out every other local business. If I were an 'evil CEO', I'd do that and then when I have 90% of a market, I'd lobby to get it reduced again or even just to get my company excluded.
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It's what everybody does lately. If you like the minimum wage you'll find a way to trash the original analysis. If you agree that the wage increase depresses hours, jobs and overall pay then you will dismiss any criticism of the original report. In the end, what matters is what employers actually do. The workers will speak up on their own if it's bad or good. Spin or bias is not going to convince people that their paystub says something different than it actually is (and that it's gone up or down as a result of the new policy)
Imagine if businesses said "Hurr-durr how dare government say I have to keep my premises clean huh? this is a free market dammit!"
People would notice the smell and not frequent the business.
Self-solving problem.
I would imagine that in certain niches or scenarios that minimum wage can cause harm. The exception is not the rule though. The overall good it does should exceed all of the bad. Where there can be exceptions made to move towards the best of both worlds care needs to be taken.
Imposing a minimum wage that's greater than what results from an efficient market should result in higher pay but fewer workers.
This is where things get muddled. There's a difference between an optimally efficient market and an optimally efficient organization. An optimally efficient organization may do things like pay workers the least amount possible, avoid paying corporate taxes by moving assets to offshore accounts, and automating many jobs. Now, if many workers are give poverty wages, that may pad employment statistics but it certainly doesn't provide the market as a whole with an optimal solution. When people don't have much of a discretionary income they can't buy many things and they certainly can't take out loans (if you want an optimally efficient marketplace, you want people to be able to take out loans because loans are what create more money).
The problem with companies relocating money into offshore accounts to avoid taxes compounds this problem because their poverty-wage workers need welfare to provide them with healthcare, food supplements, and other aid such as childcare that they can't afford with their job. This problem is further compounded by the hoarding of liquid assets by executives. Without a strong progressive tax system (and all the many loopholes that allow one to avoid the intentions of our weak progressive tax system), those who make the most have such a surplus of liquid assets that most of them just sit in a bank account. While this looks good on paper, as the interest they gain increases the money supply, this surplus of money doesn't help the economy because it's not being exchanged on the marketplace. This is the problem with wage disparity. If executives made less and low-wage workers made more, then more money would be exchanged in the economy and it would create more wealth. It's a fallacy to assume that corporations and millionaires reinvest their excess profits. At some point one has all they need/want and excess wealth just gets hoarded in bank accounts.
Finally, when it comes to automating new jobs, this rarely (if ever) results in the remaining jobs reaping the benefits of the increased efficiency. The money saved goes to the top, to those executives who are already hoarding more money than they come close to spending.
The problem with a lot of the formulas you learn in introductory economics is they are based off assumptions. Furthermore, economics can make an abstraction of human life. What may look good on paper can be a miserable existence for many. I find economics to be an extremely interesting field that provides tools for evaluating systems that cannot be adequately assessed using science, but perspective is necessary when applying these ideas. Too often we can't see the forest for the trees.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
First off, if we accept the premise that workers escaped low-wage employers and migrated to larger employers, are we to believe that this was never the case before, that larger employers didn't always offer better pay and benefits packages than smaller employers?
Second, we are expected to believe that increasing the cost of labor in no way encouraged employers to reconsider and possibly cut back on the number of workers they hire and the number of hours they work? A slightly higher wage coupled with fewer hours of work per week leads workers not to enjoy more money in their pocket and increased leisure time, it instead motivates them to seek out additional work to make up for smaller take-home paychecks.
But hey, who knows - in San Francisco restaurants are closing due to increased wages for workers. Granted they are lower-reviewed restaurants, but that doesn't lessen the sting for the terminated employee or former employer when their 3/4 star Yelp-rated restaurant closes.
Ken
I've not seen a single study on this topic that didn't have significant flaws.
I doubt the majority of Starbucks, McDonalds, and WalMart employees are paid the minimum wage. In my experience (observational, not personal) they tend to offer better than minimum wage to attract employees that can function at a higher-than-minimum level.
Ken
You provide such a well thought out and eloquent retort.
It's hard to buy the whole "raises wages costs jobs" argument when the evidence is to the contrary.
Your single, cherry-picked example considered in the most superficial terms proves nothing.
How many "minimum wage" workers were there in the region before the increases, how many now? (And remember, as the minimum wage increased by 100% over the last ten years it would have scooped up anyone earning between $5.01-$10.00/hr as going from making better than minimum wage to becoming minimum wage workers.
Another point to consider, as the minimum wage increases, it chokes off first-job opportunities, leading to more unemployment in the "just out of school" age group (18-24), as previously no-skill, first-time job opportunities are eliminated because the economic incentive for the current employee to move on is removed.
Ken
McDonalds hires only the minimum number of workers to serve its business, to sack workers it would need to have a drop in sales, which isn't shown.
Or automate.
Ken
Market *does* regulate itself. It is a constant self adjusting price feedback loop. When YOU say 'regulate', what meaning do you assign to that word? There is only one meaning: price adjustment. Not 'feel good, social justice crapola', but *price* adjustment as a result of the totality of decisions by all market participants.
You can't handle the truth.
I'm surprised actually that McD, Starbucks and Walmart don't actively drive minimum wages up just so they can completely drive out every other local business. If I were an 'evil CEO', I'd do that and then when I have 90% of a market, I'd lobby to get it reduced again or even just to get my company excluded.
Because it's easier and more efficient to kill local businesses by simply leveraging your size to charge less, even to the point where your store is losing money since you can afford losses at one store when you have hundred of other stores. Then, once local competition has been driven out, you raise prices. If you want to kill a business you go after their customers, not their employees. Plus, this way you don't have to deal with the mess of raising, then trying to lower the minimum wage (good luck getting a minimum wage reduced).
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
Actually it's nearly but not quite as bad as OP's argument.
This is actually a known and well understood problem in engineering disciplines. The optimum for an entire process is NOT the same as the optimum for each part of a process. Usually the two are not even related. That is why we have things like Whole Process Optimization. This was a basic part of my classes for chemical engineering and drilled home in quite a number of assignments and projects.
What I don't get is why is this a surprise to people in other fields or in economics. If you want a system to work efficiently you have to optimize for the entire system not just tiny parts of it. With society that is a very complex problem and requires a lot of analysis so you do have to simplify to some extent but the more variables you take into account and MEASURE the more likely the system is to work.
Right now I see companies doing what is best for them and then trying to justify that it means it is also best for the system. This is a losing proposition and without some kind of external correction the system will end up tearing itself apart.
Computer modeling for biotech drug manufacturing is HARD!
That is a nice dichotomy of Keynes vis-a-vis neoliberalism, which most people would probably associate with Keynes' intellectual rival Friedman. While Friedman indeed advocated having no minimum wage, I would like to point out that this was not his central point of disagreement with Keynes'. Rather it was on the matter of whether the government should intervene in the business cycle to smooth out recessions. I also object to the idea that Keynesian economics is not taught. His normative policies are by no means heterodox, although there is disagreement on whether they are better or worse than the suggestion to not implement them by Friedman. If anything, this thread reeks of layman Marxist economics, which are both heterodox and largely not taught past their historical role due to their high specificity and different vocabulary being used for what are essentially specialised cases of general phenomena.
Who exactly do you think works in minimum wage jobs? Look, you can set minimum wage to $100/hour and you will have a fantastic increase in average wages—nobody is disputing that—but you should not be surprised when you create an enormous deadweight loss in the economy and the overall prosperity drops.
While I generally agree with the gist of your post, one thing is simply not true - rich people don't hold a significant portion of their wealth in a bank account, but buy real estate, stocks and bonds.
Things that are wrong often make sense. There's a word for it now, truthiness.
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You're right, they don't pay minimum wage. They usually pay $2-4/hr more then the minimum wage, it's the small business owners like mom n' pop restaurants, gas bars, small hobbyist stores, convenience stores that pay right at the minimum wage because their monthly profits are just enough for the owner to make ends meet if they're lucky(and providing they're not the ones who are there for 15hrs/day anyway). Strange thing though, every time these bumps in the min. wage happen those big name stores also stop hiring full-time workers, and rely more heavily on part-time. That's the case going on here in Ontario as well, which has had 2 big bumps in the min. wage and the same government just pushed through a $15/hr min. wage.
People who would have worked their way through the layers from PT to FT to management will never get there now, and there's far greater chance that their job will simply be automated out of existence. That's what the Mc'D's in Ontario are planning, and Wendy's and Burger King and Tim Horton's are now looking to do. Places that are unionized like Zeher's are also increasing self-checkouts, more automation, the bottom of the barrel stores like Food Basics or NoFrills are pushing more automation more self-checkouts as well. All those people are going to end up jobless, and the best estimation is talking 25-43% unemployment for this province. How the fuck is that not going to cause mass social unrest?
Om, nomnomnom...
Remember economics is a social science. It might be wrong even though taught as basic economics.
-- Make America hate again!
No, what we have here (your message) is a hyper partisan upset the one study that confirms his pre-existing bias turned out to be deeply flawed. Of course this article must seem like a liberal conspiracy! The one (and only) study showing job losses just has to be true.
This same thing happens with anti-vax and climate change denial. People who really want to believe these things cling to a small number of discredited studies and insist the large number of others contradicting their views don't exist.
Numerous states and cities have passed substantial minimum wage increases. Most are still gradually phasing in, many reaching $15 around 2020 to 2022. Plenty more studies will be published over the next several years.
I have a feeling you're going to be quite busy denying more and more of them as liberal conspiracy.
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Easier yes, but dramatically less accurate. Quite suitable for an introductory class attempting to communicate the basic concepts, but not for anything else.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
If the business didn't have a valid business plan because they didn't properly budget for labor, that just artificially lowers the price of the goods to fake a profit.
This is basically what Ford did in his production plant back when the Model T was the craze. He paid an insanely high wage, which led to very few sick days and near perfect retention, because people would have rather killed themselves than losing a job that paid about twice of what they could otherwise earn. This in turn led to very high productivity because people knew what they were doing, which also led to much higher product quality and very low waste.
