What Minimum-Wage Foes Got Wrong About Seattle | Hacker News Reader

What Minimum-Wage Foes Got Wrong About Seattle

bloombergquint.com

90 pointsherrkanin156 comments

All the top-level comments are making excuses for inconvenient facts. I'm guessing a lot of folks on Hacker News believe themselves to be objective analysts and yet are blind to how their bias against the minimum wage is causing them to look foolish in ignoring any new information that might possibly conflict with their world view.

The ONLY proper response if you're a critic of this study (if not with the methodology, which nobody here has found ANY problems with) is to say, "well there's a wide variety of findings on minimum wage." Instead, you have people intentionally misreading the study, making ideological claims about the "value" of the work minimum wage workers do, or a conspiratorial claim they reversed because of "pressure" without any evidence whatsoever.

It's quite sad to see people so willing to reject inconvenient facts.

Mr. Ritholtz did three things. He found the most extreme over-reactions to the law, he criticized those over-reactions for being too extreme, and he provided one graph of one statistic that charts restaurant employment from 1990 to 2018.

This is his only argument in the piece:

> [Restaurants] were in fact opening; employment in food services and drinking establishments has soared.

But does that data support his conclusion? Could Seattle's population growth explain the gains in restaurant employment? Why a chart starting from 1990 for a law passed in 2018? Has enough time elapsed to understand the impact of the law? Was the downturn in restaurant employment in 2018 related to the minimum wage law?

Though I love it, let's skip the Socratic dialogue. The $15/hr minimum wage does not go into effect until January 1st 2019! Let's wait and see how customer's react to higher prices before declaring victory.

I think the more noteworthy article (since I agree the OP is lacking) is the NYT article that it links to:

https://www.nytimes.com/2018/10/22/business/economy/seattle-...

Here's the new paper it describes: https://www.nber.org/papers/w25182?utm_campaign=ntw&utm_medi...

>Mr. Ritholtz did three things. He found the most extreme over-reactions to the law, he criticized those over-reactions for being too extreme, and he provided one graph of one statistic that charts restaurant employment from 1990 to 2018.

You missed the fourth thing that prompted this story, he discussed two studies done about the new data. The first made several mistakes that they addressed in the second, and the conclusion showed that pay was rising.

>Why a chart from 1990 for a law passed in 2018?

>The $15/hr minimum wage does not go into effect until January 1st 2019!

The law was passed in 2015, and it mandated a gradual increase of the minimum wage over the next four years. In 2018, the minimum wage is $15 for businesses with over 500 employees, $14 for other businesses.

I read this comment and think instantly of a creation vs evolution debate. Neither side can disprove the other and things just get more heated as we talk past one another.

There is a fundamental logic to thinking that the floor for wages should be 0. Otherwise one can generate a bunch of facts regarding different values and circumstance and controls.

Neither set of arguments proves the other is wrong, they just reference different basic truths. With minimum wage is there are two competing claims, that interfering in the price of exchange is bad and that thumbing the price in favor of the worker vs business has good results. While both can be true, the moral claim can be completely true while the data based claim is at best true to an unknown point.

Studies like this do nothing to convince me there should be a minimum wage, regardless of the claimed optimum point, because a more transparent mechanism to increase lower income worker pay would be a government redistribution that is proportional to all transactions, not acutely affecting specific transactions. I.e. Tax and spend or print and spend, don't price control.

Just like creation and evolution, you can have it both ways but you need to iron it out consistently.

>Neither side can disprove the other and things just get more heated as we talk past one another.

Woh woh woh. Back the truck up. One side has a hypothesis that can be subjected to falsification. The other says "A wizard did it. Trust me."

The debate on minimum wage is an emperical question that both models fail and succeed on various tests. It's a truly hard question to answer and likely has no stable model.

Completely 110% different types of logical incongruity.

Agreed? An empirical claim that $15 minimum wage is better than $10 could be proven false by some set of metrics and controls. That $1 is better than zero? That is a different type of argument, and one for which expounding upon the scientific method is irrelevant.

The belief in chasing a continuous optimum is as much a belief as choosing the endpoint, so I think there is disagreement about what the debate is.

The thing I find most obnoxious is that people don't seem to understand that a minimum wage is necessary to prevent employee abuse. Without a minimum wage, corporations will gladly hire people who are unable to negotiate hire rates despite doing the same work as everyone else. The disabled, prison labor and immigrants are all examples of people who have been historically abused by companies in order to pay them much less.

Ultimately when any job is better than no job, people will take what they can get. Companies know this, and will pay people obscenely low amounts to take advantage of people without any other options. Therefore to protect them and ensure they can have a livable wage, we need to maintain a minimum wage.

If I may rearrange your post a little (and please tell me if I am misrepresenting your view, because that is not my intent):

Employers may abuse employees in terms of wage, and this has been seen in the past.

Corporations have a stronger negotiating position than many (most?) potential employees, and one of the primary ways this is manifested is in the following manner:

When a person faces the choice of no-income (substituted for your use of "job") or income, the choice of income is near-universally better.

I think the conclusion "we need a minimum wage" is too strong. This is not the only way to provide bargaining power to potential employees. By way of proof I offer an alternative means to a minimum wage, namely some form of subsidy given to all humans. This type of arrangement is often termed a universal basic income and there are numerous specific implementations which have been proposed over time.

It seems that having identified a problem (employees may be faced with a raw deal when interacting with employers), we should look for multiple (though perhaps not all - exhaustive searches can be expensive (keep in mind time is a resource and that opportunity cost is always present)) approaches and weigh their positive and negative characteristics.

To do otherwise seems but a parody of rhetoric and reason, captured well in the "Yes, Minister" scene linked below[0].

I do not propose UBI as the only alternative to a minimum wage, or even as the best of all possible options, only to suggest that your obnoxious people may perceive both the problem you have posed and an alternative solution that they believe to be better than the one you propose.

The way you present your argument seems to me to assume that those who disagree with you must be ignorant or malicious. Starting a conversation with either assumption seems fruitless. To accuse (even obliquely) a person of ignorance and forcibly try to educate them is, in my experience, an exercise in insult and folly - even if a person is ignorant, an aggressive teacher is not likely to be listened to. To engage a malicious actor with reason and education seems simply folly - if they understand the problem you pose and enjoy the ill it brings to people, then you have nothing to gain by explaining that negative effect. It seems to me that such a rhetorical approach is geared to identify friends and foes, group these people together, and allow the speaker to dismiss the latter.

You have the unlucky position of being the first in this thread engaging in such a way. I see it equally among those that I imagine you would side with and those you would side against. I have the unfortunate disposition of occasionally ranting as I have above.

I hope that if you've stayed with me this far that you are, in fact, interested in reasoned discourse and willing to accept some unsolicited advice from an internet stranger who is ornery today. Perhaps you might do better at engaging those obnoxious people by finding common ground - it is usually simple to agree that you are both interested in improving the lot of those who are least well off and that you both agree that certain problems can and do exist. From there it is much easier to find a productive conversation about various means to address the specific problems, and the many positives and negatives of each.

