The $15 minimum wage

Right now national minimum wage is $7.25.

Eight states, most recently Florida, have approved an eventual $15-an-hour minimum wage. Several cities have higher minimum wages, including Seattle ($16.69 an hour for large employers), San Francisco ($16.07 an hour), New York City ($15 an hour) and Washington, D.C. ($15 an hour).

I think the jump to too fast to implement at once.  I would recommend doing a gradual implementation.  $10 this year - $12 next year.  I think it could also be adjusted to the cost of living on a regional basis.  NYC is an obvious contender for $15.  Coolville, Ohio - not as sure.


It is important to set a higher minimum wage.  It is equally important to tie that the eventual wage (whatever it may be)  to inflation and the cost of living with mandatory yearly adjustments.


Klinker said:

It is important to set a higher minimum wage.  It is equally important to tie that the eventual wage (whatever it may be)  to inflation and the cost of living with mandatory yearly adjustments.

 I think Biden's proposal does just that. Plus it's a 5-year phase-in - which I think is too long, IMO.


$15.00 per hour for a 40 hour week is $600.00. Should anyone work for less? How far does that go to cover essentials like rent and food?

What are low wage working people to do while the $15.00 minimum is "implemented" in stages or "phased in"?


drummerboy said:

 I think Biden's proposal does just that. Plus it's a 5-year phase-in - which I think is too long, IMO.

 Will the phased in targets be adjusted for inflation as well or will we just end up in 2026 with a minimum wage that is $15 2021 dollars minus 5 years of inflation?


Klinker said:

drummerboy said:

 I think Biden's proposal does just that. Plus it's a 5-year phase-in - which I think is too long, IMO.

 Will the phased in targets be adjusted for inflation as well or will we just end up in 2026 with a minimum wage that is $15 2021 dollars minus 5 years of inflation?

 I'm pretty sure it's the latter.  Which is one of the big problems with a phased approach.


ml1 said:

 I'm pretty sure it's the latter.  Which is one of the big problems with a phased approach.

 A bit of a bait and switch.


I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.


terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

Can’t go there with you on this one, however like  Jamie implied in his post, the impact on small business is certainly worth consideration, and I’d go so far as subsidization in the short term.



terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

With a phased-in approach? The pandemic isn't going to go on for five years.


terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

Its never the right time for folks like you. 

Besides, don't libertarians oppose the idea of any minimum wage? The sacred freedom  of poor people to starve and all that?


terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

The unstated assumption in this bon mot is that raising the minimum wages hurts businesses.  Making that assumption itself assumes that the following questions have been considered:

  • Has the diminishing real value of the minimum wage (over time, due to inflation) helped or hurt business?
  • Is there a study of the viability of small businesses, over time, as the real value of the minimum wage gone down?
  • What do studies show about the impact of higher minimum wages (where they are set higher locally) on businesses covered by it?

nohero said:

terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

The unstated assumption in this bon mot is that raising the minimum wages hurts businesses.  Making that assumption itself assumes that the following questions have been considered:

  • Has the diminishing real value of the minimum wage (over time, due to inflation) helped or hurt business?
  • Is there a study of the viability of small businesses, over time, as the real value of the minimum wage gone down?
  • What do studies show about the impact of higher minimum wages (where they are set higher locally) on businesses covered by it?

 the most recent available studies are typically dismissed by people who are against raising the minimum wage.  I mean, why do you need research when your good old common sense tells you that raising the minimum wage kills jobs and businesses?


nohero said:

terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

The unstated assumption in this bon mot is that raising the minimum wages hurts businesses.  Making that assumption itself assumes that the following questions have been considered:

  • Has the diminishing real value of the minimum wage (over time, due to inflation) helped or hurt business?
  • Is there a study of the viability of small businesses, over time, as the real value of the minimum wage gone down?
  • What do studies show about the impact of higher minimum wages (where they are set higher locally) on businesses covered by it?

 The minimum wage helps big business at the expense of small business.   Like most regulations, if the minimum wage has any effect on business it will make doing business more expensive.  Big businesses are much better positioned to absorb these additional costs. 

You may want to take your inflation argument up with drummerboy(what inflation?).  But yes, price inflation will lessen the effects of minimum wage over time as everything else(including the minimum wage rate) being equal.   This helps both the worker and the business.  This especially helps the unskilled worker who's time is best spent acquiring job skills. The best way to acquire job skills is to work.  You can demand a higher wage as you acquire skills.  

