I'm from Seattle so pretty curious to see how all this plays out. How do you guys think it will affect the local economy both in the short & long term? Will this trend continue in other cities?
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great article here sent to me by John Mauldin, you'll have to scroll to the middle of the page for the blurb on minimum wage: http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/arc…
I was surprised by the figures he noted about it actually eliminating 500,000 jobs. what doesn't get talked about often enough I think is the distribution of minimum wage jobs. how many of these are part timers, high school/college kids (who aren't supporting a family), or moonlighters?
in my mind, this is low hanging fruit that attempts to solve a structural employment issue, America as a whole isn't producing enough workers where the demand is. we ought to put our efforts towards getting kids excited about STEM programs, instead of ensuring fry cooks make $10 an hour.
I do believe everyone who works hard should be afforded the opportunity to get a job where he/she can support a family, but I don't believe that should be determined centrally. the world does need ditchdiggers, but for me that's not a top priority.
Andy, to answer your question directly, I think other states will continue to do this, which is fine by me. I think the long term impact of this specifically will be a rounding error, I'm more worked up about the fact that they're focusing on it instead of the tough issues.
Which means that they will lose many full-time jobs esp. in the service industry. If companies have no incentive to pay 15 bucks an hour except for a wage law, they will respond by not locating to Seattle, cutting full-time jobs that otherwise would pay less than 15 and simply fill up on part-time employees.
Yah, they will cut workers where they can, automate when possible and if that fails, pass the cost onto the customer. I get what they are trying to do, but the world has changed.
What is funny is a lot of wealthy cities would pay much higher minimum wage without a government mandate simply because there wasn't enough people willing to work for minimum wage. They had to pay the higher rate. Regretfully, when you try and artificially put a floor in when there is plenty of supply you'll see people out of work.
But the goal isn't to help people so I suppose this will work (getting elected and staying in power is always the goal).
I remember seeing a piece on NBC a couple years ago about how fast food restaurants in fracking towns were having to pay workers $20/hour because they couldn't get enough workers due to the low supply of people in ND and all of them wanted to work in the fracking industry. It was a fascinating story and if I remember correctly not ONE of the reporters on the story made mention of the basic economics that it displayed.
I was talking to a women who lived in North/South Dakota (I forget) and she was saying her friend who owns a bunch of gas stations has to pay managers $100K in order to just keep them. While this is only in one small area, you can see other places with higher than state mandated wages simply because they need to do it in order to attract workers.
IMO, we simply have far too many low skilled and uneducated workers. Times have changes. You could be a moron and make decent money 50 years ago because we simply needed a shit ton of hands to do the work. Now we have robots, automation, outsourcing, etc.
I also love the people that bitch about outsourcing. We live in a country that has had a stable govt for over 200 years, never been invaded, freedom to travel, free public education (K-12) world class state and private universities, libraries, a myriad of public assistance programs, clean air, freely available drinking water and a bill of rights that protect our basic freedoms.
We've also been either the dominant or one of the dominant economic, political, and military forces in the world for many generations now. But yeah, fuck some poor farmer in China who for the first time has a chance to move up the economic curve simply because Americans who procrastinated for the past 50 years and now found out their low skilled ass isn't needed.
This shit is 30-40 years in the making. Just look back at union workers trashing Japanese cars because they were high quality and fuel efficient. The people bitching now are simply those who have put their head in the sand for generations and finally woke up to the fact that no one owes you anything.
It sounds like a modern day gold rush.
Except for The Economist, reporters don't understand economics. That's why there reporters.
Cause unemployment or more under the table cash jobs unless the market wage is above $15 minimum.
I think that another perspective to look at the issue (though not a mainstream one - but to add some spice to the discussion) is that higher minimum wages are a pressure on efficiency, as opposed to pressuring out players within the industry as a whole. Admittedly there will be losses of jobs, and even entire businesses may now be infeasible, but if you hold that a minimum wage should exist to support families etc then I think that's a warranted pressure. It's not like the US doesn't need any inflation either, you guys would benefit from it at the current point in time.
I mean as an Australian - the fact that your service industries are essentially supported by shadow spending (via tips), means that a minimum wage essentially exists anyway, it's just hidden within discretionary spending (which itself is culturally ingrained). Having an explicit minimum wage wouldn't change that fact, essentially nullifying at least part of the 'passing costs onto consumers' point for tip-dependant industries anyway.
I'm ok with this. I wish the Democrats would adopt this federalist model in general. If the residents of Seattle think a $15/hour minimum wage is a good idea then more power to 'em. If their economic model is correct then high quality workers will flood to Seattle, everyone will earn more, and those increased earnings will go right back into the Seattle economy when people spend more.
I'm eagerly awaiting the first time in history that mankind witnesses government mandated prosperity. The worst case is that Seattle's decisions don't impact me in McLean, VA. Federalism.
