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Authors of Controversial 'Seattle Minimum Wage' Study Revise Their Conclusions (bloombergquint.com)
Seattle's increase in the minimum wage "brought benefits to many workers employed at the time, while leaving few employed workers worse off," reports the New York Times -- citing a new study by the same researchers who'd claimed last year that workers were hurt by the wage increase.
"The dire warnings about minimum-wage increases keep proving to be wrong," argues a Bloomberg columnist, in an article shared by gollum123: The authors behind an earlier study predicting a negative impact have all-but recanted their initial conclusions. However, the authors still seem perplexed about why they went awry in the first place.... The increase was an "economic death wish" that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks... Despite their dire forecasts, not only were new restaurants not closing, they were in fact opening; employment in food services and drinking establishments has soared...
As we noted in 2017, the study's fatal flaw was that its analysis excluded large multistate businesses with more than one location. When thinking about the impact of raising minimum wages, one can't simply omit most of the biggest minimum-wage employers in the region, such as McDonald's and other fast-food chains, or Wal-Mart and other major retailers... There were two other glaring defects in the first study that are worth mentioning. The first is that its findings contradicted the vast majority research on minimum wages. As was demonstrated back in 1994 by economists Alan Krueger and David Card, modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way. Ignoring that body of research without a very good reason made the initial University of Washington study questionable at best. Second, there potentially is a problem with having a lead researcher -- economist Jacob Vigdor, whose affiliations among others include the right-leaning Manhattan Institute -- whose impartiality is open to question. Long-time Slashdot reader Martin S. writes that "When the UK introduced the minimum wage we had the same doom and gloom scenarios," adding that "the reality was very different." He argues that increasing the minimum wage "increased productivity so business did not suffer, reduced government spending on benefits, and increased the the velocity of money improving the overall economy.
"It had no measurable effect on unemployment."
"The dire warnings about minimum-wage increases keep proving to be wrong," argues a Bloomberg columnist, in an article shared by gollum123: The authors behind an earlier study predicting a negative impact have all-but recanted their initial conclusions. However, the authors still seem perplexed about why they went awry in the first place.... The increase was an "economic death wish" that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks... Despite their dire forecasts, not only were new restaurants not closing, they were in fact opening; employment in food services and drinking establishments has soared...
As we noted in 2017, the study's fatal flaw was that its analysis excluded large multistate businesses with more than one location. When thinking about the impact of raising minimum wages, one can't simply omit most of the biggest minimum-wage employers in the region, such as McDonald's and other fast-food chains, or Wal-Mart and other major retailers... There were two other glaring defects in the first study that are worth mentioning. The first is that its findings contradicted the vast majority research on minimum wages. As was demonstrated back in 1994 by economists Alan Krueger and David Card, modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way. Ignoring that body of research without a very good reason made the initial University of Washington study questionable at best. Second, there potentially is a problem with having a lead researcher -- economist Jacob Vigdor, whose affiliations among others include the right-leaning Manhattan Institute -- whose impartiality is open to question. Long-time Slashdot reader Martin S. writes that "When the UK introduced the minimum wage we had the same doom and gloom scenarios," adding that "the reality was very different." He argues that increasing the minimum wage "increased productivity so business did not suffer, reduced government spending on benefits, and increased the the velocity of money improving the overall economy.
"It had no measurable effect on unemployment."
As was demonstrated back in 1994 by economists Alan Krueger and David Card, modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way.
And then we have automation devastating the numbers of hours worked in a significan't way.
have all-but recanted their initial conclusions
"All-but"? How about just plain "all but"?
Sincerely,
The Crusade Against Hyphenitis
You won't find the problem in employment statistics. Business has to run and will do what it needs to in order to keep running. You'll find the problem in the cost of goods and services, and ultimately the value of a dollar. In other words, inflationary effects and cost of living increases.
Either way. Why would you expect the effect of a minimum wage increase to always do the same thing, regardless of the size of the increase or other circumstances in the economy? I'd expect depending on the size and circumstance that the effects would vary.
It's kind of like how I feel about government spending. Politicians tighten the public belt when there's a recession and spend like crazy when times are good. They should do exactly the opposite. When times are good they're taking money out of an economy that's doing well at turning dollars to jobs. When times are bad they're keeping dollars in an economy that's not converting dollars to jobs very well.
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There's probably a ratio on how much you can actually get away with, unpredicted side effects, local culture...
We live in a society.
On the local radio here in Seattle, the study's purveyors did mention that it hurt entry-level opportunities. Similar to what sounds like the case in Britain, employers focus harder on getting more for their increased payouts, holding out for more experienced employees when hiring, and pushing productivity higher. I would question whether that situation actually results in better value for the workers.
It seems a bit futile anyway. In an economic upswing, what the market gives, employers will tend to take, and what employers are then forced to give, the market too soon takes away when the cycle turns downward.
Strange things are afoot at the Circle-K.
That's the core of Keynesian Econoics, which most mainstream economists these days consider voodoo,;as you can't write up a nice, neat, overly clever set of equations to describe; but which is the only economics which has been proven to work in the real world.
putting the 'B' in LGBTQ+
Most economies can handle small changes over shorter periods of time, but over the long haul we will see the actual results.
We repeatedly hear if you cut taxes, people will have more to spend which will help businesses and the economy grow. Why wouldn't the same thing happen if you give people a raise? In fact, giving people a raise not only gives them more money to spend, it also raises the amount of taxes taken in.
"study's fatal flaw was that its analysis excluded large multistate businesses with more than one location"
;)
So it harmed small businesses the most! So all new businesses need to do is start out as a large multi state business with more than one location.
OK, simple enough, should we print up a pamphlet telling individuals who want to start a business how they should do it.
Just my 2 cents
businesses into receivership should be obvious.
Businesses hire people when there's profitable work that needs to be done. They don't hire people when there's no work for them to do.
Yes, the Federal government should increase spending during recessions and save up when the economy is going well. As you point out, the politicians are stupid and mostly just give money to their donors... i.e. cut taxes for the rich and cut spending on anything that might benefit everyone else regardless of the economy.
