[bootlegga]

$1:

Too many Americans aren’t paid enough to enjoy a decent standard of living. That is unacceptable in a country as rich as the US. California and New York plan to phase in a $15-per-hour minimum wage over the next few years, amid a push for $15 to also be set as the national minimum wage, from $7.25 today.

This is the wrong way to solve the problem. It’s not just that a wage increase that large risks job losses, but if the goal is a fairer distribution of income between rich and poor, then the minimum wage is a lousy way to achieve it.

Sadly, the money to pay low-wage workers more has to come from somewhere. It can either come from the savings that result from cutting jobs or hours, from dipping into profits, or by raising prices. Even pro-minimum wage economists worry that $15-per-hour goes too far and risks job losses.

What about profits? Some, like White House economist Jason Furman, believe minimum-wage employers pay their workers less than they are worth, so higher wages can come from lower profits. But according to official statistics, about one-third of minimum-wage workers are employed by small businesses (employing fewer than 50 people), mostly in the retail and food sector. Many others work for independently owned franchises of big brands, like McDonald’s or 7-11. These sorts of firms earn small profits—a survey of food-franchise owners found that half of them make $50,000 or less in annual earnings.

That leaves prices. A study of a large minimum-wage hike in Hungary (pdf) concluded that the higher wages mostly resulted in higher prices. Research in America (pdf) suggests that every 1% increase in the minimum wage boosts prices by 0.04% to 0.40%.

Higher prices impact everyone, rich and poor alike. For this reason, Stanford economist Thomas MaCurdy argues that a minimum-wage hike is similar to a rise in the sales tax rate. He studied a US minimum-wage hike in 1996—an increase from $4.25 to $5.15 per hour—and concluded that the resulting rise in prices amounted to a 0.59% tax on all low earners. The effective tax was lower for high earners, because the extra money they had to spend accounted for a lower share of their wallets. So it’s not just a higher sales tax, but a regressive one as well.

These may not sound like large increases, but MaCurdy’s study considered a relatively modest increase during a booming economy; the equivalent today would boost the minimum wage to $8.8o per hour. Pushing the minimum wage to $15 is a much bigger increase amidst a weaker economy—presumably, the accompanying price increases and additional burden on low earners would be larger too.

It is possible to take money from high earners and give it to minimum-wage earners more directly, without making the lower and middle classes pay too. Most economists champion the Earned Income Tax Credit, which reduces or refunds taxes owed by low-earning families. Not only does this avoid putting jobs at risk, it targets the families most in need and shifts tax revenue (collected from a progressive tax system) to those who need it most.
In many ways, it is ironic that both free college tuition and a $15 minimum wage are key parts of progressive presidential hopeful Bernie Sander’s economic policy prescriptions. Neither are very effective at redistributing from the rich to the poor—quite the opposite.

http://qz.com/664196/wholl-pay-for-a-15-minimum-wage/

[DrCaleb]

$1:

But what kind of effect do minimum wages have, here and around the world? Sifting the evidence, David Neumark of the University of California, Irvine, tells us minimum wages don't actually alleviate poverty generally - for many, they make it worse.

http://www.bbc.co.uk/programmes/p03vkvvt

I heard this program this morning. Very enlightening!

The key point he makes is that minimum wages don't generally lift the poor out of poverty, because the poor are poor because of lack of marketable skills. The increase in wages means employers will retain or hire those with more skills to justify the higher wage, and that excludes the people who minimum wage was designed to help.

[DrCaleb]

And as we read earlier this week, if it's cheaper to buy a robot for a one time cost to flip burgers rather than train a short time employee, the robot wins!

http://www.canadaka.net/link.php?id=96760

[Thanos]

Plus the robot won't spit on the food for laughs.

[andyt]

Ok, so min wage is a poor way to solve the problem, supposedly. So then what, fuck em? Because I don't see anybody coming up with another plan. You want to give money to people who can't earn enough directly, fine, but look at the howling that starts up here every time that subject comes up. So basically the attitude is fuck em, with all the costs to society that entails.

It was the same when people pointed out all we were willing to do for the Syrian refugees, but not our homegrown poor. "We can do both" was the smug reply. Are we doing both?


