Raising the minimum wage to $15 has not worked in California's favor (1 Viewer)

[Masterhawk]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

 

[joG]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

That is elementary economics that liberals did not want to listen to ie decided to ignore. But that makes sense. Hey, their voters actually believe that handouts are free. BS showed that unequivocally and Clinton has promised a policy mix that will almost certainly reduce employment and GDP on its own, while actually reducing tax income in the long run. But people don't want to understand the principal of the free lunch and she knows that as bad as it is for her voters, it is the way to get herself elected.

 

[Carjosse]

That is elementary economics that liberals did not want to listen to ie decided to ignore. But that makes sense. Hey, their voters actually believe that handouts are free. BS showed that unequivocally and Clinton has promised a policy mix that will almost certainly reduce employment and GDP on its own, while actually reducing tax income in the long run. But people don't want to understand the principal of the free lunch and she knows that as bad as it is for her voters, it is the way to get herself elected.

Clearly you do not understand elementary economics either. When you implement a minimum wage there will be some loss but it will usually result in net gain for minimum wage workers. If for example wages increase by 20% prices do not increase by 20%, because they can't, this is due to elasticity. You also will not see hours reduced by 20% either, again due to elasticity. What you probably will see is maybe a 5% increase and a 5% decrease in hours worked but in total there is a net gain for society.

 

[Captain Adverse]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

(Please forgive the lengthy response, incomplete as it is.)

I agree, in principle. Minimum wage was never meant to be a "living wage," as it is defined today.

In public policy, a living wage is the minimum income necessary for a worker to meet their basic needs. This is not necessarily the same as subsistence, which refers to a biological minimum, though the two terms are commonly confused.

https://en.wikipedia.org/wiki/Living_wage

IMO when considered back in 1938 the idea was to reduce hours and sets standard for child labor to protect worker health and safety, while providing a minimum wage standard that allows for subsistence. Subsistence is defined as barely sufficient to maintain life. Thus a family group working together (as was normal in those days), each earning minimum wage, together could earn enough for the family to maintain an above-subsistence standard of living.

The national minimum wage was created by Congress under the Fair Labor Standards Act (FLSA) in 1938. Congress enacted this legislation under its Constitutional grant of authority to regulate interstate commerce. FLSA was a comprehensive federal scheme which provided for minimum wages, overtime pay, record keeping requirements, and child labor regulations. The purpose of the minimum wage was to stabilize the post-depression economy and protect the workers in the labor force. The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees. Others have argued that the primary purpose was to aid the lowest paid of the nation's working population, those who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage.

https://www.law.cornell.edu/wex/minimum_wage

The problem is that many things have changed since then. America back then had a highly protectionist trade policy; then after WWII our economy became the strongest in the world thanks in no small part by the destruction of most of the rest of the "First World" powers industrial capability. We had jobs for everyone, and unions were able to get major concessions from businesses in both wage increases and employee benefits.

This lasted into the 1970's when things finally began to show clear signs that the rebuilt economies of the First World nations were providing highly effective competition. Then came the international trade agreement efforts which gave Corporations the ability to invest in cheaper, unregulated development in Second and Third World nations utilizing cheap labor and the lower building and maintenance costs to make massive profits. They could then eliminate jobs in the USA to reduce the costs of higher wages and benefits American workers demand for their labor. Moreover, many industrial businesses that remain in the USA have opted to automate as much as possible, further reducing job opportunities in long-term employment.

Meanwhile, starting the in 1970's our government monetary system reverted fully to the National Reserve Banking system, allowing the unlimited production of money based solely on faith in the government's ownership of land and the natural resources awaiting development on it. More money in an economy typically leads to inflation as the belief develops that more money means less value and thus the profit motive compels producers to demand more of it in exchange for goods. A penny in 1938 had the purchase power of $0.17 today, an inflation rate of 1609.5%. Inflation Calculator | Find US Dollar's Value from 1913-2016

We are told that these things are good for our economy; that this reduces prices, that the fewer employees remaining are able to earn more money to spend on these cheaper goods; that more jobs are thereby developing in service jobs. But this is like a snake eating it's own tail. Our population is growing, both by births and immigration (legal and illegal). As technology improves more businesses are automating (including many in the service industry), and advances in robotics will end up replacing people as well. This means more people but fewer jobs, and those earning wages paying more in taxes for all the social welfare programs needed to provide "subsistence" to the non-working population.

Inflation affects everyone, but more so those earning the least. How do we address this issue sans a living minimum wage?

