"Living wage" and minimum wage

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?

Reductio ad absurdum has to be used within the confines of the question being debated, or it becomes a straw man argument. You have to work within the bounds of the original claim being made, which was not whether the minimum wage can be set to any level and have no effect on unemployment, but whether the minimum wage levels people are actually asking for are likely to lead directly to measurably higher unemployment. I said there was no discernable correlation, and that statement is correct. If there were a state with a $100/hr minimum wage and high unemployment, that would contradict my claim, but there aren't, so the question of whether an unimaginably high minimum wage might possibly cause more unemployment (which is by no means settled) is irrelevant, and a transparent attempt to play in the land of unprovable hypotheticals instead of talking about the reality of the situation we're in now.



I have no idea what this means. The paper directly those factors as other channels through which employers can respond to the higher minimum wages that don't involve "prohibiting" jobs. You seem to believe the current price of their labor has been magically arrived at by some perfect machine without any kind of elasticity or other adjustment channels other than laying people off, which is ridiculous. The paper calls these other channels out by name. If you can't tell me why none of those channels is valid, and firing people is the only option, then you have no argument.

First of all, minimum wage increases aren't binary. You can't divide states into "above" and "at or below", count them, and prove a point, because states that are higher above the federal minimum than others have to be weighted more heavily when determining the correlation. Your logical error is akin to if we tried to measure the correlation between ionizing radiation exposure on leukemia by simply recording if someone was exposed to any level of ionizing radiation above the mean instead of recording the actual level they were exposed to.

This is why we have statistical analysis -- to measure actual correlations. These do not prove or disprove causation, but they can be used as part of an inductive proof or refutation of a question. Your facile binary analysis cannot.

And, anyway, your numbers looked like bullshit to me, so I checked them, and they're indeed bullshit. Here's what a spreadsheet of current state minimum wage laws and current state unemployment rates looks like. The numbers on the right side show the rankings within the top 10, 20, etc. Note the complete absence of a pattern. Five of the top ten have minimum wages higher than the federal minimum, and five are lower. It continues with 10 of the top 20, 13 of the top 25, etc. I don't know what kind of numbers you were looking at, but they're just not even close to accurate, and, again, you can't just look at above vs. below, you have to look at how much above.

So you think the numbers from the Department of Labor (USG) and Bureau of Labor and Statistics (again, USG) are bullshit, but CEPR is a lot more trustworthy?

No, I'm saying that in addition to trying to make this a true/false story when it's actually a lot more complicated than that, you cherry-picked the "top 6" spots to make a tendentious point, and when you look at the list in its entirety, it's clear there is no trend there. We're looking at the same numbers, but you're trying to interpret them in a way that would get you laughed out of a high school statistics class.

Oh, and I'd be remiss if I didn't respond to this:


with this.

and this:



with the fact that two sides sign a contract, and the union side fulfilled their part of it by doing their jobs, while the employers, be they auto makers, government agencies, or anything in between, are the ones who couldn't hold up their end of the bargain.

It's also the employers who were looking to exploit the favorable tax treatment of non-cash compensation by giving out inflated pensions and health plans. All things being equal, I can guarantee you the unions would have rather had money on the table now instead of promises of money in the future. Management calculated wrong, and it blew up. You can't blame the unions for that.

Wow, talk about a straw man! This is an absurd statement. Those other options can be valid, and occur, AND employers can reduce staff. It can be (and probably is) a combination of all these things.

My argument applies. The claim, supposedly supported by this study, is that increases in minimum wage do not affect unemployment rates. Considering a $10,000/hour minimum wage is clearly a reductio ad absurdum argument meant to test this assertion. I am not saying that anyone is considering a minimum wage that high, merely that in these corner cases, albeit absurd, unemployment would certainly be affected. So, the assertion is false: unemployment can be driven by minimum wage. At what level this affect becomes statistically measurable is a different argument entirely, as is whether we "should" do it.