[0]: https://youtu.be/trw1PbQt_Yo?t=11

Not OP, but in their defense -- we know a minimum wage is effective at increasing wages. I'm very open to the idea of UBIs but it's largely untested. You don't mention it, but I think the most effective way of shifting power is with strong labor unions.

The thing I find most obnoxious is the "a better end naturally justifies removing liberties" concept.

Suppose there was positive correlation between racial diversity and violent crime in the US. Would you support de jure segregation, because it reduces violence? Even if there seem to be good effects from segregation didn't necessarily mean the government should dictate living locations.

Even if there are good effects from legislated prices, that doesn't necessarily mean the government should dictate employment contacts.

I find it obnoxious to say "yes, a minimum wage makes for a better society overall but I'm going to take a principled stand because ideologically I'm opposed to forcing employers to pay a living wage." Seems silly to me. If I think something will make society better, I'm in favor of it.

> Even if there seem to be good effects from segregation didn't necessarily mean the government should dictate living locations.

To be clear, you're NOT saying there are good effects of segregation, right? That was just an example to illustrate a point? Because I see zero positives from segregation.

Your argument is moronic. De-segregation is not the cause of violence in your hypothetical and if it was then you were imagining a racist dreamland.

It's a (negative) example. It's supposed to be moronic.

To play devil's advocate (you can read my response to OP to see how I feel generally about the overall argument), it does seem to correlate that more homogeneous societies, e.g. Japan, Norway, have lower crime statistics, or lower violent crimes.

Possible reason being, the more likely you are able to socially connect with your potential victim and the less likely you are to see them as the "other," then the less likely you are to feel justified in causing them harm.

KKK feels justified because other races are inferior, the rich feel justified in exploiting the poor because poor people are lazy, e.g.

And you could find similar examples in the US as well. E.g, the least violent state (Maine) also is the least racially diverse.

Like you say, it's not hard to believe that homogeneity (whether race, religion, culture, ethics, politics etc.) causes less conflict. Naturally, that's an awful justification for a terrible practice.

But you find many tunnel-visioned "the statistics justify the means" arguments: minimum wage, gun control, privacy, etc. Proper laws are not just about statistically good outcomes.

Canada has a lower violent crime rate even in major city centres where diversity is crazy high.

Are you serious? That's almost the basis for our (U.S., Western) form of government.

"Social contract arguments typically posit that individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and submit to the authority of the ruler (or to the decision of a majority) in exchange for protection of their remaining rights."

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

The only thing you're actually arguing against is applying it mindlessly regardless of any other concerns, as in, the reduction of violent crime is sufficient in and of itself to be a "better end" -- in actual fact, we've seen separate but equal doesn't work.

As an aside, look at people like Marcus Garvey. As an attempt to resolve the conflict in America between black and white, complete segregation has been seriously proposed; it was not (entirely) stopped or prevented due to ethical/moral arguments. As a slightly silly example, you have a family who has been living in a home for 100 years, but the neighborhood they live in has shifted. Perhaps you use eminent domain to remove them. Now multiply that by thousands -- will they all move peacefully? Where are you getting the money for this? etc. etc.

> Even if there are good effects from legislated prices, that doesn't necessarily mean the government should dictate employment contacts.

Doesn't necessarily mean it shouldn't either. I would argue the better solution would be mandatory union participation. Unions would equalize the power imbalance between the individual worker and, say, McDonald's, without the government dictating terms. But I'm guessing you, or people who also support your argument, would balk at that as well.

> Where are you getting the money for this? etc. etc.

A more plausible approach is discouraging immigration of heterogeneous population.

Sound familiar?

Germany actually just introduced minimum wage a few years ago. They did not actually have this. Their unemployment rate is at an historic low. So the arguments used against that here did not quite pan out either.

But of course Germany was a bit of an anomaly in Europe: this stuff is old news to most of the rest of Europe.

Regardless of ideology, the debate seems to be about the cost of minimum wage (especially on the right side) and not really about the benefits. The benefits of not having abject poverty in your society are many. Minimum wage is an important tool for that. Regardless of your position on this, you'd have to consider both cost and benefits for any analysis worthy of that word.

To name just one such benefit, people with disposable income tend spend that income on things. This is great for the local economy. So instead of funneling money up the corporate hierarchy towards off shore accounts, a second house for the CEO, or whatever, funneling money back into the economy where it actually gets used has an effect on that economy: it grows.

Seattle seems to be doing fine demonstrating that this works as advertised. More people can afford to go to restaurants so the restaurant business is booming. That should not be that surprising to economists.

> So instead of funneling money up the corporate hierarchy towards off shore accounts, a second house for the CEO, or whatever, funneling money back into the economy

I assume the CEO isn’t willing to generously give up their second house and will find a way to push this cost onto all consumers including those happily earning higher wages.

Is there a mechanism in place to prevent this?

The same mechanism that ensures that the local coffee shop isn’t charging so much that the owner has a second house in Bermuda — if you raise prices that much you won’t be competitive.

Obviously in an particular case, who knows? But in general I think the expectation is that the market will decide.

A minimum wage isn't one coffee shop with expensive beans. It means Every shop has expensive beans.

Minimum wage raises in America generally come out of the landlord's pocket, not the consumer's.

I’m not sure what your statement means. Can you explain what you mean?

Landlords have wide pricing power. They basically get all of the money. Rents rise until merchants make minimal margins. If the law says that wages have to go up, that depresses margins and therefore rents.

>will find a way to push this cost onto all consumers including those happily earning higher wages

I never understand this argument. Those happily earning higher wages are already planning on spending most of those wages. The resulting increase in sales should already cover much of this cost, price increases aren't the only way to generate more revenue.

> But a new paper by the same authors (Sci-Hub mirror) shows that the rising minimum wage generated major increases for the workers who had the most hours, whose hours were only cut a little, but still came out ahead thanks to the wage increase; workers with fewer hours saw no financial harm from the rising minimum wage, working fewer hours and bringing home the same sum; and they found some harm to people who had the smallest number of hours) (which may actually reflect stronger demand for workers and fewer workers in this category of very-low-hour work).

Is this actually reversing the claim? Or just making a narrower claim that the minimum wage hike increased some workers. Most claims around the negative effects of minimum wage say that workers will lose employment - not that those workers who remain employed will suffer. By restricting the conclusion to "the workers who had the most hours, whose hours were only cut a little" essentially dodges the question of whether the change benefited workers as a whole.

Ultimately, though, this is a subjective questions. If you have 10 workers, making $12.50 an hour and if you had the option of making 9 of them get $15.00/hr but one of them gets fired is it a good outcome? The pool of workers are making a greater amount of money (it "breaks even" as other commenters have put it), but does that $2.50 an hour increase for 9 workers offset the negative of one of them getting fired? Maybe getting fired has less tangible effects that make the net increase not worth it. That fired worker may end up on the streets. Is instability of income is a greater problem than low income? I'm not saying there is any right answer here, my whole point is that it's subjective to determine what outcome is better.

And your 9 remaining just saw their work demands go up 11% (with no additional hours), to cover the departed's work which still needs doing. Sure, 20% more pay for 11% more work is a deal, but it's still more work than originally signed on for.

Exactly. Still an Employer's market. With less jobs, employees have to compete harder to keep theirs.

Where are you getting "less jobs"?

