I'm curious about the communities thoughts about living wages and minimum wage. Here in Seattle, and a number of other US cities, fast food employees are on strike and demanding a $15 an hour rate. (http://www.bbc.co.uk/news/world-us-canada-25239433)

A small city to the south of Seattle called SeaTac voted in November to raise their minimum wage to the same $15 an hour level. (http://www.bbc.co.uk/news/business-24811045)

I personally find this reasonable, and believe the economy can support it without issues. I do frequent restaurants and fast food outlets enough, and see that in recent times, these jobs are being filled by those who cannot find work elsewhere. Our economy continues to be a problem for pretty much everyone except the top 1%. These jobs in the past were seen as just a temporary position meant to help people bootstrap themselves into better positions. But that appears to now be more of a fairytale then a real solution. (http://ideas.time.com/2012/09/07/the-myth-of-bootstrapping/)

I think $15 an hour minimum would help start to balance out the massive wealth gap in this country. (http://www.youtube.com/watch?v=QPKKQnijnsM)

SeaTac only did the $15 for certain employees. Not everybody qualifies for that minimum wage.

I don't get the $15 for fast food workers. If you have a skill, you should get paid what that skill is worth. Just because the economy sucks or somebody doesn't have the skill to get themselves into a better job doesn't mean that job is suddenly worth that much more.

Yes, those jobs were originally meant for students, either high school or college, to give them some spending cash. They weren't designed, or meant, to raise a family on. If you need that, do something to improve your chances of getting a better job.

That $15/hr figure is kind of funny to me. That is almost what we pay starting engineering interns. I don't know how people can even begin to equate dunking fries in grease or flipping a burger to being an engineering intern.

I don't think the real disagreement is over getting paid in relationship to the skill level required for the job, but in terms of a wage that can actually sustain a person with today's cost of living. Perhaps those interns should be getting a raise as well!

As I'm sure most everyone reading this knows, the minimum wage in the U.S. hasn't come close to keeping up with inflation, which means that either it was either way too high in the 1960s, or it's way too low now, or some combination of the two. If you assume it was correctly set in the 1960s, it should be over $10 now only factoring in inflation.

If you then factor in productivity gains since then, it should be between $12 and $22, depending on how much of the credit for productivity gains you give to the workers at the bottom of the wage scale. (Numbers from page 2 of this pdf. This is the figure that serves as the basis for Sen. Elizabeth Warren's much-publicized $22/hour figure.

When you take into account that there is no discernible correlation between increased minimum wage and increased unemployment, there is no reason we can't do better than the federal minimum we have now. (And the ridiculous $2.13 tipped labor exception to the minimum wage, put in to placate the restaurant industry, needs to die a painful death.)

There are interesting, if not entirely practical proposals out there to begin providing a universal basic income to everyone, which would obviate the need for a minimum wage. To provide a livable basic income would cost a lot of money, but it could be funded by scaling back / eliminating some of our current safety net programs, which has given the idea some traction on the right. Switzerland is currently debating a rather generous version of a basic income measure right now (or was, anyway) so it's like it's a Looney Tunes idea, though it probably is far out there in the current U.S. political climate.

So, yes, let's experiment with these higher minimum wages all over, let's raise the federal minimum to at least get it to parity with what it was in the 1960s, and let's analyze the results. Let's let the laboratories of democracy work for us.

Example: Sometime I hire some high school kids to help out around my small farm. I pay them $7 an hour or a little more if they go a good job. If I was required to pay $15 an hour I would not hire them. I would do all the work myself. Thus spreading the income gap between a middle class part time farmer and a high school student.

I have a feeling $15 would result in a lot of layoffs and jobs closings. It would not punish the rich for being rich or even come close to making everyone middleclass. It would only hurt many of the people currently making minimum wage (out of a job), raise prices for goods that would in turn put the hurt on the middle class and lower. This would also increase “under the table jobs” and encourage illegal aliens.

While raising minimum wage sounds good, when the free market is messed with the results usually are not good.