What I was getting at about there being other factors is that unemployment is a volatile measurement that is affected by many factors. It's quite possible that there *is* an affect, but smaller than the measurement certainty of the overall "unemployment" number. For example, if we imagine something like 2-4% of workers are actually employed at minimum wage, and then we say that raising it has a 1% increase of unemployment for those workers, then this is only .02-.04% of the employment total. It's quite possible that measurement methods won't show this affect and conclude there is "no correlation", when in fact there is one. Another example is how "unemployment" is defined, which is really mostly defined today as people collecting unemployment benefits. If a worker isn't on unemployment, they aren't "unemployed", which is why some people like to look at U6 instead of this number. Consider you generally need to work a certain length of time and at a certain number of hours before you become eligible for unemployment. Imagine a hypothetical situation where the minimum wage rises and employers fire all the recently-hired minimum wage workers, most of whom don't yet qualify for unemployment and thus are not considered. Finally, there are macro trends that affect the (un)employment rate much more than minimum wage. Yes, I understand that linear regression techniques are meant to eliminate those from analysis, but for small affects on small populations, this can be quite difficult to do.

Incorrect. The claim, supported by this study, is that minimum wage increases have not affected unemployment rates.

Yes, fair enough. But we must not conclude from this that further increases would not. That's the point of my thought experiment.

And I'm calling a foul on that, because it takes us out of things that are at least notionally connected to the economy we live in. Engaging with that argument allows you to take shots at unprovable theoretical problems at the outer reaches of the debate instead of the debate we're actually having about potentially raising the minimum wage to $10 or $15.

But since you won't relent, and I'm feeling generous with my time in the holiday season, I'll bite.

A $100/hr minimum wage sounds unthinkable, and we couldn't just jack up the minimum wage to $100 and expect things to go smoothly -- economies don't like short, sharp shocks. But it's not like people would stop working and producing goods if we phased one in over time. What would happen is prices would go up to adjust to the fact that labor costs more.

A HA!

But, of course, your consumers are most often someone else's employees, so the extra money they're getting would make them able to pay the higher prices you're now demanding as a business owner. The entire wage scale would shift upwards, and everyone who's working would be fine. Non-workers would have to have their "wages" (retirement income or safety net spending) increased in proportion to the amount of the minimum wage increase, but that's not hard to do in a hypothetical where it's possible to multiply the minimum wage ten-fold -- I just assume the same can opener you did when you created the mythical scenario, and we're done.

See why it's not helpful to have economic debates this far outside the bounds of our current economic realities?

Actually, I think this is a *very* helpful conversation. Your argument is that a big jump would merely cause inflation, and nothing would be materially affected in the long term. This is true, assuming that money supply is not fixed. If there was a fixed quantity of money, or if a "hard" (commodity) currency is used, then this can not occur. Of course, a reasonable man might ask, "why bother then"?

With respect to this:



I grant you that this is possible, so let's see some real numbers, not hand-waving. The fact that something could happen in the world of made-up numbers doesn't win against the actual results of actual states that have actually increased their minimum wage.

The burden of proof, therefore, is on those like you and Tim who insist, despite our real-world experience, that unemployment will skyrocket if we raise the minimum wage. The fact that the best you can do is cite American Samoa as an example speaks volumes.

I would argue that a jump to, for example $15/hour, is a much larger jump than past jumps, and suggesting that what happened in the past is not necessarily predictive. I also argue that the study merely shows that no *measurable* correlation *has* existed for past changes. It seems entirely reasonable to me, especially given a distressed economy like we have now, that the American Samoa situation could arise if a big enough jump were made. The biggest theoretical difference between our economy and the Samoan "micro economy", is that a much higher percentage of workers in Samoa were affected by the change to the minimum wage. The bigger the jump, the more workers are affected. The study does not find, and you can not rationally conclude, that the large increases being proposed or enacted today (like in Seatac), will have no measurable affect simply because previous increases did not.