"For low-wage workers with less experience — a high-school student looking for a summer job, say — the wage increases have led to fewer job opportunities, the researchers found." [1]

1. https://www.seattletimes.com/business/local-business/a-tale-...

That's not how it works. If they could get 9 people to do the work they would. Wage increase or not.

Why would you have 10 workers if the job can be done by 9? There wouldn't be 10 workers to start with in your fake scenario.

> Why would you have 10 workers if the job can be done by 9?

Because not all work is the same. If you clean the equipment weekly it breaks down less often than cleaning it monthly. If the cost of an employee increases then the cost of more employees can exceed the cost of more equipment failures, so you cut staff (or hours).

Sounds like that one guy should look for a job at the equipment factory.

Unless the primary cost of the equipment failing is lost business from having to clean it during operating hours, without any profit going to the manufacturer.

Generally speaking, you should have more employees than the bare minimum required to operate. That way, you have enough staff available to, say, cover when someone calls in sick, gets in an accident and takes short-term leave, goes on vacation, quits unexpectedly, etc.

When wages are already close to the marginal value add, increasing the wage floor means needing to cut hours. When wages are not, then increasing the wage floor has little effect on hours or people hired. If there's already sufficient buffer, it might even result in fewer jobs over time as companies attempt to get by with less wiggle room in headcount.

Just a thought.

You’re also assuming that there is no price elasticity. When all parties see the cost of resources go up, the prices go up or margin goes down.

Anyplace with a geographic monopoly demonstrates this. Rest Areas, large institutions and places like airport usually require a cut of the gross sales are part of the lease agreement.

I know of one where that cut is 15%, but the restaurant charges a 30% premium since it is also a near monopoly within the institution. People are still buying coffee and burgers.

Most dev teams above 4 or 5 probably could do the same amount of work if one of their co-workers got the axe. But it'd probably come at the expense of other factors: employment fatigue, tech debt, less reliable quality.

Or of course the response is: sure I’ll work 20% more hours, what is the comp?

This doesn't seem relevant, as the article is about minimum wage.

It is relevant. I think the implication of the commenter two layers above was that the 10th worker wouldn't be fired because if 9 workers were sufficient the business would have only hired 9 in the first place. This may not always be correct. 9 works may indeed be sufficient, but at wages lower than the mandated minimum the 10th worker is better. For that reason, a wage hike can indeed cause workers to lose employment.

If you can manage with 9, but do better with 10. It’s not like starbucks needs three people behind the counter; its just a hell of a lot smoother and faster order processing, and better service in general (eg cleaning more consistently)

If you’re concerned about and increase in minimum wage, I’m confused about why you have extra staff.

Alternatively you’re saying that the remaining 9 workers are going to be doing an additional 1/9th of the work, so presumably the hours.

So all you’ve done is kick someone onto the street (I do love the claim that you are on their side, while fighting against wages rising), while paying the same amount - possibly more due to overtime wages.

So yeah, if your business is poorly run you may get a significant impact from a fairly minor wage increase, but mostly because your business was already poorly run.

More importantly you're paying minimum wage: you clearly in no way value the skills any of these people bring to the business, otherwise you'd be inclined to offer more in the first place.

This is a weird claim. At the federal minimum $7.25 and 2000 hours per year that's $14.5k. Overhead on an employee (taxes, insurance, equipment, office space, etc.) is at least another 50% of that, call it $20k total.

So just hiring someone merely to break even means you estimate they can generate something worth $20k over the course of a year. That's just about the price of a new mid-size economy sedan.

It's not a weird claim, it's minimum wage. It means you're operating a business where you are either fine with a long lead time to fill positions (since you're looking for someone who can execute a skilled job of some sort but will work for the absolute bottom-dollar of the market), or it is close to totally unskilled work which anyone can do, and which the moment they have any marketable skills (say, from just doing the job for any length of time) they have every incentive to move to another company.

Literally every bit of improvement your employees make in their ability to do the job, implies that they should be paid more because their value per hour proposition, as you put it, is going up.

It's easy to see the logical flaw here by considering a reduction to absurdity. Imagine a minimum wage of $200/hour. This would of course lead to mass unemployment and collapse the market, except for a very minuscule percent of the labor force in extremely high skill high value positions. Just because somebody would now be earning $200/hour most certainly would not mean they were not valued. Instead you'd have simply squeezed everybody out of the market except these most incredibly valuable employees.

But you can also see the same flaw by just considering a mathematical distribution of wages. That distribution would resemble a bell curve. There will be a small number of very low skill positions with very low wages. And on the other end there will be a small number of very high skill positions receiving very high wages. And in between you reach the fat of the market with average skill positions reaching average wages. The effect of the minimum wage is to create a clumping on the left side of this curve as the people earning wages for extremely low skill work are now earning exactly the same as the wages for those doing more skilled work. And those abnormally low skill jobs that cannot afford to be paid anymore simply disappear.

For instance gas stations used to regularly be full service - you park, pay, and an attendant would fill you up or take care of any routine maintenance you needed. Those jobs went away, in the US at least. And similarly we're currently in the process of gradually phasing out cashiers, which I imagine our grandchildren will look back on with similar quaintness as we might full service gas stations. The point there being that you're left with a higher and higher skill level as the baseline just to enter the job market. And just because somebody's being paid the new minimum, does not mean they're not substantially more valued than others.

Wage distribution certainly does not resemble a bell-curve. It's a long-tail distribution. This is observed consistently across different economies. This US figure is from 2015, however it should give the right idea:

https://www.census.gov/library/visualizations/2015/demo/dist...

Doesn’t your argument apply for any value of the minimum wage, whether it is $7, $15 or $100?

It applies anytime minimum wage is a separate number to market rates for work when there's a competitive hiring environment.

The target demographic of HN, for example, we all value ourselves well above minimum-wage rates.

You can always make the numbers really stupid if you want to get bizarre looking answers, but that's not the reality we live in - minimum wage just barely covers living expenses sometimes.

So your claim that "you clearly in no way value the skills any of these people bring to the business, otherwise you'd be inclined to offer more in the first place" is true whenever you're paying (the minumum wage that is) less than market rates.

That's seems quite uncontroversial. If you pay less than market rates you may have a problem (in a perfect market, at least).

Overhead on an employee (taxes, insurance, equipment, office space, etc.) is at least another 50% of that, call it $20k total.

I think you are wildly underestimating that portion. It's at least as much again, and possibly a lot more. 2-3x isn't unusual.

It depends. It can be way less than 50% for so low wage positions too.

Are you counting the cost of some expensive piece of industrial equipment used by a minimum wage person as part of those overheads?

Or are you just putting minimum wage people on for more hours, using the same office space others are using at different times?

Having run a small business myself I know, the hard way, it can be much higher :) I was just trying to pick a small uncontroversial figure.

I'll note that much of what you site as overhead doesn't increase with minimum wage. There are a few taxes that are higher, sure, but they are only a portion of the increase. If their pay goes from 15k to 20 k, it doesn't mean your costs jump from 7.5k to an evne 10k. Your portion of the taxes on the employees doesn't go up that much per employee.