Not sure tons of people will "rush" to Seattle for $15/hour. Also, doubt an increase in spending will occur since many jobs that cannot sustain a $15/hour wage will be cut. Simply put, many small businesses will need to fire that extra employee. A basic example, let's say you have a $20/hour payroll budget and have two employees making $10/hour each. You need to fire the slacker or both and hire a more efficient $15/hour worker that can replace two people essentially. What you have just done is kept quality but decreased the hourly input into the economy by $5/hour. Minimum wage laws are more a political ploy than a good economic strategy. More people will lose jobs and go on welfare, great plan. I say pay people what they're worth and let the free market decide that. All you're doing is removing low skilled jobs where workers can build skills and experience to make a higher wage in the future, rather than sit and collect welfare with no productive output. Honestly, less than 1% of 1% of the population actually raises a family on minimum wage without some other source of income. This is just preposterous.
I agree that people won't flock over to Seattle for minimum wage. However, increasing the minimum wage will give people more expendable income after taxes. Compared to making $8.00 an hour on minimum wage. So we should also see more people spending more because of disposable income.
And I don't believe the free market will be able to work itself out when it comes to minimum wage.
Because the owner will try to have the least amount of expenses possible and will undercut the employee. Look at the economy, so many graduates are working in Starbucks and etcc who desperately need money to pay off their loans and to live. Given this fact, I think the advantage is in the employers hand because the owner knows that the person is desperate for money and can pay him/her nickles/dimes.
But as a business owner the prudent decision would be made regardless. Let's say the minimum wage doesn't apply, but the same situation holds: you can have two employees at $10/hr or hire one to do both their jobs at $15/hr. Wouldn't you want to cut your overhead and hire that single employee? Obviously there are extraneous factors that are considered in hiring, but your thought experiment doesn't really hold as an example of the problem of a minimum wage.
That's approaching some banking analysts hourly pay...not sure if fully compensates for the rain though.
The $15 minimum wage is being rolled out over a number of years depending on the size of the employer which give companies operating in Seattle plenty of time to adjust. It would be interesting to see the gradual changes taking place there. The impact of minimum wage legislations on jobs is often not very crystal clear and employers will often find loopholes. In the UK for example, the introduction of minimum wage in the 60s directly resulted in a huge uptick in the popularity of "zero hour contracts" which actually ended up reducing effective hours worked/compensated for and total earnings of many workers and add much more variability to their incomes, making them arguably worse off.
+1.
Higher minimum wage will lower demand for minum wage employees through automation.
Yep. I can't wait until McDonalds finally unveils a completely automated restaurant (in final testing at the moment).
I know. I am pumped. And once they do it, everyone will do it.
I never understood this argument. You're basically asserting that business owners weren't concerned with lowering overhead costs until this law passed. IMO that just makes you a bad business owner. In other words, regardless of one's overhead cost, a good businessperson would be interested in lowering it if possible. The obvious response to this is that one is only concerned with paying money to lower overhead if its costs for doing so are offset by the projected savings, but just look at how much of a McDonald's restaurant goes towards overhead already. There's a reason they've been trying to improve efficiency and reduce headcount for years.
I think he means it will increase the demand for more rapid automation. Necessity is the mother of all invention--so long as you can inexpensively manage variable costs you won't have incentive to invest heavily in unproven overhead technology costs. Give businesses the incentive to invest in automation (i.e. making your cheapest employee cost $18/hour after paying taxes and insurance) and you'll get more rapid automation.
Supply and demand determine price in a free market. The powers of supply and demand change when price is predetermined. Doubling the minimum wage will decrease business owner's demand for minimum wage workers.
Business owners don't always have the capital to invest long term. Sometimes a less efficient, but short term cheaper option wins the day. Hence why some people continue to fix a broken down car instead of buying a new one.
Once you increase minimum wages past a certain point the economics of the long term investment make sense. I suppose you could increase minimum wages to just under this point if you could discover it.
I can see both sides...obviously the higher minimum wage will create more incentive for automation but that doesn't necessarily mean it will happen any faster than it would have otherwise (though it could inspire more creativity). Just because you have more incentive though doesn't necessarily mean you can suddenly just turn rocks into gold despite your previously failed attempts.
http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-cashiers/
Already happening. Small business owners will get screwed (Pizza shops, etc) that cannot afford or don't have the scale for this type of technology. They will either 1) lay workers off or 2) increase the price of their goods. People will either pay the increased price at the small mom and pop or go to chain pizza places that will be able to support these technological investments.
Judging from the success Wal Mart has had and the "loyalty" to the small town shops that people have when faced with higher prices I sense a losing proposition for the mom and pop.
I don't think mom and pops would lay people off. It's like $4/hr more. Those types of business already treat hiring decisions as big deals. They don't hire someone unless they have to, which means that the extra pay from this wouldn't make them lay someone off. It might be reflected in pricing to some extent, depending on the business and their ability to set prices, but it also will probably just be eaten.
I'd just make people do more with less. If you are paying someone $15 an hour they better work. And if they don't there are a ton of people, some with college degrees, that would take their job. I think this will just push out the people who really need these jobs and replace them with other people who have an education and should be doing something different with their life.