State and local government does have the constraint that they have to have balanced budgets so they tend to spend less when tax receipts go down during a recession.
I don't read your sig. Why are you reading mine?
It's kind of like how I feel about government spending. Politicians tighten the public belt when there's a recession and spend like crazy when times are good. They should do exactly the opposite. When times are good they're taking money out of an economy that's doing well at turning dollars to jobs. When times are bad they're keeping dollars in an economy that's not converting dollars to jobs very well.
It depends on who you are, though. If you don't have a stable economic base or tax base (e.g. Greece) and/or don't have control over your own monetary policy (er... Greece again) then you don't really have a choice. You have to spend less when the economy is down because... you have less money to spend. Some economies are simply screwed up enough systemically that throwing more money into them will be a waste because they need to be fundamentally restructured. If your economy is totally based on something external you can't control (like oil prices or tourism) then printing more money is no better than a band-aid. There's no amount of money in the world that would make Venezuela's economy sustainable right now. So "austerity" is your only remedy if you don't have an economy that is fundamentally sound.
However, Keynesian economics will tell you that you should inject money into the economy when it slows down - much like FDR did in the United States during the Great Depression, or the "Obama stimulus" infrastructure spending in 2008. Keynesian thinking follows what you suggest, but it's only practical in cases where you have control over your own money supply and there is a reasonable chance that all the economy is missing is enough people spending money.
"95% of all Slashdot
even though I haven't made min wage in 20+ years. Let me explain (no no, there is no time, let me sum up).
Scenario 1: Guy makes min wage. It's not enough. Guy works really hard, learns new skill gets new job making twice minimum wage. Enters new job market, wages in that market go down because supply just went up.
Scenario 2: Guy makes min wage. It's enough. Guy is content in his job and life. Doesn't enter my segment of the job market. My wages go up because supply goes down.
TL;DR;, Supply and Demand work both ways folks. That guy who can't make a living washing dishes will probably fail at being a computer programmer. Probably. Some don't, and they're gunning for your wages.
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The libertardians are still waiting for Social Security to lead to Stalinist firing squads and jumping through bad basic arithmetic hoops to try and fail to discredit the New Deal and canonize supply side economics. When the evidence isn't ever on your side wave the flag.
Freedom shouldn't be spelled free-dumb.
The City of San Jose raised its minimum wage law a while back. A local pizza chain with six locations in and around San Jose told the local newspaper that they had to raise the per-slice charge by $0.25 and customers didn't mind.
Goodbye, Slashdot!
Let me get this straight. So it closed down small businesses, and the big multinationals who are already testing out small deployments of robotic workers were more than happy to snap up the market space?
And we are supposed to consider this a win for minimum wage workers?
The entire reason the initial study excluded multinational corporations is that they are more than willing to spend billions using anti trust tactics if they feel they will be able to squeeze the market unmercilessly after.
Troll is not a replacement for I disagree.
The "fatal flaw" in the study is that it was conducted by+for idiot republicans and conservative think tanks.
You are assuming the cost of living for a fast food worker is tied to the price of the product they work to produce and sell. I don't think that is a valid assumption.
If I were working fast food at lower-end wages as a head of household, eating out would be a sometimes thing not an everyday thing. You can shop and produce far better burgers at home if you put even a slight amount of effort into it.
Fifty years ago in the US, even 25 years ago, that might have been a problem for the general economy. However for the last 20 years (at least) productivity gains and real wage gains have been transferred almost exclusively to households in the top 10% of income, and the wealth gains have been transferred almost exclusively to households in the top 1% (or even 0.5%) in wealth. So if general prices rise by 25% today that money is not going to be extracted from the pockets of those in the 80% range because they don't have it - it will mostly be paid by those in the 10% and then transferred down. Which is what our personal and corporate income tax bracket structure and reasonable dead-people-are-not-citizens inheritance taxes accomplished prior to 1980.
I'll now be getting my pizza at the place that charges less. It is in my best interest to get maximum value for my money.
Well, I wouldn't, but that is what Microeconomics 101 says (and Micro 401 just barely hints might not be entirely correct), and 90% of the Western world's economic policy since 1980 has been based on simplistic Micro 101 theories, so it directly affects all Citizens in those regions.
https://www.google.com/search?...
September 2009 (Seattle's peak)
Seattle unemployment 8.7%
Portland unemployment 10.4%
May 2018
Seattle unemployment 3.0%
Portland unemployment 3.1%
Portland Minimum wage 11.25
Seattle Minimum wage 15.45
Looks like Portland with a lower minimum wage had a larger and faster recovery especially since portland had a peak unemployment rate of 11.4% in Jun of 09
Odds are if Seattle hadn't raised its minimum wage it would have hit full employment faster, and would have reached the point where lack of labor supply was driving up wages anyway especially with all the Amazon development
Not everything can be automated and if you think and automatic cook will be working 24/7 you should read about about health regulatation. It will have to be turned off, taken apart and everything that touches food will need to be cleaned thoroughly regularly. Wich is something someone will have to do.
As for working without complaint... You never had any problems with machines, do you? They will require maintenance (costs money) and will sometimes break down, requiring repairs (costs money). The more complex the machine, the more costly it will be to run due to this.
That introduces a confirmation bias, where studies will (after revision) on average have results which tend to confirm your preconceived beliefs. To avoid bias, all study results need to be nitpicked to the same degree. You may remember from your high school science courses that one element of your writeup in the conclusion is a discussion of limitations of your experiment and how you may have screwed up. That step is there specifically to force you to nitpick your results even if they confirmed your expectations. No experiment is perfect, and if you can't come up with possible flaws in one which confirms your expectations, you're allowing your biases prevent you from thinking critically..
