To me the more interesting questions are around other workers and buying power. Does this devalue wages of the $20/hour EMT that went to a technical school for 2 years? Have prices gone up in relation to this wage increase or are businesses just cutting hours (service levels) to compensate? If prices are rising because of this, does this decrease the buying power of these minimum wage workers since they are likely to shop and patron many business that also employ these minimum wage workers?
It's also challenging to consider because housing inflation in Seattle (and the west coast in general) has gone absolutely haywire for years now, often 20% a year or more in some cases.
Will this put even a slight dent in the zeal of the $15 minimum wage folks? Their platform was not based on any kind of economic analysis to begin with, so I suspect that additional data in that field will not affect their desire to see this pushed through.
It won't put a dent in mine. I live in Seattle, I'm seeing the effects of economic growth here, and getting to a minimum wage that's inflation-adjusted still makes a ton of sense.
From [1]: "Our results show that wages in food services did increase—indicating the policy achieved its goal — and our
estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however,
was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13."
The push for a national $15 minimum wage is so unhinged from reality, yet so politically popular, that it's terrifying. People living in coastal America just don't realize that they'd essentially be banning work in large swaths of the country. An hour of work simply isn't worth $15 in many places. Those places also have very low costs of living.
If a $15 minimum wage was imposed nationally, these communities would collapse and you'd simply have millions of additions to the ranks of urban poverty.
A dollar here is not a dollar there; a $15 minimum wage would be a $19.77 wage in Australia purely through currency exchange. Even then, the purchasing power parity would not be the same - goods generally tend to cost more in Australia for a variety of factors. As well, the population of Australia is over an order of magnitude smaller than that of the US over a similar geographic landmass.
Perhaps making a direct comparison wasn't what you intended to do, however?
Just my own experience traveling through America. Go to a small mountain town and look at the prices in the restaurants and supermarkets, and the local real estate. There's no way that enough money is flowing to pay everyone $15/hour, nor do you need that much to live there.
I do wish I had something more rigorous to give you. I am pretty sure I am not the first to make this argument though.
Ben Spielberg, a Teach For America alum and former member of the Executive Board of the San Jose Teachers Association, works on issues related to inequality, economic opportunity, and full employment with Jared Bernstein at the Center on Budget and Policy Priorities.
So he's not an economist, not a statistician and is a political activist having an agenda that this study seems to undermine. I don't have enough knowledge in statistics and econometrics to know which team did better job - Berkeley or UW - but if I had to choose, I would certainly not make the choice based on a word of a political activist without relevant background.
Economists have been warning this for more than decades[1]. There are extensive studies about it. There are even former Marxists who talked about it, like Thomas Sowell[2]:
>Sowell has said that he was a Marxist "during the decade of my 20s"; one of his earliest professional publications was a sympathetic examination of Marxist thought vs. Marxist–Leninist practice. His experience working as a federal government intern during the summer of 1960 caused him to reject Marxian economics in favor of free market economic theory. During his work, Sowell discovered an association between the rise of mandated minimum wages for workers in the sugar industry of Puerto Rico and the rise of unemployment in that industry. Studying the patterns led Sowell to theorize that the government employees who administered the minimum wage law cared more about their own jobs than the plight of the poor.
Why do almost everybody think they can go against the laws of economy?
Minimum wage isn't really Marxist afaik, and people go against 'laws' of economy because they aren't laws in the same sense that say, thermodynamics or gravity seem to be. We have trends that arise out of messy and massively complex systems, and people feel free to believe that whatever variables were at play in some other situation aren't in theirs.
Edit: This is aside from any opinion about how good or bad the content of the article is, just pointing out why I think people are increasingly okay with ignoring economists' opinions.
I don't really understand why capitalists think they can continue to pay people the same amount in the context of increased efficiency. Profits are higher than ever but the public doesn't see a dime of it. Surely it will have negative impacts on consumption down the road.
Higher profits aren't a bad thing. Higher profits mean higher taxes paid, higher profits also mean more money put into work (personal investments or by third parties, i.e. put in a bank and the bank makes their own investments or loans it). Higher profits means wealth is being generated. Contrary to popular belief, minimum wage does not distribute wealth, but rather excludes those who have less, therefore helps accumulating wealth.
Minimum wage jobs aren't meant to be a job for life. It's an entry level job. If you want higher paid jobs, you need to earn it. Minimum wage increase causes unemployment, you end helping a few at the expense of others who happen to need help the most.
Just a guess, but is it because increase inefficiencies has nothing to do with the actual workers skills?