I've never really understood the Left's position on wages, automation, outsourcing and mom-and-pop stores. The Left is furious with companies outsourcing; they want to require artificially inflated wages while increasing regulation and requiring union membership; then they also want to bring in an army of low-skilled foreign workers who simultaneously depress wages; they also want to run big box stores like Wal-Mart out of business while burdening vulnerable mom-and-pop competitors with regulation, unionization, and higher wages that only large, efficient corporations like Wal-Mart can manuever.
The American Left's economic schizophrenia is likely why they fail, fail, and fail again every time they have the opportunity to implement their public policy beliefs.
Win. I'll need to remember this post word for word so I can shut some hippies up
I still don't understand how these $15 minimum wages foot with the inflation data. 15 years ago I worked for minimum wage which at the time was $5.75 an hour in CA. That's 161% growth in the minimum wage, or 6.6% annualized. This means either 1) minimum wage workers are dramatically better off in terms of standard of living at $15/hr vs where they were then (doesn't seem anecdotally true), or 2) the CPI data has dramatically understated inflation. Eventually hopefully America will wake up and realize that the CPI is a hoax, and inflation in reality has been running at 5-10% for some time now.
Financial repression, anyone?
I cant wait for 4 years from now when Seattle shuts down because an army of well paid Baristas demand $20 an hour...........
Democrat leaders = troll geniuses; Democrat voters = Eat shit for breakfast
Find a way to make people happy in the short term, and unemployed and dependent in the long term. POETRY!
Sad that they aren't focusing on the real structural issues so they'd rather waste time and tax payers' money discussing the minimum wage, a policy that won't do any good in the long run anyways.
I didn't mean that outsourcing happened because Americans are lazy. Outsourcing has been happening for a long time. The writing was on the wall. What fucked many people is their laziness in seeing the future and reacting to it. Now we are here and they are "shocked" you can't have a house, two cars and a family while working at McDonalds.
And $4.00 an hour extra is $8,320 more per year in wages. Probably more considering the proportion share of a salary you have to pay to the state regarding unemployment, etc. So lets just say this would mean an extra $10k per employee. More people you employe and you do the math.
does anyone know if its city or county wide? And are they any proposals for the rest of the WA state.
It's only for the city of Seattle. The city of Seatac, where the aiport is located, was the first city in WA to enact the $15/hr min wage.
It would be real interesting to see what the voters of Seattle would say if the city put this up for a vote.
There seems to be so many radicals in Seattle - electing a socialist to the city council, May Day anti-capitalist, WTO riots etc. I do not believe in the $15/hr minimum wage because you can negotiate. If you don't have skills where you can demand a higher wage, then take the necessary steps to become more marketable. Just a minor example, but my friend the other day went to McDonald's for lunch and bought a cheeseburger...but they messed up and forgot to give him a burger patty. Nothing like some cheese and bread!
I do not support this minimum wage law.
It always amazes me that people never read the article in question before posting an highly opinionated response. If you read the article it said that is a complicated proposal to be phased out over several years and takes into consideration such things and health care and tips and industry and company. This isn't a black and white floor that would be enacted tomorrow.
How does it not hold. Isn't it assumed that someone who makes more will do more? Trying to get someone who is being paid $8.00 to do a lot of work is difficult when you are stuck with hiring only people who will work for so little. Once you have a higher minimum wage you now have people applying to these jobs with a range of experience. So now you can hire people with a different skill set or work ethic.
There is a point where it shifts and there are many variables that decide when that point it. Doubling minimum wage will greatly alter that point.
Regardless of the impact (laying people off, closing businesses, automating, reduced hiring, etc) there will be an impact when you essentially double wages.
If raising the minimum wage is good for the people, then why don't they raise it to $20/hr ,or better , $50/hr? The reasons they will say for not raising it "so much" is the same for not having ANY minimum wage at all.
Anyone who has employed people for minimum wage will tell you about the insane turnover, theft and all around bad behavior. The idea that wages would be $2.00 an hour without a floor is comical. Most places pay above minimum wages if they want quality, long term employees.
The minimum wage is about optics and votes, nothing else.
+1 SB. It's definitely more about optics and vote than altruism.
Western WA is pretty liberal, so this move doesn't surprise me.
On minimum wage accelerating the automation of low skill industries, courtesy of one of my favorite economists:
http://johnhcochrane.blogspot.com/2013/09/mcdonalds-and-minimum-wage.ht…
I am glad this experiment is happening.
I am glad this experiment is not happening in my city.
This experiment will keep everyone honest. If it fails in Seattle, we will have good arguments against raising the minimum wage. If it succeeds in Seattle, it will keep the Republican honest and make it harder to oppose a $10 minimum wage.
My personal opinion is that $9/hour over the next few years seems to be a happy middle ground. I believe the number is costing 100k jobs and taking millions out of poverty and off of food stamps. All else equal, I'd prefer a higher minimum wage than more food stamps. We're a happier country when the wealth transfers are less overt.
I am not so sure all of the costs will get passed on to consumers. Lower and middle end consumers have shown remarkable price sensitivity over the past five or six years. I think it will get passed onto investors and lower returns. At the very leastx it seems reasonable to believe that a higher minimum wage will at least transfer some wealth from investors to workers. And that's not necessarily a bad thing, so long as the wealth is getting transferred to workers.