Higher wages will make people move to the area if possible, and they will also want to keep their jobs. And people with money spend it, and spend it locally which in turn drives the economy.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
So you don't want to account for higher productivity? Companies can actually see advantage to better wages and benefits. It's far more nuanced than "if wage higher then prices higher".
The world's burning. Moped Jesus spotted on I50. Details at 11.
I need money. Not an occupation. I can find something to do with my time just fine.
If you job doesn't pay decent money, it's worthless and you can as well shut down for all I care because the world is no poorer without your "jobs".
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The lie was too transparent, and too easy to shift the blame for failing on someone else. The capitalist lie is much more insidious and personal.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Any economic study will have limitations. You can't do repeatable experiments, and any controlled experiments are usually in toy environments (like undergrad economics classrooms). All else is never equal, many relevant measures are unknown, and the fact that we have way more variables than data points means any model is terribly underconstrained.
As Arnold Kling often points out, most social science has a level of "casual density" that gives a lot of room to explain things the way you like, so economics (as an example) tends to have a lot of frameworks of interpretation -- ways to look at the world, usually with the effect of reaching desired conclusions -- rather than well-understood, solidly supported models.
The currently real existing capitalist market economy is invariably lopsided against the demand side, to the point where it cannot fulfill its duty. In a working capitalist model, the demand side has to choose between the offered products, choosing the best and thus "rewarding" those that produce what the demand wants, which means that those that do not offer what demand wants have to perish due to a lack of customers.
Now explain Comcast.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
That is from various polls from non cited source in a text book (" I include a table of propositions to which most economists subscribe, based on various polls of the profession") and limiting the scope of the proposition in the poll on young people is suspicious. What is the overall effect for example is not cited. And frnakly polls are useless they only represent what people EXPECT, they do not represent what study finds.
Call me crazy but I am untrusting your blogspot source about polls, and expect peer reviewed litterature, just for the reason that at least peer review and publishing allow to uncover the flaw cited in the summary.
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Said person can have that decision taken from them: By not having money.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
This is true, but I see that as just another way of hoarding money. It's just that some assets appreciate more than bank interest (real estate, stocks), or in the case of bonds they provide a higher interest rate. While this results in money creation, which is good, the money that's created stays with the wealthy. This is one of the reasons there's such a wealth disparity in the U.S.—when the wealthy do things to create more money, that money tends to stay at the top.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
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Labor supply is anything but fixed. People take a gap year or go to law/grad school instead of getting a job, they retire early (possibly very early on disability), they work fewer shifts or less overtime or whatever, they work one job instead of two, they stretch their unemployment benefits out, they marry and raise kids at home rather than work. In the long run, they have more children or fewer.
One of the biggest changes in the workforce since 1970 or so is the increase in the number of women working full time, which happened almost entirely because they could specialize and improve their lives more by working outside the home than by working in the home.
Who buys your shit? Simple: Everyone not working here. They could earn money, but NOT HERE!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
It only makes sense if you simplify economic theory to a closed system containing only one transaction.
If you actually model everything (for example, workers having more income resulting in more money going to the poorer, in turn resulting in more money being spent in the local economy, in turn resulting in businesses doing more business, and having more money to pay their employees), then it becomes much less clear what the outcome is going to be. In all states that have introduced higher minimum wages so far the economy has got substantially better since doing so.
The fact that we're trying to model a complex system, and not just a simple single transaction means is why studies (and good quality ones that don't ignore half the economy) are needed to determine the actual effects.
Because even though trickle down policies don't make sense even from a logical perspective and which have been consistently found to be useless over the past decades, the owners and robber barons still beat that drum. It's like 10,000 scientists saying "climate change is real and caused by humans", but when one guy says "I don't buy it" suddenly the politicians have turned that into "there is no consensus on climate change"
BTW the "logical perspective" I mention means the fact that employers don't hire employees because they're making more profits, they hire them when the output of their current employees is less than the demand for their product. Additionally, someone who is already well off doesn't necessarily start spending more money when you give him a tax break, he's just as, if not more so, likely to just "bank" that money somehow.
If you want to stimulate an economy, the absolute best way is to put more money in the hands of the lower income because they spend every penny they make.
Only to people who don't understand them. But that's the case with pretty much anything, you can bullshit anyone using a "proof" he doesn't understand.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
How is the UW study to be considered flawed for excluding multi-site businesses while the UCB study ONLY looks at restaurants, where in many of which, minimum wage doesn't even apply?
The market wasn't free in the first place - in order for a free market to function correctly every player needs perfect information. That isn't possible.
That's why regulation is necessary - it enforces that the market behaves somewhere close to what would happen if people actually had perfect information.
>This is taught in introductory economics courses Had you continued past 'introductory economics' you would have learned that most of what you learned isn't how world works in practice. Supply and demand regularly fails and rational actors generally are not. Empirical evidence is what to believe, not theory, and not 'what sounds intuitive'.
Or, has been found before, the increased business that resulted from the increased minimum wage more than paid for the increased cost of labor.
And fyi, Walmart has also done the opposite multiple times and cut labor (and labor costs) so much that it resulted in a much larger loss of business.
Put it another way. If you give all the profits to one person, they can only buy so many cars, tv's, lattes, etc. If you share the profits with a hundred employees, they can buy 100 cars, a hundred TV's, and a hundred latte's.
Right now- we have way too much capital piled up with too few people. The catastrophically low bond yields is strong evidence of this fact.
And productivity has risen along with profits- but those profits were not shared with the workers due to the global labor glut and due to practices of using less workers and forcing them to work longer hours.
We need higher over time pay (back to double time), and we need a lower work week badly (like 35 hours).
It took measures like this to help end the great depression.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
It would if their customers having more disposable income didn't also have an impact
for the profit to be real, you just need the COGS to be less than the price the customer is willing to pay for those goods
And the profit margin is often wider than it used to be. If a business can increase profits by lowering labor costs, they will. If they don't have that freedom, they will have to accept a smaller (more fair) profit. At the same time, other businesses that should have failed are being artificially supported with the welfare of cheap labor.
So your arguing, that reality is wrong, because intuition? Sure, why not. Seems to fit a theme nowadays.
What said person? The same said person that can have the decision taken from them by not having food? I am sorry, but I sense a bit of a double standard here.
That doesn't work any more thanks to entitlements. The reality is that making twice of minimum wage isn't worth it. All it does is reduce your government assistance. Be it child care, rent reduction, food stamps, college assistance, etc. I'm not saying these things are bad, just that things aren't as simple as make a little more, lead a better life.
How cute, somebody thinks it is remotely possible to statistically correct for all the relevant confounders in economics.
Even if the study has flaws, it makes sense in economic theory.
Only if you ignore all the confounding affects.
If the only things in your system are labor price and work hours, then it behaves as you describe. In the real world, the system is not nearly that closed. There's labor availability, changes in demand for the employer's products/services, changes in economic growth, increased supply of higher-quality workers (people move to get paid more) and so on. There's even the utterly illogical effects such as expectations of the economy in the near future.
Real life is far more complex than a two dimensional graph.
Hold up a minute. If the smaller business is allowed to employ people at a lower minimum wage than the larger business (and remembering here we're talking in both cases about a wage above the unregulated market wage for that job) then the smaller business has gained a competitive advantage relative to the larger business, compared with the prior situation.
So you'd expect the larger businesses to be contracting, and the smaller businesses to be expanding.
If the study shows that the smaller businesses are actually contracting, that means the damage in absolute terms to those businesses is greater than the benefit from being able to steal a march on their larger competitors. But that doesn't mean they aren't winning some trade away from the larger businesses, just that it's not enough to fully cancel out the damaging effect.
Not covering the larger businesses is a limitation of the study. But far from proving - or even suggesting - that they've expanded by an equal or greater degree to the contraction by SMEs, actually we can guess that the contraction there is EVEN WORSE. (Note here that we're talking about contraction in employment: it's possible the larger corps limited the damage to their profits by contracting employment even more sharply, e.g. the robo-servers we see taking orders in McDonalds).
Bottom-line: OK, that study had limitations. What study doesn't? But don't be too quick to say that implies the opposite of the study's conclusions: it might be even worse than you think.
Mom and Pop places are not required to pay the new minimum wage in Seattle. That is the problem with the study. It doesn't include employees actually making the new minimum wage. Seriously, SlashDot used to be a place for intelligent discussion.
once more into the breach
One of the reasons we have research is to separate what everybody "knows" from what actually is.
Because reality has a certain perversity, and reality when people are involved even more so.
Except that it doesn't make sense in economic theory.
Supply-side, Chicago School and Austrian School are not economic theory - they have both been utterly debunked.
For higher wages to drive inflation: the potential profit from new customers (higher-earning workers at other businesses) must be less than the cost of the higher wages. This cannot happen with moderate wage increases -in fact mathematically it only becomes likely at truly insane raises. Otherwise the businesses will make more money by absorbing the cost and selling more goods at lower margins.
For higher wages to drive job-loss -they must be so severe that it's no longer possible to operate the business at all. Contrary to what you think economic theory is - hiring rates are relatively independent from the cost of labour because companies need to meet demand in order to stay in business. The amount of work that needs to be done is therefore the primary driver of hiring. Assuming the company is meeting current demand if the cost of labor goes down the company won't hire more people, so why would they fire people if it goes up ? Both decisions would cost them money ! A company will expand if it can credibly determine that there is unmet demand. Not because workers are cheaper. There's no point in having workers make goods you can't sell, anymore than there is any sense in having to turn customers away because you don't have enough workers to make the goods for all the customers. The impact of labour cost on hiring levels then is miniscule.
In theory the wage increases should, actually, increase demand and make expansion more likely - more people with more money means more of them can potentially be your customers.
All in all - study after study after study has consistently found that moderate increases in minimum wage have a nett-zero effect on employment rates, and this is also born out by historical data.
