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Comment by MLR | Hacker News Reader

If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.

I agree that a lost job should carry some kind of premium compared to a total increase in wages paid, and you also have to go and look at the total hours worked to get a good picture, but if the total relative increase in remuneration was higher than about 10% or so I think that's probably enough to be able to hand wave the employment decrease.

If it only turns out to be 5% I'd be a bit iffier about it.

In the UK we have a pretty generous minimum wage (for over 21s), I think even relative to $20 in California, and the effect on employment has been very small while minimum wage jobs now give a pretty OK life, so I'm inclined to support high minimum wages generally.

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> If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.

That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.

So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.

Also low minimum wages are actually just corporate welfare.

The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".

This right here. We should demand not to subsidize the richest companies in the world. The Walmart family can afford to pay their employees a living wage. Instead you and I pay for that in taxes, while they extract billions in profit and value from their business.

If anything we should be subsidizing small businesses to give a more level playing field against companies with global economies of scale.

> We should demand not to subsidize the richest companies in the world.

Not without overturning Dodge Bros vs Ford, I believe. The ruling created shareholder primacy, the privilege of shareholders to have maximum bites of the corporate apple. It rigidly protects shareholder (and by ext, executive) interests.

The never-ending wealth that flows from that - first buys politicians, then officials, judges and (eventually) every part of regulation & corporate oversight.

ref: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

Have you actually looked at what Walmart pays? Even in areas where the minimum wage is still $7.25, they're paying nearly double as a starting wage. They raised their starting wage over $10 in 2017 and have consistently raised it even where they're not legally obligated.

Meanwhile, all raising wages in the current market does is implement a wealth transfer from businesses to landlords with minimum wage workers as the mules transporting the money.

If you let the housing supply remain this tight and just increase wages, you just bid up rents and make the most economically vulnerable fight over the insufficient supply of affordable units.

> what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die

I take this to mean the assistance covers the gap to prevent death.

I would amend that to note the following: We can exist in a state of profound poverty w/o assistance for a very long time without dying. Persistent Hunger and crisis-level stress kills very indirectly; it commonly takes decades.

source: me + 5 kids. a decade of hunger-level poverty in a red state.

This isn't so straightforward. I would argue that they have some effect on the customers as well.

In the US, fast food restaurants are remarkably cheap, which is probably caused by low wages as well. If the workers were paid Danish or Swiss wages, quite a non-trivial part of the US population would be no longer able to afford a visit.

Now there is a wider question if that wouldn't actually improve their health, but that is already a bridge too far from the conversation. Miserly wages of restaurant workers do make the restaurants themselves more affordable to the general public, and the customers seem to be content about it.

The Netherlands has a lower minimum wage for people under 21. This is why you see a lot of teenagers working at McD.

A big Mac is still 5 eurodollars.

No, it's not corporate welfare. Min wage hikes mean those workers unable to add that much value don't have jobs anymore, are left out of a workforce and thus cannot gain skills, and now require actual welfare.

Requiring companies to pay more than value added by an employee simply fire those workers.

The purpose of govt is to provide assistance, and perhaps training, so those on min wage can gain experience and skills to move up.

Min wage is merely an entrance wage into jobs.

> I agree that a lost job should carry some kind of premium compared to a total increase in wages paid

I don't think it's nearly that clear. Western nations are at a near record low unemployment rate. We should want to remove low paying jobs.

But that was the best job they could find. Presumably those people are going to be unemployed now. I mean, maybe they're kids and their families will have enough slack to just adsorb the change but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr. So it actually costs the broader economy more than the salary they lost - firstly the work they were doing isn't being done, secondly someone else now has to work to earn the keep of the person who was just laid off because the job that paid them around what their skills were worth just got regulated out of existence.

You'd probably have to know more about what the jobs were. Certainly there's more self-service and fewer people waiting around to help customers in large stores than there were at one time. And small-time retail has also fairly visibly declined in favor of big-box and online purchases.

> but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr

Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?

That seems fucking insane. If that's true, we have a huge problem with misallocation of value.

I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads) and have that be something that an employer would voluntarily do.

Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.

Ohh no, it's Jordan Peterson.