 

[Celebrity]

Clearly you do not understand elementary economics either. When you implement a minimum wage there will be some loss but it will usually result in net gain for minimum wage workers. If for example wages increase by 20% prices do not increase by 20%, because they can't, this is due to elasticity. You also will not see hours reduced by 20% either, again due to elasticity. What you probably will see is maybe a 5% increase and a 5% decrease in hours worked but in total there is a net gain for society.

The net gain for society is more money on the table and less hoarding.

 

[Glen Contrarian]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

Mm-hmm...which, FYI, is the very same argument that's been used against minimum wage ever since the 1930's. Ever since then, the Right has proclaimed that minimum wage was going to destroy the economy.

How'd that prediction work out, hm?

One more thing - try living in a nation where there's NO minimum wage. I have...and what I've seen with my own eyes is how the lack of a minimum wage results in a race to the bottom when it comes to workers' wages. Business A sees that Business B's got lower prices, and so is forced to cut wages to the bone to be able to compete...and then Business B sees Business A do that and is forced to cut the wages even further.

That IS how it works - I've seen it with my own eyes, and it really, truly sucks for the workers. You think income inequality is bad in America, try going to nations where there's no minimum wage at all, and then see what it's like.

One does wish, however, that y'all would listen to what the "Father of Capitalism" - Adam Smith - said about having a living wage:

Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.

— Adam Smith, Wealth of Nations, I .viii.36

The guy just about freaking INVENTED capitalism...but when it comes to the part y'all don't like, y'all flatly ignore what he plainly said. And you know what? All Adam Smith was doing was expounding upon what the Greek biographer Plutach had said nearly two thousand years before:

“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

But y'all want to forget history...and so have to learn the same damn lesson all over again.

 

[Aberration]

Given the number of people who are unemployed, underemployed, or dropped out of the work force, seems pretty accurate.

And his comment doesn't support government mandated minimum wage. It says nothing about the government doing anything about it. Neither does Plutach's.

You'd have to understand Capitalism to understand what Smith is saying. Capitalism is exactly what will help fix the situation. Commanding the economy has always been the cause of social inequity, whether it's Feudalism or Communism or Fascism.


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[Beaudreaux]

Clearly you do not understand elementary economics either. When you implement a minimum wage there will be some loss but it will usually result in net gain for minimum wage workers. If for example wages increase by 20% prices do not increase by 20%, because they can't, this is due to elasticity. You also will not see hours reduced by 20% either, again due to elasticity. What you probably will see is maybe a 5% increase and a 5% decrease in hours worked but in total there is a net gain for society.

Well, elementary economics must give way to real life economics it would appear - Forbes Welcome / $15 wage law has little impact on Seattle's thriving labor market, report suggests | The Seattle Times

 

[Glen Contrarian]

Given the number of people who are unemployed, underemployed, or dropped out of the work force, seems pretty accurate.

The current unemployment rate is 4.9%...which is very close to what economists refer to as "full employment", for having a lower unemployment rate than that takes away from the "churn" of people searching for better-paying jobs.

If you'll check, the very month that Obama first took over, we lost 800K jobs! But now, we're still in the middle of the longest stretch of positive private-sector job growth in ALL American history - every single month since September 2010! Heck, if Obama'd had an (R) behind his name, the Right would be clamoring to have his face added to Mount Rushmore. But since he's got that (D), well, ha-RUMPH, that means he's destroying the economy and the American Dream!!!!

And his comment doesn't support government mandated minimum wage. It says nothing about the government doing anything about it. Neither does Plutach's.

You know, you're right. In ALL the first-world democracies, there is one and only one nation that doesn't have a government-mandated minimum wage - Germany. But how does Germany maintain high wages for their workers? The unions there are MUCH stronger than they are here.

The point being that left to themselves, businesses will NOT pay decent wages to entry-level workers. In all the democracies with the highest standards of living, ALL businesses are forced - whether by the government or by the unions - to pay decent wages even to entry-level workers. Contrast that to ALL other nations where there is no government- or union-mandated minimum wage - how's it work out for those nations?

Not so well, huh?

Give businesses a choice, and they WILL pay their workers as little as they can get away with...and it becomes a race to the bottom as I described in my previous post. However, if businesses are NOT given a choice - as is the case in ALL first-world democracies - and what happens? Apparently, prosperity on a national scale - otherwise, the first-world democracies wouldn't be first-world nations in the first place.

You'd have to understand Capitalism to understand what Smith is saying. Capitalism is exactly what will help fix the situation. Commanding the economy has always been the cause of social inequity, whether it's Feudalism or Communism or Fascism.