Unicode killed the ASCII-art *
This is basically what Ford did in his production plant back when the Model T was the craze. He paid an insanely high wage, which led to very few sick days and near perfect retention, because people would have rather killed themselves than losing a job that paid about twice of what they could otherwise earn. This in turn led to very high productivity because people knew what they were doing, which also led to much higher product quality and very low waste.
Higher wages will make people move to the area if possible, and they will also want to keep their jobs. And people with money spend it, and spend it locally which in turn drives the economy.
Cool - but this isn't what is happening here. Here, employers are being forced to pay their employees more.
Just curious, is there a study on people that were making $16 an hour before the hike? Did they get a similar raise or did they just lose buying power?
I know when minium wage went from 515-7.25, it hurt my wife's buying power. She was at $7 an hour (which was ok back then) and then got bumped to $7.25 along with everyone else that was making minuim wage (even though she had been at the company for a few years and had several raises.)
Go and demand it if you're worth it.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The AC above said that a person cannot decide to not consume essential goods. He can. By proxy. No money means no consumption.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
And then another business will open up to the supply the demand from consumers - and hire people.
Unicode killed the ASCII-art *
You are dumb. The company I work for sells something. It sells labor. It's part of the market you fucking idiot. Labor is supply and demand. I can't even begin to fathom how you figured out how to get on the internet and type stuff...
You realize that what you just wrote is a recipe for legalized slavery right ?
All you need is the employer to constantly add new "training days" to the end of the contract, and keep dropping the wage until it reaches zero (since there is no minimum wage anymore) - while the employee isn't even allowed to quit by law.
Unicode killed the ASCII-art *
You cannot point at something like Comcast and close your eyes pretending that government did not cause the current situation with communications, transportation, energy infrastructure. Health care, insurance, education, you name it.
You cannot point at any of those problems and claim that the problem wasn't created by corporatism, either. Corporations write laws and then hand them to politicians for passage, alongside a big bag of "campaign contributions".
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
That doesn't work any more thanks to entitlements. The reality is that making twice of minimum wage isn't worth it. All it does is reduce your government assistance.
Yes, that's just another argument in favor of MGI. If everyone gets it, not only do we not need a minimum wage at all, but people aren't motivated not to do work so that they can keep their assistance. They won't lose it if they make some money.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Not original poster, but here you go.
So reading between the lines, the study's results were largely correct when talking about small businesses, higher minimum wage hurts small business.
Nope. You're ignoring the effect of the different minimum wage for "mom and pop" businesses and larger businesses.
Pretend you're going work at a cheap restaurant. Your choice is $13/hr at a restaurant with one location, or $15/hr at a restaurant with multiple locations. You'd tend to choose the latter option, right?
It turns out, so would a lot of other people. So now the small business is dealing with a crappier, less-productive pool of workers because all the "good" ones are working for the large companies.
It's not that minimum wage hurts small business. A lower minimum wage causes labor to go to where they get paid more for the same work. And supply-and-demand results in lower productivity and lower quality workers when you're paying less than the other employers.
But since nobody is actually proposing that- it's meaningless to study it.
What DOES make sense is to study what effects small and moderate minimum wage increases have on employment - since those are what actually happens.
Nobody would set such a high minimum wage because everybody knows it's insane and would have terrible effects. But it does not logically follow that a small increase would have the same bad effects.
Your bathtub is at 25C. Increasing the temperature of your bathwater by 100C would kill you, increasing it by 3C just makes for a nicer, more comfortable bath. Small interventions do not always have the same effects as a large version of the same would have.
The overwhelming evidence is that moderate minimum wage increases have little to no impact on overall employment rates. It makes sense too - what business would choose to LOSE money by firing people it needs and losing out on sales because it couldn't produce enough goods ?
A business would only start looking at layoffs if the increase is so big that they would lose MORE money paying those people than they will lose turning away customers (and that's BEFORE we even consider the possibility of having more customers when wages go up).
Unicode killed the ASCII-art *
Correct, there probably was "no job loss at all", because Seattle's booming labor market would have skewed the results by compensating for job losses with unrelated job gains.
When you replace a $8/h worker with a $15/h worker, there is no "job loss" as far as the business is concerned, but the $8/h worker is still out of a job. That was the original intention of minimum wage laws in the US, after all: to replace cheap, non-union "colored" workers with more expensive white union workers.
How poetic that you say "cherry-picked example" ... "proves nothing", in the comments about the flaws in a study that examined only 60% of the data.
Then even better, numerous broad assertions not supported by *any* data or citation.
PJRC: Electronic Projects, 8051 Microcontroller Tools
That's one very foolish government. Glad mine isn't falling for this.
Because one big employer has a government by the balls. Give me the laws I want or you deal with 10,000 unemployed tomorrow. And hope I don't want more just to not close shop here and move to Mexico.
In turn, a government can easily squeeze small businesses. Don't like my laws? Tough luck, the 2 people you could fire don't matter to me and you can't move so easily, you invested pretty much all you have here!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
In that case, the person can just as well decide not to work, but proxy by having no food or just voluntarily and die as a result, just as he would die deciding not to consume essential goods. Assuming you agree with mwvdlee and not just toying with absurd scenarios, this line of reasoning is tantamount to having your cake and eating it too. Needless to say, the separation of labor market from the overall market is still unclear at this point.
how you get an insightful for that comment is beyond me. The Washington study is out of step from the other studies done. Since it has significant flaws in methodology their conclusions absolutely do not make any sense. Confirmation bias at it's finest on display I would say.
so, you assume people want to get assistance? You think they have an incentive to work less because we offer a safety net? Please show me the evidence that if people can get gainful employment that they will not (as a whole) choose not to work in lieu of a very difficult to get and pain in the ass process of government assistance.
Wealth invested in stocks, bonds, and real estate provides the capital for others to start businesses, buy/build homes, build factories, build public infrastructure, and much, much more. This is pretty basic econ-101, I'm puzzled at your lack of understanding.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
Even if the study has flaws, it makes sense in economic theory.
Economic theory is just that: Theory. Economics lacks proper scientific properties such as repeatability and falsifiability. It is barely anything more than a bunch of opinion dressed up in a thin veneer of respectability. To borrow a phrase from elsewhere, you can put lipstick on a pig...
I don't care one whit if this study agrees with any particular theory if the study itself has been shown to have many flaws above and beyond the fundamental limitations of the study of economics, then it is essentially worthless, and trying to claim any conclusions based on it is at best ignorant, and at worst dishonest. That includes the contrapositive of claiming that the studies inviability supports any contradicting theory either. The simple truth is that with the glaring flaws in the study, it should be sent back to the original authors to be corrected. If no such correcting is possible due to the basic structure of the study itself, then it should be destroyed and forgotten as it has less value than the paper it is printed on.
I wish I had a good sig, but all the good ones are copyrighted
"Obviously at the extreme of a $10k / minute minimum wage, nobody would hire anybody (unless hyperinflation happened), so there are limits. But if you're unconvinced of the possibility, I invite you to also consider something less politically fraught: https://en.wikipedia.org/wiki/... [wikipedia.org]. Paradoxically, one can sometimes improve traffic by removing roads, and make traffic worse by adding roads. There are classes of problem for which the optimal form of the "Invisible Hand" gives suboptimal results. Optimizing the economy by optimizing each employment contract is a greedy algorithm, which is not always going to be globally optimal."
You know you've just made the Laffer Curve argument, right?
The Laffer curve assumes that $0 is the revenue raised at the extreme tax rates of 0% and 100%, and that at some point between 0% and 100% there must be a rate between that maximizes government taxation revenue. The actual shape of the curve is uncertain, and there is always a question about whether tax rate of X is to the left or right of the maximal rate. (Note esp. that the Laffer curve doesn't say "reducing tax rates increases revenue"...but that may indeed be the case if the previous rates were on the wrong side of the maximizing rate).
Nevertheless, one implication of the Laffer curve is that increasing tax rates beyond a certain point is counter-productive for raising further tax revenue, and conversely that at some levels, decreasing rates may actually improve revenues. Certainly the same logic applies to wages, in that a minimum wage of 10k/minute means no one gets hired and $0.01/week means some people might be taken advantage of. But it is impossible to know that a minimum wage of X is the "best" wage.
On the other hand, government is not necessarily trying to maximize revenue with taxes, sometimes government is just trying to punish some behaviors and reward others based on what is in favor or disfavor at the time. One might say the same thing about minimum wages, in that governments are not actually interested in helping workers so much as they are happy to punish businesses, or at least be seen as "doing something" even if it has negative consequences.
Capitalism IS corporatism.
That's ridiculous. Companies don't get bailed out by governments in capitalism! In true capitalism, we celebrate when companies fail because they get replaced by a greater number of stronger companies.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
You think they have an incentive to work less because we offer a safety net?
Oh please, it's a fact that this is a way in which the system self-perpetuates. If you start to get some money in the bank, you lose GA and AFDC. So you either hide your money under your mattress and risk losing it to fire or burglary, or you work less so that you can continue to afford to raise your children. The public education system has failed you, especially in states where they fight tooth and nail against sex ed, so you probably have several of them. It doesn't matter who you want to blame it on, whether it's the assertion that Democrats are trying to protect a voting base or that Republicans are forever sabotaging social programs. Either way, the results for the individual are the same: if they actually start to get themselves out of their poor conditions, they're no longer eligible for social services, or at the least their assistance is reduced. That's just one way in which MGI is superior to GA and/or AFDC. Another is that you eliminate most of the fraud, basically limiting it to collecting benefits for the dead. Death records are something which needs to be improved in America anyway, that problem is related yet distinct.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
I hadn't put this in context of the elderly/retirees (i.e. fixed income). If prices to go up to account for the higher cost of doing business, fixed income will need to go up as well.
I'm making a lot of assumptions here, but I wonder how much this has been taken into account? The people who simply can't work due to age, disability, ______ (fill in the blank) would be affected. Similar to social security not keeping up with inflation -- it's tough on the people who need it the most.