Wages in China and India are rising. Jobs that managed to survive 2003-2009 are less likely to get outsourced because wages are going up. This is probably a much safer time to raise the minimum wage than, say 1972. All else being equal less government intervention is better, but a higher minimum wage may result in less government spending. So I am tentatively in favor of a modest hike to $9, maybe $9.50 with two years' inflation, over a couple years, assuming things go well in Seattle.
But we have to see what happens in Seattle first.
Remember social conservativism in 2008? Remember how they made dire predictions of the demise of America if a democrat won? Some of those predictions, mailers, and announcements got played back in 2012 and energized the liberal base while keeping the social conservatives out of the election. Not being a social conservative, I don't feel bad about this.
Same goes for all of the dem sound bites. If this fails, it will be embarrassing for them.
It's not ideal, but sound bites and predictions- and the embarrassment that ensues from them- generally results in more evidence-based policy rather than people making bland 50 year old assertions. These social experiments are the best thing we have.
So I'm not wildly optimistic, but I'm optimistic. Rather than going around stating that minimum wage hikes help starving families or price people out of the job market(the same arguments people have made for 50 years), we'll have a representative case study that shows how theory turns into practice.
I have a suspicion that one side will look dumb and the other side will look smart. The problem is that if the tea party libertarians are wrong, they will look ridiculous. If the Dems' mild mannered support turns out to be wrong, they'll look merely foolish. So the convexity here is tilted in favor of the dems due to the accountability this case study imposes.
The more accountability we can get in politics, the more moderate we can force politicians to become. We need more of these high-profile experiments.
When I was four, I thought that chocolate milk came from brown cows, and then I 'flip-flopped' when I found out that there was something called chocolate syrup.
I also think a state should try a vacation program for low wage workers working more than 40 hours/week at multiple jobs. We can do it using excess unemployment contributions.
If you average 60 hours/week, and your employer doesn't offer paid vacation, you get to take one week off at 80% pay, up to the unemployment insurance limit for your state. (This typically isn't very high. NY works out to ~$11/hour)
This is not available to people pulling a merely full-time schedule.
This is only available to people working for multiple employers and pulling more than a full time schedule but not getting overtime. It would be funded by the fact that multiple employers are paying unemployment insurance on the same worker.
But if you work multiple part-time jobs to feed your family, and it's adding up to more than a full time schedule, you deserve a little bit of a rest every year. And you're getting screwed on UI as well as social security as it stands.
I remember when I was in college, I had a professor who said his nephew was making over 50k a year as a valet attendant in Vegas.
If this trend spreads to the rest of the country, I think we all need to promptly move elsewhere.
From a purely theoretical point of view, this is a horrible idea. I don't understand why 500,000 people losing their jobs is worth those who keep their jobs being paid more money. I think that on top of the absurd number of people who will lose their jobs, there will also be a lot of people who simply are not hired. When you hire a new worker, you have to pay his/her wages, but you also need to deal with the costs associated with hiring/ selecting and training that new worker. So now, every time mcdonalds hires a new worker, on top of paying for that worker's training, plus the cost's associated with advertising the job opening, recruiting and selecting the new hire, they also need to pay 15 dollars an hour!? The point is, if you're a low-skilled individual good luck finding a job. The fact that these places need to spend exponentially more on new hires, will deter them from hiring people. SO i think the 500,000 could actually be a lot higher if you factor in all of the people who are not explicitly losing their jobs but are implicitly losing them because they are not being hired for jobs for which they would have been hired under the hitherto used system.
Another thing to keep in mind is that labor is a semi-fixed cost. So, in order to get around the above-mentioned issue with hiring costs, an employer could simply fire a bunch of people, and then up the hours and responsibilities of a smaller group of employees. For an employer this would be the best way of combating the wage increase because you would be increasing the responsibilities of the workers to a level that might be more appropriate given the marked pay increase. However, for all intents and purposes, the workers will be in the exact same situation-- that is, if you view this as a ratio of pay to how demanding the work is, then the wage increase would have no affect.
Also if an employer does not realize the semi-fixed nature of labor costs and simply goes through the motions of increasing wages. the business's income will decline substantially, and the owner will make significantly less. The decline in the owner's income probably will reduce his spending in the local economy. Although, on owner probably won't really affect anything, if this happens to enough employers, that could really fuck up the amount of money being pumped into the local economy.
A $15/hr wage is unsustainable for the national economy, I don’t think anyone would argue that it is. On a national scale a $9-$12/hr would need to be considered with a potentially higher rate for major urban areas (either cities of 500,000 or more or metro areas of 1 million or more). 500,000 people losing their jobs makes sense when you consider that a higher number of people will be pulled out of poverty. Add to that the fact that jobs are not charity, which is how the right-wing seems to make it seem. Businesses need their employees; if they could fire all of them they would. But they can’t they actually need someone do work for them to be able to generate revenue and (try) to earn a profit. There are some businesses which will fail in the face of rising wages. Well guess what, if margins are that tight, they would have failed eventually anyway. The reason that the right-wing is so against a wage hike is not that they are worried about businesses going under or people being unemployed, they know that it will hurt the bottom line for business owners and investors. There are hundreds of billions of dollars in profit being produced every year in this country, there is certainly room for more money to go to workers. The truth is even if 500,000 lost their jobs 450,000 would have new one within 3 months and would now be making closer to a livable wage, because the work still needs to be done and most of the time labor is vastly cheaper than automation.