Equipment, office space, insurance, payroll costs, and so on do not increase with wage increases. I'll note that these are things you are likely going to pay no matter what the employees make as a minimum wage. At least one of these - insurance - can mostly be passed off onto the employee (save some time telling employees about the plan and even that can be passed onto someone else for a fee).

you clearly in no way value the skills any of these people bring to the business

If you didn't value their skills in any way, you wouldn't employ them at all.

Well no, it means you value their skillset at less than or equal to minimum wage, but since you can’t actually hit the “true” value, you end up at minimum wage.

Of course, they still have to bring at least that much in value to the business for the hire to be worth doing in the first place. And obviously increasing the minimum pay also means increasing the minimum value extracted

Chances are the slack will be taken up by people on a salary so they won't get anything extra pay wise -- managers and whatnots.

Or they cut the service level so maybe the table will be wiped down before you sit there and maybe the garbage will be taken out before it gets so full you can't throw stuff in there.

But the most likely scenario (which I witnessed the last time they raised the minimum wage in the AZ) is they just raise the prices on everything storewide. Well, that and reduced "amenities" like mopped floors and clean parking lots.

So you have 10 salaried employees and 1 hourly?

Also most salaried jobs have hours written into the contract, so you can’t make a salaried person worked longer just because your business is poorly run.

I'm not sure what country you're referring to, but in the US salaries employees explicitly do not have hours written into their employment agreements. If there are hours written in, they are legally classified as hourly employees and legally eligible for things like overtime. Lots of companies have run afoul of this but the courts have been very clear on the matter. If you treat your employees as hourly employees they are hourly employees, and you better track and award overtime according to hourly regulations.

If you are a salaried (paid per unit of time other than hourly) employee but not exempt (from overtime) then you still need to record your hours. For example, inside retails sales positions allow for overtime exemption, however in order to determine if they are exempt you need to determine their hourly wage. The only way to determine thier hourly wage is to know how many hours they work. So these salaried employees need to record their hours.

To add to this, in the US the Fair Labor Standards Act governs topics like minimum wage and overtime, and it provides a number of exemption criteria [1] for managerial, professional, creative, and computer employees. Most employers take advantage of these exemptions for qualifying jobs, and classify these jobs as 'exempt' from FLSA rules about wages and overtime. Therefore, most US professionals, managers, and computer programmers are not paid according to hours worked [2], but given a fixed salary, and their job description avoids mentioning an expectation about hours worked.

[1] https://www.dol.gov/whd/overtime/fs17a_overview.htm [2] https://www.monster.com/career-advice/article/whats-the-diff...

Except I'd be fired if I decided I didn't feel like working 40 hours a week every single week without taking paid time off. Hours are tracked for full time salaried employees, of course, that's been the case for literally every single job I worked. (And I'm no spring chicken)

If it worked the way you claim, then what would prevent me from working 2 hours a week and be like "lol, I'm salaried, pay me a full time salary for those two hours?"

https://www.shrm.org/resourcesandtools/tools-and-samples/hr-...

>The Department of Labor (DOL) states in the 2004 overtime exemptions preamble to the final regulations that employers may require exempt employees to record and track hours and to work a specified schedule: “We agree that employers, without affecting their employees’ exempt status, may take deductions from accrued leave accounts; may require exempt employees to record and track hours; may require exempt employees to work a specified schedule; and may implement across-the-board changes in schedule under certain circumstances.”

"Exempt" employment status largely works against the employee in practice.

I had a salaried job a long time ago and there were no hours written into my contract. Ended up working mon-fri and every third saturday up until my boss quit and I had to take over all his responsibilities with no increase in pay since I was, wait for it...a salaried employee. Didn't last more than a week or two under those conditions.

> Or they cut the service level so maybe the table will be wiped down before you sit there and maybe the garbage will be taken out before it gets so full you can't throw stuff in there.

Anecdotally, this seems like a common route for businesses to take. I was shocked moving from the Midwest to the Bay Area at the low cleanliness of tables at fast food and fast casual restaurants. Prices aren't as much higher as I expected them to be, but a dirty table at a restaurant was basically unheard of where I came from, and it's expected in San Jose.

I think most people simultaneously underestimate the cost of labor and overestimate the profit margins of companies, often by quite extreme margins. I think that's because many here view things like Apple as typical where they make something like $400k in profit per employee. Excessive profit margins aren't really a sign of a well run company so much as silly huge markups. Apple sells phones worth around $300 for $1000 in large part because of extremely effective marketing. This is not how a normal business works.

A company that offers competitive prices is often going to run on razor thin profit margins. For instance WalMart, opinions of the company/owners aside, certainly qualifies as well run. Yet their profit per employee is just $4,200. That just ends up being a whole lot of money due to scale. At the same time just $4,200 per employee means their entire profit margin is heavily dependent on labor costs. Give everybody a $2.50/hour raise and they've gone from an incredibly profitable company, to a company on the path to bankruptcy.

And in these two extremes WalMart is far closer to a typical business. While I do think we should do what we can to help ensure good jobs for qualified applicants, I also think we should not move towards a world where the survivors in business are obligated to move more and more towards Apple level markups just to cover their costs. And those increases in turn often doing a great job of then stripping away real gains in come.

If you evaluate companies by free cash flow, the numbers look even worse. Even if a company is not engaging in accounting tricks that make themselves look very profitable, what the paper margins say usually do not reflect the real cash remaining in the bank accounts.

Certainly this turns in to a double edged sword for a certain segment of wealthy people. They do all of these things to make themselves look like they have a tremendous amount of money yet they sit right on the brink of failure.

In reality, while the margins are slim, a company may be able adjust costs when mandated by law. Maybe restaurant portion sizes are way too large, maybe the quality or purity of raw materials is too high, maybe there are just too many employees. Some companies just have more room to do these things than others.

Presumably you don't have extra staff; you have the amount of (relatively unskilled) staff that can (and will) do the job in the time allotted. As soon as you have to pay them more, you expect more from them. The workers that can't deliver $15/hour in value get let go. The ones that can deliver stay on. This is great for the existing workers that were already delivering that value but were underpaid. For the workers that can only deliver $7.25/hour ... they're never going to get (or keep) another job.

If a food business is making close to minimum wage in value per worker, then they are going to fail anyway. Last time I was on minimum wage was being a kitchen porter, many moons ago. If minimum wage had gone up, the job would have not changed at all in the slightest. I mean, they were not going to serve the food on dirty plates and none of the chefs or owners were going to stoop to cleaning anything.

I'm using $15/hr and $7.25/hr in "value" for convenience here (though I didn't make that clear). Really, I mean $15/hr plus benefits + overhead + margin.

But, to my argument, I think that jobs will have to change. I'm regularly appalled by the quality of the service at fast food places: trash overflowing, dirty tables, dirty bathrooms, slow order taking, incorrect order taking, etc. Okay, you can't get the best employees for minimum wage, and some spreadsheet probably figured that the loss in customers due to poor service is more than made up for by the low cost of workers. Once that cost is cranked up, that cost/benefit ratio changes, and better service will be expected. Yay! That's a good thing. For employees that can deliver it. But for those that can't, especially those that struggle with English (many, where I live), they're going to be cost/benefited out of a job.

