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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."
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 is absolutely, 100% not true. As in false. As in bullshit.
https://benjaminstudebaker.com...
https://www.jstor.org/stable/4...
You are welcome on my lawn.
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
There is no evidence to actually back up the idea that the rate of inflation is significantly accelerated through minimum wage rises when those rises have not kept pace with the rate of inflation in the first place for decades. This seems to be a common folk wisdom fallacy that might appear to make sense on its surface, but fails to actually be supported by real world data. I have my own theories on why this is, but perhaps there's someone with an economics background out there that can explain exactly why minimum wage increases don't drive inflation as much as some people fear it would or should.
File under 'M' for 'Manic ranting'
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 so much, as has been proven by many economic studies and real world cases over the past 50 years.
This gets more money flowing into the economy where it's needed, at the lower end.
That in turn increases demand for pretty much everything, which increases sales, which increases demand, etc.
Don't forget that this money is already in the system, but now instead of going to the top of the economic food chain where it mostly sits static or in stocks, bonds, or off shore accounts where it does absolutely nothing for the economy, it's now flowing through many hands at the base of the economic chain where it actually does good.
The rich don't create jobs, they stifle the economy. The richer they get, the worse it becomes. These are very well known and studied economic realities among economists. Many of them, including winners of the Nobel Prize for Economics have talked about this in language us non-economists can understand.
As to it violating what is often called "common sense". That's pretty common with reality not conforming to what uneducated humans expect.
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.
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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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.
I wish you guys would stop talking about the "rich" and the "minimum-wage" as thought it was some sort of binary thing.
You need everybody with _some_ money to spend, you do _not_ need multi-multi-billionaires. You need _some_ millionaires, more who are _"pretty well-off"_, even more who are _"reasonably well-off"_ and as many as you can get of people who manage OK and sometimes have a bit over for something extra.
The fabulously rich just tie up money that mostly does nothing useful to society, the "minimum-wagers+" are the _core_ of your economy.
Mac
The extreme counter example also highlights the idiocy of the parent poster: set wages to $0 and then burger prices will be free!
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"
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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