This is an entirely baseless claim. There is an external correction system and economists have been well aware of it for quite some time. The term being externalities. This typically refers to parts of the economic process that cannot be regulated by supply and demand mechanisms alone and require collective action, i.e. a government. A classic example of this is pollution controls. You can't expect the individuals to, as people like to say, "vote with their wallets" on whether the factory next to them should be pouring poison into a nearby river. By electing official to represent them and agreeing to abide the authority of the said individual, the externality can be addressed, e.g. through fees per barrel of poison added to the river, and the externality is said to be internalized.
I would suggest you actually take a course in a subject before you lambast us for being as smart as you.
Ontario has healthcare for all. Usa has jail / prison healthcare for all for the stuff that the er does not cover.
Even if the study has flaws, it makes sense in economic theory.
Put another way, "The minimum wage increase works in practice, but it doesn't work in theory".
"Now what makes an Egg McMuffin so yummy in the tummy?
Is it the delicious cheese? The egg itself? The Canadian bacon (or optionally, the sausage patty)? Or is it the English Muffin?"
No, it's the 730mg of sodium and 6g of saturated fat, the combination of which can make even a slice of cardboard taste like something.
Even if the study has flaws, it makes sense in economic theory. ... This is taught in introductory economics courses...
It "makes sense" in much the same way that it would "make sense" for Formula One cars to have narrow tires. Introductory physics courses tell us that friction is linearly proportional to normal force and the coefficient of static friction; changing the area in contact with the road doesn't matter.
But wait--that's nonsense. Real cows aren't spherical. The simple first-year physics model breaks down quite readily when one encounters more complex physical systems.
For some reason, though, there are people who like to think of economic systems as absurdly ideal transactions in a vacuum and then pretend that they understand what they're talking about, or that they can draw broad and meaningful conclusions. To take one aspect of the Seattle situation--what does the ECON 101 model have to say about demand when we increase the number of potential customers with money at the same time as we increase labor costs? Where's your pat "intuitive sense" now? A little knowledge is a dangerous thing.
~Idarubicin
Mankiw is a rightwing Chicago school economist still clinging to an economic theory that has been disproven literally every time it has been tried. It's the most wrong theory since phlogiston.
Unicode killed the ASCII-art *
Since nobody is moderating you up, I'll just write that I agree with you. I don't think there are many other disciplines that are as butchered by laymen as economics and political science.
But the thing is, you can do a good job at a non-skilled job and get raises and make more money. But it is a non-skilled job and you really are not in a position to demand - especially knowing that the how payroll budget just blew up with the minimum wage spike.
Maybe it's been a while since you worked a non-skilled job and are just a bit out of touch with how that works.
I know plenty of gainfully employed people who make the decision of when to retire or how long to stay out of the work force before coming back as contractors based on how it will affect next years taxes. In this case its considered smart planning. Yet a person who doesn't work more hours because they'll lose their section 8 housing isn't smart planning? In the end whatever gets you the most for least amount of work seems the best practice. Not even getting into morality.
This is essentially the very antithesis of minimum wage policies though. As you yourself described, the incentive is to work hard to keep the exceedingly well-paying job. This does not occur when all jobs at your qualification level pay the same.
So, it is worse than the original study ... it provides a disadvantage to mom and pop shops in favor of the stamped in the same mold chain stores. This would seem to be inline with the Seattle concept where coffee shops became like McDonalds via Starbucks, where literally there is one within a block in most cases, and the occasionally they appear across the street from one another. But it means places like the late Hurricane (removal of a landmark late night spot, that fell to Amazon's downtown campus) would have likely been victim to people leaving and going to a slightly higher paying job at a chain. So the local color will fade and the Borg win. Unintended consequences.
- Tjp
I am in wallow with my inner money grubbing capitalistic pig. ... Oink!
Economics is not subject to partisanship, but rather economic "laws," how things are and operate in a world of scarcity; from which one can draw conclusions on how their political agendas are likely to function in relation to their desired ends. That is informed policy making, not economics. I don't care if you're partisan or not, but whether you are a good economist. And if you support minimum wage laws in the belief that this will help those making low ages, which seek to overturn economic laws such as supply and demand, which operates on the pricing system, whether that system is real or artificial, you do not understand very basic economics, and as such are a very very bad economist.
Slashdot: Playing Favorites Since 1997
One of the biggest changes in the workforce since 1970 or so is the increase in the number of women working full time, which happened almost entirely because they could specialize and improve their lives more by working outside the home than by working in the home.
Bullshit!
Two-income families have become the norm simply because it now takes two full-time incomes at a minimum to buy a modest house and raise a small family while maintaining a moderately-comfortable standard of living, where in the past a single income would suffice.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
It is a bad argument though. From a utilitarian point of view every extra dollar you make bears less utility than the one before (a dollar to someone who has one dollar is more important than to someone who has ten, hundred and so on). This disincentivizes attempting to earn more at all levels of society, but particularly at the bottom decile, which is, as you well know, also the one that is at the center of this discussion. Let us not get into the whole discussion of how the society is also supposed to pay for this. You make everyone pay more so that the least productive members of the society can earn less.
This is basically what Ford did in his production plant back when the Model T was the craze. ....Higher wages will make people move to the area if possible, and they will also want to keep their jobs. And people with money spend it, and spend it locally which in turn drives the economy.
Ford's action was voluntary, not government-mandated.
CO2 traps solar energy. This has been known for over a century, as has been the fact that if you increase CO2 concentrations in the atmosphere, you will trap.mote energy. To deny this is to deny physics.
The world's burning. Moped Jesus spotted on I50. Details at 11.
We're talking people's time here, not people themselves. Jobs aren't slavery. That's trading employee time for employer money. End of story. It's part of the supply and demand market. Your whole post makes no sense to that discussion. Yes, all of what I have or what anyone has can be gone. But your presumptions about me are as ridiculous as your entire post.
That's false in general. There are a lot of dual-income couples where only one needs to work -- people married to surgeons, biglaw partners, etc. But even to the extent that working class people find it easier to live with two incomes, that's still just a particular (tendentious) restatement of what I said: people work outside the house rather than gardening, sewing, and so forth to provide the things they want or need to live. They buy rather than build.
That's not how the scientific process works.
A theory's validity is supported and or challenged by solid repeatable experiments. To say that a flawed study is valid because it supports established theory is completely backwards.
A poorly designed study based on skewed sampling is flawed at best and propaganda fodder for worst.
Much of this criticism was actually covered in the paper. The complaints therefore seem overblown.
For example, here's footnote 14: "The Seattle Minimum Wage Study surveyed over 500 Seattle business owners immediately before and a year after the Ordinance went into effect. In April 2015, multi-site employers were more likely to report intentions to reduce hours of their minimum wage employees (34% versus 24%) and more likely to report intentions to reduce employment (33% versus 26%). A one-year follow-up survey revealed that multi location employers were more likely to report an actual reduction in full-time and part-time employees, with over half of multi-site respondents reporting a reduction in full-time employment (52%, against 45% for single-site firms)."
The paper excluded chain locations for a few reasons, including the issues of an employer with one foot in and one foot out of the affected region, but generally concludes that with reasons to suspect both effects on the exclusion of chains, "Our employment results may therefore be biased towards zero."
The paper itself: https://evans.uw.edu/sites/def...
The problem with your perspective here is the impossibility of identifying the one "with all the money."
Businesses have all the money? No, they try to serve customers who have all the money. But wait, they work to get money, so I guess it's employers who have all the money? Hm, no, employers are just businesses, who are serving customers, who I guess have all the money.... and on around.
In reality nobody "has all the money" but instead the exchange of money shows how we work for each other to mutual benefit. We each set prices for the money and labor that we hold by placing a value on it that seems right to each of us individually.
Go for the gold, AC. Look down your nose at people who believe what they were taught in third grade arithmetic. Math is racist, after all, isn't it?
That is a bad argument also. Diminishing returns on increasing wealth doesn't trigger until a certain threshold is reached - a dollar to someone who has ten dollars is just as important as a dollar to someone who only has one dollar. That is why things like "poverty line" and "minimum standards" exist.
So you would need to establish the threshold at which the diminishing returns begin. It would be heavily dependent on area, but assume that it would be enough money to cover basic necessities - food, rent, transportation, etc. It may also depend on social situation - a person supporting a family would need to make more to meet the minimum standard then a person alone. A two income family dropping to one income (unemployement, accident, etc.) would suddenly increase the value of each dollar the single earner is now earning.
So, if anything, the bottom is more incentivized, not less.
Not really. What you would also have is low end businesses undercutting each other to save costs on hygiene, imposing health costs that probably overcome the savings of not taking care of hygiene. Businesses and customers don't have, and can't afford, perfect information, and don't make the most rationale decisions for themselves.
Something like "for every complex problem there is a solution that is simple elegant and wrong".
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
That is irrelevant. The salient fact is that higher wages make for better employees and a better economy. It metaphorically raises the tide for the boats that previously had been moored to a now deeply underwater dock. Unless you've lived in poverty, you don't understand the problems that come with it. So, don't be a dick to the people that serve your food, you evil fat-fuck.
Only I can judge you.
500 employees is guaranteed $13.50 an hour, while a worker at a company with fewer than 500 employees is guaranteed only $11 an hour"
This means growing to the point of adding worker #500 will cost not 13.50/hour but 1250.00 per hour?
why not follow that to it's logical conclusion and drop everybody's wages to 1 cent/hr?
Yeah, I'm being facetious. But it's a core argument made by the other side (raise minimum wage to $200/hr!).
And yes, those studies are correct. They're correct because you'll see adults competing for jobs that only kids can hold right now. That's because only kids could make that little and survive. It's a minor thing since poor economic conditions forcing adults to take second jobs and increasing workload at school has forced most of them out of the job market anyway. It does, however, let you take their research out of context and make it look like raising the minimum wage hurts people that live off it; which is wrong.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Nevertheless, one implication of the Laffer curve is that increasing tax rates beyond a certain point is counter-productive for raising further tax revenue, and conversely that at some levels, decreasing rates may actually improve revenues. Certainly the same logic applies to wages, in that a minimum wage of 10k/minute means no one gets hired and $0.01/week means some people might be taken advantage of. But it is impossible to know that a minimum wage of X is the "best" wage.