One of my statistics homework assignments told half the class one thing ("couples with similar personalities have a lower rate of divorce"), the other half of the class was told the opposite (two different homework question printouts, handed out as if they were all the same). Everyone was told to come up with reasons why that trend might be. The next day, both sides presented their answers. Both sides came up with very plausible-sounding reasons and mechanisms to support both results, even though obviously only one of them could be correct. This was to highlight the danger of spending too much effort trying to rationalize the results of an experiment - all results can be made to seem reasonable, blinding you to the bias you're introducing. (And to keep your reasoning honest, I won't tell you which one is correct. That's not what's important here. As long as you're wondering which one is correct, you're reasoning in an unbiased manner. The moment you think one is correct, you're in danger of biasing your reasoning.)
but my politicians spend non stop good or bad times. Oh... you meant on social programs & healthcare? Yeah, they cut those nonstop. We're in an economic boom over here and the speaker of the house just called to end Social Security & Medicare.
Socialism for the rich, Dog eat dog for the poor.
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Think of it this way. A man is told by his doctor that his blood sugar is too high, and he is in danger of diabetes. So he changes what he eats and reducers his A1C blood sugar from 8 to 6. He feels great. He has lost weight, looks good and thinks "Wow, if this is so good, I should do it some more. He cuts his food again and reduces his A1C down to 4.7. He feels even better, being in the mindset of more is better, changes his diet again, bringing his A1C down do 3, whereupon he falls into a comma, from starving himself to death.
For a very very long time now, the Conservatives have had a death grip on taxes and wages. 60 years ago taxes may have been too high, and the minimum wage is similar. But they have lowered those values so much that they are no longer solving the problem, they are creating new ones.
excitingthingstodo.blogspot.com
The study's mostly raw data. The other possibility is that higher wages are drawing more experienced workers the new workers can't compete with. But if that's the case the problem goes away if you make $15 the national wage; e.g. what's actually happening is those less experienced workers are stuck getting jobs outside of Seattle for less pay.
Basically, Seattle's big enough that they're are probably outlying suburbs that have incorporated to dodge taxes and minimum wage laws (my city does just that). They're soaking up the new workers right now, probably right on the boarder. Heck, where I am right now I've got political signs for a proposition to pay for roads in the rich neighborhoods right down the street from me because those neighborhoods are technically another "city" than me. It's so they don't have to pay into the general fund but can take advantage of the city proper's amenities. Crap like this is why we have a national minimum wage.
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The argument against establishing a minimum wage only predicts that unemployment will be higher than it *otherwise would have been*. It does *not* predict that unemployment will necessarily rise. Increasing the minimum wage in Seattle is not a controlled experiment where all other factors are held constant, and in fact it happened against a backdrop of a tightening labor market.
But if you think that this economic law doesn't apply, then why stop at raising the minimum wage only a few bucks? Why not make it $5,000 per hour if it can't have any negative effects? Then everyone will be rich.
they're doing just fine. It had a very small impact on hiring new workers. That said, it's entirely possible those workers are still getting jobs just fine outside Seattle city limits. And that's probably not even a long drive. A common trick the well to do use is incorporate a suburb just outside city limits so they don't have to pay taxes and higher minimum wage to their workers but can still enjoy all the benefits of living in a major city. I'll bet when you look at the data you'll see exactly that at play.
We need a national $15 wage and it needs to adjust for inflation (and "real" inflation, e.g. the price of the sorts of things a minimum wage worker buys, no fair including BMWs in that, no matter what talk radio tells you $15/hr doesn't buy you a BMW).
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Why not just set the inheritance tax at 100%?
After all, the person is dead and the government has better uses for the money than giving it needlessly to the spouse, children or other family members who didnt make it.
"Increased productivity" is code word for "eliminated half the jobs and made the remaining workers work twice as hard". I'm not sure that's a net positive for the working poor.
On the day that minimum wage went up 15%, all of the fast food restaurants increased prices by 25%.
This makes no sense, and I think you just made it up. The cost of labor went up less than 15%, since not all workers were below the threshold. Other costs, such as COGS, rent, utilities, did not go up at all.
At fast food restaurants labor is about 25% of revenue. So a 15% rise in wages is less than a 4% rise in total cost.
So maybe they just used the wage increase as an excuse to raise prices? No, that makes no sense either. Businesses can change their prices anytime they want, and they do it all the time. They don't need an "excuse". If the market would bear a 25% increase, they would have raised prices long ago.
Your entire scenario sounds like made up bullcrap.
Their cost of living would be tied to whatever the cheapest rent, food, etc. that they could procure would be. That doesn't necessarily mean that those options are provided by businesses where labor is a majority of costs, in turn mandating a raise in prices in response to increases in wage as well. Over the long term, I would expect those costs to decrease, or at least remain stable, even if the way in which services are procured (i.e., people buying from Amazon instead of locally) changes.
It's kind of like how I feel about government spending. Politicians tighten the public belt when there's a recession and spend like crazy when times are good. They should do exactly the opposite.
What you are describing is Keynesian economics:
I would summarize the Keynesian view in terms of four points:
1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.
2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.
3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.
4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.
* https://krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/
It's okay to be a deficit hawk... at the right time. It's okay to be a big government spender too... at the right time.
In On the Wealth of Nations, Adam Smith argued that the big reason why Great Britain was able to dominate like it was able to in the late eighteenth century was due to a lack of inflation for 200 years and that unskilled laborers had a steady wage to cover food, housing, and living expenses for themselves and two dependents, over those 200 years. I agree whole heartedly with the conclusion.
Well, again that seems simplistic to me. Keynes said you could just bury money in the ground and let people dig it up, and it'd have a stimulative effect, and I'm sure that's true. But I do think it makes a difference what you spend money on. The government should spend money on things like infrastructure that improve private sector productivity when the economy turns around.
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RAY MORRIS THE LYING FAGGOT NAZI PUSHED RETARDED NAZI PROPAGANDA EVEN AFTER DEBUNKED - https://tech.slashdot.org/comments.pl?sid=12520486&cid=57184660
LYING FAGGOTS LIKE RAY MORRIS NEED TO BE DEALT WITH - ASAP
Even without the raise in minimum wage, the fact the economy took off creating jobs, more demand, and less unemployed meant wages would have gone up anyway. The test will be when the next downturn happens and how quickly those jobs go away.