Fast food has good margins and a customer base that is surprisingly price insensitive, beyond that of choosing where to eat out. People who have time, skill, or inclination to cook at home usually already are, and those who are not take a lot of convincing to change their habits.

I very much doubt that at the level of fast food employee on minimum wage, you will see all that much of a change in the job, or for the people in those jobs to change all that much, purely because of a hike in minimum wage at that level.

Of course, if minimum wages were inflated high enough to make fast food businesses in general unprofitable, and not just the badly run ones, then this would cause economic problems, but I am not aware of this situation having occurred anywhere. If someone can tell me of a jurisdiction where McDonald's cannot run a restaurant, due to minimum wages being too high, then I'd love to hear, but it would seem to be an extreme exception, if it happens at all.

Note: I've owned restaurants for decades.

This is absolutely true. As wages have gone up over the years, especially this year, and my managers have been more willing to let someone go because they don't perform as well as others or don't show the potential. We have always had a higher bar--and paid higher accordingly--but cheap extra staff might take some of the burden off the others if they could accomplish some parts of the job till we could find someone else. Some years, like now, that can take months.

Letting someone go means others may get overtime, which is OK by me. I would rather have a good person there, and pay them extra, than an under-performing person there who only ticks everyone off and leaves a bad impression on a customer.

What I find interesting is people think the rising minimum wage has no affect on the cost to the customer. Recently, I sold one of my restaurants to someone whose first action was to raise prices by 20% because we paid more than his other restaurants do AND he cut hours by 25%!

Why weren't people paying the workers who deliver $15/hr in value that much money? Those people are getting fucked by the system.

where do you think profit comes from? The excess value generated by employees is extracted by the owners of the business.

Imagine you're an enterprising, privately operated F1 pit crew. You shop your company around to teams, which hire you to be their crew. The teams promise you $10,000 per race because you have built a reputation for being fast, and there are 20 races a year. You have gathered a team of 10 crack race-car mechanics, and you agree to pay them each $16,000 a year each (equivalent to ~$800/race). This leaves $40,000/year, some of which you use to buy the uniforms and replace equipment. The rest goes into your pocket. This is a part time thing for all of your pit guys, since they only need to be there for some practice and the race-days - not a 9-5 type of job.

Now, somebody decrees that nobody should be paid less than $20,000 a year, because anything less wouldn't be enough to live on. This argument doesn't really hold for your mechanics, but they're subject to the rule just like everybody else. You increase all of their wages as required by law.

Now what do you do? The economics don't make sense anymore. You're getting the money from the team, then giving it directly to the crew. There's no money left to properly service the equipment, so it starts coming out of your own pocket. The F1 teams won't budge - the prize winnings for each race have stayed the same, so they're still going to pay you the same amount. Your SO is starting to wonder why you're now _paying_ money to spend your own time working. You consider telling the team that you're going to shut down the team, but they urge you to re-consider, because this is a source of income for them and they've built a rapport. With great hesitation, you ultimately convince yourself that you might be able to get away with 9 crew-members if you drop one of the less essential crew functions. You tell him the bad news, and now you've opened up $20,000 to plug the money leak.

But when you get to the next race, you discover that the guy you let go was absolutely essential. The windshield scrubber job may have seemed less important than the guys removing the wheels, but the driver can't see after he leaves the pit, and gets into a crash. A total disaster.

After this incident, you find that teams are much less interested in hiring you for races. You fail to book a race for any team the next month, and after that you have to accept a lower race fee to convince one of the needier teams to hire you. Now you're making even less money relative to the salaries you've promised the crew members, but they are still owed their salary. By the end of the year, $100,000 of your own money in the hole, you give it up. One of the other crew members tries to take over the business in your stead, but he doesn't have any contacts with the team leadership, so he struggles to make the same contracts. Plus, he doesn't have any way to buy the equipment he would need to keep running - you took back all of your drills and jacks, since it was yours after all and you needed to sell it just to keep from being _two_-hundred thousand in the hole.

That's how it works. Some businesses just need a lot of hands at a low price. If you can't get that, then the business eventually won't make sense. You can try to limp with fewer employees, but what's going to happen is that the quality of your product/service will fall, or you'll just do less business overall.

That’s a lovely analogy, but let’s cut to the chase. If a business owner cannot run a business (say a restaurant) without exploiting their workers, then maybe they shouldn’t stay in business.

So your takeaway from my example is that the pit crew was being exploited? Even though they didn’t know it, and even though literally everyone was worse off after the wage hike?

The study did look at loss of employment as well. The conclusion states:

> Evidence indicates that these workers experienced no significant decline in their likelihood of being employed and a modest reduction in their hours worked over the six quarters following the first and second wage increases.

Right. You can quit your third job if you're making more from the first two. This is a plus, not a minus.

Was it the employee or the employer who reduced the employee’s hours? I interpreted it as the latter.

> Or just making a narrower claim that the minimum wage hike increased some workers.

Not only that, it's a specific type of workers, namely those that work for large bureaucracies that can absorb the cost. It seems like a pretty good argument for having the minimum wage only apply to companies with more than 500 employees.

>If you have 10 workers ...

That was the argument against the minimum wage being introduced in the UK, it turned out to be false.

On the other hand, if that fired worker was working 2 jobs just to afford rent, but keeps their other job and now makes enough per hour to get by doing just one job - and can spend more time with their family or studying or whatever - that isn’t necessarily so bad.

Not to mention that more disposable income in the area likely means more people spending more money at your business. Chances are that not only your revenue will go up enough to employ that 10th person, but that the workload will increase enough that you’ll need the extra pair of hands.

I think there is a relatively easy calculus here: calculate the amount of government spending required to get to "make everyone whole", subtract any new tax revenue/decreased benefits spending. If you're losing money, then you're probably better off not doing it.

The goal with the minimum wage is to provide a baseline. The same goal as general poverty reduction programs, so one should probably look at what is most effective from a government cost perspective.

This does shift the burden onto consumers, but this is probably for the best in the long run.

People working fewer hours and bringing home the same amount overall also benefited.

This issue isn’t about economics of course, but what I don’t quite understand is why the right feels like it’s an injustice to change the playing field, like it’s cutting in line, or will put the laws of nature into chaos if someone gets more than their fair share for the work they did. I really don’t follow...

> This issue isn’t about economics of course, but what I don’t quite understand is why the right feels like it’s an injustice to change the playing field, like it’s cutting in line, or will put the laws of nature into chaos if someone gets more than their fair share for the work they did. I really don’t follow...

But it is about economics. The theory of the minimum wage is that you take money from some hypothetical fat cat capitalist who would otherwise have stored it in a mattress to no avail and instead give it to a hard working stiff who can benefit their lives with it.

The problem is that there are also a multitude of other things that can happen instead, pretty much all of which are bad and do actually happen in practice. The money may come from someone other than a fat cat, like a local small business owner or a working class customer. If prices rise, local businesses may be less competitive, resulting in higher unemployment and a smaller tax base (resulting in lower tax revenues or higher tax rates or both). The working stiff may lose their job. In the worst case, the entire business may close down. It's quite a bit worse than cutting in line.

If you really want to understand the problem, list every consequence can think of for a minimum wage of $1000/hour. Most of the problems still apply at $15, just at a smaller scale.