Not every job is the military. Most jobs are in fact not the military. Not qualifying for military service does not render you worthless in the general economy. Furthermore, being worthless in the general economy does not render you worthless in society.

I wasn't qualified for military service in my country, not because of intelligence but some physical conditions. I became a banker.

> I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads

Ignore the mock outrage of my sibling comment, they are uninformed.

You are absolutely right that some people aren't capable of work valuable enough to pay at least the minimum wage, and in fact there are programs in place specifically to serve these people. The Fair Labor Standards Act allows qualifying employers to hire people with disabilities (including mental disabilities) for less than minimum wage. This is specifically to ensure that employment opportunities still exist for such people, who otherwise could not provide labor worth at least the minimum wage. In some cases, other state programs may pay part of the disabled workers income, effectively the state subsidizing the employment of the otherwise unemployable.

The real problem I think comes from people who are able-bodied and mentally capable, with no legitimate disability, who are just unwilling to take the jobs available to them because it doesn't fit their desired lifestyle (e.g. let them be lazy and keep their hands clean.) Entry level jobs in manufacturing settings have better pay than being a cashier at a burger joint. A first time factory job for a 19 year old highschool dropout with no developed skills but a willingness to show up on time and try hard will almost always pay more than the minimum wage, but finding people who are willing to even apply to such jobs can be challenging due to perceptions of social status and entitlement. These are people who have no legitimate disability but are unfit to work due to their poor attitudes towards working. Our system doesn't accommodate them, unlike people with legitimate disabilities, because the general consensus is those people need to get bitch slapped by reality and man the fuck up.

The problem is that people don't understand that it's a market that determines wages, and instead think it's a number that employers just come up with off the cuff and minimum wage is the only thing stopping them from picking $1/hr.

Don't you think it's a little unlikely that people, in this day and age, with the current political climate in the west, don't "understand that it's a market". I think it's extremely unlikely.

I think it's more likely (because that's what I'm doing, and I expect others to do the same) that we are rejecting your market based framing, because it unnecessarily restricts good political action. I understand that wage can be viewed through the lens of the labor market, even Karl Marx knew that. I just don't think that's a very important or useful lens to view it through.

It's much like viewing political climate action, or product safety action, through the lens of the "market". You can do it, it's just not very useful for setting public policy.

The "labor market" didn't get children out of the factories, restrictions on that market did.

Right. They also fail to understand that many low end jobs only provide very marginal value to companies and could easily be eliminated if the minimum wage exceeds that value. For instance, baggers at grocery stores hired as a convienence to shoppers and to speed up checkouts. But this is only very marginal value; customers and cashiers can do the bagging themselves and the negative side of that is only very slight to the business. It's an easy job to eliminate first, many stores these days don't have one. Low minimum wages create more jobs like this, which are good jobs for teenagers or people with intellectual disabilities.

Lowering the minimum wage for people with disabilities creates more jobs for people with disabilities, demonstrating the whole point. Higher minimum wage price less capable labor out of jobs.

> Ignore the mock outrage of my sibling comment, they are uninformed.

I'd like you to point at the "mock outrage". If it's anything it's very real outrage. Real outrage that this disgusting example of a military IQ test as the decider of the worth of a person, is being perpetuated by otherwise intelligent persons. You cannot point at an IQ test and say "that proves this person is worthless" because the next step for that line of reasoning is eugenics. That's where the outrage comes from.

With that out of the way, I can address your point. A point that's much more interesting than what you're responding to. It's true that there are differences in people's abilities. Some people have mental disabilities, some people have physical disabilities. Those disabilities can affect us in different ways in different tasks. You can't neatly stack people in a gradient of ability, because tons of different tasks require different kinds and combinations of abilities. I think we agree so far.

My problem starts when you then extrapolate that into "for such people, who otherwise could not provide labor worth at least the minimum wage". Firstly you pick the symbolic "minimum wage" which abstracts away the actual value. That implies, at least to me, that you think those people would be unable to provide "labor worth the minimum wage" no matter what the minimum wage was. That obviously silly, but I'd encourage you to fix that with a number.