On the other hand, government is not necessarily trying to maximize revenue with taxes, sometimes government is just trying to punish some behaviors and reward others based on what is in favor or disfavor at the time. One might say the same thing about minimum wages, in that governments are not actually interested in helping workers so much as they are happy to punish businesses, or at least be seen as "doing something" even if it has negative consequences.
The Laffer Curve applies to taxation and taxation alone. Your phony attempt to apply it to wages is laughable and transparently lame. If you are going to attempt to endow your fantasies with an aura of credibility, you'll have to troll better than that. Start by establishing a firm theoretical and better yet empirical basis for your arguments.
Only I can judge you.
Their study used "synthetic" models, that is to say, they dry-labbed it. At school and work you get quickly dismissed for such shenanigans, at any level of such behavior. Apparently if you call attention to your having synthesized your data from whole cloth because it was the only way to get your commercial sponsors the results they wanted, even the "geniuses" at slashdot fall for it. I guess being good at programming, does not also come with the ability to think critically in topics outside of programming (like chess-playing).
Only I can judge you.
We should outsource being rich or automate it for better efficiency.
Nullius in verba
If your "intuitive" "introductory economics courses" are teaching you that businesses are closed systems, then you should slap your economics professor around with a copy of The General Theory and walk out.
Businesses are not closed systems. It might be true that a single business raising wages might find it has less money to spend on workers, but there's no reason to assume it's true if all businesses raise wages.
Raising wages means that someone has more disposable income to spend. Doing that for a significant number of people who have no disposable income (like minimum wage employees) is going to raise incomes for local businesses. That means more money, not less, to spend on employing people. At worst, the vast majority of employers in a community where all have raised wages for those with the least disposable income should be able to employ just as many workers after they've raised those wages. At best, they should be able to employ more than they were before they raised incomes.
You are not alone. This is not normal. None of this is normal.
I'm sure they already accounted for this, but the thing that struck me as I was listening to the explanations on the radio was that they considered low wage to be $19 and were no longer categorized as low wage.
Nullius in verba
You are coming dangerously close, and in fact may already have crossed the line into admitting that the government can and should intercede in declaring minimum wages given how heavy handed they have been in favor of corporations (due to corporatism) as drinkypoo has pointed out. There is literally zero proof that all these entitlements to corporations have improved the life of our citizens since the 1970's. Wages have been stagnant and declining for 90% of US Citizens, for whose benefit the government _should_ operate, else what is the purpose of government?
Only I can judge you.
I vote for "already there". More so now with the morbidly obese cheeto occupying the white house.
Only I can judge you.
So that businesses start charging more for products because the employees are making more just like when women entered the workforce and then the free market adjusted to account for their income and things started being valued higher to account for the wages being paid to the average home. Government setting labor wages is failsauce and has failed always and forever in a free market system, which system is where actual REAL wealth is created on this planet. Seattle already has experienced this failsauce and it was a big let down to the little Socialist dreamers, so we have to pretend they weren't wrong - cue Berkeley's fairy story. Everyone loves to badmouth Capitalism all the while riding its coattails into the future. Socialism is failsauce because you eventually run out of the wealth created by Capitalism. The finger wagging "do-gooders" wag their finger and do their fake "good" all while being buoyed up by the Capitalist, Free Market system. This has been a public service announcement.
Faith: Belief in Truth. Superstition: Belief in Falsehood.
So, you're saying that economics is total bullshit because even in theory it fails? I agree with your statement. Physics, chemistry, and biology are borne out by real life experiments and don't permanently reside in a ivory tower of theoretical perfection. Engineering exposes physics, chemistry, and biology to the crucible of reality and those sciences are refined and moved forward. Economics seems to never evolve, but it is a nice career choice as you/it can never be wrong. Economics theory provides cover for what governments and corporations wish to do, kind of like our neocortex provides cover (she's smart!) for what our limbic system wants to do (want to impregnate her!). Economics theory is the religion of government/corporations, they can hide all kinds of evil behind its veils.
Only I can judge you.
This. Exactly.
Faith: Belief in Truth. Superstition: Belief in Falsehood.
I would suggest you actually take a course in a subject before you lambast us for being as smart as you.
I doubt anyone had the slightest intention of having the inkling of having any such thought. ;-)
The fundamental problem is that externalities are never paid for by the fucking corporations. That is why they are called externalities, to the psychopathic American corporation, externalities are and SEP (somebody-else's-problem). The only reason they ever give two shits is if someone can afford to outlast them in an expensive and protracted lawsuit.
Only I can judge you.
How has this "basic econ-101" been working out for us as a nation? We have obscene wealth disparity, health disparity, education disparity, etc, etc... Maybe because life and our complications and corporate owned government have left us a snafu that can't be addressed or analyzed with "basic econ-101" solutions?
Only I can judge you.
I don't see your case. A dollar to a person who only has one dollar is worth significantly more than a dollar to someone who has ten, unless you argue that a charity dollar that we have only one of should be split between them equally. If that is not your stance, I don't see how your statement is valid. By the same logic, someone who is guaranteed income is considerably less inclined to work than someone who is not entitled to anything. The only benefit for the society as a whole from this entire business is that those on welfare are also less likely to commit crime to obtain necessities.
I completely agree with this, next time log on so we know who the smart people are... :-)
Only I can judge you.
Imagine that.
The only benefit for the society as a whole from this entire business is that those on welfare are also less likely to commit crime to obtain necessities.
No, there are numerous other benefits as well. For one, you can eliminate make-work which people do simply because they have to do it to survive. That means a lot less energy consumption, and notably, a lot less waste. We effectively "use up" our sustainable natural capital some time around august every year. Reducing make-work will help push that back. Much of the crap that currently gets produced, and shelved, and then not sold, shipped on to some store that only sells shit, not sold, put back in a box and landfilled can simply not be produced, and we will all benefit. In addition, all the commuting to make-work jobs can go away with it, saving even more energy.
A lot of people are just going to sit on their asses and watch TV, and that's suboptimal, but OK. Some other people are going to take advantage of their free time to go forth and help other people. And many people will want more than they get handed to them, and they will work so that they can have it.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
IMHO, the definitions of small, medium, and large businesses is flawed. 500 people is a pretty big company. Companies with that many employees are likely generating a lot of revenue every year and probably have enough sway in the marketplace to pass higher minimum wages on to their customers. Companies with a few employees probably don't otherwise their would have plenty of work to justify hiring more people. And then, of course, will come the inevitable higher demands on the existing employees because the small companies can't afford to hire more people.
At it's heart, this is artificial market distortion and it will lead to inflation. There is no getting around that.
I am sorry, but are we talking about a capitalist country or the U.S.S.R. here? Who exactly are these marvelous businesses that pay their employees for not doing anything?
The people who want more than welfare are not and have never been the problem. If you are a career oriented individual or someone who works at least to a considerably degree out of passion or due to conviction, you will not be on welfare for very long. I am yet to meet a chronically unemployed individual who is churning out ten CVs a day looking to get his foot in the door. For that matter, volunteers really shouldn't be living off welfare either.
Don't be unskilled, then. Be awesome like cayenne8, roman_mir and SuperKendall.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
If they are TOO low, people won't want to work, they'll just be lazy and attempt to live off the government. But, anything to "achieve their socialist utopia" in the Sea-Tac area. Expensive to live their, expensive to eat their, expensive to work there.
Pun duly accepted. :)
That is hardly true. You (not you specifically, of course) have just elected a president who has already manage to ruin several years of trade negotiations. Those trade agreements are hardly going benefit American corporations, but they will, complete distrust of democracy aside, very much benefit certain sectors of the working class. Not for very long and at the cost of everyone, including the same workers, but it is a public decision against the interest of a serious portion of more economically minded individuals. I am not saying that there is no injustice in the world and that all externalities are well-accounted for, pollution being one of them, but let's not go into absolutes here.
Its been in print since the early 20th century. Ever heard of John Maynard Keynes ? Heck if the US government had listened to Keynes in 1929 instead of that idiot Von Mises black Friday would have been a minor recession, not the great depression. Hitler would never have been elected. The holocaust never happens. The evil that Laizes-Faire versions of capitalist theory has unleashed upon the world is literally without end.
Unicode killed the ASCII-art *
there's too much competition for work. Mix in automation and there's even more. That's the trouble with Capitalism. It was thought up in a time of local craftsman. Adam Smith didn't see modern satellite based telecommunications coming.
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I don't think Keynes would disagree with... well, just about anything in Mankiw's book. Quite frankly, I don't know why you guys keep bringing him up like he was some kind of antithesis to classical economics. Keynesian writings occupy a very important place in the development of economic theory regardless of what school you are from. Quite frankly, his expansionist policies aside, he helped to liberalise the shit out of the international economy at Bretton Woods, which so far proves to be a fairly good deterrent against warfare between major nations.
80% of businesses fail in the first 5 years. A McDonald's franchise costs millions and requires a proven track record of business. Even a bloody Subway costs over $100k and no bank will just give you that money.
Now, if my daddy left me millions of dollars to invest and millions more to live off of if those investments didn't pan out you'd have a point. But we can't all be Donald Trump.
Lastly what you believe has little to no bearing on what actually happens in reality. You're not free so long as somebody controls your access to food, shelter and healthcare. And you're not secure in your freedom if even 1/3 of the populace lacks that security. Sooner or latter some demagogue will come along, mobilize them and turn them against you. I've got 5 thousand years of demagogues to back me up on that assertion. Real freedom can only be had when the working class has solidarity and nobody gets left behind. Until then you're just waiting for the next round of gestapos, guillotines and gulags..
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they capped CEO pay to something like 20x the lowest paid employee (can't remember the scale but it was pretty high). It worked great. If the CEO wanted more pay they had to pay better. Naturally the law didn't last long.