For every study that says the min wage doesn't work, there's one that says min wage increase work if not done too drastically. When the wage is allowed to stagnate for years, no wonder people push for a radical increase. So is there a wage that should be set as a minimum, or just go with Bart's plan of no set minimum?

[andyt]

$1:

Column: Why raising the minimum wage is good economics

The billionaire fails to realize that the real minimum wage (that is, the minimum wage adjusted for inflation) has been declining steadily and precipitously. If adjusted for inflation, the minimum wage of 1968 would be $10.90 today. That is a whopping reduction of the federal minimum wage by a third. It’s worth noting that the unemployment rate was 3.6 percent in 1968 with a higher real minimum wage. So the unemployment rate is higher today — at 5 percent — than it was in 1968, while the real minimum wage is lower today than it was in 1968.

Moreover, the minimum wage in the U.S. is well below that of other advanced countries. The Economist estimates that the minimum wage should be about $12 an hour in the U.S based on our GDP. That makes a lot of sense, especially because $10.90 would put it just where it was in 1968. If we add a little extra to the minimum wage for the growth in productivity, $12 seems to be a conservative estimate of where the lower bound of workers’ wages should be. In addition to the 1.3 million people working at minimum wage, there are another 1.7 million working below minimum wage (tipped employees) and an additional 21 million employees who are working just above the minimum, but below $10 an hour. They would also be affected, because their pay is pegged to the minimum wage. So an increase in the minimum wage would affect a third of the labor force being paid an hourly basis.

MORE FROM MAKING SEN$E
The man and the thinking behind the minimum wage hike
Those against raising the minimum wage often argue that it will hurt young people the most and that they “need the experience” of working at the minimum wage. But notice that the youth unemployment rate in Germany is 7.8 percent, and in Switzerland, it is 8.5 percent. In contrast, youth unemployment is 15.5 percent in the U.S., even though the U.S.’s minimum wage (using Purchasing Power Parities exchange rates) is below that of these Germany’s and Switzerland’s $10 and $9.20 an hour respectively. In other words, both have higher minimum wages, but much lower youth unemployment rates. Their overall unemployment rate is also lower: 4.5 percent and 3.4 percent, respectively. The minimum wage makes no difference on unemployment.

The brilliant neurosurgeon who is fourth in national polls in a field of 14 candidates weighed in on the discussion, saying, “Every time we raise the minimum wage, the number of jobless people increases.” Myths dye hard. But the matter of fact is that there is no evidence to back that assertion, as Alan Krueger of Princeton University told the PBS NewsHour.

One of the reasons that increases in the minimum wage would not have an impact on unemployment is that in today’s economy an increase in minimum wage would come mostly out of profits. And there is plenty of that to go around.

Think of it this way: You’re running a McDonald’s selling 1,000 hamburgers a day. You make, say, 75 cents on each Big Mac costing $3.99. Will you raise its price by a nickel to $4.04 in order to make up for an increase in the minimum wage? That would be silly, because $4.04 is not an attractive number, and you’d lose too many sales as a consequence. Rather, you’d be satisfied with a lower profit margin on a Big Mac of 70 cents. But you notice that the Big Mac Meal is selling for $5.69; that gives you the opportunity to raise its price to the next attractive number of $5.75 in order to make up for the increased cost of labor. Will the demand for Big Mac Meals decline? It is doubtful that customers will even notice that tiny increase in price. Hence, Krueger concludes, “The net effect is basically no change in overall employment.” Profits might decline slightly, but not on every item. There are offsetting benefits as well: “decently paid workers tend to do a better job.”

http://www.pbs.org/newshour/making-sens ... economics/

[andyt]

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Minimum Wage Mythbusters


Myth: Raising the minimum wage will only benefit teens.

Not true: The typical minimum wage worker is not a high school student earning weekend pocket money. In fact, 89 percent of those who would benefit from a federal minimum wage increase to $12 per hour are age 20 or older, and 56 percent are women.

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, "In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front."

Myth: Small business owners can't afford to pay their workers more, and therefore don't support an increase in the minimum wage.

Not true: A July 2015 survey found that 3 out of 5 small business owners with employees support a gradual increase in the minimum wage to $12. The survey reports that small business owners say an increase "would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities."

Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would hurt restaurants.

Not true: In California, employers are required to pay servers the full minimum wage of $9 per hour — before tips. Even with a 2014 increase in the minimum wage, the National Restaurant Association projects California restaurant sales will outpace all but only a handful of states in 2015.

Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would lead to restaurant job losses.

Not true: As of May 2015, employers in San Francisco must pay tipped workers the full minimum wage of $12.25 per hour — before tips. Yet, the San Francisco leisure and hospitality industry, which includes full-service restaurants, has experienced positive job growth this year, including following the most recent minimum wage increase.

Myth: Raising the federal minimum wage won't benefit workers in states where the hourly minimum rate is already higher than the federal minimum.

Not true: While 29 states and the District of Columbia currently have a minimum wage higher than the federal minimum, increasing the federal minimum wage will boost the earnings for nearly 38 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. Raising the federal minimum wage is an important part of strengthening the economy. A raise for minimum wage earners will put more money in more families' pockets, which will be spent on goods and services, stimulating economic growth locally and nationally.

Myth: Younger workers don't have to be paid the minimum wage.

Not true: While there are some exceptions, employers are generally required to pay at least the federal minimum wage. Exceptions allowed include a minimum wage of $4.25 per hour for young workers under the age of 20, but only during their first 90 consecutive calendar days of employment with an employer, and as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive the current federal minimum wage or the state minimum wage, whichever is higher. There are programs requiring federal certification that allow for payment of less than the full federal minimum wage, but those programs are not limited to the employment of young workers.

Myth: Restaurant servers don't need to be paid the minimum wage since they receive tips.

Not true: An employer can pay a tipped employee as little as $2.13 per hour in direct wages, but only if that amount plus tips equal at least the federal minimum wage and the worker retains all tips and customarily and regularly receives more than $30 a month in tips. Often, an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage. When that occurs, the employer must make up the difference. Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, he or she is entitled to the provisions of each law which provides the greater benefits.

Myth: Increasing the minimum wage is bad for businesses.

Not true: Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

Myth: Increasing the minimum wage is bad for the economy.

Not true: Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised.

Myth: The federal minimum wage goes up automatically as prices increase.

Not true: While some states have enacted rules in recent years triggering automatic increases in their minimum wages to help them keep up with inflation, the federal minimum wage does not operate in the same manner. An increase in the federal minimum wage requires approval by Congress and the president. However, in his call to gradually increase the current federal minimum, President Obama has also called for it to adjust automatically with inflation. Eliminating the requirement of formal congressional action would likely reduce the amount of time between increases, and better help low-income families keep up with rising prices.

Myth: The federal minimum wage is higher today than it was when President Reagan took office.

Not true: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s. That's why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.

Minimum Wage Mythbusters

Myth: Increasing the minimum wage lacks public support.

Not true: Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013 when President Obama first called on Congress to increase the minimum wage have consistently shown that an overwhelming majority of Americans support an increase.

Myth: Increasing the minimum wage will result in job losses for newly hired and unskilled workers in what some call a “last-one-hired-equals-first-one-fired” scenario.

Not true: Minimum wage increases have little to no negative effect on employment as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

Myth: The minimum wage stays the same if Congress doesn't change it.

Not true: Congress sets the minimum wage, but it doesn't keep pace with inflation. Because the cost of living is always rising, the value of a new minimum wage begins to fall from the moment it is set.

https://www.dol.gov/featured/minimum-wage/mythbuster

[DrCaleb]

andyt andyt:

Ok, so min wage is a poor way to solve the problem, supposedly. So then what, fuck em? Because I don't see anybody coming up with another plan. You want to give money to people who can't earn enough directly, fine, but look at the howling that starts up here every time that subject comes up. So basically the attitude is fuck em, with all the costs to society that entails.

No, it isn't. If you listen to the interview I posted, the study our of Irvine suggested that the best way to lift people out of poverty was a progressive tax and minimum income for the poor. And skills development.

That was the jist of another story I posted, where Apple is replacing 60,000 workers at the iPhone assembly plant with robots.

http://www.canadaka.net/link.php?id=96764

Robots are going to take over low skilled repetitive tasks, and if workers don't upgrade their skills they will end up being a class of workers with no marketable skills. Dropping out of junior high and driving an idiot stick isn't going to be a viable career like it was 100 years ago.

andyt andyt:

It was the same when people pointed out all we were willing to do for the Syrian refugees, but not our homegrown poor. "We can do both" was the smug reply. Are we doing both?