When we hire babysitters, we've been paying $10/hr to high school kid and $15 to college kids. Paying them all $15 isn't a big deal.

If I'm going to eat fast food, I'll go out of my way to eat at a local joint rather than a nationwide chain. Yes, that basic cheeseburger will probably cost $6 rather than $3, but it's not going to suck. Higher paid jobs attract better employees who actually care.

Supposedly, Walmart's been having problems where their low-paid employees just don't care about things like keeping the shelves stocked, while Costco's higher paid employees maintain a tight ship. I don't shop enough at either one to have personal experience here.

I suppose the core question is whether a higher minimum wage will have an impact on the people-who-don't-care. Perhaps they'll be less likely to work 60+ hours a week, to make ends meet, and will instead work less and put more effort into it.

One thing somebody posted on Facebook, perhaps with an ironic intent, is that raising wages would lead to the replacement of supermarket checkout people with automated self-checkout systems. This was intended as a reason against raising minimum wage, but I see it as a plus. I'd rather have more employees around the store to give me meaningful advice (e.g., these beets looks neat, how would you prepare them?). I can swipe my own groceries by a scanner.

Except the paper I cited shows there's no correlation between state minimum wage laws and unemployment. None. You can feel whatever you want, but at some point we have to speak in empirical terms, not what we feel.



Should we get rid of the minimum wage altogether, then? What about child labor laws?

But with a minimum wage, either everyone's pay will go up, meaning more cost to you; or there'll be no differential between low and high pay: the lazy people won't work any harder, and the hard-working people will probably become lazy.



I doubt that. They can already earn more by doing a better job. Paying them more for doing the same job isn't going to encourage them to step up.



And you really think this'll happen? They'll just have the same number of staff on the floor, and fewer at the checkout.

Don't get me wrong, I'm the liberal (small-L) around here, but I believe that arguing for minimum wage on some kind of financial basis is nonsense. Do it because you believe that people deserve to survive, not because you think it'll improve service in your local supermarket chain.

You can cite whatever you'd like but doubling the minimum wage in my state will cause employers to try to mitigate their losses by reducing their workforce where possible. When prices rise demand lowers. I'm no economics expert but that is fact.

It will also produce the "why F'in try" attitude in workers that have risen up the pay ladder by hard work to just have their hard work mean nothing when the next loser in the door will be making as much as they are. I have a friend in that exact situation now and he is pissed, fact.

If we are helping the bottom should we restrict the top as well? No one needs as much money as Bill Gates has, lets tax him down and spread it around, greedy asshole.

At least Obama is shifting focus away from all the massive health care issues to something else. No wait, he just wants to help the poor and bring down the corporate machine that has the poor in a stranglehold. I'll choose which of the two strategies to believe.

It actually isn't fact, and my second link provides eleven reasons why it's not a fact, but if you're going to just keep restating what you know to be a fact instead of trying to make an actual case for why your supposed fact is true despite being proven false in the real world, I suppose we're done here.

The studies I've seen for the SeaTac proposal showed a much smaller percentage rise in the cost of the goods, compared to the percentage increase to the wage. Hopefully the impact to those not being bumped up a little (the non locals) won't be too harmful.

Thinking about it more, along with Tony's comment about the "laboratories of democracy", it is probably best to push for this at the regional level. SeaTac is a great start, in an area where demand isn't likely to change, and most of the business comes from non residents of the area. I look forward to seeing the research from SeaTac in a few years to see the outcome.

History is also not on your side with that comment, in regards to a big American corporate success story in the early 20th century. Henry Ford was a strong believer in welfare capitalism. His action of doubling the minimum pay of his employees led to more profit for Ford, a better workforce for the company, and an economic boom felt throughout the entire region.