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There are several countries with no minimum wage, hellholes like Iceland, Norway, Sweden, Finland, Denmark, Switzerland.
paying people less money than it takes to live then you've broken the social contract between Job Creator and worker. If that contract is broken then I see no reason why the workers shouldn't take their own steps to fix it. And the sane thing to do is organize. There's Unions, but why stop there? If we're going to have a contract why should it be verbal only. Make it law.
/.tters like the sound of anarchy. It's not nearly as nice as it sounds. No AC, you get sick from the water and before you know it folks turn it into a dictatorship just to get the trains running on time.
That's what minimum wage is. It's codifying that social contract. It's saying: "If you can't run a business that pays people enough to live you have no business (sic) being in business". If we as a civilization can't pull that off what's left for us but anarchy? And yeah, I know a lot of
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The first time I used a grocery store in Ontario, it was nearly deserted. After checkout, the cashier and I both stared at my pile of groceries. I then realized I was expected to bag them myself. From that point on, when I find myself in Ontario I will only shop where there is a self checkout. Whoever is scanning the items is in the best position to bag them, cashiers who don't bag are completely unnecessary. Anything they would do, the one person watching 4 self checkouts can do just as well. Whatever union won that concession, won the battle but lost the war.
I am sorry, but are we talking about a capitalist country or the U.S.S.R. here? Who exactly are these marvelous businesses that pay their employees for not doing anything?
The people who derive the most benefit from the system are going to have to pay for the maintenance of the system, because no one else can afford to do so. Or, they can actually do what they claim they do, and they can create jobs for these people. If you know a third way that doesn't involve killing billions of people, billions of people are interested in hearing about it.
For that matter, volunteers really shouldn't be living off welfare either.
Why not? If it meets their needs, who cares?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Most of the discussion requires restricting rights or taking something away from somebody and giving to something else. What is often forgotten is this is not a fixed sum equation. Our economy is dynamic and everyone can gain at the same time. Historically, you could get a good paying job without a college degree working the assembly line. Unfortunately, many of these jobs are being outsourced and/or automated. As a result, these blue collar jobs are being eliminated and nothing is coming in to replace them. A $15 an hour job at a restaurant will not provide a solution no matter how better it is compared to the $10 an hour minimum wage. What these "blue collar" people need are opportunities to find fulfulling and good paying jobs. Today there is a huge barrier to this -- the college degree. The time and expense of achieving this are either unobtainable or not a very good investment. Also, many are burdened with huge college related debts afterwards which effectively reduces their wage for many years. I don't often quote articles in the NY Times, but this one was right on and hits close to many of us on Slashdot. How about the "blue collar" coding/programming position. Have companies stop filtering by college degree and start filtering by abilities. Many non-degreed people become excellent programmers. As an experienced software developer I would love to take on interns who are committed, talented and hardworking people and help them learn my trade. They may not get paid as well as me with my formal degree, but they sure will get paid far more than they would at a minimum wage imposed restaurant.
https://www.nytimes.com/2017/0...
Boeing has had internship openings for blue collar jobs. We should encourage other companies to encourage internships for non-college bound positions. Those of the non-libertarian persuasion may even consider subsidies and/or tax breaks for companies that promote these kinds of jobs.
You have dismissed option 3 out of hand, that is a mistake...
Killing billions of people would indeed work, you would call it horrific, but that doesn't mean it can't be a solution.
Those millions of people sitting at home watch TV, do they just make 6 more kids to feed? Or do we start limiting procreation to those who pay taxes?
No, it isn't. You missed the key point...
ONE company did it, not all companies... it becomes an entitlement when all companies pay it, when it is just Ford, they can be picky about who they hire.
They can pay more, but why should they? They don't pay more to UPS to ship those games than they have to, do they?
Also, increasing the wage drives out the worst employees before the better ones. If you're belt-tightening then people start putting more effort in to be the ones that are not cut. Then the shittiest employees get exposed. An increase in the wage attracts or keeps only the better class of employee. So ... productivity will increase because of a rise in the wage purely due to the fact that productivity is a bell curve distribution. You don't sack those at the top of the curve when the labor price increases.
Do you honestly believe the purpose of the government is to care about the common man?
Really?
That has never been true in human history, least of all the USA.
You are completely correct in this, but many people are blinded by the most visible governments that tried "whole system optimization": namely the Soviets and other Communist governments. They failed miserably in trying those optimizations, resulting in frequent stations and some truly crazy results (see the backyard "steel" production fiasco from China's "Great Leap Forward"). There were many reasons for these failures, but the primary underlying one is that they could not get good enough information in order to make good enough centralized decisions. Add to that a hearty dose of ideology and you have a recipe for disasters on large scales (which happened over and over).
In theory the distributed decision making inherent in Capitalism is supposed to be the fix for the ills of centralized planning. But in practice we have found that it requires a lot of external correction, as it tends to centralize power in the hands of a few (see the Robber Barons of U.S. history, or contemporary Russia), and do awful things when companies can externalize their problems (see: pollution, slavery, or the horror of the early 19th century Chicago meat packing industry as described in Upton Sinclair's "The Jungle"... seriously, worth a read).
The problem with trying to patch these problems in Capitalism is the people quickly forget why those controls were put into place, and instead get focused on the localized problem that the company is facing, forgetting that the global optimum (whatever that is) is what they should be looking at.
I don't have a solution, but I do see us slowly approaching the crisis in Capitalism that Karl Marx predicted (not that I think he had a solution figured out... only that he saw the coming problem, if dimly).
Whether government mandated or not is not the key point, it is a red herring that "libertarians" try to use as a freedom wedge to separate us humans from what should be our common cause, to improve the lot of all humans living in (at the very least) our country. Corporatists are so happy to latch on to this unimportant point when it's convenient and make it an issue because "'murica!" Corporatists are not so independent minded when it comes to asking for government help in maintaining their monopolies (software patents for example) or government subsidies (corn, wheat, monsanto) because "oh, the economy can't live without us". Fuck them. Fuck you too for being so naive as to buy in to the corporatist agenda.
Ford did it because it made his employees able to afford his cars. He literally said so. The better employee loyalty and quality was apparently an unintended consequence, fortuitous, but nonetheless a side effect. Entitlements are the corporate welfare that is given to so so many corporations by apparently all levels of government. Why aren't you whining about that? Isn't that an entitlement? Why are corporations so entitled to entitlements and flesh and blood humans aren't? Are you an AI poorly pretending to be human?
Only I can judge you.
That is not actually a good argument, either way the result is the same: by investing his margin in his workers Ford was able to improve the quality of his product, and the dependability of his workforce, while still making a (smaller) profit.
I should point out that Henry Ford was not a Capitalist by modern standards in any ways. Many of his business decisions run exactly counter to what is advocated in business schools nowadays: paying high wages, producing only a single version of the product ("any color you want, as long as it is black"), paying worker extra if they chose to live in "temperance" (no alcohol) dorms, and he justified many of his decisions on moral not economic) grounds.
Rather your argument should have been: that works for one business, but what if all of his competitors (both for business, and for labor) did the same thing? Would that have produced the same results, or just runaway inflation?
I do honestly believe that. If not that, then what? What is the point of us throwing in our lot with a government if not for enhancing our lives and self-cum-group protection?
Really.
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Emphasis mine.
Only I can judge you.
I don't think the answer is central planning. Most of the problems I see stem from externalities where a business can push off some of the costs of their doing business onto society. Classic examples would be pollution. If companies had to pay for the FULL cost of the pollution they created the costs of their products would rise. It would also mean that companies that do a better job would create a cheaper product. There are many other examples like walmart helping workers apply for welfare. That allows them to push off part of the cost of doing business to someone else that is paid for with tax dollars.
I don't know what a complete solution is and I doubt we could make all industries pay the full cost of all activities but at the very least we should know the full costs and for those we don't have the industries pay for it should be a very conscious choice. If we know how much they are costing us to clean up we also know how much to invest in cleaner technology and where the payoff is and is not worth it. If you factor in the full externalities for an electric car, hybrid car, gas car, diesel car etc which one really is cheaper? How much we are truly paying for these vehicles? Are our cars cheaper at the cost of higher healthcare? Does our food cost us more in health care than better food costs? Is it cheaper to clean up the pollution from coal power plants than to clean up chemicals from making solar panels?
Computer modeling for biotech drug manufacturing is HARD!
In engineering whole system optimization is extremely hard to do right and easy to screw up.
What is the example of a real life whole system optimized system? I can't think of any. Everything I have seen applied in economics has been doing with a a very strongly biased position. People would decide what the best system is and then impose that system without actual studying, measurement and feedback. Right now we have Democrats and Republicans both believing in their one true solution and the other side has nothing to offer in any way at all. In reality the optimal solution is not only not between them but each of them has useful ideas to contribute.
Computer modeling for biotech drug manufacturing is HARD!
Oy. Words continue to lose all meaning. A factual report pointing out gaping holes in a study used to make a phony right-wing point ends up being called the conspiracy. And the guy calling it that doesn't even realize that's what he's doing...
What amazes me is that this shit shows up on Slashdot - the site that used to specialize in pointing out skewed sampling and 'tuned to the test' studies of, oh, Microsoft software vs the competition, etc. But make it a subject that can conceivably be categorized as on a 'liberal' vs 'conservative' axis, and all ability to see facts is lost. Liberals may see a study they don't like and attempt to refute it - and admit when they can't. But conservatives see a study they do like and support it in the face of contrary facts. That's just how it is - don't tell me both sides are the same. They aren't.
Posted from my Android phone. Oh, I can change this? There, that's better...
Those countries also have little niceties like free healthcare, child care - and probably subsidized housing. But who's counting...
Posted from my Android phone. Oh, I can change this? There, that's better...
Even if all externalities are taken into account I don't know if that is enough for whole system optimization. Would that increase our average education level to support a higher tech economy? It would probably fix the roads and other infrastructure at least. I just don't see it as the whole solution. Right now though we do very little of it.