But an increase to $9/hour means only 100k will lose their jobs. I think that's a happy medium everyone can live with. In the process of lifting 10 million people out of poverty, 1% of those people will lose their jobs. Over the 1 year period that wages increase, more than 1% of those people will also die of natural causes. I don't think losing 100k jobs in a 6.3% unemployment market is inflicting a lot of unnatural trauma on the economy.
If you want to reduce income inequality and get people off the public dole, raising the minimum wage to $9/hour is one of the most effective public policy options. $10 is a bit more debatable, but $9 is a pretty darned easy case in my book. It will result in 1/5 as much unemployment- unemployment that would be canceled out by a few weeks of job growth- and it would lift millions out of poverty.
Finally I don't see why anyone would want to leave the US. The only options more capitalist than us are Hong Kong and Singapore. They don't have large resource economies and countries like the US (we are the Saudi Arabia of coal, water, and most importantly food) are probably going to force unfavorable trade agreements on them over the next 50 years. Actually, if I were the US, I might even team up with China, park a bunch of aircraft carriers outside of the harbor, and demand a sovereignty tax on the richest citizens. Singapore should not allowed to operate as a tax haven that spends very little on its military while the major powers tax their citizens to keep the world safe.
Yep. Your best bet is probably the US. At least it beats the 1970s when we had the lowest taxes- and they were still 70%. (This is not something I want to come anywhere close to coming back to). Raising the minimum wage ensures we need to spend less on social welfare- and this can keep taxes lower.
Furthermore, small business requires a lot of capital to start up either way you swing it. Most small business owners are fairly wealthy.
And finally prices may increase. Especially prices for goods sold to lower-income people. An increase in minimum wage could mean inflation at the lower end of the income scale. Normally that might be a problem, but we haven't seen a lot of inflation in rural housing costs and lower end goods in the past few years and we can afford a bit more inflation. The US NEEDS inflation to help pension funds stay solvent anyways.
The problem here is that Ms. Secretary is also more efficient than the other secretaries, and about 1% of the secretaries also got taken out of the labor pool. She may not see a $2.75/hour hike, but she'll probably start getting offers from other employers having trouble finding more productive secretaries for $11.50 or $12/hour. At the very least, with a $10/hour price floor, Ms. Secretary who is more productive than minimum wage will still see some premium. It may not be as much premium over $7.25, but it will be nonzero for the average Ms. Secretary in her situation.Also, even if raising the minimum wage lowered welfare dependency in this country, the costs of these programs never will do down, mainly because they keep on getting expanded by the same people who advocate raising the minimum wage. Just look at the Earned Income Credit, which went from a non-refundable credit for FICA taxes to a $3,000-$6,000 annual payday for low-income parents.
[/quote] Look, I'm a Republican, I don't advocate expanding welfare; I advocate increasing the minimum wage and finding other ways to subtly tilt the scales a little less against working people.
I don't expect things to change for America's poor. I simply don't want things to get worse for them. Minimum wage in the late 1950s was $1/hour- about $9/hour inflation adjusted to 2014.
http://www.usinflationcalculator.com/inflation/consumer-price-index-and…
I think we need to spend a year rebuilding some of our infrastructure (while we can do it with cheap labor) and then start raising the minimum wage to $9/hour inflation adjusted.
Big mistake, simple economics. This has been debated back and forth so much on here...the only explanation I can ever see from those in favor is "but it gives people more money"...unbelievably short-sighted.
I was also a big believer in Chicago school economics when I came here in 2010, but the inflation predicted by the conservatives in response to TARP and QE never materialized.
The US minimum wage is relative low on a historical basis. It's certainly lower, inflation-adjusted, than it was in the '70s and that's before we get to GDP per capita growth. $7.25/hour is an incredible bargain for employers and there is nothing wrong with hiking it to $9/hour nationally. The CBO estimates it will cost 100k jobs. Meanwhile 10 million people will be earning $1.75 more per hour, so that's a huge accrual of wealth to minimum wage workers. It will also push up wages lower on the income scale, too.
The US had a $1/hour minimum wage back in the 1950s when the economy was booming. Raising it back then did not take any steam out of the economy. Inflation-adjusted it's actually lower today.
It's hard to make a case against $9/hour. Maybe $10, maybe Seattle's $15 phased in over many years with lots of conditions.
The last question is where is the money going to go if the US becomes slightly more socialist? China? It's a kleptocracy. Singapore? The tiny island that would surrender after 24 hours if they were invaded? Europe? Latin America? They're more socialist than we are. It's staying here in the US where it will be treated fairly but not obsequiously.