When minimum wage goes up by a buck, the pizza joint owner knows his pay roll is going to up by 2000$ per employee per year. But all the people who buy pizza from him, their income goes up by 2000$ too. At 20$ a sale, if 100 more pizzas per employee get sold per year the payroll increase has been met. This is two additional pizza per week! Instead of asking, "would you pay your employees 1$ more per hour?" if you ask, "Would you like all your customers to get 1$/hr pay increase?" they might answer differently.
But the small business people are extremely cautious. Especially the ones that inherited their business. The ones who started from scratch are less risk averse. The only certainty is the payroll going up. Customers might buy 2 more pizza a week, or they might affluent and go the steak joint once a while and his sales might not go up. So they discount any positive outcome that might happen due to increased purchase power of the customer base, and oppose minimum wage increases.
Small increases, gradually done, automatically going up to account for inflation would be the way to introduce it. Real wages have been declining in America since the 1980s. Slightly higher than inflation adjustment, something like 3 or 4% every year, year after year, would help the economy.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
And you wonder why people drop you out of helicopters.
There's just one problem: Money isn't wealth.
The British people were generating wealth, and that wealth was being measured with their money.
Either way. Why would you expect the effect of a minimum wage increase to always do the same thing, regardless of the size of the increase or other circumstances in the economy? I'd expect depending on the size and circumstance that the effects would vary.
I suspect that many people want an easy answer, and they want it to fit their pre-conceived notions of how things should work. If changes to the minimum wage have a single, predictable effect upon the economy, then we have a way to manage at least some aspects of the economy (and a clear blame target when things don't go as desired). Complicated mechanisms with conflated context, cause, and effect relationships are messy, hard to understand, and don't lend themselves to simple policy decisions.
Your analysis is incredibly simplistic. The question you should ask is what is the level of minimum wage that will start to have a net negative effect.
Historically many societies have done that, and as noted even under current US law when a person dies they are no longer a citizen. However, since we use open markets (which have mostly evolved into capitalism) to organize our economy it is considered a matter of incentive to allow some percentage of the accumulated wealth no longer owned by the dead body to pass to designated heirs - helps keep the rich at the coalface. Metaphorically speaking of course - the rich send others to die at the coalface for them.
It amazes me anyone could have thought raising minimum wage would be in any way bad for workers. That indicates that:
1. The people doing the study knew nothing about how economics works. Higher wages costs businesses relatively little, puts more money in circulation and, when done at this scale, has very little impact on inflation. Any first year eco student knows this.
2. They didn't look at any examples of other places doing the same thing. In Canada minimum wage has been going up quite rapidly, about doubling in the past 15 years from around $6 up to $12-something in most places and as high as $14 in certain areas. And employment rates have stayed the same or improved while cost of living/inflation has been at a low.
Americans across the border are worried about raising the min wage from $7 when we're on the other side making $12.25+ and facing no ill effects.
We are (or were?) in the midst of an economic boom shortly after the federal reserve injected several trillions of dollars into the economy. Let's see what happens during an economic contraction/recession.
The US dollar has devalued something like 80% in the past 8 years so it really isn't a fair comparison.
Costs change all the time. For example, the price of tomatos changes weekly. Fast food places don't change their prices daily by 1% or 2%. Instead, every couple years they change prices. The minimum wage hike was significant enough that it forced a price reset. That reset included othet actual or expected cost increases.
"Think about that for a minute. Why don't we just set minimum wage to $5,000 / hour?"
You throwing out a massively different number than what any serious human being is talking about is just ridiculous and meaningless in this context. Obviously there's an upward limit somewhere. Where exactly that is, as with many things in economics, we don't precisely know but as this report is pointing out we clearly haven't hit it yet.
I ignore Anonymous Coward posts. If you want to discuss something, that's awesome. Log in.
we can't raise wages because then prices go up. It's obvious bullshit since if it were true then we'd still be living in the gilded age. Obviously there is a way for wages to go up faster than prices.
The answer is productivity. As productivity rises one of two things happen. Wages go up and we're all better off, or wages stagnant and decline and only the folks at the top are better off.
Productivity has more or less doubled since the 70s with wages staying the same, so anyone want to guess which of the above happened?
Oh, and be careful when measuring productivity. Right now "productivity" is technically down because there are fewer start ups producing less money in the economy, but raw manufacturing and farm outputs are way, way up, which is the type of productivity that most effects wages.
What's bizzare is watching all these economists try to come up with theories about why wages aren't going up during full employment. A few are finally saying "Unions are dead so workers have no bargaining power" but _very_ few. The right wing figured out some time ago they need to control the media narrative so they just bought everything. You can do that when you're the last man standing after an economic crash you caused and got bailed out of.
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So basically these larger businesses were passing the cost of doing business in Seattle to other areas of the country. Got it. Oh, and this explains why it won't work applied across the country.
From what I've seen, prices haven't been going up, but this event is apparently from several decades ago, so things may have been different back then. More recently, what you get for that price has been decreasing. For example, you might pay the same amount as you always did, but get a smaller burger or fewer chicken meat wads.
That aside, you're ignoring that the other costs incurred by a business aren't also tied to the cost of labor for their respective suppliers. You have to look at how increases in minimum wage increase the cost of other goods or services (i.e., the non-labor portion of their costs) that the business purchases. While it isn't going to be an increase for everything, it's not going to be nothing either. In the event where every input is based entirely on the cost of minimum wage, then it really is a 15% increase in cost since every one else had to raise prices.
Finally, you may not necessarily get an additional 15% revenue for a 15% price hike because the demand curves are almost never linear. If a business raised prices by 100%, they'd probably lose more than 50% of their customers which means that increasing prices results in lower revenue. It's likely that increasing prices by 25% means that you lose enough business that you only get a 15% increase in revenue from doing so. If you only raised prices 15%, maybe you'd only get a 10% increase in revenue which isn't enough to offset the costs.
The actual headline.
Please do not read this sig. Thank you.
you might pay the same amount as you always did, but get a smaller burger or fewer chicken meat wads.
Ahhh, this explains why portion sizes have been declining. No wonder Americans keep getting skinnier.