For example, Someone owns a fence building company, and their crew can lay 1000' of fence a day by shoveling the fence post holes. The owner spends $100,000 and invests in a couple of big power augers, which lets his crew now lay 5000' of fence a day(also, the crew is less tired at the end of the day).
The crew is now 5x as productive as they were in the past, but it is because of the capital investment of the owner, not through any intrinsic increase in productivity from the crew itself.
Genuinely curious: if employers are simply cutting back hours to save paying the extra wages, what's happening with those hours that aren't staffed anymore?
One possibility is that the businesses were already overpaying for labor by staffing more employees for more hours than were needed. But that just turns a minimum-wage hike into a convenient excuse to roll back hours/staff (much as economic downturns tend to be used as a cover for companies to lay off people they no longer needed anyway).
Another possibility is that more hours are being assigned to salaried employees since it doesn't cost extra to have them work more. But that would actually be a good thing -- it would increase the demand for salaried full-time employees, and being a salaried full-time employee is much better than being a minimum-wage hourly employee.
Another possibility is that businesses are just closing down more often rather than pay people to keep things operating. But that seems unlikely.
It's a pricing system. When prices go up, you only pay it if you really need it. How much are you willing to pay for having someone washing your dishes at home?
The State of Victoria (Australia) had a $14.50 minimum wage when I lived there, and most baristas and servers I knew wouldn't take jobs that paid less than $20. It's important to note that's the entire wage as AU doesn't really have a tipping culture. Melbourne has been voted 'most livable' city multiple times.
Seattle's situation is much more complex. Condos are going up and ST3 is funded, but the city needed that rail system a decade ago. The biggest problem in Seattle, as is the Bay Area, is growing income inequality.
When the fishing industry grew in Seattle, so did local shops, bars, hotels and all the other industry that gets paid various wages across the board to support each other. Seattle is a tech capital, and those jobs are very high demand. People in tech often get paid more than lawyers and even doctors.
I remember a lawyer telling me very few of the police he's met live anywhere near the areas they work in. People who bought houses decades ago for $150k are watching their neighbours take buyouts and leave, selling their places for $800 to over a million.
The disproportionate amount of income given to those in high demand fields hurts everyone else across the board. Seattle is building a lot more housing, unlike the bay area, but there is still a considerable amount of single occupancy housing in the city that's empty simply because the owners won't sell it or bring it up to code.
It's more than just minimum wage. There are a lot of complexities in that city where you can't just focus on a couple of numbers.
Hmm they want me to pay to read the paper. But I have many questions, e.g. how do they know this wouldn't have happened anyway. Was there an increase in the number of worked hours being classified as non low wage, and is that why less hours worked were classified low wage, etc.
But ultimately minimum wage laws are based more on ethics than anything. I've not heard of any business going out of business because of this in Seattle. I doubt there are any. This city is ridiculously expensive to live in. I want the people serving me food, etc. to be able to afford to live here. $15 per hour doesn't go far enough, but in lieu of something more dramatic it's the least we can do.
Every prediction of doom from minimum wage hikes has failed to come to pass [1], yet the anti-minimum wage dead-enders advance ever more tendentious, hair-splitting and arcane justifications for why minimum wage increases are "bad news."
A policy that has the effect of transitioning the economy from low-skill low-wage jobs to more high-skill high-wage ones ought to be celebrated among human beings as a victory. It provides an incentive for workers to improve their skills to compete more effectively and meaningfully increase their income.
Only those who outright prefer a serf economy can describe this study as a negative for Seattle.
If I were an employer hiring minimum wage workers in Seattle, I'd be looking to dump my employees worth $10/hr and hire some worth $15.
Assuming my ability to raise prices is capped due to out of city competition, then my only choice is to do more with less, which means hiring more productive workers.
To me, that means hiring better people. People who don't need training, can multi-task, who can deal with having more work than time.
So, sorry kid looking for your first job, I just hired someone from outside the city who was making $15 an hour because they where worth it. I can't afford to train you anymore.
31 comments
[ 3.2 ms ] story [ 73.1 ms ] threadI'd be interested to know how it has impacted broader economic activity in the region.
From [1]: "Our results show that wages in food services did increase—indicating the policy achieved its goal — and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13."
[1] http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Ex...
https://news.ycombinator.com/item?id=14642828
https://news.ycombinator.com/item?id=14645866
If a $15 minimum wage was imposed nationally, these communities would collapse and you'd simply have millions of additions to the ranks of urban poverty.
Perhaps making a direct comparison wasn't what you intended to do, however?
I do wish I had something more rigorous to give you. I am pretty sure I am not the first to make this argument though.
https://www.washingtonpost.com/news/posteverything/wp/2017/0...