The theory of the minimum wage is just the theory of a price floor. The effect on employment is dependent on the market composition and the cross-price elasticity of labour. Comparing a price floor of $15/h (highly substitutable unskilled labour) with $1000/h (unsubstitutable specialist labour) isn't really tenable.

For most minimum wage positions you'll find the bulk is employment by large firms (potentially under a franchise arrangement), labour is substitutable, and wage-bargaining power is weak. Total production is more likely to be driven by demand, and a (relatively) small unit cost increase is likely to be absorbed (if anything, we'd expect it to affect firm profit more than purchased labour).

You're correct that less competitive SMEs may be affected more here, operating as a price taker for both their product and labour. These firms however will be disproportionately affected by any external market movement - there's nothing particularly magical about a minimum wage increase.

> The effect on employment is dependent on the market composition and the cross-price elasticity of labour. Comparing a price floor of $15/h (highly substitutable unskilled labour) with $1000/h (unsubstitutable specialist labour) isn't really tenable.

The proportional composition of the markets wouldn't be exactly the same, but they're both highly diverse markets. It's not just unskilled labor, it's anything with an oversupply of qualified labor, e.g. internships or childcare. Even unskilled labor has a wide variety of potential substitutes depending on context.

> For most minimum wage positions you'll find the bulk is employment by large firms (potentially under a franchise arrangement), labour is substitutable, and wage-bargaining power is weak. Total production is more likely to be driven by demand, and a (relatively) small unit cost increase is likely to be absorbed (if anything, we'd expect it to affect firm profit more than purchased labour).

Perhaps, but that doesn't mean there is low elasticity of demand. There is a price at which a large company will automate the job or move the entire facility to a location with lower labor costs.

And a large firm may have a profit margin equivalent to $4/hour rather than $1/hour for a smaller firm, but raise the wage from $10 to $15 and they're both making layoffs (or forced to raise prices).

> You're correct that less competitive SMEs may be affected more here, operating as a price taker for both their product and labour. These firms however will be disproportionately affected by any external market movement - there's nothing particularly magical about a minimum wage increase.

Which is why we prefer to avoid those other things as well.

Automation usually requires a high fixed cost to enable long-term low-operating costs. If you suppose a decreasing unit installation cost or scale construction over time you'll eventually hit a point at which companies will automate, especially if there's added efficiency (two examples: McDonald's certainly didn't shift to kiosk solely due to minimum wage, nor could we set an hourly wage low-enough that a typist pool could compete with a common word processor).

Ditto for location shifting: it's dependent on a) the transferability of the activity, b) the cost of shifting, and c) the price differential between the two locations. Minimum wage may be a component in this decision - but it will not be the only one.

For context: I work as a policy economist in Australia, principally in regional employment. The minimum wage rate here is (AU) $18.93/h, unemployment sits at trend around 5.5%. In my experience the primary driver for regional employment (often less complete markets) is labour demand rather than the cost of supply.

Isn’t labor demand a curve with a slope, rather than a point? Does not the cost of supply curve interact with demand?

> Automation usually requires a high fixed cost to enable long-term low-operating costs.

Sure, but it still has a relationship to wages. You take the fixed cost and amortize it over the expected lifetime of the equipment, add the operating and maintenance costs and compare to wages. If the automation costs $25,000/year per employee replaced then you use it as soon as employees cost more than $25,000/year. It's clear what happens when the cost of an employee rises from $20,000 to $30,000.

> nor could we set an hourly wage low-enough that a typist pool could compete with a common word processor

Sure you could. No one would willingly take the job for so little money, but that doesn't mean the dollar value doesn't exist. But nobody needs to "save" those jobs because there are many other jobs that pay more. A $0.05/hour job is useless when there are unfilled $10/hour jobs. But a $10/hour job can be better than unemployment when there aren't unfilled $15/hour jobs and the employer's automation threshold is $12/hour.

> Ditto for location shifting: it's dependent on a) the transferability of the activity, b) the cost of shifting, and c) the price differential between the two locations. Minimum wage may be a component in this decision - but it will not be the only one.

It's not a matter of it being the only factor, it's a matter of whether it pushes the number over the threshold. Which is what happens at the margin.

for me it’s because minimum wage is a shit way to do income redistribution.

you can do income redistribution without the potential for killing jobs - negative income tax.

Still makes it practically illegal to produce less than $15/hr value. Can't produce that much? no work for you.

This ensures that, even in the article's revised view, those who do suffer are those most needy.

I’d love to know how you get to that conclusion.

Looks like you’re not running your business but rather a 9 to 5 office slave

Its basic accounting. If you have to pay someone $15/hr, they better be providing at least that much value back to you, otherwise you're running a charity

Flip it. If you're gong to pay someone $15/hr, you better have something that needs doing that's worth that much to you.

One way to look at employment is that it's your responsibility, as the employer, to know how much a job is worth to you; it's their responsibility to perform that job.

If you're having people do something that's not worth what you're paying them? I would say that sounds like you're not running your business very well.

But there is no “I’m going” but rather “I’m forced to”. So if I don’t have something worth 15/h in my shop should I shut out?

And what if you need floors mopped? Now the small business is just getting gouged for that service

That’s the point: business won’t have people do something that’s not worth what they have to pay them. That’s what the OP said: “Can't produce that much? no work for you. This ensures that, even in the article's revised view, those who do suffer are those most needy.”

You pay for work because it produces more value than out costs. Minimum wage requires paying at least $X/hr; some work is simply not worth that much - the employer loses money by paying for it.

Example: I'd like to hire someone to sweep floors every day, but a self-emptying Roomba is $949. At just 2 hours a week, and buying a new one each year, the Roomba costs less than $10/hr. At $15/hr minimum wage, I could buy a new one every other week and still save money. I'd rather hire a person who needs work, giving them a leg up to a better paying job, but between the state threatening me if I pay what the work is worth, vs the cost of buying robots to do the job, someone doesn't get a job.

If you flip the script, you're saying that an hour of a human's life can be worth less that $15; to paraphrase, it's worth at least an inch of jade.

But, seriously, I don't see the issue with ensuring that low-value work isn't worth it for anyone to do, employer or employee.

If nothing about a person is worth at least $15/hour, well, that sounds like a serious failing of the society that created that person.

From what I've seen, the most needy are the people who's work is worth well more than what they're paid, and who aren't paid enough to begin with.

But there is work that can be done for under $15/h, if you can do it with automation. Suddenly humans are legally unable to compete with things like McDonald's ordering machines.

There are people who would gladly work for less than minimum.

Automation was always going to be involved sooner or later. This would just increase the rate of adoption.

This is what we (as an industry) do, we disrupt and automate things, so I don't understand why you're so concerned about it.

And as for work worth less than minimum, then yeah maybe it's not worth doing by a human anyway.

> Automation was always going to be involved sooner or later. This would just increase the rate of adoption.

The rate of adoption is actually something that matters. If you automate too early you lose money as a business. Also, the minimum wage not only changes the rate of automation but also the things that are automated; namely work that was previously performed by low skilled workers.

> And as for work worth less than minimum, then yeah maybe it's not worth doing by a human anyway.