The minimum wage raise killed most shops in Paisley, because the cost of living in London is faaaaaaaaaar higher than in the rest of the UK, and the people who set the minimum bar only paid attention to London. I went from having a good salary at my University to be paid the minimum salary in one day (and obviously, I didn't get a salary raise). Who is going to spend years and a fortune studying a difficult career if I get paid the same than a cashier at Poundland who doesn't even know how to count? Who can afford to pay this illiterate retard the same wages than a PhD?
That people pretend that destroying UK with stupid stunts like these has had a good impact is outrageous. I receive e-mails every day from local and national authorities spelling doom and calling the current situation a disaster, and that Brexit will surely destroy the only things that still work.
White Europeans are fleeing from UK in such large droves that our immigration became negative for the first time, and companies are straight out BRIBING them to try to stop them from leaving, while the non-European newcomers require ONE WHOLE MONTH OF TRAINING just to learn how to serve coffee at Starbucks, and they still contaminate it with E. Coli.
Slashdot is now a place for people who want to live dettached from reality.
becausr OMG sky will fall!!
fuck those assholes. stop giving them your money. eat somewhere that pays their employees a life.
Wow, you responded with a well thought out counter opinion. Well done!
Oh wait, no, just the opposite. I have strong doubts Ray is a homosexual, has stunted mental capacity, or belongs in a group that has historically has looked to kill Jews, Gypsies, homosexuals and people with birth defects. What does what you offer have ANYTHING to do with the topic being discussed. [sigh] [shakes head]
Most businesses employ at least some lower wage workers.
Most businesses do not employ any minimum wage workers.
Increasing the minimum wage will result in increased costs of business and thus prices
Of course. That is the deal. We all pay slightly more, and the lowest paid get a raise. TANSTAAFL, so that money has to come from somewhere.
So is this a good policy to reduce income inequality? No not really, because most minimum wage workers are not poor, and most of the poor are not minimum wage workers. Most minimum wage workers are 2nd or 3rd earners in households averaging $53k in income.
Meanwhile, 60% of households below the poverty line have NO earned income at all. The problem isn't "low pay" but "no pay". Instead of just focusing on higher pay, it would be better to focus on getting these people into the workforce, even if just on the bottom rung.
The law destroyed a bunch of local businesses that couldn't make it on the new margins.
But a bunch of big multi-state/national corporate conglomerates hung on and expanded their reach...
Okay, good for the conglomerates and all.
But that means the profits are, eventually, leaving the state.
As opposed to remaining local the way it did with smaller owners...
Not sure that's something to crow about and celebrate.
Chas - The one, the only.
THANK GOD!!!
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Chas - The one, the only.
THANK GOD!!!
On the day that minimum wage went up 15%, all of the fast food restaurants increased prices by 25%.
I won't accuse you of lying, but I will credit you with "motivated mis-remembering". The reason why actual studies by actual economists are important is to understand what really happens rather than replying on made-up anecdotes.
Wages make up 25% of the cost of fast food on average. To cover a 15% wage increase not more than a 4% food price increase would be required.
The claim that "all of the fast food restaurants increased prices by 25%" fails the credibility test on several levels.
Fast food is a very competitive business based on low prices. All businesses increasing prices by 4% the same day due to the minimum wage increase would at least be plausible (but still probably made up, more likely the increases would be scattered over time). A huge jump in prices unrelated to wage increases on the same day is not plausible at all.
Second class citizen of the New Gilded Age
Why not just set the inheritance tax at 100%?
After all, the person is dead and the government has better uses for the money than giving it needlessly to the spouse, children or other family members who didnt make it.
Note the presumption here that it's the government's money to give in the first place. And nevermind that the now-deceased has already paid taxes on those earnings or properties over his or her entire working life.
There are just so many things that are morally wrong with this argument. You seriously just argued that a widow should not inherit his or her spouses assets? What about children who's parents die young? Kick the kids into the streets, because screw you kiddies, the government deserves whatever savings or property they have? Note that this would have little effect on the rich, who can afford all the lawyers and accountants in the world to set up legal mechanisms that would avoid these problems. But it would definitely cause problems lower and middle class family wealth, and make it all that much harder to climb the economic ladder over successive generations.
Beware unintentional consequences to simplistic feel-good solutions. This is the same shallow thinking which launched the luxury tax in the early 90's, then saw it repealed as the disastrous unintended consequences came to light.
Irony: Agile development has too much intertia to be abandoned now.
If wage models are anything like the economic models I've seen, they tend to be simple formulas.
What about the effect of spending money locally?
If the minimum wage increases for restaurant staff, then people receiving that money will most likely spend it locally, causing positive follow-on effects.
If instead profits to restaurant shareholders increase, then those shareholders most likely live far off and don't spend it locally.
Hence a model that predicts higher minimum wages cause bad things might not necessarily be wrong looking at everything as a whole, but fail to take into account the positive local effect of more local spending vs more remote spending.
You're right that direct labor costs are about 25%-30%.
Food costs are also about 25%-30%, paying ng for things like hamburger buns and lettuce.
Who do you think makes hamburger buns, low-wage workers, or guys in suits? Who harvests, sorts and packs lettuce? People working close to minimum wage, or people making $125,000?
What do you think happens to the cost of making hamburger buns, tomatoes, and cups when minimum wage goes up 15%?
I know its too much to actually RTFA but it actually shows a mix of harm and benefit and is restricted to low wage workers. The summary mixes together links to give the impression of a slam dunk but a lot of the links like the "all-but recanted their initial conclusions" article are actually a little more neutral and don't contain any such words like 'recanted' in them. *sigh* just another day at slashdot I guess.
For the folks at the lower to middle end of the economic spectrum, some inflation can be really nice. The propaganda against it is based more on the concerns of the upper class.
I remember the days of hitting more than 10% in the late 70s-early 80s. In the middle class, wages managed to mostly keep up while many of the bills did not - especially their fixed rate loans on homes and cars. My parents did well during that time. In a short time, inflation reduced the lifetime costs of their homes and cars by a double-digit percentage. That became a significant amount of extra spending money in their pockets for years to come due to the reduction in the proportion of their income going to those major bills.