If you want capitalism with little or no regulation, go visit a third-world democracy and see it with your own eyes. But it would cost you a heck of a lot less money to simply realize that ALL first-world democracies have three things in common: "big government", high effective taxes, and strong regulation...whereas ALL third-world democracies have precisely the opposite three things in common: "small government", low effective taxes, and weak regulation.

Yes, I know, correlation does not equal causation...but when the correlation is so freakishly strong, one would do well to think that hey, maybe the ones who are so successful are doing something right....

 

[Aberration]

I clearly did not just say unemployment. You arbitrarily limit the comparison to now. N Korea is one of the worst 3rd world countries and they have a huge government, high taxes and strong regulations. So does Venezuela. While you might be right about the correlation with 1st world countries and those attributes, you are wrong about the 3rd world. And when you compare the two, usually you find not simply smaller government but more specifically more power in the people, more power to make their own choice, and when you compare that to history it's quite obvious.


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[joG]

Clearly you do not understand elementary economics either. When you implement a minimum wage there will be some loss but it will usually result in net gain for minimum wage workers. If for example wages increase by 20% prices do not increase by 20%, because they can't, this is due to elasticity. You also will not see hours reduced by 20% either, again due to elasticity. What you probably will see is maybe a 5% increase and a 5% decrease in hours worked but in total there is a net gain for society.

That is the story that one-period-economists would tell the people they want to con into voting for them.

 

[Aunt Spiker]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

$15.00 / hr min wage in Arkansas would be something that would destroy the economy.

But to claim that $15.00 / hr (later - it's not in motion, yet, the plan is to build up to it over time to allow the economy to adjust) in a place where the average min wage was ALREADY CONSIDERABLY HIGHER THAN THE NATIONAL AVERAGE and THAT is what has / is going to tank things for people is ridiculous bull.

 

[Kushinator]

$15.00 / hr min wage in Arkansas would be something that would destroy the economy.

But to claim that $15.00 / hr (later - it's not in motion, yet, the plan is to build up to it over time to allow the economy to adjust) in a place where the average min wage was ALREADY CONSIDERABLY HIGHER THAN THE NATIONAL AVERAGE and THAT is what has / is going to tank things for people is ridiculous bull.

Exactly! The minimum wage will not be $15/hr until 2022. :coffeepap

 

[Moderate Right]

The net gain for society is more money on the table and less hoarding.

Bull hockey. The rich will raise prices enough where they will make the same amount as they did before and "hoard" the same amount as they did before. Liberals always think that like the rape fallacy, business owners will just sit there and let themselves be raped. They won't.

 

[Kushinator]

Bull hockey. The rich will raise prices enough where they will make the same amount as they did before and "hoard" the same amount as they did before. Liberals always think that like the rape fallacy, business owners will just sit there and let themselves be raped. They won't.

Can a business just raises prices without losing market share?

 

[ludin]

Clearly you do not understand elementary economics either. When you implement a minimum wage there will be some loss but it will usually result in net gain for minimum wage workers. If for example wages increase by 20% prices do not increase by 20%, because they can't, this is due to elasticity. You also will not see hours reduced by 20% either, again due to elasticity. What you probably will see is maybe a 5% increase and a 5% decrease in hours worked but in total there is a net gain for society.

Hiking Minimum Wage an Inefficient Tool to Fight Poverty: Fed Research - NBC News
not according to the federal reserve paper.

They get very little of the minimum age increases.

 

[Lord of Planar]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

Not only that, but social benefits often decrease too.

 

[ludin]

The net gain for society is more money on the table and less hoarding.

There is little hoarding. you don't know what you are talking about.

 

[ludin]

Mm-hmm...which, FYI, is the very same argument that's been used against minimum wage ever since the 1930's. Ever since then, the Right has proclaimed that minimum wage was going to destroy the economy.

How'd that prediction work out, hm?

One more thing - try living in a nation where there's NO minimum wage. I have...and what I've seen with my own eyes is how the lack of a minimum wage results in a race to the bottom when it comes to workers' wages. Business A sees that Business B's got lower prices, and so is forced to cut wages to the bone to be able to compete...and then Business B sees Business A do that and is forced to cut the wages even further.

That IS how it works - I've seen it with my own eyes, and it really, truly sucks for the workers. You think income inequality is bad in America, try going to nations where there's no minimum wage at all, and then see what it's like.

One does wish, however, that y'all would listen to what the "Father of Capitalism" - Adam Smith - said about having a living wage:

Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.