I have only taken a few economics classes in college. What I see in real life though is politicians that have a certain view on the world and then they find/twist some kind of evidence to support their view point and then they do what they wanted to do and say that it makes sense no matter what the cost. It is very hard to get an actual sane discussion about almost any topic because it becomes politicized and turned into some kind of team sport. People choose sides instead of rationally looking at the issue and making a real discussion.
Computer modeling for biotech drug manufacturing is HARD!
Also, they usually get 6 weeks vacation to start.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
The 99 cent menu doesn't exist anymore. You'd know this if you didn't think you were too woke for McDonald's.
Do you honestly think a $15/hr wage will have this same effect?
They aren't businesses. They are the State.
Killing billions of people would indeed work, you would call it horrific, but that doesn't mean it can't be a solution.
Historically, attempts to kill large numbers of people have been met with resistance. It can be a solution, but I'm rejecting it because if that's your plan, you're an asshole and nobody should want to talk to you, except to figure out where you live so that your home can be firebombed later. Advocating for killing large numbers of people has a problem, in that large numbers of people will want to kill you first.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
My understanding is that the great hope behind the minimum wage, is that labor isn't a particularly large fraction of a business' expenses. There are other expenses besides labor, so if you raise the cost of labor by n%, you're raising the total cost of a widget or service by less than n%.
This viewpoint is endangered, though, if you think that the cost of everything is 100% someone's time, even if a lot of it is indirect (e.g. you're paying miners in your electricity bill, your insurance payments contains the overhead of the insurance business which hires people to figure stuff out, etc). Everything is made out of humans' time. But even so, I guess a minimum wage advocate would say that some of these jobs already pay more than min wage, so whatever expenses flow from these jobs don't increase. (e.g. your insurance payments don't go up, because the insurance adjustors' salaries don't go up, because they were making more than minimum.)
People in higher-paying jobs should see their expenses go up, but can sit and take it without having to ask for a raise. Presumably their lowered prosperity is counter-balanced by a lower crime rate or other benefits of a safety net.
"Believe me!" -- Donald Trump
For higher wages to drive job-loss -they must be so severe that it's no longer possible to operate the business at all.
So what would be a "severe" increase in wages? $20/hr? $40/hr? What if we increase it slowly, e.g. by 20% a year every year? Is there a point at which a "moderate" increase is no longer beneficial or is it always beneficial, no matter what the current minimum wage is?
Contrary to what you think economic theory is - hiring rates are relatively independent from the cost of labour because companies need to meet demand in order to stay in business.
That's not true at all. If there's more demand than what they can produce, they can also increase the price until they no longer have excess demand. There are several markets at work for a business: the goods market, the labor market, and the capital market. As far as the business is concerned, these markets are all independent, and their goal is to maximize the income from the goods market while minimizing the costs in the other two. Sometimes that means increasing production. Other times it means reducing it.
Imagine for example that I have 2 factories producing the same widget. The demand for the widget at the current market price is 5% more than a single factory's output. However, the lease on the second factory plus wages to run the production line costs significantly more than the revenue from that extra 5%. I can reduce costs and increase my total profit by shutting down the 2nd factory.
You also make the argument that increasing the wage would drive up demand, but the real question is how much, and for whom. Certain services will see a significant increase in demand with higher wages, but others won't. Gas stations for example, probably won't see any demand increase, because people don't drive more just because they can afford it. Some might take more road trips, but they would also be offset by those who can now afford to fly instead.
You should learn your history...
Historically attempts to kill large numbers of people have worked...
so it never occurred to them to have minimum wage laws. For all practical purposes they have minimum wage laws, they're just enforced by Unions (which are themselves quasi-government bodies in many countries).
Basically, they've achieved the same thing with a different set of laws. Government intervention was still necessary to prevent worker abuse. They just went about it a different way.
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Historically attempts to kill large numbers of people have worked...
They lead to backlashes. Nobody wants to be next. "Worked" is a relative term. The only nation which hasn't paid the penalty yet for its successful attempts to kill large numbers of people is the USA, but our star is descending.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
You misunderstand what a free market is.
Free market means that governments or regulatory bodies cannot set the PRICE of goods and services. There's nothing wrong in setting minimum acceptable standards.
Ex: Sure.. mandate $150/Hr. then businesses can choose to either sell at existing price+$150, get rid or replace some employees and sell at same price.
Get it? the final PRICE is what's free to be decided by businesses.
Minimum wage and free markets can co-exist. Imagine if businesses said "Hurr-durr how dare government say I have to keep my premises clean huh? this is a free market dammit!"
What you're describing is simply a market. You're right in that markets are fundamentally to do with prices as a means of communicating information about resource allocation between independent actors. However, a free market is specifically a market free of systemic, coercive interference (read: government regulation).
But those who buy/build homes and build factories are those who already have a decent chunk of capital themselves. What you're proposing is "trickle-down economics," and if your Econ-101 prof was teaching you that he deserves to be fired. Investments such as the ones listed do create more wealth and they will increase GDP, but that doesn't bring people out of poverty. The wealthy invest in the wealthy, because those are safe investments. In the long run, the standard of living may increase for the poorest dregs of society, but that generally means being able to buy more cheap junk at Wal-Mart even cheaper.
The problem is that, as the U.S. economy is currently structured, it's easy for money to get shifted from the bottom to the top, but it doesn't work the other way around. This is what happens when you break the progressive tax structure—the wealthy hoard a greater and greater percentage of the nation's wealth. This is the danger of using GDP as an absolute barometer of economic success. If the wealth is distributed too unevenly, the vast majority of the citizenry doesn't reap the benefits of living in a wealthy country.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
Because one big employer has a government by the balls.
Wrong.
Guns/prisons > money.
Hard to have anyone by the balls from a super-max cell or a grave. These days government can simply seize or freeze assets with the press of a key or click of a mouse.
Government will always have the upper hand as they have a monopoly on the use of force. Fascist, socialist, and communist nations would not have succeeded nearly as often at nationalizing entire industries as they've done, otherwise.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
The term being externalities. This typically refers to parts of the economic process that cannot be regulated by supply and demand mechanisms alone and require collective action, i.e. a government.
You mean those things that corporations have bought their way out of paying for?
I would suggest you actually take a course in a subject before you lambast us for being as smart as you.
I don't think anyone here would willingly suggest that their intelligence is equal to yours.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Whether government mandated or not is not the key point,
It is a key point, because if it is not government mandated, some other guy can come along and undercut you by selling to people desperate enough to buy an inferior product. That doesn't work in every industry, but it works in many industries.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
>So what would be a "severe" increase in wages? $20/hr? $40/hr? What if we increase it slowly, e.g. by 20% a year every year? Is there a point at which a "moderate" increase is no longer beneficial or is it always beneficial, no matter what the current minimum wage is?
It's not about the number - it's about the percentage. As long as it's within a percentage point or two of inflation, it should have no impact. The 15 dollar proposal is, in fact, exactly what the number would have been if it had been allowed to track inflation all along.
>You also make the argument that increasing the wage would drive up demand, but the real question is how much, and for whom
And all the evidence of decades of research says - by almost exactly the right number to offset any jobs that are lost with expansion elsewhere in the economy. There is no evidence that minimum wage raises increase employment (or if it does, by miniscule numbers) - but it also doesn't reduce it.
>Gas stations for example, probably won't see any demand increase, because people don't drive more just because they can afford it.
Except of course that if more people can buy cars (even old junkers) that's more demand for gas right there.
Unicode killed the ASCII-art *
Nobody said you should have demand-side instead, that's a false dichotomy.
Sane economists are BOTH - not either. Because without demand, anything you produce is a waste.
And the track record of supply-side ideology has been utterly dismal. Everytime it's tried there's a massive recession followed by mass unemployment and all the sufffering that leads to.
And not to mention - the great depression itself was absolutely caused by supply-side economics. If a more sane theory like Keynesian economics had been followed at any time between 1929 and 1941 the depression would have ended right away. Ten years of global suffering, a world war and the holocaust- all caused by supply-side ideology (I refuse to call it a theory). Ironically it's worst outcome, was also it's cure, the war forced the government to start spending money -which is what they should have done all along because nothing else could undo the deflationary effect of the depression. When the government spent lots of money, the depression was ended for good.
That's not to say the war was good for the economy - it's just that all the things which would have been better were never done.
Unicode killed the ASCII-art *
He would disaggree with the idea that government should not regulate or interfere with markets at all. And he would be right. Besides it's the 'classical' economists who keep pointing at Keynes as being their opposite. It's they who think he was a socialist, not those of us who merely think he was right - and proven right every time his policies are tested in the real world.
Unicode killed the ASCII-art *
I find the places that expect you to bag yourself charges for plastic bags as well.
Which works fine for me - I bring my own (plastic) bags, so instead of advertising for them, I advertise for Walmart instead. OR since Safeway still gives free bags, I'll leave the non-Safeway grocery store advertising for Safeway.
OF course, I don't have kids or a spouse to help me out, and I shop for the week, so I have a few bags that I fill, which means if the cashier doesn't help me out, the next customer will be getting his stuff scanned and the cashier has to stop and wait for me because his stuff backed onto the scanner.
Can't rush me, I'm packing my goods using my own bags. Oh sure, the other customer can pack his stuff, but his stuff is right where the payment terminals are, so he's got to reach over, so even wife and kids are standing around waiting for me to pack my stuff.
At T&T Supermarket (Asian supermarket in western Canada), the cashiers DO help you - after you paid, they will pack your stuff in the bags while you sort yourself out to speed the line along. (You got to put cash back in your wallet and wallet back in pocket, etc, which can take a little time). So instead of the cashier looking around stupidly waiting for you to put your money away and your food into bags, they'll bag while they wait.
And they're scary fast - I was putting my money and coins away and by the time I was done, it was all neatly packed in bags.
Protip - never go in line with a single person who has a lot of groceries in a store with a pay-for-shopping-bags policy. Like me, they'll hold up the line packing their stuff away. If you see a spouse and kids hanging around, it's A-OK as they'll be packing while checkout is happening.
Usually it is solved with benefits and social housing.