Moderately higher inflation, especially for short periods as in the adjustment after sudden raises, can be a boon for the struggling worker class and even for large corporations with heavy long-term fixed rate debt. It is publicized as bad because it hurts financial institutions holding those loans, reducing the profit they make off of the less affluent.
According to the CPI The price of a cheeseburger went up from 80 to 81 cents in 1993 and then down to 78c in 1994. If you saw a 25% increase in your area it sure wasn't widespread
Generally speaking about 30% of the cost of a restaurant food item is labor So if labor costs go up by 15% it seems unlikely that would mandate a .25% price hike to break even.
If you have facts to share, please link to them.
Nullius in verba
Cryptofeces Lepidoptera Creimerus infestation is a serious problem. Not only are they capable of reproducing asexually like amoebas, they can also lay eggs hermaphroditically in unexpected places. They can disguise eggs as something useful to fool the unaware, sometimes pretending to be a haiku author, blogger, vlogger, or IT closet cleaner.
Very dangerous. They can seemingly reproduce out of the cosmic background radiation, even if you step on twelve of them, there's always one you miss.
Don't be fooled by the C. Lepidoptera Creimerus's innocuous, rolly-polly, and almost friendly appearance; despite its great size, stupid demeanor, and bedraggled toothless appearance, they have the hardiness of a tardigrade.
Only a concerted, targeted downmodding campaign has been shown effective in controlling this dangerous pest.
Experience shows that stopping such a campaign leads to C. Lepidoptera Creimerus returning within days.
Don't let it happen again!
If increasing minimum wage has only or mostly advantages, then what are we waiting for? Let's set it at 100$/h and make an end to poverty.
Obama spent like crazy when he inherited housing bubble disaster from Bush. Heck, I got a new road.
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It is truly amazing to see all these fucking idiot conservatives STILL using the same stupider than fuck arguments against raising the minimum wage when they've been proven wrong consistently by the reality of what actually does happen. How fucked in the head does someone have to be to ignore reality when it continues to slap you in the face? Are there no conservatives out there with even the smallest functioning brain?
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Exactly. The OP just essentially wrote the conclusion of the paper that got revised and reversed. I look forward to him coming back and revising and reversing his post.
The minimum wage increase directly caused 30%-50% of the price increase through increased costs.
4/25 = 16%
plus the price of hamburger buns, lettuce, cups etc, all made by low-wage employees, went up.
Agricultural workers are exempted from minimum wage laws. Manufacturing workers are not paid the minimum wage. 2% of full time workers earn the minimum wage, and they are not working in cup factories.
the politicians are stupid and mostly just give money to their donors.
That may be self-interested and greedy, but it is not stupid.
If anyone is stupid, it is the voters that re-elect them.
taken from existing profits so that business expansion plans get reduced.
Taken from needed equipment upgrades. So any competitive advantage is lost.
What does the business get for that finding money to pay for new wage spending? The same quality of worker.
The way out of that is to move to a much better city and state that allows a business to grow rather than be wage taxed.
Domestic spying is now "Benign Information Gathering"
(er... Greece again) then you don't really have a choice.
The Greeks did have a choice. The problem is that they chose poorly and are now living with the consequences.
Even when the cost of their financial recklessness was becoming obvious, they continued to elect irresponsible populists who promised them cost-free bread and circuses.
In 2009, the average retirement age in Greece was 57. Germans work to 67. Why should a German factory worker get up and go to work every morning for an extra decade to pay younger Greeks to relax?
I don't often eat fast food, and I do eat it even less frequently when i find myself in Seattle. That being said, I also know that the chains in "Seattle proper" have all got airport style prices for the same gutter-quality crap that is dollar menu everywhere else. I'm guessing here, but I think people put up with this in part because they know the workers are making what would have been almost close to a living wage 10 years ago, and it makes them feel good about themselves. Seattle is all about the good vibes and warm fuzzies after-all.
I honestly don't know why people still choose to spend 5 dollars on coffee, or 3 on a soft drink, or 10 on a meal from any of these chain restaurants. Their food is fucking poison. There are so many different styles of food in the Seattle area that may not be super healthy, but most are not as universally bad for you and addictive like these fast food chains all seem to be.
Seattle is stand-on-head crazy. Clap for 15/hr and smile while you write your 4000 rent check for your studio apartment?
You are being ripped off every second of every day, so that advertisers can help rip you off even more tomorrow.
as a tech worker I'm happy to have fewer H1-Bs. But that said, I don't expect to see your guys out in the fields picking strawberries. Even for $15/hr. That's not just because it's shit work, it's also work that's hard to have a life around.
Also, well, we are going to need some kind of immigration because Americans, like the rest of the first world, just aren't having enough kids. If you want your 401k to not collapse you're gonna have to let them in. A better economy can only do so much for birth rates.
What you really want and need is more social programs paid for by the wages those immigrants earn and the wealth they generate. Single Payer health care's a great start. How about a federal jobs program? Infrastructure spending? The real problem with immigrants is that you as a worker don't get any benefit from them (me neither, btw). The best way to change that is with Democratic Socialism. Let 'em come here and work, but make sure the money they bring in doesn't just go to the top.
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From the article: "In their latest paper, which has not been formally peer reviewed, ..."
I believe in light of their "flip-flopping" conclusions that people should wait until the peer review process is completed.
--- You are in a little twisty maze of comments, all different.
The problem with any in the wild economic studies is the economy is incredibly complex and there is no control group. As much as they try to account for other variables, there simply is no Seattle where the minimum wage wasn't raised. We have been in a pretty long economic boom, and current unemployment is realistically zero. When I was in college my economics professor claimed about 5% unemployment was structural (people between jobs) and anything less than that was functionally zero. So arguably the "market" minimum wage for most jobs is already above legal minimum wage, so the legislation really didn't do much. And that's always been the case during boom economies. When I got my first job as a 16 year old lifeguard in 1986 I got paid more than minimum wage.
if they hadn't been shut out of the world banking system by US sanctions. I've never once heard a good explanation _why_ we sanctioned them either. Meanwhile the Saudi's just murdered a permanent resident (more or less a citizen finishing up their paperwork) and we didn't just turn a blind eye, we bluntly said "we make too much money selling them bombs to punish them".