— Adam Smith, Wealth of Nations, I .viii.36

The guy just about freaking INVENTED capitalism...but when it comes to the part y'all don't like, y'all flatly ignore what he plainly said. And you know what? All Adam Smith was doing was expounding upon what the Greek biographer Plutach had said nearly two thousand years before:

“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

But y'all want to forget history...and so have to learn the same damn lesson all over again.

Study finds higher minimum wage hurting youth employment - MarketWatch
yet again actual research says otherwise.

Clemens estimates that rising minimum wages reduced employment among 16- to 30-year-olds without a high school degree by 5.6 percentage points from 2006 to 2010.
Put another way, rising minimum wages accounted for almost half of the decline in the share of these workers holding a job during that five-year period.
Here’s some more bad news for millennials in that bracket. Not only are far fewer of them working, but their wages have essentially stagnated. So it’s even harder for them to make ends meet.

Some researchers such as Clemens believe higher minimum wages have been harmful. “The evidence supports the view that this period’s minimum wage increases had significant, negative effects on low-skilled workers’ employment,” he wrote in his latest study.

 

[Lord of Planar]

Well, elementary economics must give way to real life economics it would appear - Forbes Welcome / $15 wage law has little impact on Seattle's thriving labor market, report suggests | The Seattle Times

Does Seattle have any major export products that are now harder to compete with against others?

A large amount of their viability comes because they are a major port on the west coast.

 

[ludin]

$15.00 / hr min wage in Arkansas would be something that would destroy the economy.

But to claim that $15.00 / hr (later - it's not in motion, yet, the plan is to build up to it over time to allow the economy to adjust) in a place where the average min wage was ALREADY CONSIDERABLY HIGHER THAN THE NATIONAL AVERAGE and THAT is what has / is going to tank things for people is ridiculous bull.

They haven't even gotten to 15 an hour yet and it is already having negative affects on the economy.
the same thing is happening in seattle.

Businesses that you need to grow aren't. if anything they are cutting job, working people less hours
and raising prices.

you can't raise the floor on people without consequences.

 

[ludin]

Well, elementary economics must give way to real life economics it would appear - Forbes Welcome / $15 wage law has little impact on Seattle's thriving labor market, report suggests | The Seattle Times

Not really.

America's Future Foundation | Minimum Wage Hike Backfires In Seattle Suburb

 

[Lord of Planar]

Washington state already has the largest minimum wage in the nation at $9.47/hr. It is now at $13 in Seattle, not $15.

The current $13 represents a 37% higher rate than the rest of the state. $15 represents a 58% increase. For federal minimum states, $13 would be a 79% increase, and a 107% increase at $15.

This is also, only for large businesses. The $15 doesn't kick in until 2021.

Hamburger flippers are not getting it.

 

[Lord of Planar]

Minimum Wage Rate Schedule 2 Employers (500 or fewer employees in U.S.)

$10.00 by April 1, 2015

$10.50 by January 1, 2016

$11.00 by January 1, 2017

$11.50 by January 1, 2018

$12.00 by January 1, 2019

$13.50 by January 1, 2020

$15.00 by January 1, 2021

$15.75 by January 1, 2022

$16.50 by January 1, 2023

$17.25 by January 1, 2024
​

I will assume this quick search for a source is true: Minimum Wage Washington, Seattle and SeaTac | US Paywizard.org

The $10.50 for 2016 is only 11% higher than the rest of the state.

 

[Visbek]

Raising the minimum wage seems appealing at first but businesses either shrink or they raise the prices. A worker might be overjoyed at first only to find out that he has been laid off or that it didn't help him because now the goods cost more.
Minimum wage increase bad for business in California | SanDiegoUnionTribune.com

Surprise! The article you linked has no empirical data whatsoever to back up the opinions of the business lobby that wrote it.

Empirical data is generally quite mixed, but generally does not indicate that there is a large negative effect that results from minimum wage hikes.

One recent example is Seattle, which also put in a law that gradually increases minimum wages. It has not done a lot to help income yet, but also has had no effect on prices or unemployment figures.

One reason is that after years of cost-cutting, businesses today are extremely lean. Few can afford to cut staff hours further, and the demand for that type of low-wage work is now inelastic.

It is also critical to note that minimum wages in most states are not indexed to inflation, meaning that employers are basically getting a small drop in wages every year that there isn't a minimum wage hike. Most of these increases do little more than catch up on a few years of inflation,

Or, to put it another way: If your business cannot survive without cutting wages by 2% every single year, then you're doing something wrong.