Many of the Syrian refugees came in with marketable skills. Like I pointed out in that thread, Diasporas tend to be performed by the higher educated and richer portion of a population. It leaves the receiving country better, and the original country poorer.

andyt andyt:

For every study that says the min wage doesn't work, there's one that says min wage increase work if not done too drastically. When the wage is allowed to stagnate for years, no wonder people push for a radical increase. So is there a wage that should be set as a minimum, or just go with Bart's plan of no set minimum?

I don't think I can answer that. That's economist territory. I'd say look at what we are doing, and is it working? If not, try something else.

[andyt]

BC raised the min wage from 8 to 10.25 an hour in just over a year. BC has Canada's strongest economy. It has the second lowest unemployment rate in Canada next to Manitoba's, where the min wage is higher than BC.

$1:

Minimum wage increases are 'supercharging' economy, says U.S. multimillionaire
'People who are defending these low wages today essentially are free riders,' says Nick Hanauer

http://www.cbc.ca/news/canada/british-c ... -1.3124917

[Thanos]

andyt andyt:

....The billionaire......

At this stage in the proceedings the adult Damien Thorne from the third Omen movie had a better developed social conscience than those who control everything in the real world. I don't know about $15 an hour for certain kinds of work because it doesn't seem to be the more important meta-issue. The greater threat is at the middle-class level where there is zero intention from the masters and their politician pets to ever allow wage increases to match the rises in cost of living.

Wide swaths of society going forward are simply going to have to accept that the middle-class dream circa 1945 thru 2000 is permanently dead. It's not coming back and what's happening is a return to pure feudalism.

[DrCaleb]

andyt andyt:

BC raised the min wage from 8 to 10.25 an hour in just over a year. BC has Canada's strongest economy. It has the second lowest unemployment rate in Canada next to Manitoba's, where the min wage is higher than BC.

$1:

Minimum wage increases are 'supercharging' economy, says U.S. multimillionaire
'People who are defending these low wages today essentially are free riders,' says Nick Hanauer

http://www.cbc.ca/news/canada/british-c ... -1.3124917

Everywhere is different.

Alberta restaurants face 'double whammy' as costs rise, sales drop: industry advocate

The provincial government in Alberta has delayed the minimum wage hike, because they know it would be catastrophic.

[andyt]

Just clutching at straws, since the woes of Alberta's restaurant industry are caused by the oil price decline. You could halve the minimum wage and it wouldn't do much to boost the sector if people don't have money to spend.

[andyt]

$1:

Research Shows Minimum Wage Increases Do Not Cause Job Loss

In the 2015 report, Minimum Wage Policy and the Resulting Effect on Employment, the research institute Integrity Florida observes, "Economists cite several reasons why increases in the minimum wage, which raise employers’ cost, generally do not cost jobs. Increased pay adds money to workers’ pocketbooks and allows them to buy more goods and services, creating higher demand, which in turn requires hiring more workers. The higher wage may make it easier to attract applicants and results in less turnover of workers, lowering costs of employers." They report, "Our examination of employment statistics in states found no evidence of employment loss in states that have increased the minimum wage and more evidence that suggests employment increases faster when there is an increase in the minimum wage."

http://www.businessforafairminimumwage. ... e-job-loss

[DrCaleb]

andyt andyt:

Just clutching at straws, since the woes of Alberta's restaurant industry are caused by the oil price decline. You could halve the minimum wage and it wouldn't do much to boost the sector if people don't have money to spend.

What you call 'clutching at straws' the rest of us call 'reality'. As you point out, a reduction in minimum wage might not change anything. But a rise in it surely would. It certainly wouldn't result in a 'supercharged' economy like BC.

[andyt]

Of course not, because the minimum wage doesn't have that much effect either way. (except for the people actually earning it.) Raise it too high too fast, sure there will be job losses. OTOH, BC allowed the min wage to stagnate at $8 ($6 for the first 500 hours worked) for years, and it didn't make us all of a sudden have a boom. Going by the stuff I've posted here, a modest wage increase in Alberta wouldn't cause havoc at all, in fact might help a bit. But it definitely helps those earning the min wage or near it - every little bit helps when you earn so little. Alternatively, let's institute a refundable tax credit for low workers to boost their take home pay. Although that, of course, is just a subsidy for employers.