That doesn't really work either. You can do that with a few multinational corporations, of course, but afterwards, the others leave the sinking ship faster than any ordinary rat. If you threaten me, I leave. And I don't even give a fuck whether you want to let me, I'm a multinational corporation, you can arrest the people I have in your country but you can't touch me.
This isn't the 1940s when corporations have their eggs in one basket mostly. This is the 2010s where a corporation and its money is finely distributed across the globe. Of course you can reign me in by getting every country on the globe to agree, to close all the tax loopholes that make me go to their pastures instead of yours when it comes to taxing my profits and to harmonize the laws so I cannot escape your grasp.
Good fucking luck, dear government!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
No. I know that it does. I live in a country where paying a living wage is pretty much mandatory and even umemployed can get by. In return we have an economy that is doing pretty well considering the global situation.
What matters is the purchasing power of people who pretty much have to spend their money locally. Poor people tend to spend their money on local goods and services, they are more likely to spend their money in local malls and buying local services than buying online and flying to remote destinations to get services there. This in turn drives the economy.
Yes, we do have a pretty heavy distribution of money from top to bottom via taxes and social services. Guess what. It works.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Then why did you get pay raises in the first place if your employer could get away with not giving them to you?
Something doesn't add up here.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Really? Do you also think the argument that if 1 pill in the bottle will make you feel better, then surely taking the whole bottle of Oxycodone right now must be great?
Most rational people recognize there are many things, where either too much or too little can very bad. Even simple "good" things like oxygen and water have levels where too much is harmful or even fatal.
Fanatically anti-fanatical
But in the end, only leftism, collectivism, socialism, communism hurt and kill people.
And this is why my Father in Law loves to tell stories about his father's lumber mill, where it was cheaper to nail severed thumbs to a sign telling the employees to be careful than to buy safety guards for the buzz saws... It was all communism's fault. Damn you Florida and your secret communist past!
Fanatically anti-fanatical
Again, history...
USSR killed far more than Nazi Germany, yet never paid the price for it... no one was held to account.
That is not why Ford did it, you should do some more reading on the subject...
You don't stay in business selling to your employees, it was all about retention of skilled workers.
That's ridiculous. Companies don't get bailed out by governments in capitalism!
That sounds like a No True Scotsman fallacy.
In true capitalism, we celebrate when companies fail because they get replaced by a greater number of stronger companies.
That's not actually true. A company will be replaced if the demand still exists, but there is no requirement that the company be replaced by more companies or stronger companies. And "a greater number of stronger companies" is a highly unlikely scenario. In fact, in a competitive market, the company that failed is most likely to be replaced by its already existing competitors. So it will most likely not be replaced by any new companies. Although, it's competitors will each become stronger because of the reduced competition. Note, this is generally bad for the customers of those corporations because competition has been reduced and each player in the field now has an increased ability to raise prices. Finally with fewer competitors, collusion is now both easier and more profitable. Of course, the destruction of the remaining competitors is also more enticing so that full power over the marketplace can be established, and then the market's customers will really pay.
My point is that you don't seem to understand Capitalism very well. Maybe you should be a cheerleader for something you do understand?
Fanatically anti-fanatical
You said pretty much what I did but with a lot more words.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Ah. I missed the sarcasm, sorry.
Fanatically anti-fanatical
The charging for bags thing used to bother me until I realized what it actually was - a tax on the poor enacted by liberals. To me, a nickel a bag is as meaningless as the nickel deposit for bottles and cans - I make an effort to bring them back but no big deal if I can't. To someone who has to go without bread every week they need to buy a new pack of lightbulbs or whathaveyou, that nickel does have meaning. Those reusable cloth bags also have to be washed in order to keep bacteria and mold out of them (think of the stuff on the bottom of milk and other dairy containers, or the juices that leak out of meat packaging, or fruit/veggie bits that fall off). To me who has a washing machine in the other room, that's not a big deal. The person who has to lug their laundry out to a laundromat and pay every time, is not going to waste space in the machine on them. This makes the less fortunate less healthy. But the important thing is less plastic in landfills! Screw the poor!
They sure are required to pay the new minimum wage in Ontario. Wait for the shit to hit the fan in a year and change and get back to me when businesses are shutting up shop.
Om, nomnomnom...
No, Ontario doesn't. You're paying out of pocket for a lot of stuff. If you're not carrying supplemental insurance like blue shield/green shield etc., you're probably going to go bankrupt if you're seriously injured. You are paying for your drugs and medications.
Strange that in the US they're required to cover the cost for people who aren't able to afford it though. And it's only been like that since the 1980's. Hey, fun thing. Did you know that 40% of people in Ontario who required medical care have gone to the US for treatment? Welcome to reality. It can be a very long wait when it's 90 days before seeing a specialist and another 180 days before you even start treatment for something. And you might wait as long as 300 days for cancer treatment or a bypass.
Om, nomnomnom...
That's pretty much expected in the no-name stores here. And the proliferation of no-name stores which sell things cheaper is a direct result of policies by the government where wages have remained stagnant, and costs have increased. If you live in the middle of a nice neighborhood in Toronto, you're likely not bagging your stuff. If you live in the middle of South-Western Ontario you likely are, and barely making ends meet to boot.
Om, nomnomnom...
Supply/demand is well understood - but rife with confounding factors in any but the simplest of scenarios, and changing the minimum wage is an *extremely* complicated scenario.
At it's most basic, yes, you're increasing the cost of low-end labor, but it's not at all clear how elastic demand for that labor is - very many products will see almost no change in consumption levels even in response to very large price changes - an inelastic demand curve. Tobacco and gasoline are common examples - people need a certain amount to "get by" regardless of price, and typically will not increase consumption significantly in response to lowered prices, nor decrease it in response to higher prices. (gasoline in the summer is more elastic, as seasonal road trips show very elastic demand, but the daily commute is fairly non-negotiable)
Meanwhile, 42% of the US population currently makes less than $15/hour, and by increasing the minimum wage above that you're giving a huge swath of the population substantially more money to spend - which translates to greater overall demand for more elastic-demand goods and services - which in turn means more jobs must be created to provide them.
Whether you see a net gain or net loss in jobs depends on whether the elasticity in demand for low-wage jobs is greater or less than the overall elasticity in demand for all the things those low-wage workers would buy if they had more money. And so far the non-cherry-picked evidence, both historically and in those cities leading the current charge, suggests that a higher minimum wage leads to more than enough additional total economic activity to offset the expected reduction in demand for low-wage employees if you looked at that single market in isolation
--- Most topics have many sides worth arguing, allow me to take one opposite you.
honestly.. I don't know about Ontario but here in Seattle the place is flooded with high wage earners. Places can and will raise prices to accommodate the wage increase and not one person will care one bit about it. When kids are leaving college and coming here for 120k per year starting no one cares if their beer is a buck more or their burger is 50 cents over the national. Seriously.
once more into the breach
In Ontario, the difference between living and surviving? If you're making $60k in Toronto you're not even making ends meet. If you're making $60k in Ingersoll, you're going to be well off. But large bumps in the minimum wage don't translate well to large geographic areas(cities to provinces/states). It's the small businesses that will shut up shop first, it will be the union shops that demand that they go from $24-26/hr to $38/hr to keep pace with the $10/hr to $15/hr jump in wages.
Om, nomnomnom...
Is fewer small businesses and more chain stores what Seattle wants? Cuz it's what they're getting.
There's a word for people who cling to disproven theories: morons.
Then how could the US fall into a fascist oligarchy like you previously asserted?
What is there about a fascist oligarchy that demands that rich/corporations are the ones in charge, and not the government leaders (the ones with the guns, prisons, courts, judges, etc)? How could socialists and communists nationalize businesses and entire industries?
Sorry, but a building full of lawyers is no match for a main battle tank (although seeing it demonstrated would be a beautiful thing and nothing of value would be lost :P). Unless they've had military training and have anti-tank rockets, but I'm not aware of that being a lawyer-requirement.
The short answer is that currently, large corporate interests/agendas and those of the US government align to a greater or lesser degree, depending. Everybody is getting something currently and so are willing to go along for the most part. When their interests/agendas diverge sufficiently that government leaders see more advantage than down-side to a takeover/nationalization or similar, it will happen.
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
Some (most) jobs give raises every year if you do your job well and don't quit. It doesn't mean you are that much more skilled than someone else.
I am really confused here. Have you never worked a minuimn wage job before?
And those raises are nullified should the minimum wage be raised? What's my reason to stay with you if you pay no more than someone else?
And no, I never worked a minimum pay job. Having a rare skill set and a few even harder to find abilities, both being in high demand, does that for you.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
https://www.marketplace.org/20...
CEO Bill Phelps says his thoughts on minimum wage have evolved. In 1994, Phelps co-founded the fast food chain Wetzelâ(TM)s Pretzels, which has almost a hundred outlets in California.
âoeLike most business people,â Phelps said, âoeI was concerned about it a couple of years ago when California started raising the minimum wage."
The state increased the minimum wage in mid-2014 and raised it again Jan. 1 on its path to reach $15 per hour by 2022.
Phelps worried increasing wages for his employees would cut into profits and that if he raised prices to compensate, fewer people would come eat and sales would drop. But something else happened entirely. Sales at his California stores immediately shot up.
âoeI was shocked,â Phelps said, âoeI was stunned by the business.â
The same exact pattern happened in 2016, Phelps said: A wage increase by the state led to a bump in business. Now Phelps is convinced that minimum wage increases arenâ(TM)t bad for the fast food business. Theyâ(TM)re great. ...
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I know that you know, but politicians are not economists or not economists first. These issues are being discussed in specialist circles, but it is generally fairly difficult to address them in a conversation that isn't one-on-one outside of the said circles. Beyond personal conviction, it is more important for a politician to satisfy win-sets of the interest groups, be those oil companies, labor or hippies, rather than apply a policy that the experts consider best but will remove both the politician and his coalition from power for the next electoral period. It is not economics or even democracy, but any system that does not have a ruler with unquestionable power over the entirety of his constituents.