This is pretty straightforward stuff.  The late great Walter Williams captured this in his 1982 documentary "Good Intentions".  While he focuses on the affects these type of policies have on the black community, these concepts are universal. He states them in a way that is very easy to understand.  While Part 2 is the most appropriate for this conversation, I recommend watching all 3 parts.


ml1 said:

nohero said:

terp said:

I'm not sure the lockdowns have crushed enough small businesses. Perhaps a high minimum wage will finish the job.

The unstated assumption in this bon mot is that raising the minimum wages hurts businesses.  Making that assumption itself assumes that the following questions have been considered:

  • Has the diminishing real value of the minimum wage (over time, due to inflation) helped or hurt business?
  • Is there a study of the viability of small businesses, over time, as the real value of the minimum wage gone down?
  • What do studies show about the impact of higher minimum wages (where they are set higher locally) on businesses covered by it?

 the most recent available studies are typically dismissed by people who are against raising the minimum wage.  I mean, why do you need research when your good old common sense tells you that raising the minimum wage kills jobs and businesses?

 If you have a good fundamental standard of economics, you can see right through these studies.   Most of these studies make the argument that a small increase doesn't seem to hurt much as far as they can see. However, they have not control group.  The economy is very complex.  They only see the data points that they look at and they are looking at an economy that is being affected by a whole host of factors. 

So, when they claim "Well unemployment didn't go up much"or "Well it stayed stable", how do they know that unemployment wouldn't have gone down in the absence of the Minimum wage hike?  And maybe the next economic downturn will have a deeper impact given the distorted wage rates? 

Price floors cause surpluses. This is an extremely basic and easy to understand concept.   You have to compose some fancy studies to make one not understand this simple truth. 

Another way of saying this is that if you increase the cost of a good or service, less of that good or service will be consumed(again all else being equal).  This is what most of our green policies are based on.  Slap a tax on gasoline!  Slap a tax on oil, we need to clean up the environment.  Susbidize green energy so it can be delivered more cheaply so it will be used more.

Progressives consistently make these types of arguments, but seem to forget this concept when it comes to things like minimum wage and income tax policy.  One can only assume this disconnect exists because these basic laws must only apply in ways that they favor.  Alas, that just isn't how the world works. 


Except when people have more money to spend, a slightly higher price may not be an impediment to increased demand.


Steve said:

Except when people have more money to spend, a slightly higher price may not be an impediment to increased demand.

 Explain to me how the person starting out that cannot command $15 an hour ends up with more money. 


Wages go up, and at least one of these will happen:

- Businesses raise prices in response, customers by and large shrug it off. End result -- consumers pay more, workers pay more.
- Businesses raise prices in response, a significant number of customers respond by purchasing less, and business reduces staff. Laid off staff might find other work at a business that can afford the higher wages, may have been considering exiting the workforce and now does so, or may become unwillingly  unemployed.
- Businesses raise prices in response, a significant number of customers respond by purchasing less, some businesses are no longer able to compete in the marketplace and go out of business. Former workers might find other work at a business that can afford the higher wages, may have been considering exiting the workforce and now does so, or may become unwillingly unemployed.

Which of these scenarios happen, and at which mix, is something we can try to guess at via data, accepting of course that forecasting is not the same as actually knowing. Almost certainly actual results will be some mix of all of these, though the proportions are what's in question.

How people rate these various outcomes as "success" or "failure" is going to be heavily influenced by their ideology (broadly speaking -- ideology's not quite the word I'm looking for but I'm blanking on the better word now). Someone very focused on the perspective of workers might see an outcome where some businesses close but most of the former workers find new employment as a win, whereas someone more focused on businesses would not.

So there's both a data question here, as we try to come up with a reasonable forecast of what is likely to happen, but also a question of perspective, as there's not necessarily agreement on what constitutes a "good" outcome.


To add a bit more to the above, another factor is whether the economy grows. If it does -- for instance because higher wages creates greater overall spending capacity -- new businesses may rise to meet the increased demand, either reducing the number of businesses closing, or replacing closed ones with new ones. My previous post skipped over that, as if the economy were a closed system with a finite amount of demand and supply in it.


terp said:

Most of these studies make the argument that a small increase doesn't seem to hurt much as far as they can see. However, they have not control group.  The economy is very complex.  They only see the data points that they look at and they are looking at an economy that is being affected by a whole host of factors.

 A challenge not just for economics, but the social sciences in general. The interesting research on minimum wage I've seen tries to address this by looking for "natural" experiments, for instance cases were one state raised their minimum wage but their neighbor didn't and they share a common labor market.