So he's not an economist, not a statistician and is a political activist having an agenda that this study seems to undermine. I don't have enough knowledge in statistics and econometrics to know which team did better job - Berkeley or UW - but if I had to choose, I would certainly not make the choice based on a word of a political activist without relevant background.
>Sowell has said that he was a Marxist "during the decade of my 20s"; one of his earliest professional publications was a sympathetic examination of Marxist thought vs. Marxist–Leninist practice. His experience working as a federal government intern during the summer of 1960 caused him to reject Marxian economics in favor of free market economic theory. During his work, Sowell discovered an association between the rise of mandated minimum wages for workers in the sugar industry of Puerto Rico and the rise of unemployment in that industry. Studying the patterns led Sowell to theorize that the government employees who administered the minimum wage law cared more about their own jobs than the plight of the poor.
Why do almost everybody think they can go against the laws of economy?
[1] 50 Years of Research on the Minimum Wage: https://www.jec.senate.gov/public/_cache/files/c876c468-ffca...
[2] https://en.wikipedia.org/wiki/Thomas_Sowell#Education_and_ca...
Edit: This is aside from any opinion about how good or bad the content of the article is, just pointing out why I think people are increasingly okay with ignoring economists' opinions.
That's correct, but current Marxists or people who claim to be left-wing always make it a top priority issue to increment the minimum wage.
Minimum wage jobs aren't meant to be a job for life. It's an entry level job. If you want higher paid jobs, you need to earn it. Minimum wage increase causes unemployment, you end helping a few at the expense of others who happen to need help the most.
For example, Someone owns a fence building company, and their crew can lay 1000' of fence a day by shoveling the fence post holes. The owner spends $100,000 and invests in a couple of big power augers, which lets his crew now lay 5000' of fence a day(also, the crew is less tired at the end of the day).
The crew is now 5x as productive as they were in the past, but it is because of the capital investment of the owner, not through any intrinsic increase in productivity from the crew itself.
Who gets to capture the increase in revenue?
One possibility is that the businesses were already overpaying for labor by staffing more employees for more hours than were needed. But that just turns a minimum-wage hike into a convenient excuse to roll back hours/staff (much as economic downturns tend to be used as a cover for companies to lay off people they no longer needed anyway).
Another possibility is that more hours are being assigned to salaried employees since it doesn't cost extra to have them work more. But that would actually be a good thing -- it would increase the demand for salaried full-time employees, and being a salaried full-time employee is much better than being a minimum-wage hourly employee.
Another possibility is that businesses are just closing down more often rather than pay people to keep things operating. But that seems unlikely.
So what's actually happening?
Seattle's situation is much more complex. Condos are going up and ST3 is funded, but the city needed that rail system a decade ago. The biggest problem in Seattle, as is the Bay Area, is growing income inequality.
When the fishing industry grew in Seattle, so did local shops, bars, hotels and all the other industry that gets paid various wages across the board to support each other. Seattle is a tech capital, and those jobs are very high demand. People in tech often get paid more than lawyers and even doctors.
I remember a lawyer telling me very few of the police he's met live anywhere near the areas they work in. People who bought houses decades ago for $150k are watching their neighbours take buyouts and leave, selling their places for $800 to over a million.
The disproportionate amount of income given to those in high demand fields hurts everyone else across the board. Seattle is building a lot more housing, unlike the bay area, but there is still a considerable amount of single occupancy housing in the city that's empty simply because the owners won't sell it or bring it up to code.
It's more than just minimum wage. There are a lot of complexities in that city where you can't just focus on a couple of numbers.
But ultimately minimum wage laws are based more on ethics than anything. I've not heard of any business going out of business because of this in Seattle. I doubt there are any. This city is ridiculously expensive to live in. I want the people serving me food, etc. to be able to afford to live here. $15 per hour doesn't go far enough, but in lieu of something more dramatic it's the least we can do.
A policy that has the effect of transitioning the economy from low-skill low-wage jobs to more high-skill high-wage ones ought to be celebrated among human beings as a victory. It provides an incentive for workers to improve their skills to compete more effectively and meaningfully increase their income.
Only those who outright prefer a serf economy can describe this study as a negative for Seattle.
[1] https://civicskunk.works/moving-the-goalposts-on-seattles-mi...
Assuming my ability to raise prices is capped due to out of city competition, then my only choice is to do more with less, which means hiring more productive workers.
To me, that means hiring better people. People who don't need training, can multi-task, who can deal with having more work than time.
So, sorry kid looking for your first job, I just hired someone from outside the city who was making $15 an hour because they where worth it. I can't afford to train you anymore.