I'm not saying Venezuela is some kind of wonderful, lord knows they've got their problems, but like all of South America they'd have a lot less problems if the American CIA would stop fucking with them. And meanwhile we'd have a lot less illegal immigration if we'd stop destabilizing South America & Mexico. Kind of a win-win for everybody but the oil industry and prison industry.
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So we're all good now.
Surely this translates to a national model...
and not median income. You're mixing in a few high earners who skew the results.
You can't target the working poor. The right wing will put in so many exceptions that your attempts to will fail. In Missouri they just put a work requirement in place for Medicaid. They didn't raise the income threshold before you get kicked off Medicaid. You can probably guess where this is going...
There's an easy way to see how badly off min wage workers are: even with all the attempts to deny them access to gov't help they still get $6 billion/yr in help, which is a $6 billion dollar subsidy for companies that pay minimum wage, paid for by you and me.
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Both the Great Depression under FDR and the Great Recession under Obama showed that the Keynesian model only greatly extended the length of the bad times. Of course, that was to the political benefit of both of them, so I sure they didn't mind screwing the populous.
"Agricultural workers are exempted from minimum wage laws."
That's not entirely true, is it? They are not exempt from federal minimum wage laws. Further, they do not generally pay for their housing or transportation on seasonal contracts.
A minimum wage hike at the federal level would have an effect on ag products cost.
"or 3 on a soft drink, or 10 on a meal from any of these chain restaurants"
Because they're stupid. If I find myself out in the field and hungry where I haven't made plans already (no boxed lunch or anything) I hit McD or Carls Jr. for a "hold me over" meal.
McD - Chicken Sandwich + 1 large diet coke. Cost $2.00 + tax
Carls jr 1 or 2 sliders + large diet coke. Cost $2.00-$3.00 + tax.
Enough to fight off the hungries without totally killing you on fats/carbs the $4.00+ burgers will. And the soft drinks are $1.00 any size.
Homelessness has been increasing every year since the wage increase. So people have fallen off the public roles and those that remain working are working far harder. If you drive downtown Seattle, it is pretty obvious.
The authors of the study should not pat themselves on the back for a ideal response.
Engineers often deal with how it was designed and a different outcome.
Why are you looking at national average grocery prices to see the effects of a minimum wage increase in one state on fast food prices on that state?
That seems about as relevant as looking at the average NFL score.
The Brits spent their wealth civilizing their colonies; that's why the empire fell apart after WWII; it wasn't profitable to keep civilizing them on British resources.
Long-time Slashdot reader Martin S. writes that "When the UK introduced the minimum wage we had the same doom and gloom scenarios," adding that "the reality was very different." He argues that increasing the minimum wage "increased productivity so business did not suffer, reduced government spending on benefits, and increased the the velocity of money improving the overall economy.
Except, what they're never seemingly willing to tell you is that today's "economic improvement" is tomorrows "what went wrong with inflation?" We're already seeing the effects of this kind of reasoning over the long term, in every city in America where people complain about the cost of living. There is no silver bullet here. More money in the economy means higher prices for everything in the long run, higher taxes, and the need for future hikes like this in the future. Driving up the lower end drives up the higher end as well, and has ripples through the whole economy. And if your goal is helping the poor, here, are we really certain that sending money to large multinational chains like Walmart (who already don't pay anything in taxes) is a solid idea? I'm thinking... not so much.
The better solution on this is education about education. In America, people are endlessly ignorant about their education options, and they make terrible decisions because of it.
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The predictions about the negative impact of raising the minimum wage have been a standard argument for decades. There is no evidence they have ever had the predicted effect. Those predictions are based entirely ideological belief. And, like all ideologues, they don't let reality disturb their beliefs especially when those pressing those beliefs pay the bills.
Certainly the economic ripples from raising the minimum wage are complex and vary depending on a variety of factors. But almost all of them are positive in terms of growing the economic pie. The result is almost always going to make minimum wage workers more productive either because the price of the products and services they produce are raised or because the incentives to invest in technology allows each minimum wage worker to actually produce more. Either way, they purchase more goods which increases economic activity.
A lot of economists insist that WW2 ended the great depression or rather the American victory in WW2 did.
There was virtually nothing to buy during WW2 and people were making money head over heels. Once the war ended there was such a demand for consumer goods that the actual beginning of the "American Way of Life" began.
For example before WW2 maybe one American in four had a car. Buy the end of the fifties, virtually every adult had a car. Meat consumption went of fourfold in the decades after WW2.
Historian Steven Ambrose has a very good talk on who the winners and losers were on WW2.
https://www.youtube.com/watch?v=sGYwk6yuQGM (Recorded in the early 1970s)
As far as FDT New Deal ending the depression, it actually made it worse...
Roosevelt's advisers saw in his program not merely a road to recovery but the opportunity to remake society. In FDR's Folly, Jim Powell, echoing an idea advanced by Milton Friedman, suggests that they "never appear to have considered the possibility that more power would magnify the harm done by human error or corruption."
Their intellectual approach was to contrast "actual capitalism with ideal government," with intervention judged not on the basis of its effects but of its intentions. Further, the intellectual program of the New Deal was inconsistent and often contradictory. Powell argues that pragmatism and political expediency ruled the day:
"It didn't bother [Roosevelt] that New Deal policies contradicted one another. When an adviser gave FDR two different drafts of a speech, one defending high tariffs and the other urging low tariffs, FDR told the adviser: "Weave the two together." The Agricultural Adjustment Act forced food prices above market levels, in an effort to help farmers, but higher food prices hurt everybody who wasn't a farmer. The National Recovery Administration forced up prices of manufactured goods, hurting farmers who had to buy farm tools and equipment. Agricultural allotment policies cut cultivated acreage, while the Bureau of Reclamation increased cultivated acreage. Relief spending helped the unemployed, while corporate income taxes, undistributed profits taxes, Social Security taxes, minimum wage laws, and compulsory unionism led to higher unemployment rates. New Deal spending was supposed to stimulate the economy, but New Deal taxing depressed the economy."
https://mises.org/library/world-war-ii-did-not-end-great-depression
That may be self-interested and greedy, but it is not stupid.