I can see your friends point, but I think his anger is probably directed at the wrong place if he's aiming it at the incoming person. It's his responsibility to negotiate a reasonable wage for his job, and to only accept if he finds the companies counteroffers reasonable. Along with also ensuring his raises are at least keeping up with the rate of inflation and higher productivity. If someone coming in the door does a better job of negotiating their pay, it's not their fault for your friends situation. I've personally had to jump ship once due to a pay freeze that hindered my ability to keep my salary where I thought it should be. It kinda sucked at the time, but it led to a much better position later.

The fast food movement is an organized attempt by people in a position just like your friend. They are directing their anger towards trying to correct the situation, at least as far as they see it. That seems more productive to me then stewing in anger and letting it reduce your work output.

I do NOT have a problem with the “Henry Ford” scenario, I like it. He offered twice the wage and got twice the worker (he could pick and choose). Then got them to get into his “melting pot” classes which I DON’T agree with. He “Bought” talent. Unfortunately now “talent” has a minimum price. No matter if they can spell their name or not why are worth $15 an hour .

Bottom, line is “Salary should depend on what a worker can produce and what the market will pay.”

I will not change anyone’s opinion and I am just pissing into the wind, so, I am out.

I’ve registered my opinion.

Really - when prices go up demand isn't reduced, really. Wow, I need some of what you have.

It's counter-intuitive, but many things in life are counter-intuitive but true nonetheless.

I linked you to a piece entitled "Why Does the Minimum Wage Have No Discernible Effect on Employment?" that describes eleven reasons why it is absolutely correct that there is no relationship between the minimum wage and unemployment. Here's a picture for you of the lack of correlation between state minimum wages and state unemployment levels:



The R-squared is 0.002, meaning no correlation whatsoever. This is inarguable ground truth. You can try to find alternate explanations for it, but you can't wish it away with platitudes about supply and demand.

Ok, you linked a study, but you haven't read it, have you?

That study refers to minimum wage used up to the point in time the study was conducted. So, that is the context.
Worse: as you may read in the conclusion, it is hard to sum up the studies conducted on the subject matters in years, so they only show a "metastudy" that seems to support what you say -: so, EVEN in that specific context, there's no "absolutely" and no "proof", and the matter remains open to debate. As it usually happens in science and especially in economics, you know.

The study does not say anything about the future or about using minimum wage policies in general. So you simply cannot state: "When you take into account that there is no discernible correlation between increased minimum wage and increased unemployment,". That statement is not a logic consequence of the study you linked. This fact is, indeed, indisputable.

As to the graph you posted above:

"no correlation" as indicated by R-Square does not mean "there is no correlation in reality," but rather that no correlation was made evident in the study. Correlation may still exist and we may be missing information. You use the R-square to look for positives, when it comes to social sciences, not to look for negatives.

This is like stating: I've never seen aliens so there's no life on other planers.
That's false logic.
Instead: I've seen an alien, so there is life on other planets, works and makes sense.


So, I agree no correlation was found. One may still believe there is, and that is perfectly reasonable.

From an economic/scirntific standpoint, that graph is of no use if you want to make your point: where's "time"?
One may argue that while the increase in minimum wage was causing unemployment, a growing economy offset that trend and we actually saw an increase in employment. Again, that chart without context tells me virtually nothing.


Finally, a statement such as "A Minimum Wage has No Discernible Effect on Employment" per se, out of contest, makes no scientific / economic sense. It is possibly a good title for a paper, but you have to read the paper, then, to understand what it really means, if it does meany anything at all.

If I set a minimum wage to $1000/hr, will that have an effect on employment? Still no correlation? If I increase the minimum wage by .001%, will it make a difference?


Minimum Wage effect should be measured in as specific economic context. What is the average wage in an economy? What is the average wage trend? What is the distribution of various wage levels in society - as the average per se tells me little or nothing yet? Is the avg wage increasing, decreasing, and why is it? How's the wage of various segments of society changing? What are the causes for employees being hired at a minimum wage? What would the labor market set those wages at, if there was no minimum, and why is there that specific delta, and not more, nor less?

The truth is that without *at least* that analysis depth, you can argue anything and its opposite, and use such arguments to support your political view and criticize different ones. Whatever your political views are.

