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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."
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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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.
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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.
And yet inflation remains stubbornly near historic lows.
In theory, I would've expected inflation and unemployment. But that's not the actual outcome we've seen at all. And if there's ever a time to increase the minimum wage, it's when unemployment and inflation are exceptionally low. Keep increasing the minimum wage until we start to see some movement on the inflation and unemployment numbers, and that's when we'll know we've found the right number and can freeze it for a while.
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Profits today benefit people tomorrow. Don't believe me? Ask yourself if the country you want to live in ten or twenty years from now is one with a decade or two of high corporate profits under its belt or a decade or two of dismal performance. Hell...do you want to work for a company that's making money or one that can't run two nickels together?
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 $15 the national wage; e.g. what's actually happening is those less experienced workers are stuck getting jobs outside of Seattle for less pay.
Basically, Seattle's big enough that they're are probably outlying suburbs that have incorporated to dodge taxes and minimum wage laws (my city does just that). They're soaking up the new workers right now, probably right on the boarder. Heck, where I am right now I've got political signs for a proposition to pay for roads in the rich neighborhoods right down the street from me because those neighborhoods are technically another "city" than me. It's so they don't have to pay into the general fund but can take advantage of the city proper's amenities. Crap like this is why we have a national minimum wage.
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When minimum wage goes up by a buck, the pizza joint owner knows his pay roll is going to up by 2000$ 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.
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And yet Seattle is still doing better than Portland. Portland only had a larger recovery because it was worse off.
Your logic suggests that if you stub your toe, you should break your femur with a hammer so you can have a bigger recovery./
Fuzzy headed thinking like that would be really really funny except that it needlessly increases suffering in the world.
Profits today benefit owners today. That's all.
If you expect any loyalty from a company where you have sold your soul, you are very naive.
I don't read your sig. Why are you reading mine?
"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."
Cool, so if they were already so close to a price reset then it wasn't really the increase in minimum wage that did it at all. A bad tomato harvest would have done just the same.
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Two questions:
1. Do you realize that 70% of Federal spending is on welfare and retirement benefits (in which Social Security and Medicare reside)?
2. Do you realize that Social Security and Medicare are in a deficit spending situation, are projected to both go completely bankrupt within 12 years without major reworking?
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That reset included othet actual or expected cost increases.
Yet, after waiting for years, they all increased their price by the exact same amount on the very same day? That seems wildly implausible.
And if the price rise had little to do with the min wage increase, they why bring it up?
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.
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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.
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.
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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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