It is in fact stupid. Unchecked, a society that permits that behavior only ends one way, just ask the French aristocracy, or the Russian Tsars.
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Minimum wages can and likely should rise during the greatest economic boom of the modern era. However had the economy remained as it had recently been, the initial assessment would also have remained valid.
Open your wallet. I'll bet there isn't a single bill in there that says "Dutch Gun" on it. I'll bet they all list a government.
A government absolutely owns the money. If the US said tomorrow that $20 bills will not be honored, what do you think would happen? Would you take one?
For showing the first example of something (labor), that when the price increases, the quantity demanded also increases.
An analogy to physics would be creating a new element that is found to have anti-gravity properties.
Can we stop with the bullshit birther conspiracy theories that Obama was from Keynesa?
The reason that the study didn't reach the correct conclusion is that there is huge demand for restaurants and bars due to economic explosion. The real stats should be on purchasing power. I guarantee that nobody making even $25 an hour is buying a condo in Seattle...heck even apartments are crazy. Try the $15/hour minimum in say Pasco or Moses Lake.
"The government should spend money on things like infrastructure that improve private sector productivity when the economy turns around."
Easier said than done, if companies knew how to improve their productivity then why wouldn't they already do that. And for infrastructure, in the developed economies we're just that - fully developed, there's not much infrastructure than can be built that isn't already build with regards to being more productive, it's a case of diminishing returns.
Why do we bust? Isn't it the banks screwing up every time and interest rates swinging too wildly. The economy suffers when banks won't lend, if businesses can't invest because the banks won't lend then building infrastructure will simply increase public debt to no avail.
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Well, again that seems simplistic to me. Keynes said you could just bury money in the ground and let people dig it up, and it'd have a stimulative effect, and I'm sure that's true. But I do think it makes a difference what you spend money on. The government should spend money on things like infrastructure that improve private sector productivity when the economy turns around.
That is pretty much Keynes' point. Digging up money in jars (an analogy to mining gold for money - a similarly pointless exercise) would be better than nothing because it would create a stimulatory result, but a much smarter use of that same labour would be to do something useful like, say, building houses.
The impact of the min wage on small, non-chain restaurants has been devastating. Almost 40% have closed! It was the reason behind the initial bad analysis. But throwing in all the multi-state establishments is rigging the outcome. Simply because chains can survive the increase doesnt mean it works; youve gutted the small independent businesses and increased the walmartization of the city. This is like claiming local retail is doing well because Amazon seems to be doing fine.
Not many economists believe that due to this growth data:
U.S. Economic Growth 1925-1950
Year %Growth
1925 2.3
1926 6.5
1927 1.0
1928 1.1
1929 6.1
1930 -8.5
1931 -6.4
1932 -12.9
1933 -1.3
1934 10.8
1935 8.9
1936 12.9
1937 5.1
1938 -3.3
1939 8.0
1940 8.8
1941 17.7
1942 18.9
1943 17.0
1944 8.0
1945 -1.0
1946 -11.6
1947 -1.1
1948 4.2
1949 -0.5
1950 8.7
As you can see, the recovery from the Great Depression began with a period of strong growth beginning in 1934. Years 1934-1941 (bolded) averaged 8.6% growth. These were the years of the New Deal, all before WW2 began on December 7, 1941. This doesn't mean the New Deal caused the recovery, but it sure didn't hurt, and it helped a lot of folks get back on their feet.
See above.
You misunderstand what Keynes said. What he was saying was the burying thing alone would be worth it for the stimulative effect. Hence, that government spending would happen on useful stufft. He thought they would spend it on stuff like infrastructure, cause, hey, extra free money as long as it gets spent. And, when Keynes was alive and his ideas taking hold in the 30's,t hat's what governments did.
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I picked four items from the menu to compare prices at the two restaurants; a Big Mac, an Egg McMuffin, a large Coke, and a large fry. At the Seattle location (9304 Rainier Ave S, Seattle, WA 98118) those items respectively cost $5.89, $3.89, $1.99, and $3.39 plus 10.1% sales tax for a total cost of $16.69. At the Renton location 3 miles away (73 Rainier Ave S, Renton, WA 98057) those same items respectively cost $4.89, $3.79, $1.00, and $2.89 plus 10% sales tax for a total of $13.83. So there’s a 21% increase in cost in Seattle compared to Renton for the same items.
umm.... WW2 began in 1939 when Germany invaded Poland...
In other words, if you support increasing the minimum wage but don't support large corporations like McDonald's, you face a dilemma.
Disclaimer: I haven't RTFA
I think it's a good thing that we have the ability to run these kind of experiments on a local level. Even if you think they're doomed to failure, doing so provides evidence pro or con. The same should go for UBI, and other things like pot legalization. We've fortunately got 50 large laboratories to run things.
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Actually Keynes said it had a stimulative effect even if you paid half the people to dig ditches and the other half to fill them in, and it does. He was making a point about how effective it is, not making a recommendation about what should be done with the money. Keynes would likely agree with you completely that spending the money on public infrastructure is better than spending it on make work projects.
Fanatically anti-fanatical
Greece isn't really a good example for your argument. You've outlined Greece's problems correctly. However that didn't stop them from spending when they had less money. All they did was threaten to leave the Euro and take massive loans from Germany.
Their tax and corruption VS the monetary policy aren't really related issues either (but both important in their own right).
However if the did have their own money, they could simply devalue their currency (print more money), which would have an impact on inflation of course, but it would have been an option to them other than to just take massive debt. Though I forget how it turned out, as I think they ended up defaulting on it all anyway so there is that. Also Greece has like zero exports. About the only thing they make money on, would be tourism. Additionally by printing money, devaluing their currency, and increasing inflation, they can basically make everything cheaper (for tourists with money that is worth a lot more than Greece's), making it much more attractive to tourists to come and visit and spend foreign money. That is another reason the euro tanked the country, as Greece was always a cheep tourist destination which then had to compete with the rest of Europe more competitively.