Secondly, and much more importantly though. I think that your argument reveals a skewed sense of value. My argument is not, and was never, that there can be no difference between what peoples abilities. My argument isn't even in this case that disabled people should be paid if they had no disability. My argument is instead that paying somebody able, less than the cost of a parking spot in New York City is ridiculous. The core of my argument is that the normal wage should be so high that the potentially reduced wage for disabled people would still be above $20/hr.

The outrage you're detecting isn't at the revelation that disabled people exist. It's that we are discussing paying real people actually working $20/hr as some sort of unreasonable expense.

There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.

Where I live we solve this in part with state sponsored offsets in wages. If you hire a person with a medically diagnosed handicap, you get some of the wages back from the government.

That way they aren't "dependent on government aid". They get to work for a fair comparable wage, avoid having to deal with too much additional paperwork, and don't have to be constantly faced with a stigma of being worth less. They are treated equally, and the employer gets to handle their crap on the back end.

It's not some insurmountable gotcha to drag people with a handicap into the conversation.

>The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.

Condemn?

You mean take care of the least among us, which is, as many have observed, a KPI for a just society.

I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.

>I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.

And so in your ideal world, if they can make a positive contribution, just not enough to live on, we can let them live on the street? Having a "Let them eat cake"[0] moment, are we?

Who is to say that folks being subsidized because they don't have the means or wherewithal to support themselves can't make a positive contribution?

Does that contribution have to be that they mop floors, clean toilets or flip burgers?

Perhaps they might contribute positively to society in other ways, just perhaps not those that have monetary (and ones that don't allow them to pay rent or eat healthy at that) rewards?

You know what's humiliating? Living on the street. Rooting through garbage cans to find food to eat. Having to listen to wealthy, entitled folks tell them they're worth less than everyone else and that they should be happy that they're "contributing" to get scraps from their tables. Forcing those with nothing to jump through hoops just to feed themselves and their children. Those things are much more humiliating than getting a helping hand to make ends meet so one can have a roof and electricity and maybe even food.

[0] https://en.wikipedia.org/wiki/Let_them_eat_cake

A better approach would be to increase the Earned Income Tax Credit to help those people rather than distorting the labor market by increasing the minimum wage.

The abstract states that there are 2.7% less fast food jobs, not 2.7% less jobs. There might be 2.7% less fast food restaurants as a result of this change, but in their place will be other businesses that employ people of higher than minimum wage. Those businesses might hire the best fast food workers while the average fast food worker continues to be employed doing fast food. As a result, there may be no people who have now become unemployed as a result of this change, and only increases in wages. The data is inconclusive.

Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.

> their place will be other businesses that employ people of higher than minimum wage

Worth noting that California’s regime extends to fast food industry exclusively.

Presumably some of those job losses were absorbed by industries still paying minimum wage - retail, construction, warehousing, etc.

Presumably if those losses were not absorbed by those low-skill sectors, the job loss figure would've been higher.

So I guess, as you said, data is conclusive.

>in their place will be other businesses that employ people of higher than minimum wage.

Why would raising fast food minimum wage create these businesses?

If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.

The primary effect of these types of laws is that businesses that employ fast food workers are less profitable, and thus when they compete against other businesses for a given lot, will bid less for the land. If the marginal buyer changes, it would have to do so to a business that relies less on minimum wage fast food workers.

That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.

I recently had the mayor of a major west coast city tell me this was a permanent trend, that there was no way to reverse the loss of these small businesses and that the disposition of all that real estate was a major issue, compounded by a loss of basic neighborhood services like groceries that used to operate out of this real estate.

The future isn’t other businesses that somehow magically pay higher wages. The future city planners are seeing is all delivery all the time from warehouse districts, and ghost towns of commercial real estate for which there is no purpose. Even city centers are starting to turn into suburbs in terms of occupancy density.

Sure, but this has nothing to do with the land values which are still extremely positive. It has everything to do with Prop 13 allowing speculation. Repeal Prop 13 and all of those lots will be better cared for and rented out.

What do you think happened to the tens of thousands that lost their jobs? Are they homeless now?

I'd hope we could find something more productive for them to do.

Hope in one hand...

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