What a great insight. Tell the people without jobs that it's not worth for them to work at $14,99 and instead to rely on government handouts for the rest of their lives. For many people an entry level job at low pay was how they started their career.

Times change, what was the norm a few generations ago is gone, whether it's getting in as a low paid minion and move up the ladder or being able to afford a house at age 25 on a single income.

There are plenty of cases where if you factor in your expenses to go to a job, you actually get less on your bank account than getting your welfare.

If your business can't offer a salary that compete with a fairly low standard of living such as relying on "handouts" as you put it, then there's something wrong and yes it should be really hard for you to hire anyone. Yes there are some industries which are notable for being prone to that and that's usually why they also receive their own kind of handouts too.

This law sort of enforce it in a way (and beyond obviously).

I'm not US citizen nor a resident there so I have no horse in this race. But I do believe it's mostly a good thing

Wages can certainly track lower than marginal productivity. That's the expectation under monopsonistic labour markets (few or one buyers of labour, many substitutable potential employees). The observed employment effects in response to the minimum wage increase here is pretty well standard theory. https://en.wikipedia.org/wiki/Monopsony#Static_monopsony_in_...

Has the study taken into account the indirect costs over the long term? If labor is costly, the country isn't as competitive compared to others, so jobs are outsourced.

This is a diffuse impact, rather than localised — if waiters are required to be paid more, some factory workers may lose their jobs.

Are you thinking that factories are currently employing local workers even though they could be outsourcing, that they are currently knowingly paying more than they need to, and that minimum wage increases outside the factory will tip the scales and cause them to change their minds?

I’d guess one problem with those assumptions is that you may be right about the impact diffusing. Most workers in Seattle are above the minimum wage, so the total increase in costs of a regional minimum wage increase to a factory that doesn’t employ many or any minimum wage employees is going to be marginal, if even detectable.

And if we want to take more things into account and be holistic, we also have to examine the increasing in spending power of the minimum wage workers too.

> If labor is costly, the country isn’t as competitive compared to others, so jobs are outsourced.

The US minimum wage has been declining in spending power, and is relatively low compared to many other developed countries.

https://en.m.wikipedia.org/wiki/Minimum_wage_in_the_United_S...

In the long term, all of our outsourcing is temporary anyway. The economies of the places we’re outsourcing to, like China and India, experience more growth and prices increase the more we outsource. The discrepancy between costs there and costs here is shrinking, and eventually when labor costs catch up, the overseas transportation costs, extra management and quality control costs, turnaround times, time zone offsets and communication and language difficulties, will make outsourcing more expensive than local sourcing. It might take some time, but ultimately outsourcing won’t be much of an economic threat.

This is why I did piece work when I was extremely ill and homeless. On a good day, I could make around $15 to $20 an hour. On a bad day, I didn't work at all. On a so so day, if I took four hours to do $5 worth of work, making $1.25 an hour, it was $5 more than I otherwise would have had.

Earned income was critical to getting my life back. Being able to earn it, even if it meant working below minimum wage, mattered to me.

As the saying goes: Shame on you if you fool me once, shame on me if you fool me twice. Insisting on supporting politics/policies that create vast inequality then doubling down once those have taken effect is so cunningly cynical that it's almost brilliant because it superficially makes sense.

Only for wage labor. You're still free to contract for a flat rate.

As a small business owner in a state that recently passed minimum wage hikes up to 50% higher than 5 years early let me share my experience. We have raised wages pretty dramatically but realistically it has absolutely nothing to do with the minimum wage hike. Since unemployment is so low in our state we actively need to compete with other businesses to hire people and the strongest selling point is offering better wages. Now obviously the hike has forced us to pay more than we regularly would.

The results of this is that we have raised the amount we charge customers. Those customers then complain that their having to pay more for the same service. At the same time every single apartment in this area has had its rent increased by a large margin. Cost of goods have gone up. Cost of services has gone up. House prices has gone up as labor cost has as well. The people making 15 per hour before are now getting paid the same as the entry level workers. Any employee that has been loyal to the company has not had the same wage increase as the other workers yet they are paying more for everything they purchase.

In my opinion minimum wage hike is “working” simply because of the low unemployment rate and the booming economy. The statistics don’t really paint an accurate picture. Ask any of my employees if they are better off today than they were 5 years ago and most would say no. The employees we have had for 5+ years would say they are worse off today.

So an economic free lunch, cool. /s

"Ce qu'on voit et ce qu'on ne voit pas"

There are certainly conceivable changes to economic policy that result in net gains to all parties. There’s nothing theoretically impossible about arguing that such a thing has happened.

Policy-based evidence making. Reasonable economists find an inconvenient result, so pressure them to recant. Then they print something that doesn't contradict the original result, but it's less adversarial to the policy, so call it a reversal in the headline.

> As was demonstrated back in 1994 by economists Alan Krueger and David Card, modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way.

In other words, small changes have small effects. But also small benefits. What's the point of something that at best only breaks even?

A policy that is generally break even from an efficiency standpoint but reduces unwanted negative outcomes like poverty and income inequality is a clear win.

> A policy that is generally break even from an efficiency standpoint but reduces unwanted negative outcomes like poverty and income inequality is a clear win.

But the break even is on poverty and income inequality, even before you consider the inefficiencies. Then the money has to come from somewhere -- either the employer (in many cases a local small business) has to eat it, or they pass it onto the customer in the form of higher prices. It also makes local businesses less competitive against the likes of Walmart and Amazon.

That would only happen if the employees with cut hours then didn't spend their now-free hours on other stuff. If they just end up twiddling their thumbs, sure, maybe it's break even.

Maybe the people whose hours get cut are those who need the extra time more than the extra cash. Maybe they take that extra time and use it making money elsewhere, outside of the scope of what the study could measure.

Do you know what those people did with that now-free time?

> Maybe they take that extra time and use it making money elsewhere, outside of the scope of what the study could measure.

A study measuring hours worked that didn't account for hours worked in other jobs would be pretty useless.

> Do you know what those people did with that now-free time?

Something valued at no more than their original wage, as demonstrated by the fact that they had been willing to not do it in exchange for that amount of money. Meanwhile the thing they were previously doing at work was valued at least in that amount, as demonstrated by the fact that the employer had been willing to pay that much for it.

> Something valued at

I mean, good point, almost a great point, except, by whom? There are other forms of value than money.

You're right that it's unlikely they've made up the overall reduction in wages by doing something else and why, but you're missing what I'm trying to point out.

I gather your point is that the employee gets the value rather than the rest of society. But that's just the broken window fallacy.

Most companies' margins are small. More than 90% of the value typically goes to someone else -- customers, other employees, suppliers (and their employees), etc. Even the business owners for a lot of small businesses are only scraping by. There is no guarantee that 0.75X value can outweigh 1.25X value just by going to one person rather than another, and all the usual reasons to expect that it won't.

Oh hmm, no, that's not my point. My point is that unless the study also looked into what the people with fewer hours then did with the now-free hours, we all have insufficient information with which to make a good/bad judgement call on it.

I don't follow your utilitarian math. Can you rephrase?

> that the employee gets the value rather than the rest of society.