Gosh, $15/hr? Get ready for a big influx of low skilled workers into Seattle. If I weren't so lazy, I'd put together interview guides on how to operate a fryer. Higher labor supply, lower labor demand, and those jobs just got a lot more competitive...
Can you help me understand how people earning $10/hour are going to be able to afford to quit their jobs, drive for hundreds or thousands of miles to Seattle, and stay in a hotel or hostel for a week while job hunting?
While there will be a little more competition, Seattleites probably won't see a huge influx. That said, all else being equal, when DuShawnn takes my order, I'd prefer she smile and not mumble. I'm not sure there's anything wrong with a city saying that they only want high quality people living there and therefore imposing a high minimum wage.
I have been waiting to see a big jump in min. wage in a local economy, didn't expect it to be this big, but I think it is a great test case for how minimum wage hikes might impact the economy on a national scale. A few things out of the way first: 1. I dont want anyone to think I am in favor of experimenting with people's lives, this is very real and will have a serious impact. 2. $15/hr would not be appropriate for a national min. wage many place (e.g. the rural South) could not absorb that level of change. As for the short/long term effects, I think in the short term it will be as Conservatives expect and there will be immediate job losses. Businesses, specifcally those that employ hourly workers earning close to minimum wage will be forced to see if they can cut staff by about a 1/3 and still "get the job done". Long term it will force those people who are marginal labor to either work harder to meet a higher expected output or become trained to do more skilled work, or leave the area. Part time jobs will become less frequent and the prices for goods and services that require local low skilled labor will go up (e.g. fast food). What makes this interesting is to see how many businesses relocate just outside the city limits to allow for lower wages, like a housecleaning service that has it's office outside the city to ensure they can pay workers below $15/hr. I think this trend may spread depending on what the impact appears to be. But I am sure there will be a LOT of propoganda from each wing to show how this demonstrates that they are right about minimum wage. But I do think that this may lead to any future federal changes to min. wage to have a 2 tier approach one for major cities (population of 500,000 or more), and a lower tier for the rest of the country.
I’m a conservative and I’m not a huge fan of minimum wage in general, but while I expect some negative repercussions, I think we’ll be surprised at the overall few negative outcomes of Seattle hiking the minimum wage for residents. Seattle is a wealthy city—other than restaurant workers, there are probably very few people who work for less than $15/hour now within the city limits. What’s going to happen is that food prices—groceries and restaurants—will increase and there will be some job losses among staff. Instead of lunch costing $9.75 it’ll cost $10.45. Overall, few people will be helped, few people will be hurt, but each day most residents will pay more for their food to make up the difference. It’ll be like a $200/year tax on residents and workers within the city limits.
My estimation is that Seattle will be a fantastic argument for federalism, but will not be ground zero for the debate about a national minimum wage hike. It will probably be the precursor to more minimum wage hikes within other cities. The problem is that most cities nationwide are more like Wichita, KS or Columbia, MO and less like Seattle, WA and San Francisco, CA.
Just saw this.
1.) The name DuShawnn was me trolling by finding a name that connotes a retail clerk.
2.) The incident that I had in my mind posting this was actually a white woman in the basement of Grand Central. It was a Saturday morning, I had ordered a bagel, she acted terribly hungover and still had alcohol on her breath, and took 10 minutes to make a bagel. She also took five minutes ringing me up and had to try three times to key in the right code. This is a problem if people have trains to catch.
3.) That name and then saying a sentence later that a city only wants high-quality people reads a lot different today than it read last night at 10PM when I posted it. But that doesn't excuse it.
I don't think "That's not what I meant" is a good excuse for saying something that hurts others.
I feel awful if anyone connects the name and the comment later and feels marginalized.
I offer my sincere and heartfelt apology.
I will +1 this response when my bananas refresh.
Capitalism doesn't work when you half-ass it (as we are right now), nor does any economic system do what it's designed to do. For communism, perfect equality with no respect to personal liberty, rights, or capacity for success. For capitalism, completely unlimited chances for success. Socialism is pretty much everything in between, and sucks. Communism is worse, but no country on earth has ever truly had real communism..nor have they had full-on capitalism.
Point is, the reason we have so much inequality, the reason we have such a stagnant economy, no job growth, a shrinking work force, and everything else, is because we have a shitty form of capitalism in place, and it doesn't work. We have corporate welfare, a truly insane burden of regulations, overlapping laws, a gigantic amount of personal welfare, and we have basically come a long way towards ensuring that no matter who you are, if you fail, the government will subsidize you.
This is why we have such inequality. There are no jobs or opportunity to be had compared to what we might have given a much less oppressive government. The policies put in place by this administration have all but guaranteed that this downturn will continue to drag on with no end in sight. So what happens...we have record levels of people leaving the workforce, and quite a few still below the poverty line. No wealth is being created. Something that I get sick and tired of seeing (Because it's idiotic, patently false, and utterly moronic) is that the economy is a "zero-sum game"...its not. However, those on the left would you like you to believe that it is. They'd like you to believe that you can't create wealth, jobs, or opportunity. Therefore, their "rational" solution to "fixing" this "misallocation" of the "fixed" amount of capital in society is naturally to take it from those who have it and give it to those who do not.