I’m not sure of all the jargon and ideology but here, people got paid a little more and spent it: paying debt, purchasing more necessities and some health care (dental care too), replacing some bigger ticket items, some taking advantage of various home improvement packages subsidised by state and federal govts. 
read Greg Jericho in The Guardian Australia; he’s got the long-term charts and lingo to explain it all, including during recession. 


Also, please forgive brevity and cloudiness in expression: last chemo today (yay!). Hopefully, in a few weeks, my thinking will return to some measure of clarity cheese


PVW said:

To add a bit more to the above, another factor is whether the economy grows. If it does -- for instance because higher wages creates greater overall spending capacity -- new businesses may rise to meet the increased demand, either reducing the number of businesses closing, or replacing closed ones with new ones. My previous post skipped over that, as if the economy were a closed system with a finite amount of demand and supply in it.

This is one point to support the argument that raising the minimum wage could actually support growth.  Another data point is the study referenced here that concluded that raising the wage of McDonald's employees to $15/hour would only necessitate a $.17 increase in the price of a Big Mac (a 4.3% overall increase in prices).  Doubling the wages would lead to more dollars spent which would increase demand, which would support business.

Of course, @terp will reject this study because it doesn't fit his preconceived notion that the "market" cures all.


Steve said:


Of course, @terp will reject this study because it doesn't fit his preconceived notion that the "market" cures all.

 Well it's still the market. The government is neither shuttering businesses nor requiring new ones to open -- it's adjusting the constraints and letting market forces work within that.

I've never fully understood the thinking behind laissez faire economics, that goes beyond championing market forces to claiming that any attempt to direct them at all is a mistake. We don't accept this with other forces. No one attacks plumbing as an illegitimate interference with the forces of gravity and fluid dynamics. But market forces -- which are as blind and uncaring as any other force -- for some reason should be beyond any attempts to temper their destructive potential and maximize their usefulness?


terp said:

 If you have a good fundamental standard of economics, you can see right through these studies.  

And your good fundamental understanding of economics understands how the system has clearly been rigged against African Americans gaining entry to the middle- and upper-classes, and continues to perpetuate this economic inequity, correct?


I hate it when Terp hijacks a conversation.  I just could not care less about his point of view.

Enjoy yourselves.


Steve said:

PVW said:

To add a bit more to the above, another factor is whether the economy grows. If it does -- for instance because higher wages creates greater overall spending capacity -- new businesses may rise to meet the increased demand, either reducing the number of businesses closing, or replacing closed ones with new ones. My previous post skipped over that, as if the economy were a closed system with a finite amount of demand and supply in it.

This is one point to support the argument that raising the minimum wage could actually support growth.  Another data point is the study referenced here that concluded that raising the wage of McDonald's employees to $15/hour would only necessitate a $.17 increase in the price of a Big Mac (a 4.3% overall increase in prices).  Doubling the wages would lead to more dollars spent which would increase demand, which would support business.

Of course, @terp will reject this study because it doesn't fit his preconceived notion that the "market" cures all.

 I will reject the study because McDonalds has all kinds of options here.  They are likely to get by with less labor.  That is in fact happening.  They will automate as much as they can.  McDonalds has a lot of $$ to make that happen.  You know who doesn't?   The individual trying to start their own burger place.   And then, you have the hoopspa to sit here and complain about the growing inequality. 


I'm old enough(just barely) to remember when movie theaters had ushers that would help you find a seat.   I remember a time when you went to a gas station and there was someone there to check your oil or clean your windsheild.  And they were nice to you.  

Do you know why you don't see those things any longer?  People enjoyed those things, but they wouldn't pay extra to enjoy them. 

If you artificially increase labor costs the people at the bottom are going to lose.  Big business will be just fine.  Small businesses, young people, and people who for whatever reason never acquired marketable job skills will lose.  

And for the record.  McDonalds is going to price a Big Mac in a way that will maximize their profits.  They are going to structure thier labor in the same way. If you artificially increase the cost of their labor, they are going to use less of it than they otherwise wouild have.  




Klinker said:

I hate it when Terp hijacks a conversation.  I just could not care less about his point of view.

Enjoy yourselves.

 Other opinions are sooo annoying!


sprout said:

terp said:

 If you have a good fundamental standard of economics, you can see right through these studies.  

And your good fundamental understanding of economics understands how the system has clearly been rigged against African Americans gaining entry to the middle- and upper-classes, and continues to perpetuate this economic inequity, correct?

 You should really watch the Walter Williams documentary I posted further up in this thread.


terp said:

 Other opinions are sooo annoying!

 Nope, just yours.



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