Yes. I don't know why you would assume that I'm arguing in bad faith here.



The logic I was arguing against was "When prices rise demand lowers. I'm no economics expert but that is fact." The study shows that this is not true in the case of current minimum wage laws in the U.S. I agree that the general matter of whether there might be a correlation between minimum wage laws and unemployment can be debated, but in the U.S., based on current minimum wage laws, my statement that there is no discernible correlation is true.

There may be other data points one cold look at, and I invite anyone who wants to bring those to the table to do so, but without such data points, I consider this study more credible than a simple incantation of the magical words "supply and demand" as if these explain everything in economics.

To satisfy your pedantry, I will hereby ask that my use of the phrases "proven false" and "absolutely correct" be stricken from the record in favor of phrases that suggest that my evidence is merely stronger than any contrary evidence presented, but not dispositive of the general question.



Sure, but the burden is on them to produce supporting evidence.



Time is constant for all of the data points (December 2012.) It's not like they're cherry-picked from different times to tell a particular story. It's possible that there are other time periods with a stronger correlation, but of course nobody has provided any such evidence.

Here's some evidence for you. You should look into the tragedy of American Samoa that resulted from the law raising the minimum wage. Basically, the US Congress raised the wage and the tuna canneries decided it was cheaper to build automated plants. It was an economic holocaust. Recently the US government delayed a further increase because even they admit this caused very high unemployment. Of course, it's too late: the new canning plants are built now.

Here's what minimum wage laws do: they make all jobs that pay less than the new minimum illegal. That's precisely and exactly what it does. A law that says all jobs must pay $15/hour, makes all jobs paying less than $15/hour illegal. It does nothing to change the economics of whether the job is *worth* $15/hour because it provides that much value. Simple logic will show that a minimum wage law can only increase unemployment.

If minimum wage laws worked, then why are the supporters of these policies so stingy? Why not have a $100/hour minimum wage? Why not $10,000?

OK, that's an actual data point, and I thank you for it, but it's not a very compelling one.

American Samoa, being an unincorporated territory of the U.S., isn't comparable to the 50 states, for many obvious reasons. For starters, the unemployment rate in American Samoa in 2005 (long before the minimum wage increase) was 29.8%, triple the highest rate of any state shown in the graph above.

Furthermore, the population of the entire territory is a shade over 50,000 people, so a single company deciding to lay some people off can have significant effects, regardless of whether those layoffs had anything to do with the minimum wage. If the country were bigger and had more employers, you could make a credible case that it's a trend, but we're really talking about a sample size of two players (Chicken of the Sea and Starkist) that doesn't constitute anything you can extrapolate from.

The fact that the time period in question was smack dab in the middle of the economic crisis also makes it a very poor natural experiment, because the American Samoan economy is so tightly integrated with U.S. demand, which cratered during this time period. In fact, as you can see on page 40 of the GAO report summarizing the employment decline in American Samoa, there was a sharp decline in tuna exports beginning in 2008 that, minimum wage laws or not, created significant problems for the tuna industry in American Samoa.

The "why not $100 or $1000" argumentum ad absurdum really isn't worth engaging. Nobody's asking for $100 or $1000, and the PDF I linked to up-thread provides eleven concrete reasons why we aren't seeing what we might otherwise expect if we followed your simplistic supply and demand line of reasoning. Supply and demand don't vary linearly or absolutely in all conditions.

Thinking anything out of the Center for Economic Policy Research could be considered 'concrete' is pushing the bounds of reality.

So rather than arguing against the substance of the points made, you'll just attack the source? Come on.

In addition to the points that TonyC made, is there evidence that the automated plants were truly a direct response to the raising of minimum wage? The reason I ask is that I suspect that automation will usually be cheaper than people, no matter how much you pay the people. Companies are always looking to automate wherever they can. Perhaps they would have automated anyway?