This has never, and will never work, ever. It cannot possibly. You cannot subsidize wealth into existence. It makes no sense, mathematically or otherwise. If Seattle truly wants to fuck itself over and go for it, fine. Let's see what happens. Now, given the unique stats of their city, it might work for them. It might not. In the long run, it will not. It cannot. But in the short run, sure it might not be too big of a deal. But that's not how you make economic policy decisions. You must make them for the long run. This is something that the Keynesians always seem to forget...the long run matters. They like to ignore it and pretend it doesn't happen, but it does. It's math and statistics.
Not really doing a great job of explaining myself here but there's literally millions of pages that have been written on this. Read Hayek, Smith, Greenspan, Friedman, or any other learned person on that side of the debate. All you have to do is look at Europe to see where we're headed. It's not hard to figure out at all.
Evan I think you have given this a lot of thought (although perhaps have not explained yourself as well as you would have liked), but I think you are off in terms of the zero-sum nature of wealth. Let me go point by point: “Capitalism doesn't work when you half-ass it (as we are right now), nor does any economic system do what it's designed to do. For communism, perfect equality with no respect to personal liberty, rights, or capacity for success. For capitalism, completely unlimited chances for success. Socialism is pretty much everything in between, and sucks. Communism is worse, but no country on earth has ever truly had real communism..nor have they had full-on capitalism.” I agree that we have never seen true Communism. I agree in principle that water down compromises do not work. I disagree that pure Capitalism is the way to go. I would love to have as little interference from the government on commerce as possible. But there are some necessary evils, starting with restrictions on monopolies. But when you start with corporate subsidies and tax incentives you are robbing from everyone to pay the rich. For social welfare it is the opposite robbing everyone to pay the poor, and be damned if you are in the middle. Not enough space for what I would suggest, except to repeal 95% of the government’s influence in commerce, and to ensure taxation is equitable across all Americans. I think social welfare is needed, but it should be help, not full support, or at least be something that tapers off over time. BTW a higher minimum wage will incentivize people to get off of public assistance. “Point is, the reason we have so much inequality, the reason we have such a stagnant economy, no job growth, a shrinking work force, and everything else, is because we have a shitty form of capitalism in place, and it doesn't work. We have corporate welfare, a truly insane burden of regulations, overlapping laws, a gigantic amount of personal welfare, and we have basically come a long way towards ensuring that no matter who you are, if you fail, the government will subsidize you.” The reason the economy is so shitty is BECAUSE we have so much inequality. The more money moves the better it is for everyone. When a significant minority controls a significant minority of the wealth money has less reason to move. But I totally agree about the idea that our government promotes risk taking since there is always a net. “This is why we have such inequality. There are no jobs or opportunity to be had compared to what we might have given a much less oppressive government. The policies put in place by this administration have all but guaranteed that this downturn will continue to drag on with no end in sight. So what happens...we have record levels of people leaving the workforce, and quite a few still below the poverty line. No wealth is being created. Something that I get sick and tired of seeing (Because it's idiotic, patently false, and utterly moronic) is that the economy is a "zero-sum game"...its not. However, those on the left would you like you to believe that it is. They'd like you to believe that you can't create wealth, jobs, or opportunity. Therefore, their "rational" solution to "fixing" this "misallocation" of the "fixed" amount of capital in society is naturally to take it from those who have it and give it to those who do not.” Okay, this where we disagree the most. If we think of wealth in terms of hard commodities, understanding the basic distinction of hard and soft commodities, which basically break down into perishable and non-perishable stuff. We can exclude money from the definition of wealth as money in and of itself is worthless, it is a symbol that we all agree to use, but it is nothing more than that, especially in the era of fiat currency. So in terms of hard currencies which I would define as everything of value that is durable including real estate, for the most part it is a limited supply. Yes, you need to mine for metals for example but it is finite and stable. The only real “wealth creation” is when items go from un-owned to owned. In terms of soft goods, they can be created, but they also disappear just as easily. Yes you can grow corn or drill for oil, but it will be used and gone. It is valuable but doesn’t create wealth, even though much wealth gets transferred to obtain these items. So what is actually durable what can be held onto as wealth are only things that are finite and therefore wealth in the most fundamental terms is a zero sum game. However when you think in terms of commerce money is not a zero-sum game, but since it is supposed to symbolize the commodities that are durable and finite by extension it is zero-sum even though there are constantly inefficiencies which are exploited to create wealth inequalities. Now there is risk in trying to exploit these inefficiencies, but when you live in a society that rewards risk, you have what we are looking at today, a clogged economy with mountains of wealth for few and grains of sand for most. “This has never, and will never work, ever. It cannot possibly. You cannot subsidize wealth into existence. It makes no sense, mathematically or otherwise. If Seattle truly wants to fuck itself over and go for it, fine. Let's see what happens. Now, given the unique stats of their city, it might work for them. It might not. In the long run, it will not. It cannot. But in the short run, sure it might not be too big of a deal. But that's not how you make economic policy decisions. You must make them for the long run. This is something that the Keynesians always seem to forget...the long run matters. They like to ignore it and pretend it doesn't happen, but it does. It's math and statistics.” Min. wage doesn’t seek to subsidize wealth (there are no subsidies), it seeks to force a fair value for labor. Capitalism works by having workers get paid less than the value of their labor. Nothing wrong with business owners (who are taking the risk) earning a profit, but right now the bottom tier workers have no say in what their labor is worth and need help in ensuring that they can get closer to what is reasonable. No point in arguing about this we will see how this looks 2, 5 and 20 years into the future if this is a benefit or mistake. Like DickFuld said “I am glad this experiment is happening. I am glad this experiment is not happening in my city.” “Not really doing a great job of explaining myself here but there's literally millions of pages that have been written on this. Read Hayek, Smith, Greenspan, Friedman, or any other learned person on that side of the debate. All you have to do is look at Europe to see where we're headed. It's not hard to figure out at all.” Right now the biggest problem in Europe is governments that can’t pay their bills… so we are already there, we just much harder to collect on if we become delinquent. Please rip this apart, I am not an economist, but I am a highly rational person that believes that it is the duty of every person to act fairly at least some of the time, even if we all know life is not fair.