The supposedly reasonable man in your scenario is assuming that the amount of inflation would be linear with the amount of wage increase, but that is not the case:



Considering that Team Austerity won't even let the minimum wage keep pace with current inflation, it's amusing to see you rolling out the inflation boogeyman to argue against increasing it just to keep up.

I have never asserted that unemployment will skyrocket. That's a function of how big the increase is and the number of workers/employers actually affected by it. A relatively small portion of workers are actually minimum-wage workers. Saying this you behave in a way you complain about in others -- by putting words in their mouths. I do reject that we can conclude that wage laws do not affect unemployment rates at all. That defies logic.

The hell you didn't. The American Samoa example that served as your opening statement in this thread was a cherry-picked data point that had the obvious flaw of occurring in a territory with a very unique labor situation during a global economic crisis. You called it a "tragedy." You fucking used the word "holocaust." Don't try to back away from it as if you weren't predicting doom and gloom.

I believe it completely repudiates the claim that these laws have no affect on unemployment. One data point is enough to establish this. It is certainly an extreme example, but enough to prove the point.

You're not only misstating my claim, you're making a statement that wouldn't hold water even if my claim was what you say it was. To review, here's my original claim:



That is not me saying categorically that minimum wage laws have no affect [sic] on unemployment, it's me saying (with supporting evidence) that studies show that there is no discernible correlation. There may be a correlation in other studies, and there may be more studies in the future to isolate variables and conclude there is a deleterious effect, but all we have to substantiate that counter-claim is a transparently biased sample taken during a time of great economic upheaval on an island that was highly dependent on a single industry that had already begun to see falling exports before the mimimum wage was increased. That's like six different red flags for that one data point, compared to a uniform cross-section of the U.S. Are you shitting me?

Your argument is a valid as Fox News using a 50 degree day in July as proof that there's no correlation between emissions and higher global temperatures, or a Bitcoin enthusiast saying the currency is stable because there was one day where it didn't gain or lose more than 20% of its value in a 24-hour period. This is just ridiculous, and if you're offering this argument in good faith, I really can't continue, because we're just not operating in the same plane of existence.

Which of us was the one using this study to justify a change in policy?

Ok, I give up. One thing we certainly agree upon is that we are not operating in the same plane of existence. But one last bit of advice for you:

When you decide to be snarky and use "[sic]" to imply the person you are quoting is a dumbass and you are smarter than him, you should make extra sure you're right.

He was right, though. It was a misspelling. In that sentence, it should have been effect, not affect. At least in the US. I've got no idea whether that's one of those weird UK/US differences.

You have a point that he was probably being snarky by calling attention to it. We knew what you meant. In any case, one's ability to spell (especially in the case of a tricky homonym with a subtle distinction in definition like that one) is unrelated to their cited evidence in a political debate.

Change in policy? I suppose technically that's true, but really it depends on what you call change. I call the Federal minimum wage failing to keep up with inflation a covert, passive erosion of an existing policy. I don't know anyone who'd accept having the real value of their wage erode over time, but that's exactly the situation for minimum wage workers.

Besides, my statement was "there is no reason we can't do better than the federal minimum we have now." For many states, this wouldn't even be a change in policy, because many have higher than the minimum wage now. I just think it's disgusting that, with all of the productivity gains we've had since the 1960s, people are getting 2/3 of what they were paid back then in real terms. That is unconscionable.

Including [sic] to denote original errors is pretty standard procedure when quoting someone. We all make typos, so I didn't think it would be taken personally. I sincerely apologize.

I don't think I'm smarter than anyone, but I'm damned certain that I'm making more logical arguments than you are. You just tried to tell me that your one very sketchy data point is enough to repudiate many studies and meta-studies cited by the paper I linked to of the real effects of minimum wage laws in the U.S. That's an insult to everyone's intelligence, and either demonstrates bad faith on your part, or a complete inability to judge evidence. Nobody can step outside of their ideological bias, but if all I had was one data point on my side, I'd go do some Googling and bring something better to the table.