(replying to myself) Some googling says that it was layoffs in general, in all sectors there (not just canning), including Chicken Of The Sea closing a plant there entirely. There were a lot of articles written on the subject at the time, all of them quite critical of the wage increase, citing it as the primary factor. So yes, even if automation wasn't involved, it looks like the wage increase was a factor in that particular microcosm.

Still not convinced that it means we shouldn't raise the minimum wage on the mainland.

Got links to any of those articles? I ask because all of the contemporaneous articles I found were reporting the findings of the GAO report I linked to above, which in turn relied on questonnaires sent to employers (appendix 1 of the PDF explains the methodology.)

I don't think you can take an employer's response to a questionnaire as proof, and the GAO report alludes to the problems inherent in doing so:



I wasn't able to find any news stories that didn't rely primarily on the results of this GAO report. What did you find?

Yeah, you're right that everything just links back to that GAO report.

OK. I'm open to the idea that minimum wage hikes put additional pressure on employers, but I'm not going to take the employers' word for it when there were clearly exogenous problems they were dealing with at the same time.

It's not that it "puts pressure on employers", it's the unaddressed point in my post above, that what minimum wage laws actually are is the prohibition of all jobs paying less than the minimum. Since some jobs are not WORTH that, measured by how much economic value they produce compared to the alternatives, then those jobs will be replaced by the alternative or eliminated. A minimum wage law can't change the fundamental economics of what a piece of labor is actually worth, because there are always alternatives.

My other point is why AREN'T people proposing $100/hr minimum wage laws? It's because everyone intuitively understands that there is not enough profit in a gas station, for example, to pay the cashier $100/hour. This exact same phenomenon exists at lower levels of pay, it's just not as obvious.

Jim

I can't continue this discussion if you're going to keep making arguments that have already been rebutted by a source I've already linked to, and I refuse to play whack-a-mole with your straw man $100/hr hypothetical when I've cited data points in the world we actually live in.

The paper I cited above lists eleven ways that business owners can respond to an increased minimum wage, and none of them is "eliminate the jobs." You can disagree with the points made, but trying to extrapolate from a hypothetical $100/hr wage to argue against a much more modest increase is dirty pool.

It's not dirty pool at all. It's just a reductio ad absurdum argument, which is totally valid and rational.

You're missing the bigger point: the minimum wage law is what eliminates the jobs, by prohibiting them. Whether a business chooses to essentially rehire the same people at a higher wage is a different issue. It will be the case that some employees are not qualified to perform the jobs at the higher wage, and thus not profitable to employ at the higher wage. It is also the case that there is an inflection point where the job itself is not worth having a human perform at a certain wage level, which is the point of my reductio ad absurdum argument. That's why economists talk about affects "at the margin", which in this case are jobs that are only barely worth employing someone at the current wage, but would become not worth it if the wage or other costs were higher.

The study hardly rebuts the argument, since there are too many other factors involved besides minimum wage increases.

CEPR has a history of ignoring statistics that refute their viewpoint.

For instance, 19 states have higher than the federally mandated minimum wage. On the whole, these states have a lot higher unemployment rate than the national average. In fact, if you compare the lists, the top six spots are taken by states (and DC, which also has a higher minimum wage) that are in the higher than federally mandated minimum wage list.

If you look at the other end of the spectrum, 9 of the bottom 10, and 17 of the bottom 20 states, in unemployment do not have higher than federally mandated minimum wage.

Is there a correlation? Certainly seems to be when you lay it out like that.

How about the fact that automation is easier to manage than lower skilled workers? There is a reason that we are seeing automation in areas such as self checkout lines, fuel pumps, and repetitive assembly line workers.

While not exactly the same, heavily unionized (and demanding higher pay than the company thinks the labor is worth) areas are evidence that paying above what a person is worth is detrimental to unemployment. Michigan and the Rust Belt can attest to that.

As of last year, the US was facing a shortfall of over 3million (gah! I can't find the link - it might have been an internal memo) jobs in engineering/math/science/technology. How about we fix the education system and society issues that are guiding fewer people to these STEM jobs?