I don't think drawing this line is reasonable. The employee is part of society, trying to reason from a starting point of separating them from it just seems silly.

As far as I understand your argument, I definitely do not agree that it's a broken window fallacy. In your view, what is the broken window in this case?

(Not the fallacy, the thing that would be the literal broken window).

> Reasonable economists find an inconvenient result, so pressure them to recant

Who pressured them?

When the study was originally published there was a large volume of stories criticizing it for reaching an undesired conclusion.

Economists pushing views and rationalizations against labor-friendly policies (including minimum wage hikes) tend to do pretty well for themselves in America, very odd that they'd feel pressured to recant something that's well received in a lot of circles. Maybe they actually were just wrong the first time around?

> Economists pushing views and rationalizations against labor-friendly policies (including minimum wage hikes) tend to do pretty well for themselves in America, very odd that they'd feel pressured to recant something that's well received in a lot of circles.

The economists who do well producing those results work for think tanks (which partisans use to push their agendas and everyone else disregards as biased). These economists work for a public university.

of course it doesn't.

It also didn't bring ford down a ~100 years ago like all of the economists predicted then either.

It is not clear cut with the Ford story, Ford treated his workers nicely and then he got that chap in to treat them nastily.

Ford wanted to produce just the Model T and keep it at that, his competitors wanted to go with the built in obsolescence model, get the customers buying new cars every year. Ford also wasn't into creating profit for the sake of investors, he wanted to keep all the money in the company. He didn't 'get' American capitalism, but he did want to enable people to be mobile and to build a wider economy based on that.

Despite the contradictions of Ford he did prove that 'trickle down economics' was a load of rubbish and that it was far better to pay a decent wage, for the workers, for wider society and his own self-interest.

is there an upper limit to minimum wage ?

what would it be and why?

Needs to get more coverage, weighted by the impact the first claim had. Would a wayback machine for citations help find who is in duty bound to say "that thing we said, cited? they retracted.." or not?

Left out of the boingboing praise, but in the abstract:

"On net, the minimum wage increase from $9.47 to as much as $13 per hour raised earnings by an average of $8-$12 per week. The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits."

That seems opposite to the summary in Boingboing. It's also in agreement with many studies and theory which should price the lowest performing out of jobs as they cannot add enough value to make it worth an employer hiring them. Increased wages by fiat long enough merely increase inflation.

Wages are not a uniform entity. Increasing the minimum wage has very minimal economic impact becase it makes up a tiny fraction of the US economy. Consider increasing pay 7$ per hour for all 542,000 US workers workers making minimum wage * 40 hours a week * 48 weeks a year = 7.2 Billion per year that’s chump change at under 0.04% US GDP. (That’s right not under 4% but under 0.04%.)

Yes, many people make more than minimum wage, but not 7$ more than minimum wage. However, for them it’s a smaller increase so again it does not add up to much.

I don't see how it addresses the issues in the research. Care to explain?

If min wage is set to X, anyone incapable of adding more then X to an employer is priced out of the job market. In this research the rise in wages resulted in reduced hours which were made up in neighboring markets which did not have this min wage.

I was addressing your inflation statement which is really not supported by evidence.

In terms of pricing people out of the workforce, that’s not nessisarily a bad thing on net assuming a strong safty net. But again separate argument.

Two things: raising the min wage puts upward pressure on wages above the min also, so your estimate is not correct. Someone making min+1 will still expect to make min+~1 after the hike. Also, inflation need not be national to be inflation.

This is why places with higher min wages tend to have higher overall wages and higher overall prices. These things do not operate in a vacuum.

Look at prices where wages are low compared to process where wages are high, e.g., SF versus smalltown Alabama.

So there is ample evidence that these things are related. By taking national averages you necessarily miss the local variation which clearly shows a price/wage correlation.

> Increased wages by fiat long enough merely increase inflation.

If this is true then places with low minimum wage should also exhibit lower inflation than places with high minimum wage.

Can this be demonstrated?

> If this is true then places with low minimum wage should also exhibit lower inflation than places with high minimum wage.

The analog to minimum wage isn't rate of inflation, it's prices. Places with a lower minimum wage do have lower prices.

(The analog to rate of inflation would be rate of change in the minimum wage.)

True, thank you, that's a good point.

Did you look at what the study considered "experienced?" It was "greater than 700 hours worked for the past two quarters," which is about 18 hours a week for the previous six months. All of these jobs can be considered the "lowest performing," and I'm not sure what part if the summary you think this contradicts.

This implies that the critism was honest.

(Disclaimer, haven't read the article)

Minimum wage is nothing more than a privatized social safety net.

WSJ's take on the same study: https://www.wsj.com/articles/seattles-fake-free-lunch-154102...

The Wall Street Journal also likes to frame $260,000 and $650,000 incomes as typical Americans struggling to get by (originally posted on WSJ regarding Obama-era tax increases): http://i.imgur.com/bdgZa.jpg

It's hard to regard this Rupert Murdoch publication's opinions on money as grounded in any sort of reality.

Where on that image does it claim the family are “typical Americans struggling to get by” ?

That doesn’t seem like they are portrait of them as middle class struggling to get by. It just looks like examples of people impacted.

The article (https://www.wsj.com/articles/SB10001424127887323689604578220...) said nothing of the sort. It said that while the bulk of the tax increases were at the high end of the income spectrum, many individuals and couples with incomes in the 180k-500k range could see significant tax increases, too. That was contrary to the general portrayal of the "American Taxpayer Relief Act" as retaining the Bush-era tax cuts on everyone with less than 400k in income.

> It said that while the bulk of the tax increases were at the high end of the income spectrum, many individuals and couples with incomes in the 180k-500k range could see significant tax increases, too.

It's amazing that a non-insignificant number of people on HN don't think that's on the high end of the income spectrum. In most places in America, you'd be considered quite handsomely rich if you're making $200,000 a year. It puts you very, very solidly in the top 5% of earners. $300,000 puts you in the top 1%.

That people think that's "contrary to the general portrayal of the American Taxpayer Relief Act" is bizarre. A comic with objectively high income earners making sad puppy dog faces because 1% of their massive income is gone is a sign that the publisher is out of touch with the reality that typical Americans face.

$200k wasn't in the top 5%, even in 2013. Squarely in the top 10%, though. Source: https://www.cbo.gov/publication/51361

> $200k wasn't in the top 5%, even in 2013. Squarely in the top 10%, though. Source: [...]

This is incorrect. The source you cite lists the average income by percentile group, which is not the metric one wants - the average income of the top 5% is skewed by the incomes of very high earners.

One actually wants the lowest income in a percentile group; the top 5% started at around 197,000 in 2013.

Source: pg 16 of the 2013 Census income report

https://www2.census.gov/library/publications/2014/demographi...

yeah but does that take into account reduced benefits. Amazon raised minimum wage to $15/hour, which got a ton of press, but simultaneously eliminated stock compensation for those same employees, which got much less press.

This was still a major net positive for the employees of the warehouse, because the stock compensation was nearly worthless given vesting time and so forth.

> Several Amazon warehouse employees have criticized the move, stating they would actually be losing thousands in incentive pay.

https://www.theverge.com/2018/10/3/17934194/amazon-minimum-w...

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