Look, it's entirely possible that my first principles are wrong and yours are right, but the logic you're employing to get from your first principles to the point you are trying to make is just very poor. I get that you're a Hayekian free market type, so you're not going to be receptive to any argument that involves the government telling employers what to do, but you need better evidence than you've presented. I can assure you that if you have such evidence I will take it seriously, but as it is now, I read you as just not wanting to do the homework required to support your points, choosing instead to shout "QED" repeatedly.

Nope. I effect change, you are affected by that change, because it has effects. Or maybe that's an affectation? How's my example? Effective?

Washington state judge excludes airport from SeaTac's $15 minimum wage

I figured the airport would be the best place for that wage to work, since the customers using it are pretty much a captive audience and would be forced to pay whatever the increased cost of the goods ended up being.

Hrmph. Explains a few things about my experiences there.

The reasoning is that the airport is run by the port of Seattle, and not the city of SeaTac.

May be a moot point though, since both the new Seattle mayor and the new socialist council member are pushing hard for $15 too.

I wonder how long until Sawant really ticks off the businesses in Seattle. She already urged Boeing workers to take over the factories shutdown the company (which would be great for wages).

Obama Gives Federal Contractors a Higher Minimum Wage

Higher minimum wage hasn't killed jobs in Washington

So far she hasn't caused any harm in her two months of being on the council. Boeing not only picked Everett for the 777X, but also picked it to build a new factory for the 777X wings. This though is outside Sawant's jurisdiction, and always was.

In her jurisdiction is Amazon though. Her election hadn't scared them away from buying more land in the city.

"Still, economists on both sides tend to agree that the minimum wage itself isn't that big of a factor for America's working poor. For one thing, many of the people earning the minimum aren't poor at all; they're teenagers or middle-class part-timers looking for extra income.

The working poor tend to earn more — because they have to if they're supporting a family. For them, the benefit of recent minimum-wage hikes has been relatively small, especially when compared with other anti-poverty programs such as the federal Earned Income Tax Credit."

http://www.npr.org/2012/01/03/144594861/raising-the-minimum-wage-who-does-it-help

Another telling article is this opinion piece. The person who actually owns a business says they are going to have to increase their margin by about 7% to stay afloat. I liked how the recent graduate complained about the cost of living, naively thinking that raising the minimum wage somehow wouldn't contribute to increased prices.

I don't see this as a point against the wage hike. 7% increase in margin is less then the percentage increase for the workers. Workers at the minimum level could absorb that 7% rise in living expenses and still come out with more leftover money to spend elsewhere.

I personally see these minimum wage increases as a short term solution to the overall welfare situation though. Long term, I'd like to see the discussion and possible fixes move more towards either a gaurenteed minimum income or universal basic income.

It would help cut down on some of the government bureaucracy with people needing to seek independent housing, food, medical, and income welfare. While still having enough controls in place for the minimum to allow for proper housing, etc.

You aren't including the other costs or the increase in taxes paid. Overall, the increase in amount spent won't keep up with the increase in amount coming in and people will be right back to where they are now. Except, the pool of folks in trouble will be larger, and the jobs will be fewer (even the CBO agrees with that).

Can you provide examples with numbers that show this? It looks like even the CBO opted not to cover the tax angle in their study.



So far this hasn't seemed to occur in Washington, per my Bloomberg link earlier. Even if it does though, this is why my long term view includes the minimum/basic income routes, since already many of the poor are unable to hold a job where a minimum wage increase would benefit them.

This is by far the best and most accessible treatment of the issues surrounding minimum wage policy that I've seen in a long time:

7 Bi-Partisan Reasons to Raise the Minimum Wage

Worth reading in its entirety, but I'll quote a section that deals with some of the previous discussion in this thread regarding why "Econ 101" analysis doesn't cut it.

Boom goes the dynamite.

This will be interesting. Minimum wage of $19.94 by 2030.

What could possibly go wrong?