Shitty form of capitalism? Critiques of capitalism argue that in a capitalistic society there will always be inequality. It has existed long before Karl Marx wrote Communist Manifesto. The only time inequality was at its lowest was right after WW2 and most would agree that that time period is an outlier. Since the late 70's inequality has been on the rise and the only time the trend reversed was during the "Great Recession" and the trend is back to increasing inequality.
So when has capitalism really not been "shitty"? Or do we expect that inequality is just part of a capitalistic system?
Robert Reich opinion on increasing minimum wage.
[quote=EvanM]
Lie number four: Increasing the minimum wage will result in fewer jobs. So we shouldn’t raise it. In fact, studies show that increases in the minimum wage put more money in the pockets of people who will spend it – resulting in more jobs, and counteracting any negative employment effects of an increase in the minimum. Three of my colleagues here at the University of California at Berkeley — Arindrajit Dube, T. William Lester, and Michael Reich – have compared adjacent counties and communities across the United States, some with higher minimum wages than others but similar in every other way. They found no loss of jobs in those with the higher minimums. The truth is, America’s lurch toward widening inequality can be reversed. But doing so will require bold political steps. At the least, the rich must pay higher taxes in order to pay for better-quality education for kids from poor and middle-class families. Labor unions must be strengthened, especially in lower-wage occupations, in order to give workers the bargaining power they need to get better pay. And the minimum wage must be raised. Don’t listen to the right-wing lies about inequality. Know the truth, and act on it. [quote=EvanM]
Not sure what your point is...you started off with one and then made another.
I am not aware of any such studies supporting increases in the minimum wage that aren't backed by big liberal think-tanks or organizations.
I agree that we need better education. I don't agree that anyone should be forced to pay for it more than anyone else. If we all agree that we need better education, that should be something that we all get taxed on. In my mind, things like education and scientific exploration (along with national defense) are about the only things the government should fund.
Labor unions have absolutely destroyed companies in the US, I cannot understand how you can't see that. And don't get me started on public employee unions. I was born and raised in WI...and I've seen first-hand the economic effects that Walker's actions have had on the state economy and on the state budget.
Inequality will always exist, of course. Your mistake is saying that this is a problem...do you really honestly think anything would get done in any system if every factor was equal? It's simply physics and math...nothing happens in this universe without there being an inequality first. Why do you work? To make money. Why do you want money? So you can pay your rent, eat, buy a car, provide for your family, have the things you want.
I have a feeling you're one of those people that believes we should all aspire to live the same, and shouldn't want to have or buy nice things. Of course, if all of humanity could be convinced of that, then socialism would work just fine. But it won't, and nobody should be forced to subsidize this mindset.
The minimum wage isn't the cause of inequality in this country, and to suggest otherwise is simply untruthful and disingenuous. This idea that the minimum wage is supposed to be a "living wage" is one of the biggest lies that has ever been propagated in a society. It absolutely is not. It's designed to be something that can help you get on your feet in the most basic of fashions to start off with. Apart from the fact that people who work minimum wage jobs predominately do not have families, are not the sole income earners, and are not even post-college age, do you really expect there to be a minimum wage that every company must pay that allows for people to raise a family? I do not. And it's not possible...not now at least.
My larger point is that you seemed to open with but then fall away from is that our imperfect form of capitalism is the entire reason we have such large inequality in our society. You're either rich or you're poor, that's how this goes. And it's only going to get worse as more and more burdens are placed on the economy. Surely you can see that? If you really care about fixing the economy, you'd support a massive uplifting of the burdens that are currently on the economy.
I'm not asking for anarchy, I'm asking for real capitalism. That's the only answer. World history is in agreement with me here...a few outlier studies conducted by people who have a predisposition to supporting socialism doesn't convince me. However, the entire rest of human history does.
This goes a bit to address the comments that were made in reply to me above as well...not perfectly, but I'm more than willing to keep going.
Need @"NorthSider" here too.
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